Join Australia's most dynamic and respected property investment community

IP travel & accommodation

Discussion in 'Accounting & Tax' started by Owlet, 6th Jul, 2015.

  1. Owlet

    Owlet Well-Known Member

    Joined:
    25th Jun, 2015
    Posts:
    124
    Location:
    VIC
    Hi
    An ip needs maintenance task done. This will require accommodation in the area for 1 night. Am I correct that I can claim this nights accommodation? - and can I choose a reasonable place to stay. Can the accommodation be in a nearby suburb? Are you able to claim meals?
     
  2. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

    Joined:
    19th Jun, 2015
    Posts:
    1,230
    Location:
    NSW
    Is this one of those questions where it costs you $100 a night for a motel and $50 for meals and you are paying 30c in the $ tax, meaning you are seeking a tax deduction of $50? .....and at my hourly charge out rate, I think I just spent $50 of my time answering your question in the affirmative. :rolleyes: .....every little bit helps I suppose. Can't you pay a tradie $100 to go there and save you the time & trouble?
     
  3. Owlet

    Owlet Well-Known Member

    Joined:
    25th Jun, 2015
    Posts:
    124
    Location:
    VIC
    No. I understand what you are saying. The maintenance coincides with and inspection and in us making a decision about that IPs future.
     
  4. MikeLivingTheDream

    MikeLivingTheDream BCOM MCOM MTAX CPA CTA Registered Tax Agent

    Joined:
    24th Jun, 2015
    Posts:
    227
    Location:
    Philippines
    Was the repair required at the time the property was purchased ?
     
  5. Owlet

    Owlet Well-Known Member

    Joined:
    25th Jun, 2015
    Posts:
    124
    Location:
    VIC
    No repairs. A maintenance issue.
     
  6. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,374
    Location:
    Sydney
    Meals may generally be a private cost but you can stay in any accommodation of your choice that is a commercial establishment (as opposed to with relatives). Deductible at $59 a night (Ibis) or $1500 a night at the Hyatt. Your call. Bear in mind the more you claim the more scrutiny it may attract but there is no deduction limit as such. The one the ATO love to reject is when you stay 3 nights at Dreamworld Resort and claim 1 night and there is also theme park entry on the bill for a family of 5 and two rounds of golf etc. Or you stay for 6 nights and dont have a travel diary. Obviously the primary purpose for travel is a holiday. Devil can be in the detail.
     
    Last edited: 7th Jul, 2015
  7. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    4,920
    Location:
    Sydney
    Hi Mike,
    Please tell me what difference does this make to the deductability?
    Genuinely curious.
    Thanks
     
  8. Beelzebub

    Beelzebub Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    568
    Location:
    Lost
    If it was required at the time of purchase the repair would be a capital expense as it would be seen as an improvement not a repair by the ATO. The ATO believes that you purchased the property taking into its account its current state. It would therefore be deductible from any CGT payable when sold but not deductible against income. Someone let me know if I am mistaken?
     
  9. MikeLivingTheDream

    MikeLivingTheDream BCOM MCOM MTAX CPA CTA Registered Tax Agent

    Joined:
    24th Jun, 2015
    Posts:
    227
    Location:
    Philippines
    Taxation Ruling TR 97/23 at paragraph 59, states that expenditure incurred on initial repairs is capital expenditure and is, therefore, not deductible under section 25-10 of the ITAA 1997. This paragraph also states that the cost of effecting initial repairs is still not allowable even if some income has been earned before the repair expenditure is incurred.

    The devil has once again deceived us all :p

    Travel costs to carry out initial repairs do not come within any of the 5 elements of the cost base.

    Therefore the travel costs incurred by you to carry out initial repairs cannot be included as part of the cost base of the property under section 110-25 of the ITAA 1997.

    However you can include the expenditure incurred in actually repairing and renovating the property in the fourth element of the property's cost base, such as the materials used, provided the expenditure is reflected in the state or nature of the property when you sold the property: subsection 110-25(5) of the ITAA 1997.
     
    Paul@PFI and Terry_w like this.