QUESTION Furnaces Pty Ltd was advised by a local building inspector that one of the chimneys on its premiseswas unsafe and, unless it was repaired, the factory would have to be closed. Furnaces decided thatit was not feasible to stop operations to repair the chimney, so they gained permission to build analternative chimney adjacent to the old chimney, thereby allowing production to continue. They foundthat although the new chimney was substantially the same size and make as the old one, it wascheaper to build than it would have been to repair the old one. Also, the new chimney can betterventilate the weather, which was not available in the previous one. After the new chimney waserected, the old chimney was demolished.Is any amount allowable as a deduction for the cost of the new chimney?
QUESTION
Furnaces Pty Ltd was advised by a local building inspector that one of the chimneys on its premises
was unsafe and, unless it was repaired, the factory would have to be closed. Furnaces decided that
it was not feasible to stop operations to repair the chimney, so they gained permission to build an
alternative chimney adjacent to the old chimney, thereby allowing production to continue. They found
that although the new chimney was substantially the same size and make as the old one, it was
cheaper to build than it would have been to repair the old one. Also, the new chimney can better
ventilate the weather, which was not available in the previous one. After the new chimney was
erected, the old chimney was demolished.
Is any amount allowable as a deduction for the cost of the new chimney?
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