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Maximise your tax return

  • Posted: July 02, 2016

Did you know that your medical business can get a tax deduction for the depreciation (wear and tear) of your property assets?

Some of the main property related tax deductions include:

  • Plant and Equipment
  • Capital Works Building Allowance

 Whether you own or lease, it is important to consider how your premises can help reduce your tax exposure and improve your investment return.

Plant and Equipment

Items that have a limited effective life and are expected to decline in value over time (such as reception desks, furniture, carpets and air conditioning units for example) are depreciating assets.  You can claim a tax deduction for the decline in value of a depreciating asset plus any freight and installation costs.  The amount of deduction you are able to claim will depend upon the value of the asset and its expected lifespan. Consult your tax agent for further information about different methods of calculating depreciation.

Capital Works Building Allowance

The cost of constructing buildings, extensions, alterations, car parks, retaining walls and fences can also be depreciated.  For commercial properties the current rate is 2.5% per annum based upon the original construction cost, for up to 40 years.  However, the building must be used for producing assessable income during the financial year that you are claiming the tax deduction.

Know what you can claim – get a Depreciation Schedule

At the end of a fit out or construction project ensure that you request a Depreciation Schedule from a Quantity Surveyor.  The schedule will provide you and your tax agent with a clear guide on what you can claim each year so you don’t lose out on deductions that you are entitled to.  The cost of a Depreciation Schedule will depend on the type of property, location and size – but Quantity Surveyor fees are 100% tax deductible and it is likely that the savings will outweigh the cost of the report.

It is important to note that a Depreciation Schedule prepared by an Accountant, Real Estate Agent, Valuer or Solicitor is not acceptable to the ATO. 

Please note this is general advice only and does not take into account your specific needs or circumstances.  For specific tax advice please consult a registered tax agent.