Owners and operators of commercial property such as industrial warehouses or manufacturing sites are eligible to claim commercial property depreciation, which includes both capital works and plant & equipment.
The term ‘depreciation’ refers to the tax deduction available to the owner or operator of an income-producing property.
The gradual depreciation of the building, otherwise known as ‘wear and tear’ can be captured by a Quantity Surveyor alongside the numerous articles of equipment included within. Utilising this type of commercial property tax depreciation deduction with a commercial property depreciation schedule prepared by a Quantity Surveyor can result in a substantial cash flow benefit and optimised liquidity.
The list of eligible items spans across light fittings and carpet to commercial machineries such as compactors or conveyor belts.
The most significant difference compared to purchasing a residential property versus a commercial property today is that the commercial properties can claim Division 40 Plant and Equipment. In contrast, residential properties, under most circumstances, would be excluded/ineligible.
The typical owner-landlord of a commercial property industrial unit can claim depreciation on the following items:
If the owner uses the property for any other purposes, such as for operating a business or manufacturing, the following can be claimed as depreciation in conjunction with the above items:
A comprehensive list of items for depreciation for commercial property can be found in the ATO Tax Ruling Income tax: effective life of depreciating assets.
This ruling is updated yearly with the most recent being the Taxation Ruling TR 2020/3. This ruling details the effective life of plant and equipment in various industries, and a Quantity Surveyor can provide guidance in identifying each asset and giving advice on the claimable amounts.
If the cost of the asset is not known, an experienced Quantity Surveyor will be able to estimate the value of the asset using a wide range of rates and sources which can often work in favour of the client.
If you are the owner or operator of a commercial property such as industrial premises, it is recommended to engage the expert staff at Duo Tax Quantity Surveyors on 1300 185 498 to ensure you are maximising the tax deductions you are entitled to.