Private ruling: Deduction - rental property
Date of advice: 13 March 2023
Published: 1 May 2023
Ruling period: Year ended 30 June 20XX.
Date scheme commenced: 1 July 20XX.

Ruling: Q1: Are you entitled to a deduction for expenses incurred to remove trees from your rental property under section 8-1 of Income Tax Assessment Act 1997? | A1: Yes. The expenditure incurred in felling and removing the trees does no more than to remove a problem so as to put you in the same position you were in before the problem of falling branches and the damage to the tenants' belongings occurred. It is therefore considered that the expenditure incurred to fell and remove the dangerous trees does not achieve any improvement, and as such, you are entitled to a deduction under section 8-1 of the ITAA 1997.

Relevant facts and circumstances: You own a rental property (the property). The property has been maintained as a rental property for a long period of time. The property has two large trees located in the backyard (the trees). Large branches have fallen from both of the trees on multiple occasions. You had an arborist cut back the tress on multiple occasions. The last cut back was for the removal of a very large fallen branch, which the arborist advised was dead and dangerous. Your suburb was hit by a severe storm system where a number of large trees in the area either dropped large branches or toppled over, damaging houses, and cutting power. This storm system caused large branches from the trees in your backyard to break off and fall on outdoor equipment. The trees were also large enough to fall on the house if they toppled over. After this storm event you applied to the City Council for a permit to remove two trees. Soon after your application the City Council approved a permit for you remove two trees. Approximately one month later you had the two trees in question removed. The tree and stump removal cost $XXX. The property was still being rented when the trees were removed.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1