Turfing After A Drought

Question

In the recent drought, the lawn has completely dried out and died off. Now that the rain has arrived, everything has started growing again, however there is no longer any trace of lawn. The weeds have completely taken over. To maintain the property in a tenantable state, and to minimise vacancies, I am considering re-turfing. Have not received any quotes yet but it could be as much as $2,000. When a tenant rents a property, it is inclusive of both a house and usable outdoor space including lawn. My question is, would turfing in this scenario be considered maintenance and therefore a claimable expense?


Answer

I am assuming that you have tenants in the house.

Certainly laying down grass where grass was before is a repair to the yard. There are two tests you need to consider:

  1. Make sure it is not an improvement. This means that there was decent lawn there before the drought. The benchmark for and improvement is the condition it was in when you purchased the property or during the time you owned the property. If the grass was dead when you bought the property and you have not re grassed it since you bought then it would be an improvement.
  2. It is important that you do not replace the entirety. To repair something, something of the original must remain. So it is all a question of what the entirety is. If the entirety is the grass then it would be wise to leave some of the original grass that has survived. It is my opinion that the entirety would be the grass and the dirt as they are so intertwined but who wants to fight the ATO? Best just not to replace say the grass down the side that was a bit better sheltered……

Here is a link to the ATO ruling on repairs if you would like a detailed understanding of entirety and improvements https://www.ato.gov.au/law/view/document?docid=TXR/TR9723/nat/ato/00001 Unfortunately it does not specifically mention grass. Here is the paragraph that is most relevant to your circumstances:

15. Repair for the most part is occasional and partial. It involves restoration of the efficiency of function of the property being repaired without changing its character and may include restoration to its former appearance, form, state or condition. A repair merely replaces a part of something or corrects something that is already there and has become worn out or dilapidated. Works can fairly be described as ‘repairs’ if they are done to make good damage or deterioration that has occurred by ordinary wear and tear, by accidental or deliberate damage or by the operation of natural causes (whether expected or unexpected) during the passage of time.

As far as the question of whether the original lawn was from seed or turf or whether the type of lawn you lay this time, if it is more hardy, amounts to an improvement. I don’t think either of those issues should make a difference considering the following paragraph from TR 97/23

16. To repair property improves to some extent the condition it was in immediately before repair. A minor and incidental degree of improvement, addition or alteration may be done to property and still be a repair. If the work amounts to a substantial improvement, addition or alteration, it is not a repair and is not deductible under section 25-10.

All I think you need to consider is to be on the safe side don’t completely turf the whole yard. Maybe leave bits down the side so that you have not replaced the lawn in its entirety.

. .
Have a question about tax you need answered?

. Ask your own tax question here for only $79.95