Tax Depreciation FAQ'S

Who needs a Tax Depreciation Schedule?

 

  • Under income tax law, you are allowed to claim certain deductions for expenditure incurred in gaining or producing assessable income.

  • Generally, the value of a capital asset that provides a benefit over a number of years declines over its effective life, because of this the cost of capital assets used in gaining assessable income can be written off over a period of time as tax deductions.

  • Basically the owner of any income producing asset is eligible to claim the tax deduction as depreciation over the effective life of that asset

  • In the case of property this tax deduction can be split into two categories.

  • Division 43 allowances for the Building structure and Capital Improvements and;

  • Division 40 allowances for the plant and equipment.

 

Who can provide a Tax Depreciation Schedule?

 

  • Under Tax Ruling TR 97/25 effective for the 1997-1998 tax year and onwards, a Quantity Surveyor is an appropriately qualified professional to estimate the construction cost where the actual expenditure is not available

  • In addition the Tax Agents Services Act 2009 (TASA) requires Quantity Surveyors to be a Registered Tax Agent to provide Tax Depreciation Schedules

QTYS is a fully qualified Quantity Surveying company.

Tax Agent Services Act 2009 (TASA) as a Registered Tax Agent

Tax Agent Number: 255 429 16

What is the process to getting a Tax Depreciation Schedule?

 

  • Referral or request received from the property owner confirming address and billing details

  • Settlement date or date property was available for rent is confirmed

  • Access details provided from the property manager or owner to allow a site inspection to be done

  • Calculations prepared to determine cost of the building and any capital improvements

  • Assessment of plant and equipment eligible for depreciation

  • Report and invoice sent via email back to the owner within 24 hours from the site visit

  • The Tax Depreciation Schedule is provided to the Accountant by the owner to claim the allowance Depreciation for the appropriate tax year

 

Note: The Schedule is required only once for the effective life of the property and the cost is fully tax deductible in the tax year is was incurred.

Example of a Tax Depreciation Schedule

 

New Residential House

  • Rental income for the year                                $25,000

  • Less Expenses per annum                               -$17,000

  • Less Depreciation Expense per annum         -$  9,500

*Total Profit / Loss for the year                             -$   1,500

 

This can reduce your taxable income, without the depreciation the result of $8,000 would be added to your taxable income and the aging cost of your asset would be lost.

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