Private ruling: Deduction of expenses
Date of advice: 19 October 2023
Published: 27 November 2023
Ruling period: Year Ended 31 December 2022 | Year Ending 31 December 2023 | Year Ending 31 December 2024

Ruling: Q1: Are the costs incurred in relation to the agreement deductible to Company A as head entity of the Tax Consolidated Group pursuant to section 8-1 of the Income Tax Assessment Act 1997 ? | A1: Yes

Relevant facts and circumstances: Companies A and B are Australian tax resident companies. Company B, an entity unrelated to Company A, requested that Company A reposition a segment of its assets. Company B paid Company A for the costs incurred in doing so.


Reasons for decision: Summary: The costs incurred by Company A for repositioning do not amount to improvements or change in character of its assets. The costs are not outgoings that are capital or of a capital nature and are deductible under section 8-1 of the ITAA 1997.