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.