Date posted: 14/02/2020

Joint submission on TR 2019/D6 - treatment of labour costs to create capital assets

Joint submission calls for clarification on specific issues including the treatment of supervisory and support staff costs.

Chartered Accountants ANZ has lodged a joint submission with the Corporate Tax Association on TR 2019/D6 - Income tax: application of paragraph 8-1(2)(a) of the Income Tax Assessment Act 1997 to labour costs related to the construction or creation of capital assets.

The draft ruling explains when employee costs incurred by a business are treated as capital costs related to the construction of a capital asset, rather than being immediately deductible.

The submission identifies specific issues which require clarification in order to provide certainty and utility to any final ruling. Issues include:

  • The treatment of supervisory and support staff salary and wage costs
  • The treatment of on-costs of those specifically employed to construct capital assets
  • Apportionment
  • Relevance of accounting treatment.

The submission was lodged on 14 February 2020.

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