Private ruling: Rental expenses - repairs
Date of advice: 29 April 2022
Published: July 2022
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to a deduction under section 25-10 of the Income Tax Assessment Act 1997 (ITAA 1997) for expenses incurred in replacing the damaged section of your rental property drainage system? | A1: Yes. As the work undertaken to your income producing property, in response to the letter from the City Council, is not an initial repair, is not a replacement of an entity and is not an improvement. A deduction for the full amount incurred is allowable under section 25-10 of the ITAA 1997.

Relevant facts and circumstances: You own a residential property used to produce assessable income. You received a letter from your City Council's drainage surveillance engineer regarding water drains at the property. You engaged the services of a licenced plumber, who specialises in providing services in drainage installations and repairs to investigate and carry out all necessary works to ensure compliance with the local government Acts. The plumber conducted a CCT drain camera inspection and advised that tree roots from a large tree at the front of the property had broken a concrete drainage pipe and caused it to collapse. This collapse prevents water from the buildings and surfaces, including stormwater on your land, from draining via your legal discharge point. You have incurred expenses to replace the damaged section of your rental property drainage system.

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