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Tax ruling: asbestos removal and tax deductions

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Did you know…?

If you are a landlord, testing and removal of asbestos from your rental property could be tax deductible.

TAX RULING TR2020/2: DEDUCTIONS FOR EXPENDITURE ON ENVIRONMENTAL PROTECTION ACTIONS(FOR EXAMPLE – ASBESTOS)

 

If you have undertaken testing for asbestos (even if none was found), removed asbestos and/or reinstated property parts (for example, walls) that were removed due to asbestos, you may be able to claim a tax deduction on these costs.

This applies to rental or commercial properties, or your home if it is also a place of business.

Understanding what you can claim for*:

  1. Asbestos testing / environmental testing of a building you own (even if asbestos is not ultimately found), providing the building is a rental or commercial property.

If asbestos is suspected in the building and testing is required, the testing activity is considered to be integral to the undertaking of the environmental protection activity, even if asbestos is not found. 

  1. Asbestos removal by a licenced removalist.
  2. Reinstatement of a part of the property after asbestos is removed.

Example (from the taxation ruling)

  • Angela is a landlord for a house with a dilapidated shed in the backyard
  • The shed is clad in asbestos cement sheeting that is damaged and could be potential harmful to her tenants
  • An asbestos removal company safely demolishes and removes the shed for $7,000
  • The demolition and removal of the shed is an environmental protection activity as it was undertaken for the purpose of preventing asbestos pollution.
  • Angela can deduct $7,000 through her tax return

What about owner-occupiers?

An owner-occupier may benefit from this ruling* if they work from home, or rent out a portion of their property. The home must be also considered a place of business. However, the ruling does not explicitly refer to this and you are advised to seek the advice of your tax agent. Ordinary deductibility and apportionment principles will apply depending on your circumstances.

 

*Please note that this is general advice only. The above taxation ruling was finalised by the Australian Taxation Office in July 2020. ASEA is unable to provide specific advice on individual cases as to whether they qualify to claim for a deduction. Please speak to a registered tax agent or the ATO for any further advice in this regard or to discuss your own personal circumstances.