Repairs Tax Deduction

Repair Tax Deduction
Repair Tax Deduction

We do get some interesting questions from clients who have done some repair work for investment properties or at their business premises.

 Repairs deduction can be claimed for repairs on assets that are held or used to produce business income as long as the expense is not a capital expenditure.

What you claim:

  • Simple repairs or renewal of the parts of the asset rather than replacing the whole or entire asset.
  • You can’t change the character of the asset or add to it.
  • Simply reinstate the function of an asset without improving it.

Following are few examples where you can claim the cost allowable repairs:

  • Painting
  • Maintain plumbing
  • Repairing machinery
  • Repairing electrical appliances

Exclusion:

You can’t claim capital expense such as:

  • Substantial improvements to an asset, for example, installing a new ceiling.
  • Repair made to machinery immediately or initially after you purchase or acquire them. This is because the price you paid reflects the items condition.
  • The work is maintenance work executed to prevent damage to the asset in the near future rather than to reinstate functionally. However, these costs may deductible.

You can generally claim a deduction for capital expenses under the general depreciation provision for items or the capital works provisions for the property.

Building improvement costs and capital works deductions claimed would also be taken into account when working out a capital gain or loss on disposal of the property.

Feel free to contact us on 03 9740 0997 or email us on Tushar@reliablebookkeepingservices.com.au for any queries.

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