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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.

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