Claiming Tax Deductions for the Construction of a Childcare Centre

After building a brand-new childcare centre and hearing about the deductions they can claim, Rosalie, who owns Lucky Stars (Pty) Ltd, got in touch with Duo Tax for a tax depreciation schedule to make the most of her newly built property.

From the tax depreciation schedule, Rosalie realised that she was able to claim $323,764 as a first-year deduction for her child care centre.

Here's how.

The Numbers: Lucky Stars (Pty) Ltd

Here are some figures regarding ’s investment property:

Type of Purchase

She built a childcare centre for her day-care facility, which was completed in October 2021.

Rent

She also fitted out the centre with furniture, appliances, a playground and office equipment.

Expenses

The cost of construction and fit-out was $1.4 million.

Commercial property owners can claim depreciation deductions for the building’s structure as well as any assets they own within their property. Because of this, Rosalie was eligible to claim depreciation on both the capital works (Division 43) and the plant and equipment (Division 40) assets installed during the construction and fit out at Lucky Stars (Pty) Ltd’s new location.

And because Rosalie is operating a small business with an aggregated turnover of less than $50 million [Lucky Stars (Pty) Ltd], she was also eligible for the temporary full expensing scheme. The scheme allows the company to write off the total cost of the plant and equipment immediately in the first year.

Based on just the cost of the fit out and the capital works depreciation, Lucky Stars (Pty) Ltd was able to claim $323,764 as their first-year deduction. With their tax bracket of 25%, this means they benefited from a cash return of $80,941!

As you can see from Rosalie’s scenario, tax depreciation schedules can significantly affect a business owner’s cash flow each year.

What sets commercial property depreciation apart from investment property tax depreciation is that commercial property owners and tenants can benefit from substantial tax deductions. So, if you don’t own your business premises like Rosalie and still undertook renovations and fit out the building, you can still claim:

capital works deductions for the structural renovations; and
deductions for any plant and equipment assets that you added to the commercial building.

Here’s How Much You Could Be Claiming

As you can see from ’s scenario, tax depreciation schedules can make a significant difference in an investor’s cash flow each year.

However, if you’re still feeling unsure about committing to ordering a depreciation schedule, we have designed a tax depreciation calculator to help you estimate what you could potentially claim on tax depreciation.

This is an accounting tool designed to help estimate and calculate the declining value of capital works and plant and equipment assets and relies on accurate figures to present accurate estimations.

Rental Property Depreciation Calculator

Obtain your tax depreciation schedule in 3 easy steps.

Step 1

Qualify your Property

Call us and we will ask you a few simple questions to qualify your investment property.

1300 185 498

Step 2

Order a Report

Order over the phone or via our online form and we will begin preparing your report.

Order Now

Step 3

Claim Maximum Deductions

Within approx. 5 business days your report will be delivered to you and your accountant.

View Sample Report

How can we help?

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