Tax Depreciation
An asset purchased in a business can be an advantage for tax purposes when it comes to the end of the financial year.
A depreciating asset is something that has a reduced use over time which will devalue with age, like a building, car or tools. Land, shares, and some insubstantial assets are not classed as depreciating assets.
To claim the depreciation on these assets a report will need to be prepared by a certified agency.
Depreciation Reports
A depreciation schedule reports and itemises the details of the depreciation entitlements of domestic or commercial long-term assets within their investment property.
This report can be prepared by our company by calculating the depreciation deduction for each asset then assigning the cost over its operative life. The official document supplied for the end of the financial year tax return will enable you to take advantage the economic gains from the investment property.
There are a few depreciation rules to be applied including an instant write off and the simpler depreciation guidelines for a small business. Different guidelines are used for capital works and capital expenses.
The depreciation principles allocated include the cost of the asset as well as the transport, installation and any repairs required immediately after the purchase. The deductions allocated will depend on and are limited to what the asset is used for in the business to earn an income. If the asset is shared between business and personal use, then the percentage you can claim for the deduction will vary.
An investment in property is usually a major decision and financial outlay. With this major financial expenditure in mind, it is essential that you understand how this affects your taxes and what you can claim to help this.
Our certified agents can supply this detailed report to be given to your accountant for the benefit of the end of the year taxation activity statement.
Depreciation Rules
Capital Works Deduction
Works carried out to generate an income are written off over an extended period. This will include buildings and any structural upgrades. This however does not apply to other deprecating resources and assets.
The deduction is available for several works. Our certified agent will be able to advise you of the estimated construction costs and what may be able to be claimed for.
The capital works deductions can include:
- Improvements to a building i.e. extensions; alterations.
- Structural upgrades i.e. retaining walls, sealed driveways etc
- Alterations, shop fit outs
There are special rules for Landcare operations, Environment protection and rental properties.
Other Capital Asset and Expense Deduction
Claiming deductions for these can include:
- Setting up or ceasing a business
- Project related expenses
- Vehicles
- Plant and equipment
The calculations for the depreciation rates will be determined by the accountant and tax office depending on the operating life of the asset. Tax rulings can change depending on which depreciation rule is involved, the up-to-date rules will be applied.
What percentage of depreciation can you claim?
The percentage of depreciation you can claim be will up to the advice of your accountant. The benefit from using the correct structure is of upmost importance. This all depends on the asset, age, equipment. If the claim is aimed at a commercial or residential property.
We have the qualified staff to prepare these reports. A full inspection of your assets will be recorded with photographs and a detailed schedule of costs involved.
We can help you through this sometimes-complicated process.
Our staff are very experienced and are always available. Contact us any time we are ready to offer advice and answer any queries you may have.