When valuation fees are paid to decide whether a business should be purchased, this is usually a cost of capital and not an allowable deduction. However, if the assessment is used to support an application for a loan of money for use in the business, these expenses can be immediately reported as credit charges if they are less than $100 or longer than the term of the loan, or five years from the date of the loan, whichever is shorter. Legal & Professional fees for the first rental (see notes below) You will find detailed instructions on how to deduct fees from BIM46400. As you can see, the task of determining if a legal exit can be difficult, consult this office if you need help. The type of attorney`s fees is that of the object to which they relate — therefore, if the costs are incurred in relation to an item that is itself income, lawyers` fees and fees are also income. Similarly, lawyers` fees related to a case that is natural capital are also capital in nature. Legal fees related to leases can be considered income or investments. The general principle is that the initial purchase of a lease will be capital, so the associated costs will not be deductible (unless there is a disposal of the asset, in which case they will be part of the calculation of capital gains). Renewing a lease can also incur legal and professional costs, and these will also be investments, although the amount, if renewing a short lease is likely to be small and may qualify. However, as a general rule, with the exception of leases, it is generally clear whether the transaction in question is of a capital or return nature. Fees for the continuation of capital-type debts, for example. B the proceeds of the sale of the immovable property. If a replacement lease is closely related to a previous lease agreement and is broadly similar, a change of tenant will not normally render the legal and professional costs associated with it immeasurable.
Any part of the legal or other costs related to the payment of a premium for the renewal of a lease obviously remains inadmissible. Normal legal and professional expenses incurred when renewing a lease are also allowed if the lease is less than 50 years old. However, part of the legal and professional expenses related to the payment of a premium when renewing a lease is not deductible. Deductions are denied, in particular, for fines or penalties (as described above) imposed as a result of a breach of Australian or foreign law. This rule does not apply to administrative penalties, such as general interest charges (which the ATO applies to unpaid liabilities) and penalties for underestimating GST rates. However, while fines and penalties may be expressly prohibited, costs incurred in defending the remedy may be deductible. However, if the property in question is used for purposes other than rental, for example.B. use by the owner between rentals, or, for example, if a long-term lease replaces a short lease, legal and other costs are capital expenditures. . . .