EV 1052174097895currentnon-binding advice

Deduction of expenses

Non-binding edited private advice. This is an edited version of private advice the ATO gave to a specific taxpayer about their own circumstances. You cannot rely on it — it is not binding and provides no protection for anyone else (see PS LA 2008/4). Use it as a guide to the ATO’s thinking, not as authority.

1

Are the costs incurred in relation to the agreement deductible to Company A as head entity of the Tax Consolidated Group pursuant to section 8-1 of the Income Tax Assessment Act 1997 ?

2

Yes This ruling applies for the following periods : Year Ended 31 December 2022 Year Ending 31 December 2023 Year Ending 31 December 2024

3

Companies A and B are Australian tax resident companies. Company B, an entity unrelated to Company A, requested that Company A reposition a segment of its assets. Company B paid Company A for the costs incurred in doing so.

4

The costs incurred by Company A for repositioning do not amount to improvements or change in character of its assets. The costs are not outgoings that are capital or of a capital nature and are deductible under section 8-1 of the ITAA 1997. Relevant legislative provision Income Tax Assessment Act 1997 section 8-1