No. It is worth noting that:
Note:If the deductions are not high enough to make it feasible to complete a report, we will not proceed. We guarantee to obtain double our fee worth of deductions in the first full financial year claim or there will be no charge for our services.
The ATO specifies an individual effective life for each plant and equipment item. Consequently, our reports show the estimated cost for each item and its contribution to the depreciation total per financial year. The original building structure and capital improvements, or Division 43, are all written off at the same rate (unless building works have been completed over different legislation periods). Therefore individual costs for these items aren’t expressed in the report. If required by the ATO, the estimates for Division 43 can be justified.
From the date of construction completion, the ATO has determined that any building eligible to claim the building write-off allowance has a maximum effective life of 40 years. Therefore, investors can generally claim up to 40 years depreciation on a brand new building, whereas the balance of the 40 year period from construction completion is claimable on an older property.
Yes. Anything in the property that is part of a previous renovation will be estimated by our quantity surveyors and deductions calculated accordingly. This includes items that are not obvious e.g. new plumbing, water proofing, electrical wiring etc. For capital improvements to qualify for the Division 43 building write-off allowance, they must have commenced construction within the appropriate Division 43 time periods.
Information required to produce a Tax Depreciation and Capital Allowance report includes the following:
Plant and equipment items are items that can be ‘easily’ removed from the property as opposed to items that are permanently fixed to the structure of the building. Plant items also include items that are mechanically or electronically operated, even though they can be fixed to the structure of the building. Plant and equipment items include (but are not limited to):
The building write-off allowance (otherwise known as Division 43) is based on historical building costs and includes things such as the bricks, mortar, walls, flooring and wiring.
Quantity Surveyors are one of the few professionals recognised by the ATO to have the appropriate construction costing skills to calculate the construction cost for the purposes of building depreciation. BMT also prepare cost plan estimates for all types of buildings. Construction costs are estimated in today’s market and historically adjusted to the year of construction using cost indices.
A low value pool exists providing investors the benefit of pooling items that meet either of the following classifications:
Low Cost Pool
low cost asset is a depreciable asset that has a cost of less than $1000 in the year of acquisition.
Low Value Pool
A low value asset is a depreciable asset that has an undeducted value of less than $1000. That is, the cost of an asset is greater than $1000 in the year of acquisition but the value remaining after depreciating over time (opening value less deductions in year 1 less deductions in year 2 etc) is now less than $1000. Assets meeting both these classifications can be placed in an itemised pool. Pooling is used in conjunction with the diminishing value method to maximise deductions in the initial years of the depreciation schedule.
The age of the building can be determined by obtaining council documents with dates pertaining to the original application approval date or the Occupancy Certificate date and final inspection date. Similar methods are used Australia wide, however some properties are privately certified. BMT conduct the relevant searches required to accurately determine the age of a building. These include historical council searches regarding lodged development applications, as well as Occupancy Certificates and certified final inspections.
A detailed 22 page schedule includes the following components
Article Provided by BMT Tax Depreciation Pty Ltd.
Bradley Beer (B. Con. Mgt) is a Director of BMT Tax Depreciation. Please contact 1300 728 726 or visit
www.bmtqs.com.au for an Australia wide service.