Edited version of private advice

Authorisation Number: 5010107627065

Date of advice: 8 October 2024

Ruling

Subject: Rental deductions

Question

Are the expenses you incurred as repairs on your rental property deductible under section 25-10 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes.

Section 25-10 of the ITAA 1997 permits an immediate deduction for expenditure you incur to repair premises or plant which you hold or use for the sole purpose of producing assessable income; unless the outlay is capital expenditure which is prevented from being deductible as a repair by subsection 25-10(3) of the ITAA 1997.

Taxation Ruling TR 97/23 Income tax: deductions for repairs (TR 97/23) explains that the word 'repairs' should be taken to retain its ordinary meaning, which is to make good and restore the efficiency of function of that which is damaged or broken. Paragraphs 12 to 22 of TR 97/23 elaborates the ATO view on what constitutes a repair as it relates to section 25-10 of the ITAA 1997.

In your case, the XXX is a repair cost that is deductible in the year it was incurred.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

The property is jointly owned and was purchased on XX/XX/20XX.

The property was first rented out on XX/XX/20XX with the existing tenants.

The fence was rotting and moving on one side due to damage by the tree roots.

In XXX 20XX, some trees were removed, and the fence was fixed at the cost of $XXX.

The invoice for $XXX dated XX/XX/20XX, was provided.

The before and after pictures have been provided.

Relevant legislative provision

Income Tax Assessment Act 1997 section 25-1