Generally, repair and renewal expenses are claimed as tax deductions pursuant to Section 33(1)(c) of the Income Tax Act (ITA). Deduction will be allowed for expenses wholly and exclusively incurred for:
The cost of reconstructing or rebuilding any premises, buildings, structures or works of a permanent nature and the cost of any plant or machinery or any fixtures will not be allowed as a tax deduction.
The word “repair” is not defined in the ITA. However, Public Ruling provides that a repair is where an asset is restored to its original state by renewing or replacing the parts which cannot be used or damaged, without any element of improvement, addition or alteration.
It is expenditure incurred solely to put back the asset to its original condition which will enable it to function properly at its previous efficiency.
The PR has categorized repair expenses as follows:
Repair and renewal expenses
If you need further clarification, please do not hesitate to contact our tax team.
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