Zoe owns a rental property in Sydney. Her tenants call to advise that the hot water is not working. Zoe rings a repair person, who visits the property and inspects the hot water system. The repair person quotes to repair the hot water system, but also advises that the hot water system may not last long and can install a new system.
If Zoe asks to have the hot water system fixed, this would be considered a repair and would be fully deductible.
If she had a new system installed, this would be considered an improvement and the new items would be depreciated over time at the applicable depreciation rate or effective life.