Cladding – Tax Deductions – Repair or Improve – ATO Determination
Recently the ATO has determined the replacement of ACC (Aluminium Composite Cladding), is in fact an improvement to your property and not a repair.
We have several clients who are now reviewing their ACC on their sites and discussing with their fire engineer a solution to rectify their property and make safe moving forward.
The ATO have clearly said these costs will be a capital improvement for the purpose of Division 43 of the ITAA 1997 (refer to the link further below).
In financial modelling, this means, if the new cladding installed cost $1m, you can depreciate this cost from completion of installation over the next 40 years (2.5%) which equates to a deduction of $25,000 per year, as an example.
An additional deduction may be allowed to write off the existing cladding, if the original cost and installation was completed after 1979 on hotels (40 year life), commercial, aged care, industrial buildings and similar construction which commenced after 16 September 1987 (2.5%). As we have qualified quantity surveyors registered on the Tax Practioners Board we can provide this deduction for you.
Below is the link from the ATO which provides some more clarity and discussion. Continue reading
ATO to tackle Property Investor’s Rental Deductions
On the 18th August 2014, the ATO released an article highlighting the plan to investigate and analyse rental property deductions.
Within the article, the ATO states they will be reviewing and ensuring each property investor has correctly apportioned property depreciation allowances.
We continually strive to educate all investors the difference between capital improvements, repairs and maintenance items and also clarify which are structural improvements. Our reports have highlighted these costs in the correct categories for the last 24 years.
Our services are carried out by our in-house specialist tax surveyors who are all accredited tax agents (Tax Agents Services Act 2009) for the purposes of preparing depreciation schedules. Our in-house research enables us to keep at the forefront of the ATO requirements. This enables our clients to maximise their position with the surety that they comply with the tax act. Continue reading
