Ashwin purchased an investment property in Brisbane on 1 July 2018. The house was listed for rental with a local real estate agent, and is currently rented for $450 per week. Ashwin incurred the following expenses during the year ended 30 June 2021 in respect of the house:

a) Interest on the loan Ashwin used to purchase the property, totalling $13,500.

b) A new smoke alarm was purchased by Ashwin and installed in the apartment at a cost of $265 on 14 July 2020.

c) At the time Ashwin purchased the house, the decking was in good condition. It has deteriorated over time, however, as it is not undercover. Work was required to replace existing rotting boards. Once the carpenter began work he concluded that more boards needed replacing. The timber boards were replaced with a different product that gives the appearance of timber decking but is less likely to rot in wet weather.

d) The hot water system was leaking and needed replacing. On 1 December 2020 Ashwin purchased a new hot water system for $1,380 and paid $320 for an electrician to install it.

e) Ashwin required legal advice due to the real estate agent breaching the property management agreement Ashwin had signed when he appointed the real estate agent. Ashwin incurred $1,450 in legal fees to recover unpaid rent from the real estate agent.

f) Ashwin travelled 80 kilometres in her car during the income year to inspect his rental property.

You can assume that any depreciating assets have an effective life of 10 years and that Ashwin use the prime cost method of depreciation when relevant.

 

Required:

Discuss whether any amounts of expenditure incurred by Ashwin would be allowable as a deduction during the year ended 30 June 2021 under any section of the Income Tax Assessment Acts. Support your discussion with reference to legislation, case law and taxation rulings.

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