Private ruling: Incurred
Published: April 2015
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Was the expenditure for the work undertaken to your rental property incurred in the 2013-14 financial year? | A1: Yes.


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

Reasons for decision: Summary: Taxation Ruling TR 97/7 discusses the meaning of 'incurred' and clarifies when a deduction is allowable. The ruling states that as a broad guide, you incur an outgoing at the time you owe a present money debt that you cannot escape. There must be more than just an expectation or agreement that work will be done at some time in the future. There must be a right for the payee to demand payment at the present time. In your case, you had made an agreement to incur expenses for the work undertaken to the property located in town A. The work undertaken to the property was completed before the end of the financial year at which time you were satisfied that the work had been completed as per the agreement. As the contactor had a right to demand payment for the completion of the work, the expenses were incurred before the end of the financial year as at that time you owed a debt that you could not escape.

Relevant facts: You own a rental property in town A. | You were provided with a quote to undertake work to the rental property. | The work was completed before the end of the financial year. | You wanted to pay the contractor for the work completed before the end of the financial year; however, because the work was done in town A and you resided in town B you could not pay the contractor on the day the work was completed. | You paid the contractor for the work undertaken to the property in the next financial year.