21 May 099 Deductions for replacement of refractory in anode bake furnace - Alcoa of Australia LtdThe Commissioner on 21 May 2009 released a decision impact statement on the decision of the AAT in Re Alcoa of Australia Ltd and FCT  AATA 1128. The issue in the case was whether expenses incurred on replacement of a refractory in an anode bake furnace were allowable deductions for repairs or were instead capital incurred on replacement of an entirety. The AAT set aside the Commissioner's decision on review and remitted the matter to the Commissioner to allow the taxpayer's objection to an unfavourable private ruling.
In the view of the ATO, this was a decision that was open to the AAT on the particular facts in this case and does not have any significant implications for other cases. The question of what is an "entirety" for purposes of deductibility of expenditure on repairs depends on the overall impression gained from a factual scenario. It is a question of "fact and degree". Public Ruling TR 97/23 contains statements of principle to this effect and it is not inconsistent with the AAT's decision (Decision Impact Statement 2008/0670, 21 May 2009).
For a copy of the decision impact statement go here.