You can claim a deduction for repairs to machinery, tools or premises you use to produce business income, as long as the expenses are not capital expenses.
To repair something generally means to fix defects or renew parts. It does not mean totally reconstructing the item. The repairs must relate directly to wear and tear or other damage that resulted from using the item or asset to produce business income. You don’t have to own the property or item that is repaired – as long as it’s held (for example repairs to assets that are subject to a hire purchase agreement are generally deductible).
Repairs don’t include substantial improvements to an item or property, such as replacing a dilapidated ceiling with an entirely new and better ceiling. This would be a capital expense. Repairs also don’t include, repairs made to machinery, tools or property immediately after you purchase or acquire them. This is because the price you paid for an item reflects its condition, so the costs of these initial repairs are also capital expenses.
