Deductions -Repairs to employer's equipment

Is the taxpayer entitled to a deduction under section 25-10 of the Income Tax Assessment Act 1997 (ITAA 1997) for the cost of repairs to their employer's equipment as a result of an accident?

Yes. The taxpayer is entitled to a deduction under section 25-10 of the ITAA 1997 for the cost of repairs to their employer's equipment as a result of an accident as the equipment was used solely for the purpose of producing assessable income.

The taxpayer was involved in an accident during their normal employment activities. The accident caused damage to their employer's equipment, which was used by the taxpayer in carrying out their duties.

The equipment was uninsured.

The taxpayer agreed to pay for repairs to the equipment and was not reimbursed in respect of the repairs.

The repairs were not improvements and therefore are not of a capital nature.

The taxpayer is still employed by the same employer.

Section 25-10 of the ITAA 1997 allows a deduction for expenditure incurred for repairs to premises (or part of premises), or plant where the taxpayer held or used the premises or plant solely for the purpose of producing assessable income.

The premises or plant does not have to be owned by the taxpayer. However, there must be a clear connection between the gaining or producing of the taxpayer's assessable income and the equipment subject to repair. For example, paragraph 218 of Taxation Ruling TR 95/18 allows an employee truck driver to claim a deduction for the cost of parts and labour in the repair of the employer's trucks, either at the direction of the employer or voluntarily.

The taxpayer used the equipment in carrying out their employment duties. The taxpayer incurred expenses for repairs to the equipment used to produce their assessable income. Accordingly, the taxpayer can deduct the expenses incurred in repairing their employer's equipment under section 25-10 of the ITAA 1997.