Environmental protection agency
   Tax Tips    Environmental Protection Activities

Environmental Protection Activities

Environmental protection activities (EPA) are undertaken to prevent, fight or remedy pollution or to treat, clean up, remove or store waste from the business earning activities.

A business can deduct expenditure incurred on environmental protection activities. The business can also claim a deduction for cleaning up a site on which a predecessor carried on substantially the same business activity.

For the expenditure to be deductible the business earnings activities must be for:

  • Producing assessable income (excluding capital gains).
  • Exploration or prospecting.
  • Mining site rehabilitation.
  • A deduction is not available for:
  • EPA bonds.
  • Expenditure for acquiring land or constructing buildings.
  • Expenditure to the extent that it can be deducted under another provision.

In addition, rental property owners are also allowed a deduction for environmental protection activities. In ATO ID 2004/720 the ATO interpretative decision detailed that a taxpayer was entitled to a deduction under section 40-755 of the ITAA 1997 for expenditure incurred in demolishing and removing a shed constructed of asbestos from a rental property.