Division 40 refers to depreciation of a property’s plant and equipment, which are items that can be easily removed from the property. Investment property owners can claim deductions on over 6000 recognised plant and equipment assets, which are recognised by the ATO.
Why Asset Economics?
For years Asset Economics has been a market leader in the industry, and has developed into one of the most trusted voices to turn to. Our exceptional team of quantity surveyors and tax depreciation experts has the skill and experience to handle jobs of any size, and is led by a strong and passionate leader who knows the industry inside and out. The team at Asset Economics understands what it takes to make a successful project, and we take pride in boosting the performance of our clients investment properties through our unparalleled experience.
What is tax depreciation?
You can improve your cash flow by claiming tax depreciation.
If you have an income-producing building, you can claim a tax deduction on the natural wear and tear of the building and its assets. After tax deductions on interest, tax depreciation is the second largest deduction for property investors, and can save you thousands of dollars per year.
Who is eligible?
Tax depreciation can be claimed for both residential investment properties and commercial investment properties. New investment properties are still subject to depreciation, even if the property is appreciating in value.
Capital Works Deductions
Division 43 of the ITAA 1997 refers to the fundamental structure of the building and its permanent fixtures, extensions, alterations, and improvements. For example, structural improvements such as the installation of fencing and retaining walls are included in division 43. At Asset Economics, our quantity surveyors can help you to estimate your construction costs, and you can claim a deduction for the total cost of the estimate we provide within the same year it’s incurred.
Capital works deductions usually form the bulk of the total claim, but the rates of depreciation can differ depending on the type of property, the industry, and the starting date of construction. Our team will inform you of the appropriate rates as they apply to your situation so you can get the most out of your tax deductions.
Tax Depreciation Schedule
A tax depreciation schedule is a report which outlines all of the tax deductible claims in relation to division 40 and division 43, for your building depreciation and your plant and equipment depreciation. This report is to be submitted when completing your tax return, and forecasts the total depreciation of your building and plant and equipment over its lifetime, allowing you to claim thousands of dollars per year. Our professional quantity surveyors will ensure you receive an accurate report to make certain you are fully compliant with the ATO’s regulations. Your tax depreciation schedule lasts for the entire lifetime of your building and its assets, and you only need to pay the one-off cost. Our surveyors will also assist you by monitoring construction costs from the beginning of a project right up to its completion. Once construction is completed, one of our quantity surveyors can also help with replacement cost estimation for insurance purposes and mediation and arbitration.
Plant and Equipment Deductions
What’s included in the fee:
- Cover page
- Glossary of terms
- Property summary
- Division 43 summary (building write off @ 2.5%)
- Diminishing value summary (plant and equipment)
- Prime cost summary (plant and equipment)
- Total summary – 40 years
Keep in mind that the one-off cost of your tax depreciation schedule is also 100% tax deductible!