According to Australian Tax Office rules, commercial property owners and tenants can simultaneously claim for two categories of deductions: capital works allowance, for structural features, and plant and equipment items, which are removable assets.
Bradley Beer, CEO of BMT Tax Depreciation, believes an enhanced understanding of commercial depreciation rules is invaluable to SMEs of all types, as deductions and their value can differ from industry to industry.
“Many SMEs may be missing out on increased cash flow through a lack of understanding about all the legitimate tax deductions they can claim for many things in their working environment,” says Mr Beer.
“For example, business owners may need to fit out a premises with assets such as air conditioning, security systems, telephone systems and furniture such as desks, chairs and kitchen facilities.
“Security systems may cost around $6,100, attracting a first financial year deduction of $2,440, and telephone systems may attract a $454 first-year deduction.
According to Mr Beer, BMT most commonly completes depreciation schedules for office spaces. However, during the 2015-16 financial year, the company witnessed a 51 per cent increase in requests for agricultural depreciation schedules, a 67 per cent increase for childcare centres and a 32 per cent increase for hotels and motels.
“Farming equipment can attract some unique, big-ticket deductions for agricultural business owners,” Mr Beer explains.
“In terms of first-year deductions, tractors may attract $13,800, livestock grids may attract $4,140 and grain storage silos around $2,295.
“Play equipment is essential for a childcare facility and can be valued at around $92,183, which may amount to a deduction of $36,873 in the first financial year.”
Deductions that may be found in hotels include beds, which can have a depreciable value of around $62,500 and a claim of $17,857 in the first year, and commercial washing machines, which can be valued at $67,500 and allow a first-year claim of $13,500.
“Whether you own or rent your premises, or even if you work from home, there may be a wealth of unexpected and value-laden deductions you are entitled to,” says Mr Beer.
“Quantity surveyors are expert at finding and maximising these deductions after inspecting a commercial premises, which may help to reduce the costs that holding your commercial property generates or may stimulate valuable cash flow.
“Obtaining a professional depreciation schedule from a quantity surveyor will maximise the amount of deductions you can claim, which in turn should have a positive effect on the financial health of your business.”