Private ruling: Deductibility of repairs
Date of advice: 24 June 2024
Published: 5 August 2024
Ruling period: Year ending 30 June 2024 | Year ending 30 June 2025
Date scheme commenced: 9 December 2023

Ruling: Q1: Is the Taxpayer entitled to a deduction under section 25-10 of the Income Tax Assessment Act 1997 (ITAA 1997) for the cost of the roof replacement? | A1: Yes. The works undertaken to replace the roof are repairs and are immediately deductible. As per paragraph 36 of Taxation Ruling TR 97/23 Income tax: deductions for repairs , a repair is restoration by renewal or replacement of subsidiary parts of a whole. Renewal or reconstruction, as distinguished from repair, is restoration of the entirety. Further, at paragraph 40 it states something that is part of a building, e.g., a roof or wall, is just that and no more. The building itself is the entirety.

Relevant facts and circumstances: The Taxpayer owns a commercial property (the Property). The Property has continuously been rented at commercial rates. During a storm on a specified date the roof of the Property was completely torn off. The Taxpayer will receive in excess of $xx from their insurer to cover the roof replacement and temporary measures to stop further rain damage. The insurance proceeds will be received prior to a specified date. The work to be completed will restore the function of the Property without changing its character. The original roof of the Property was metal and the replacement roof will also be metal. The majority of the expenses to replace the roof will be made post a specified date.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 25-10