Private ruling: Deductions- environmental protection activities
Date of advice: 16 July 2025
Published: 22 September 2025
Ruling period: Year ended 30 June 20XX
Date scheme commenced: XX XX 20XX

Ruling: Q1: Can you claim a deduction for the expenditure you incurred for the removal of asbestos from Lot 1 under subsection 40-755(1) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. You can claim a deduction for the expenditure you incurred for the removal of asbestos from Lot 1 because Lot 1 is the site of your proposed income earning activity under section 40-755 of the ITAA 1997.

Relevant facts and circumstances: On XX XX 20XX, you purchased a property. You lived in the property as your main residence from when the property was purchased. After several years living in the property, you decided to subdivide the lot and build two detached dwellings. The proposed earning activity for the property, once subdivided and two detached dwellings are built, is for one of the subdivided lots to be utilised as a rental property. Lot 1 is intended to be the investment (rental) property. Lot 2 is intended to be your main residence. On XX XX 20XX, you received a rental appraisal from a real estate agency to ascertain the likely rent achievable for the property. On XX XX 20XX, you received a subdivision proposal plan from consulting surveyors. On XX XX 20XX, you were invoiced by Company A for the demolition of the existing dwelling. Following completion of the demolition works undertaken tests and physical inspections of the site identified asbestos located above and underground that would require additional removal. On XX XX 20XX you were invoiced by Company A for the removal of asbestos contaminated soil. You had the intention of carrying on the proposed earning activity at the time you incurred the expenditure. The contaminated areas were removed, disposed of and cleared for the dominant purpose of preventing pollution of the site. This allowed the dwellings to continue to be developed, which required a clear site, free from contamination.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 40-755