Tax Question

From: Alex Investor


Does anyone know if I can claim the cost of a new fence at tax time.

I have an IP and the fence fell down in a storm and the only option I had was to replace it as it was damaged. Replacing it was repairing it.

Regards,

Alex
 
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Sim

Administrator
Reply: 1
From: Sim' Hampel


The tax office documentation does clearly state that replacing a fence is capital in nature.

I'm not really sure whether your argument about "replacing it is repairing it" would really hold much water. There is really little difference between my fence which had fallen down due to rotten posts and had to be "replaced to be repaired" and yours which had fallen down due to a storm.

The way I had it explained to me was that if you could essentially use the existing materials and reconstruct the original structure (ie. bang in a few nails, straighten a few posts), then it could be classed as a repair. Replacing any item (fencing or new posts) essentially makes it a new item, and hence capital in nature.

I'd be interested to hear anyone elses opinion on this.

 
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Reply: 1.1
From: Robert Forward


It would be similar to your stove/oven giving up the ghost. You have to go out and buy a new one and it's capital expenditure in nature.

But I'm sure that Dale will be able to provide the right answer.

Cheers,
Robert

Get your Property Inspection Reports @
http://www.CreativeFinance.com.au
 
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Reply: 1.1.1
From: Rick -


G'day Alex,

I went through this same type of circumstance a couple of years ago with a masonry block fence that had come down during a cyclone in NQ. The insurance didn't cover it because it was not attached to the dwelling and even though it was replaced with a fence of lesser quality (arc-mesh) I had to claim it as a capital expense. I didn't really believe my accountant but after my own investigation found her to be correct.

Rick
 
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Reply: 1.1.1.1
From: Dale Gatherum-Goss


Hi

No, you cannot claim this cost as a tax deduction. You will have depreciate the cost over many years. Sorry, the laws are pretty strict in this area.

Dale
 
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Sim

Administrator
Reply: 1.1.1.1.1
From: Sim' Hampel


Would I be correct in my assumption that rebuilding a fence using the same material would be okay as a "repair" ?

 
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Reply: 1.1.1.1.1.1
From: Dale Gatherum-Goss


Hi Sim

Yes, you are. In that case, you are merely restoring the fence to it's original state as opposed to improving it's original state. An important distinction in tax law when it comes to repairs.

Dale
 
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W

WebBoard

Guest
Reply: 1.1.1.1.1.1.1
From: Andrew S


If you were depreciating the old fence that fell down, then can you can claim all of the remaining undepreciated value in the current year?

Regards,

Mr Jolly

- "Don't look at things and ask why, look at things and ask why not"
 
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Reply: 1.1.1.1.1.1.1.1
From: Dale Gatherum-Goss


Hi

Yes, that is true with any depreciating asset that is scrapped.

Well done

Dale
 
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Reply: 1.1.1.1.1.1.1.1.1
From: Alex Investor


Hi all,

Thanks for the info. I thought you could not claim it as a repair but no harm in asking.


So from what has been written you can depreciate the fence? Does anyone know the number of years?

Regards,

Alex
 
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Reply: 1.1.1.1.1.1.1.1.1.1
From: Dale Gatherum-Goss


Hi Alex

I'm afraid that you're looking at a rate of abt 2.5% of the cost of the fence each year for 40 years from the time the fence was erected.

Dale
 
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Reply: 1.1.1.1.1.1.1.1.1.1.1
From: Alex Investor


Thanks Dale,

2.5% wow $13.75 per year for the next 40 years! I'll be rich!

Regards,

Alex
 
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