Private ruling: Rental property expenses
Date of advice: 25 August 2020
Published: October 2020
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is the cost of the removal of asbestos from your rental property deductible as per section 40-755(1) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. The Commissioner accepts that you incurred costs for the purpose of carrying on environmental protection activities as per Taxation Ruling TR 2020/2 Income tax: deductions for expenditure on environmental protection activities. | Q2: Is the cost of recladding your rental property deductible as per section 40-755(1) of the ITAA 1997? | A2: Yes. The Commissioner accepts that you replaced a pollutant material with a non-pollutant material as per TR 2020/2.

Relevant facts and circumstances: You purchased the property in 19XX. You did not obtain a building inspection report at the time of acquisition. The property was already rented when it was purchased. You have continued to rent the property, earning assessable income that has been reported on your income tax returns. The property was built in XXXX and has a freestanding garage. The garage was constructed of wood and asbestos cladding materials. The property became vacant. You obtained quotes for the removal of the asbestos cladding from the freestanding garage as well as quotes to completely remove the garage and replace it with a brand new Colorbond garage. You engaged a contractor to have the asbestos cladding safety removed and replaced with a non-pollutant material while the property was vacant. As theasbestos cladding had to completely removed, the cladding was replaced with Hardiplex cladding. The works were completed, and tenants moved into the property. You paid the contractor for the removal of the asbestos cladding and the recladding of the garage with Hardiplex cladding.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 40-755 | Income Tax Assessment Act 1997 section 25-10