Breena has purchased a commercial rental property. The building is not in usable condition at the date of purchase. She intends to make repairs and improvements as necessary. She needs to know which payments will be tax deductions in the year of income ended 30 June 2022. She seeks your advice as her tax agent.

Expenses paid during YE 30 June 2022:

• Roofing $10,000. The roof was an old metal roof that had deteriorated over time. She replaced the whole roof with a new more durable roofing product.
• Driveway $8500. The driveway was in good condition but Breena wanted to improve the appearance to attract clients.
• Painting $7000. The building was faded and flaking paint covered the exterior façade. Her intention was to have this new paint last at least 5 years.
• Air conditioning units $42000. Each of the 7 commercial units was replaced with an efficient unit. Breena estimates they will last 6 years.
• Fence $2000. A cinder block fence around the car park was damaged by constant use. This fence was replaced by a lower brick fence which allowed more light into the building and made the car park more attractive.

REQUIRED:

Advise Breena of the amounts deductible in the current income year, and of how any remaining amounts will be treated in future years.

(Provide legislation and case law to support your calculations. You are not required to consider GST in this question).

Answer rating: 100% (QA)

SOLUTION Brecua is an Australian citizen has purchased She made Some a commercia... View the full answer