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How a depreciation schedule can reduce your tax burden

Did you know you are able to claim the depreciation on fencing, water facilities, cattle and sheep yards, sheds and worker’s accommodation, and much more when you purchase a property?

These items can add up to significant tax deductions and can be extremely beneficial to your business.

It is important to ensure that these depreciation schedules are undertaken by a Quantity Surveyor. Quantity Surveyors are experts in construction costs and are recognised by the Australian Taxation Office (ATO) as the most suitably qualified profession to estimate the depreciable expenditure spent on the property prior to your purchase as well as the value of the fittings and equipment within the property. In accordance with ATO Tax Ruling 97/25, if construction costs are unknown, you must engage a registered and qualified Quantity Surveyor to produce a depreciation schedule.

No matter the age of the property, all properties that are used for an income producing purpose qualify for depreciation. No matter whether the works were completed by yourself or by previous owners, you are entitled to the depreciation of these works. Even if improvements were constructed many years ago a Quantity Surveyor can estimate the construction cost using historical data therefore increasing your depreciation entitlements. Even if you have held your property for longer than 12 months a quantity surveyor can still help.

Most primary production improvements are recognised by the ATO as plant and equipment (Division 40). Division 40 allows us to value the improvements at a fair value no matter how old. This can be worth up to millions in tax deductions.

As the late Kerry Packer said “Anybody in this country who does not minimise his tax wants his head read. I can tell you as a government that you are not spending it so well that we should be donating extra.”

The valuation service offer these depreciation schedules that have been compiled by a Quantity Surveyor at a competitive cost. If you would like more information on depreciation schedules call AgForce on 3236 3100 to book a consultation with John Moore, AgForce Valuation Officer.

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