Private ruling: Deductibility of expenditure on realignment of assets
Date of advice: 3 May 2023
Published: 19 June 2023
Ruling period: 16 February 20XX to 30 June 20XX

Ruling: Q1: Are the costs incurred by Company A to undertake the Works deductible pursuant to section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes.

Relevant facts and circumstances: Companies A and B are Australian tax resident companies. Company B, an entity unrelated to Company A, requested that Company A realign a segment of its assets (the Works). Company B paid Company A for the costs incurred in delivering the Works.


Reasons for decision: Summary: The costs incurred by Company A for the Works do not amount to improvements or change in character of its assets. The costs are not outgoings that are capital or of a capital nature and are deductible under section 8-1 of the ITAA 1997.