Private ruling: Rental deductions
Date of advice: 31 October 2017
Published: March 2018
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Are you entitled to an immediate deduction for the cost of resurfacing your swimming pool at your rental property? | A1: Yes

Relevant facts and circumstances: You own a rental property and the pool at the rental property needed to be completely resurfaced due to significant deterioration throughout. You engaged a contractor to carry out the work. You have incurred expenses to complete this work.

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

Reasons for decision: Summary: Section 25-10 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for the cost of repairs to premises used for income producing purposes. However, subsection 25-10(3) of the ITAA 1997 does not allow a deduction for repairs where the expenditure is of a capital nature. Taxation Ruling TR 97/23 explains the circumstances in which expenditure incurred by a taxpayer for repairs is an allowable deduction under section 25-10 of the ITAA 1997. In your case, resurfacing the pool was required due to deterioration, repairs were carried out to fix the deterioration that had occurred since being occupied by tenants. The work carried out to the pool, in resurfacing, did not change the character of the property and does not amount to an improvement, is not a replacement of an entirety or an initial repair. The work done merely restored the former condition of the pool. Therefore, you are entitled to an immediate deduction for the cost of resurfacing the pool at your rental property under section 25-10 of the ITAA 1997.

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