It’s here again, the end of the financial year,

Napier & Blakeley are the original experts in property depreciation deductions – we will make sure that you do muscle up and receive the maximum benefits available to you through depreciation and capital allowances.  Our experience is second to none in the market place and our track record speaks for itself.  So let us wrestle on your behalf.

It’s at this time every year that we provide an update of the legislative goings on in the accounting area of property depreciation and over the past 12 months there have been a few.

Firstly the much anticipated Green Depreciation Consultation paper was launched, Napier & Blakeley briefed on this paper when it was released in December. The paper provided allowances for “Green” related works that take a building of a 2 star NABERS rating or below to 4 star NABERS rating or above.

Essentially the scheme outlined was overly complex and did not provide any immediate relief to the tax payer, instead over burdening them with red tape. Submissions were to be provided at the beginning of the year and unsurprisingly the overall weight of submissions did not have anything favourable to say about the proposals. As a result the Government has delayed the scheme until 2012.

Other depreciation news relates to the an announcement in this years budget extending the value at which assets may be written of for small business to $5,000. There have also been some minor changes to the classification and effective lives on specific asset categories.

A major change not widely publicised is the requirement now for all Quantity Surveyors providing tax depreciation schedules including those carrying out inspections to be registered tax agents. Before this recent change there has been no requirement for a Quantity Surveyor to have any formal registration before providing a report of depreciation allowances. The tax practitioners board is yet to agreed the level of education and experience a “Suitably Qualified” individual requires to be engaged in the provision of tax depreciation schedule. Discussions on this subject are ongoing though you should be aware that all individual providers of depreciation schedules should be registered otherwise their reports may not be accepted by the ATO.

Napier & Blakeley’s main tax tip for the 2010/11 tax year is to not forget about your capital expenditure. The works that have taken place over the past 12 months can be many and varied whether it’s refurbishment of common areas or landlord owned contributions there’s almost certainly opportunities to increase the value of depreciation claim for this financial year. All too often though these costs are incorrectly treated, write off’s go unclaimed and end up living on you depreciation schedules for all eternity.

Don’t miss out on the benefits, contact Napier & Blakeley and let the industries trusted advisors help you to maximise your return this financial year.

Contact

If you want further information on tax depreciation, or any other Napier & Blakeley services please contact any of our offices below:

Melbourne - John Mathew    03 9915 6300           jmathew@napierblakeley.com

Napier & Blakeley services

• Technical Due Diligence
• Capital Expenditure Planning
• Quantity Surveying
• Strategic Asset Management
• Building & Sustainability Consulting
• Property Depreciation

If during the current financial year you owned an investment property and earned an assessable income from it then you are entitled to tax deductions for wear and tear or depreciation as it is more commonly known.

Over the last 22 years Napier & Blakeley has analysed many thousands of properties, preparing depreciation schedules for owners of virtually every type of property ranging in value from a few hundred thousand dollars to in excess of one billion dollars in value.

There are well in excess of one million property investors within Australia and we suspect that the majority of property owners in Australia do not fully maximise the deductions which can significantly affect and increase their after tax yields.

In a recent analysis of a five year old commercial office building with a purchase price of $5m, a land value of $1m and an income of $500,000 we found the following.

If you claimed no depreciation and building allowances, your after tax income at the following rates would be:

                45 per cent = (highest individual tax rate)                       =$275,000  

30 per cent = (company tax rate)                                      =$350,000

15 per cent = (superannuation fund tax rate)                 =$425,000

However, if you did claim the available deductions, your after tax income would be greatly increased as follows:

45 per cent =$365,000       giving a 33% increase in after tax return         

30 per cent =$409,000       giving a 17% increase in after tax return         

15 per cent =$455,000       giving a   7% increase in after tax return         

As with lifes two certainties, death and taxes, we can guarantee you that if you don’t claim these available allowances, the ATO wont go out of their way to let you know what you’re missing out on!

Below are some questions you should ask yourself to see if you have passed the yearly Tax Depreciation rego:

o         Have you acquired an investment property of any age, type or state of repair?

o         Have you completed any construction works ?

o         Have you completed a fit out ?

o         Has a tenant left your property and you have inherited their fit out ?

o         Has a tenant left your property and you have removed their fit out and made good ?

o         Have you paid any $ towards a tenant fit out

If you have answered yes to any of the items in the tax depreciation rego form and have not considered that there could be tax deductions available to you. N&B can assist with getting your Tax Depreciation rego certified and in order for the last financial year.