Most helpful replyATO Certified Response
Author: KylieATO(Community Support)Community Support ATO Certified Response6 Dec 2023
Hi @Rockorock,
I posted on your other thread as well.
Thankyou so much for your patience while we checked this out with our tech team.
Business expenditure may include things such as materials, other consumable goods, and capital assets. Further below, you asked us about the cost of installing a shed on your business premises. Ordinarily a shed is a building and must be deducted as an item of capital works. This means that the deduction happens over a number of years, rather than in one year. You cannot begin claiming a deduction for a building until it has been completed, even if you have started using it.
For capital assets that are also depreciating assets, you only become entitled to a deduction once you start to hold and use it; or start to hold it and have it installed ready for use. Until you start to hold the asset, no deduction is available.
Material you buy to use in a production process of creating your trading stock is an allowable deduction at the time the final product is sold. Until you sell the final product, no deduction is available.
You said that the matter is currently before the court. As such, until the court reaches its decision, no deduction is available for this expense.
Regarding Section 25-45 of the Income Tax Assessment Act 1997, this section only applies to 'loss by theft etc' of money by your employees or agents. It is unlikely to apply in this scenario as you seem to have entered a contract with a third party.
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