Expenditure on Repairs

Expenditure on repairs refers to the money spent to restore or maintain an asset in its normal operating condition without significantly increasing its value or extending its useful life.

It is revenue expenditure, meaning it is deductible in the year in which it is incurred for tax purposes.

2. Key Characteristics

• Maintains asset efficiency: Repairs keep the asset functioning properly.

• Does not improve or enhance value: If the expenditure increases the asset’s capacity, efficiency, or extends its life, it may be considered a capital expenditure instead.

• Recurring in nature: Usually incurred periodically (e.g., annual maintenance).

3. Examples of Repair Expenditure

1. Fixing a leaking roof of a building

2. Painting a building

3. Replacing worn-out parts of machinery

4. Servicing equipment

5. Minor plumbing or electrical repairs

These expenses do not create a new asset but maintain the existing one.