Value for Claiming for Tax Depreciation

The easiest things we can do as a small business is to maximize the tax deductions available to us at the end of financial year.  Keep in mind that the higher the deductions, the less tax payable.  Some businesses rely on their accountant to ensure tax depreciation is accounted for, however accountants are not qualified to estimate construction costs or assign new effective lives and values to second-hand plant and equipment items.  Without an up to date depreciation schedule prepared by a quantity surveyor, deductions for tax depreciation will not be maximized for the business owner. Most of the time we see small business that have been operating for years with an out of date depreciation schedule, or sometimes with no depreciation schedule at all.  A tax depreciation schedule reports the deductions available each year for the depreciation of any building works, business fit-out and included business assets. Sometimes businesses are using an inventory list they inherited from a previous owner.  This is not ideal as the previous owner will have already depreciated the assets as aggressively as possible before sale. 

In this case, businesses should have a quantity surveyor complete a new and up to date depreciation schedule with new effective lives and asset values to maximize the depreciation still available. Many investors understand that they can claim depreciation of building works and assets they have done or added to a property.  However, many don't realize they may be eligible to claim depreciation of renovations completed by the previous owners of their investment property.  The tax depreciation Brisbane claimable will depend on when the property was purchased and the nature and extent of the renovations undertaken. Construction and assets for small businesses can be very different to those we see in residential homes, and for the best results we recommend using a depreciation specialist. Not all quantity surveyors are depreciation specialists.  Tax depreciation specialists must also be registered tax agents with the Tax Practitioners Board.  A specialist will be able to more accurately value assets, assign effective lives, utilize low cost and low value pooling and immediate write-off provisions to more aggressively claims. 

All of this can make thousands of dollars difference to the deductions reported at the end of financial year. Whilst most people know that brand new properties generate the best depreciation deductions, many investors and their advisers don’t realize the value when it comes to claiming for tax depreciation of older properties. The common myth is that if the property was built at least 40 years ago, there will be no value left to depreciate and claim. The fact is, most older properties have been improved or extended since original construction. The original building may not have claims left in it, but structural work completed in the last 30 years will qualify. When you purchase an investment property that is not brand new, any capital improvements or additions completed on the property prior to your purchase will be considered for tax depreciation Brisbane purposes. The fact that you don't know when the work was completed or how much it cost doesn't matter. Not all improvements and additions are obvious to the untrained eye. Re-pairing, electrical re-wiring, re-plumbing, roof replacements, window replacements and garages are improvements and additions that are often not recognized by investors, and yet are eligible for depreciation claims.