Earthquake Strengthening - Capital vs Revenue

Question

 I have a client who needs to strengthen their building to get up to code due to the earthquakes in the upper South Island. Normally I would say this is to be capitalised. However, do you know of any tax changes allowing building strengthening to be expensed due to earthquakes?

Answer

 The IRD has consistently argued that strengthening a building adds to its value and is therefore a capital cost, not a business expense.