Is Asbestos Abatement In A Rental Property A Repair Or A Capital Expense

News

04 September 2020

A recent ruling from the Australian Taxation Office (reference TR2020/2) has introduced the concept of asbestos removal as a revenue enhancement-deductible activity through existence classified equally an 'environmental protection activity'.

What are environmental protection activities?

From the ruling, 'environmental protection activities' are defined equally activities carried on by or for you:

to forbid, fight or remedy pollution
- resulting, or likely to issue, from your earning activity
- of or from the site of your earning activity
- of or from a site where an entity was carrying on whatever concern that you have acquired and carry on essentially unchanged as your earning action, and
to treat, clean up, remove or shop waste
- resulting, or likely to result, from your earning activity
- on or from the site of your earning activeness
- on or from a site where an entity was carrying on any concern that you have

Asbestos Removal as a Tax Deduction

Applicable to both individuals and companies, this ruling encourages the identification, removal, and disposal of asbestos in properties used for commercial purposes (including rental backdrop) past allowing the owner to claim the costs associated with removal as a deduction in their annual income tax assessment. This is to the exclusion of capital expenditure incurred in undertaking structural changes to the building.

By incentivising the removal of asbestos, the ruling could bring about a boost to the asbestos removal industry and a reduction in future instances of asbestos-related disease due to more proactive and widespread removal works in properties.

Information technology is important to note that it is ultimately the conclusion of the investor to decide what their tax outcomes are. There are limits as to what is deductible, and communication should exist sought from official sources and experts in taxation.

For further information, visit the ATO website'due south overview of TR2020/2