Private ruling: Rental deduction - capital works
Published: October 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Is the installation of roller shutters on the windows of a rental property considered capital works? | A1: Yes

Relevant facts and circumstances: You have a rental property Roller shutters were installed on the windows of your rental property

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 43

Reasons for decision: Summary: Division 43 of the Income Tax Assessment Act 1997 (ITAA 1997) provides a deduction for construction expenditure on capital works (including buildings) for residential accommodation used to produce assessable income. The rate of deduction is 2.5% of the capital expenditure able to be deducted over 40 years. Division 43 of the ITAA 1997 applies to capital works that are buildings or structural improvements and to extensions, alterations or improvements to those buildings or structural improvements. In your case, the window shutters installed on your rental property would be considered an improvement to the building and the expenditure is considered to be capital in nature. You would be entitled to a deduction, for the period the property is rented or available for rent, calculated as 2.5% of the capital expenditure over a 40 year period.