IP travel & accommodation

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

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  1. Owlet

    Owlet Well-Known Member

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    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 Well-Known Member

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    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

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    No. I understand what you are saying. The maintenance coincides with and inspection and in us making a decision about that IPs future.
     
  4. Mike A

    Mike A Well-Known Member

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    Was the repair required at the time the property was purchased ?
     
  5. Owlet

    Owlet Well-Known Member

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    No repairs. A maintenance issue.
     
  6. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    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 Life is good ☺️ Premium Member

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    Hi Mike,
    Please tell me what difference does this make to the deductability?
    Genuinely curious.
    Thanks
     
  8. Beelzebub

    Beelzebub Well-Known Member

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    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. Mike A

    Mike A Well-Known Member

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    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.
     
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