Claiming Depreciation on Fitouts … Some Rules to Note
29 July, 2015 by
COMMERCIAL PROPERTY OWNERS and their tenants can both reduce fitout costs for any business by claiming depreciation deductions.
As deductions can be claimed simultaneously by both owners and tenants, a few simple rules must be considered when a Quantity Surveyor prepares a tax depreciation schedule for a commercial property:
Commercial tenants are able to claim depreciation for any fitout they add once their lease starts. At the same time, commercial property owners can claim deductions for any of the plant and equipment items originally found in the property.
If a tenant’s lease demands that the property must be returned to its original condition, the tenant can write-off the remaining depreciable value of removed assets in the financial year of their removal.
If a tenant vacates a building and does not remove the fitout, the owner may still be able to claim the remaining depreciation for these items.
Small business owners should also be aware of the recent changes outlined in the federal budget and understand how these changes will affect their claims.
The following rules apply
- If a business has an aggregated turnover beneath $2 million per year, items added after 7:30pm on budget night (12th of May 2015) worth $20,000 or less will entitle their owner to an immediate write-off in the year of their purchase. This rule will apply until the 30th of June 2017.
. - For small business owners, assets which cost $1,000 or less installed between the 1st of January 2015 and the 12th of May can still be written off immediately. Assets above the $1,000 threshold purchased for small businesses between these dates can be added to a low-value pool and depreciated at an increased rate of 15 per cent in the first year and 30 per cent for each year after.
. - Assets purchased between the 1st of July 2012 and the 31st of December 2013 for small businesses which cost $6,500 or less are still eligible for an immediate write-off under previous depreciation legislation rules. Most other assets purchased during this time frame can still be pooled at a rate of 30 per cent.
. - For businesses with an aggregated turnover of over $2 million, although the measures implemented during the May 2015 federal budget will not apply, there are still substantial deductions available. Items worth $300 or less can still be applied as an immediate write-off and assets which cost $1,000 or less are still eligible to be added to a low-value pool.
Assets not within these thresholds will continue to depreciate based on their individual effective life, as determined?by the ATO.
Bottom Line: Commercial property owners and tenants who would like further information about how any of the recent federal budget rules will affect their depreciation claim can seek expert advice from a specialist Quantity Surveyor such as BMT Tax Depreciation.
BMT also provide depreciation schedules to help outline all of the deductions available for both commercial property owners and their tenants to lodge their claim when completing their annual income tax return.
Be Fully Aware of Your Commercial Property Deductions
10 June, 2015 by
WITH THE RECENT federal government announcement that small business owners are entitled to claim an immediate write-off for items worth up to $20,000, many commercial property owners may be wondering about what deductions they are entitled to. [Read more…]
Maximise The Cash from Your Rural Property
13 May, 2015 by
MANY COMMERCIAL PROPERTY INVESTORS may also own a rural property. And yet, are often unaware of the full extent of depreciation benefits that they can gain. [Read more…]
ATO Agrees Estimates Are Acceptable
22 April, 2015 by
FROM TIME TO TIME, the Tax Office will provide Rulings on various aspects — designed to assist practitioners and their clients, and generally simplify proceedings. [Read more…]
Tax Deductions for Medicos
1 April, 2015 by
JUST WHAT the Doctor ordered — a healthy deduction!
Did you know that Doctors can save thousands of dollars each year by claiming property depreciation? Let’s provide a quick recap on things.
What is depreciation?
As a building gets older and items within it wear out, they consequently depreciate in value. [Read more…]
Deductions to Get Your Motor Running
25 February, 2015 by
COMMERCIAL PROPERTY owners often require vehicles for use in the day-to-day operation of their business. And like other assets contained within a commercial property, vehicles can be depreciated and claimed as a deductible expense.
The Australian Taxation Office (ATO) lists most deductions available for motor vehicles under Table B of the 2014/4 Tax Ruling. [Read more…]
Your 4 Resolutions as a Commercial Property Investor
28 January, 2015 by
AS THE NEW YEAR BEGINS, many commercial property owners might be formulating their annual New Year’s resolutions.
Commercial property owners often think about the ways they can reduce the costs of owning their property and running their business. However, when they do so, the deductions they can claim via depreciation are not always top of their list.
Many commercial property owners still do not maximise the depreciation deductions available from their Commercial properties. [Read more…]
Could This Bottle Be Hidden in Your Cellar?
31 December, 2014 by
IN NOVEMBER 2010, a bottle of Chateau Cheval Blanc sold at auction for over $335,000.
However, many winemakers and vineyard owners are currently unaware that they could be sitting on a similar amount of cash in the form of property depreciation.
Like fine wine, great wineries also age and this process can be just as lucrative as it is for a good vintage.
By claiming depreciation deductions due to the gradual wear and tear of the building structure and the plant and equipment assets within a winery, owners can receive substantial returns from the Australian Taxation Office (ATO).
Case Study
The following table provides an example of the depreciation deductions one vineyard owner could claim for a winery established in 1990:
As the table shows, the owner was able to claim $89,190 in depreciation deductions in the first full financial year alone.
Over the life of the property (forty years), depreciation deductions amounted to a whopping $1,284,240.
To ensure that depreciation deductions are maximised, winery owners are encouraged to enlist the services of a specialist Quantity Surveyor to prepare a tax depreciation schedule.
The tax depreciation schedule will outline all of the deductions available for capital works (the structural elements).
The schedule will also show the plant and equipment items contained for the winery owners Accountant to lodge their claim with the ATO at tax time.
Accounting for Assets
During the process, a site inspection will be performed to ensure all of the plant and equipment assets found in the property are accounted for.
Some of the common plant and equipment found in wineries which can be claimed include oak barrels, fences, grape bins, presses, barrel racks, barrel washers, signage, carpet and corkers.
Bottom Line: Winery owners who would like more information about the depreciation deductions they are entitled to should contact one of the expert staff at BMT Tax Depreciation.
