Weather Related Costs

As you or your clients deal with the impact of the recent storms and cyclones, the income tax treatment of repair/replacement costs may need to be considered for the preparation of 2023 income tax returns.

Repair and maintenance costs are fully deductible in the year incurred. The exception to this is where an asset has been repaired to the extent that it is over and above good wear & tear. This may change the character of the asset and will be considered capital expenditure (and subject to tax depreciation if permitted).

The replacement of low value assets costing less than $1,000 can be written off when incurred.

If assets are written off and replaced, the tax impact of any insurance proceeds or government grants should also be considered.

Given the extent of the damage, we are hopeful that the Government may announce further tax relief to businesses impacted.

Please contact us if you want discuss any aspects of the above.

Prepared by Chris Ng