I recently purchased an IP that is different to all my previous purchases in that there were significant arrears owing to the Council for rates (around $3,000). Now, at a summed up level, I didn’t REALLY pay those arrears because my solicitor reduced my payment for the property by the amount of the arrears so that the net effect on me was zero BUT – I paid for a cheque to be made out to the council for that arrears amount, and I have a document that says $3,000 of my settlement funds went to the council.
I realise that this forum is not for specific accounting rulings – but I would welcome anyone’s independent opinions as to whether they consider this $3,000 to be a tax deductible expense – and if so, whether they consider it to be fully claimable in the year it was incurred.
Sorry if this has been covered elsewhere, but I have been unable to find it.
Cheers,
Scott
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