Could you help me to answer this question, please?

Q.9

Alan owns an investment property from which he derives rental income. The investment property was constructed as the main building with a separated garage adjoined to the building.

The current old iron roof on the main building had been repaired a number of times during past years, therefore; Alan has decided to replace the entire old rusty iron roof on the main building only with CHEAPER cement tiles.

Explain, with reasons, whether the replacement of the rusty iron roof on the main building with cheaper cement tiles is deductible as a repair expense. Make reference to the relevant sections of the Income Tax Assessment Act, relevant Taxation Rulings or any common law case if available in your explanation. Check the ATO Tax Ruling TR 97/23 for additional information.

THESE ARE SOME TIPS THAT WILL HELP TO ANSWER THE QUESTION THANKS

As you know, question 9 of AT1 is due this Friday at 5 pm and requires you to identify whether repair on an old roof is a repair and therefore deductible, or capital improvement and therefore needs to be depreciated via capital works at 2.5%.

The difference to the client is large (immediate deduction vs being claimed over 40 years) and your response needs to be quite detailed as suggested by the wording of the question. Please find below a guide by which you might like to review your response. If anyone has already submitted a 1st attempt and would like me to remove that attempt, just let me know before Friday.

1. Start by summarising the problem at hand - the dollar amount and the reason it was spent

2. Define what a repair is (use the tax ruling given in the question and perhaps the ITAA).

3. Define what an improvement to an asset is (use the tax ruling given in the question and perhaps the ITAA). Is a roof improved by changing it's material? Are you thinking it's improved aesthetically or functionally or both? Note that when considering an 'improvement', you should compare the old roof when it was first constructed vs the new roof.

4. Review as much of the TR as you can, but pay particular attention to paragraphs 38 - 40 and inform your answers to #2 and #3 above using them. You'll find sections in the TR that consider whether something is an 'improvement' just because technological advancement necessitated a change of building materials. Also consider: is the roof a 'part' of an asset, or is it an asset by itself? What impact would either one have on your decision?

5. Make a conclusion and provide your final advice (repair or improvement, and the resulting tax consequences)