This interpretation statement considers the general principles governing the income tax treatment of expenditure taxpayers incur in carrying out work on tangible property they use in a business or income-earning activity.  It updates the Commissioner’s guidance from 2012 guidance with the same name (IS 12/03).  IS 12/03 is widely used and often referenced in other guidance. Since depreciation is no longer allowed for buildings, it is now more important to correctly characterise repairs and maintenance expenditure. 

Although the Commissioner’s interpretation has not changed, the 2012 statement has been revised to reflect recent legal developments, improve clarity and reflect a more modern format.  The structure, diagrams, and wording have been updated to improve readability.  The examples have been updated and four new examples added. 

In CA ANZ’s view, the item is likely to be well received, notwithstanding that some outcomes may appear counter-intuitive in practice. While the guidance is comprehensive and detailed, the accompanying fact sheet is clear and concise and should prove particularly useful for practitioners.

CA ANZ comments on two specific areas, including damage following a significant event and leaky buildings and provides suggestions for further improvement.