Part F - The treatment of major improvements to assets versus maintenance and repairs of assets

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Australian System of Government Finance Statistics: Concepts, Sources and Methods
Reference period


Paragraphs 8.25 to 8.27 of the IMF GFSM 2014 provides guidance to help to distinguish between major improvements to assets and the maintenance or repair of assets. Major improvements to existing assets (such as renovations, reconstructions, and enlargements) increase the productive capacity of the asset, extend its service life, or both. In GFS, major improvements are classified as transactions for the acquisition of non-financial produced assets during the reporting period, and the value of the improvement is then added to the existing value of the underlying asset at the end of the reporting period. The exception is in the case of land where major improvements are identified separately under land improvements (ETF 4114, TALC 113, SDC).


The maintenance and repair of non-financial produced assets constitute an expense that is classified as the use of goods and services (ETF 1233, COFOG-A, SDC) in the GFS system. Paragraph 8.26 of the IMF GFSM 2014 distinguishes major improvements from maintenance and repairs by the following features:

  • The decision to renovate, reconstruct, or enlarge an asset is a deliberate investment decision that may be undertaken at any time and is not dictated by the condition of the asset. Major renovations of ships, buildings, or other structures are frequently undertaken well before the end of their normal service lives; and
  • The major renovations, reconstructions, or enlargements increase the performance or capacity of existing assets or significantly extend their previously expected service lives. Enlarging or extending an existing road, building, or structure constitutes a major change in this sense, but a complete refitting or restructuring of the interior of a building also qualifies.


Paragraph 8.27 of the IMF GFSM 2014 further distinguishes maintenance and repairs by the following two features:

  • They are activities that owners or users of assets are obliged to undertake periodically in order to be able to utilise such assets over their expected service lives. They are current costs that cannot be avoided if the non-financial produced assets are to continue to be used. The owner or user cannot afford to neglect maintenance and repairs as the expected service life may be drastically shortened otherwise; and
  • They do not change the non-financial produced asset or its performance, but simply maintain it in good working order or restore it to its previous condition in the event of a breakdown. Defective parts are replaced by new parts of the same kind without changing the basic nature of the nonfinancial produced asset.
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