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How to know if you can make a claim on maintenance and repair costs
Before you make a claim on repair or maintenance costs for your business assets, make sure you’re properly informed about the limits on where those tax deductions can be made.
You probably know that you can claim a tax deduction for the cost of repairing and maintaining your business assets.
But do you always receive a deduction for repair and maintenance costs?
The answer is no.
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If you repair an asset to such an extent that you improve it, or lengthen its life, then the repair is a capital expense and is added to the cost of the asset for depreciation or capital gains tax purposes.
If you buy an asset which needs to be repaired in order to work properly, the repairs you make are called ‘initial repairs’ and these are also not deductible.
The cost of these initial repairs also needs to be added to the cost of the asset for depreciation or capital gains tax purposes.
Tags: Business Assets, Capital Gains Tax
