Fixed asset (a deck) disposed for nil consideration

Long story but in essence as part of a build of a new IP we got a wooden deck built at the front and rear of the house. Unfortunately after the majority of the deck had been built we got a letter from the council saying we needed approval for the rear deck (front deck is fine) and we had options to either remove the deck or pay fines, get it engineered and apply for building & planning approval (which was not guaranteed and would take considerable time). We could not finish the deck until approval had been obtained.

A decision was made to remove the deck (offered it for free on Gumtree, it was custom built to an odd shape so could not really be re-used) to get the IP finished and rented ASAP.

Can we claim the cost of the deck as an expense in our tax return in the year it was paid and disposed? It was $10k. Have invoices, photos and letter from council etc.

 

Come under same rules as for a business?

Disposing of a depreciating asset

 

I think there could be more to the question than a eligible scrapping deduction. I question if it was ever eligible to be classified as a depreciable expenditure if it was illegal works. The expense may be preliminary to a deck...After all a deck is what is completed after approval, timber bolts etc.... None was completed and so no asset to write off ?

May become a CGT cost (third element)....Maybe a QS may provide a reply .....Personally I wouldnt assume its eligible for Div 43 and write off.

 

That's my initial reading of it. Aside from the legalities of it, capital works allowance starts from the completion of works and the deck wasn't complete.

 

Yep, means then its capital expenditure and a third element CGT cost since no deduction is available.