Private ruling: Deductions
Date of advice: 13 December 2023
Published: 5 February 2024
Ruling period: Year ended 30 June 202X
Date scheme commenced: 1 July 202X

Ruling: Q1: Is a portion of the works you have undertaken to remove and replace the roof and downpipes, and repaint the roof, deductible as a repair? | A1: Yes, so far as the portion relates to the unit that was used to produce assessable income during the period that the damage was incurred. For further information on apportionment, please search QC55249 on our website. | Q2: Are the costs associated with the electrical rewiring, damaged laundry, and replacement of timber frames and cabinets, deductible as a repair? | A2: Yes, to the extent that the damage relates to the unit that was being used to produce assessable income during the period that the damage was incurred.

Relevant facts and circumstances: You purchased a duplex several years ago. The duplex consists of two units being unit 1 on the top floor and unit 2 on the ground floor. Over time, problems started to emerge with the roof and downpipes. Leaking would occur during storms or heavy rain and the damaged downpipes were causing issues for your neighbours, which resulted in your local Council ordering you to repair the downpipes. The leaking was causing damage to both unit 1 and unit 2. You were advised by a tradesperson that because the roof contained asbestos, the most cost-effective solution was the removal and replacement of the roof. You were further advised that it was not possible to pinpoint the nature of the damage due to the fact the roof was asbestos. The damage resulted in the following works being required: • Removal and replacement of asbestos roof including repainting • Electrical rewiring in the roof which had been damaged by the leaking • Removal and replacement of the laundry ceiling including repainting • Removal and replacement of downpipes and guttering • Replacement of timber frames and cabinetry. The total costs for the work were $XX. You had this work undertaken in XX/202X. At the time that the works commenced, you had been living in unit 1 and renting out unit 2 for several years. During the period that the works were carried out, unit 1 was unoccupied and you were living in unit 2. Following completion of the works, you rented out unit 1 and moved into unit 2. Your claim to your insurer was unsuccessful as it was held that the issues were caused by wear and tear.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 25-10 | Income Tax Assessment Act 1997 section 43-30 | Income Tax Assessment Act 1997 section 43-140