Private ruling: Deductions - repairs
Date of advice: 25 October 2023
Published: 11 December 2023
Ruling period: Year ending 30 June 2024
Date scheme commenced: 1 July 2023

Ruling: Q1: Is the cost of painting the external wall and trims of the property deductible as a repair under section 25-10 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes

Relevant facts and circumstances: You purchased a property (the Property) many years ago. The Property has always been used to produce assessable income. The Property was built in approximately 19XX and has not been repainted since then. The external wall and trims require repainting due to the weather and exposure to the elements. It is unlikely that you will be able to match the paint to that which was originally used. As a result, the paint used on the external walls and trims may be of a different hue or have mould resistant properties. By painting the Property, you are aiming to bringing it back to its original condition. You have received a quote for painting the exterior of the Property with two coats of premium exterior paint. The following items will be repainted: • gutters, fascia and eaves • walls • balustrades • garage door • doors and windows • awnings • steps • rafters • posts • battens

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1 | Income Tax Assessment Act 1997 section 25-10

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that you can deduct amounts for losses and outgoings incurred in the course of gaining or producing assessable income. You can deduct such amounts unless they are of a capital, private or domestic nature. Subsection 25-10(1) of the ITAA 1997 provides that you can deduct amounts incurred for repairs to premises or part of premises that you hold solely for the purposes of producing assessable income. Subsection 25-10(3) of the ITAA 1997 does not allow a deduction for repairs that are considered capital in nature. Paragraph 15 of Taxation Ruling TR 97/23 Income tax: deductions for repairs (TR 97/23)provides that repairs may include restoring a property to its former appearance, form, state or condition. TR 97/23 also provides that repairs can encompass works '... done to make good damage or deterioration that has occurred by ... the operation of natural causes (whether expected or unexpected) during the passage of time'. | Detailed Reasoning - Application to your circumstances: Since you purchased the Property, it has always been used to produce assessable income. The repainting of the exterior of the Property is considered to be a repair as it is restoring the Property to its former condition. The deterioration in the paint has occurred due to the operation of natural causes over the duration of your ownership period. As a result, you are entitled to a deduction under section 25-10 of the ITAA 1997 for the cost of repainting the exterior of the Property.