Repairs and Maintenance: Navigating Income Tax Rules

Investment in fixed assets is a significant part of the capital outlay for many businesses.The income tax deduction for repairs and maintenance of these assets is an area that continues to cause many problems for business owners and accountants.

There is no specific provision that addresses the deduction to be allowed for repairs and maintenance. The current income tax rules are found only under the general deductibility rules.

The lack of legislation in this area provides uncertainty in distinguishing between capital and deductible expenditure.

The course will review the income tax treatment, including a review of:

• The process developed by the courts to determine the deductibility of repairs and maintenance expenditure.
• The relevant court cases.
• Rules for apportionment of expenditure on an existing asset as capital and revenue.
• Repair of recently acquired assets.
• Notional repairs.
• Deductibility of demolition costs.
• Expenditure on leaky homes.
• Earthquake strengthening expenditure.

In each area, we will review the law and its application and work through practical examples to illustrate that issue.

Suited to:

This course will be suited to intermediate through to advanced accountants in public practice who are dealing with SMEs. It will also be suitable for corporate accountants of SMEs.