David Lee Depreciation

All business owners and property investors need a tax depreciation report on their depreciating assets.

Why?

Business owners who purchase assets or lease assets with the intention to purchase those assets later can deduct the full cost of most plant assets from their taxable incomes over 6 to 10 years thus claiming the full after tax return cash benefits for the life of those assets.

Each business asset depreciates from its installation date. My reports calculate the depreciation of each business asset from its installation date including tenancy fit out and show yearly total deductions in either a 40 year Diminishing Value schedule or a 40 year Prime Cost schedule for all of the assets owned or leased by that business.

Under the Uniform Capital Allowance System business assets & business capital expenditures that are depreciable are as follows

Plant

Software

Mining & quarrying

Intellectual property

Forestry roads & timber mill buildings and

Spectrum licences

Any capital works in the tenancy fitout owned by the business is also a depreciating asset and is claimed under Division 43 ITAA.

If there is more than one owner of the business or property asset each owner’s interest in the asset is treated as a depreciating asset & it’s eligibility for inclusion in the Low-Value Pool or as a $300 item or less is based on the value of each owner’s interest in the asset.

GST Input tax credits: If there is a creditable acquisition or creditable importation of a depreciating asset the base cost of the asset is reduced by any input tax credit you are entitled to claim for the acquisition or importation. If there is an input tax credit claimable in the second element of cost to bring the asset to its present condition & location (such as the cost of improving the asset) the base cost of the depreciating asset is reduced by this tax credit amount.

Intangible assets in general are not depreciating assets except for the following assets if they are not trading stock:

In-house software for which you have incurred expenditure to develop or acquire, or purchase a right or licence to use for income production

Certain items of intellectual property such as standard, innovation & petty patents, registered designs, copyright (except copyright in a film) & licences of these.

A mining, quarrying or prospecting right relating to mining operations to obtain

other than petroleum or quarry materials

petroleum

quarry materials

Spectrum licences

Datacasting transmitter licences

and Telecommunications site access rights

I can depreciate any of these intangible assets for you according to the effective lives or laws pertaining to the calculation of effective lives for each of these intangible assets under current legislation provided by the ATO.

Property Depreciation

For property investors eligible depreciating assets that cost less than $300 are deducted at their full cost of the interest in the asset in the year of purchase.

When you purchase a second hand property & there are no agreed values for depreciating assets in the sales agreement I can do an independent valuation of the depreciating assets based on the market value of the asset compared to the total purchase price of the property. This means the more you pay for a property the greater the valuation of the plant assets relative to their market value.

Deductions for capital works include buildings, structural extensions to buildings, renovations, & structural improvements eg. gazebos, carports, fences, driveways, & retaining walls which were constructed within eligible dates. Expenditure on clearing land prior to construction & earthworks that are permanent but not integral to the installation or construction of the structure are construction expenditures which cannot be claimed.

If the cost of a depreciating asset is taken at market value say in a business premises purchase with eligible plant included which constitutes a creditable acquisition then the market value of the plant assets would be reduced by any input tax credit percentage of the total purchase cost you are entitled to claim on the purchase of that business premise.

David Lee Depreciation in Brisbane City, Brisbane, QLD is listed under Accountants specialising in services such as Tax Planning, Tax Minimisation.

Some other services offered by David Lee Depreciation include .

Contact David Lee Depreciation to make an appointment with our friendly staff.

Services

Property depreciation

Inspection of property to
Determine detailed valuations of plant,
Allocate all eligible renovations, extensions & original building & structural improvements to capital works deductions based on actual costs provided or estimated from construction databases.
Allocation of plant into Low-value pool & $300 items according to the cost of the interest in the asset for each owner in separate reports.
Apportionment of the purchase price relative to the market value of each plant asset to establish reasonable values for plant that satisfy ATO requirements.

Business Assets Depreciation

Calculate the cost of the asset including the first element of cost that is incurred with holding the asset & the second element of cost incurred to bring the asset to its present condition & location such as the cost of improving the asset.

How I can maximise your up-front deductions & after tax return cash flow

Apportionment of the total cost of each depreciating asset into the cost of the interest in the asset according to each owners legal interest in the property or business asset & producing a separate report for each owner with the cost of their interest in all depreciable assets allocated. When there is more than one owner of the property or business asset this usually means more plant assets are incorporated in the Low Value Pool & $300 items if any thus, maximising each owners up-front deductions. (The Low Value Pool is deducted at 37.5% per annum whilst $300 items are deducted at 100% for the first year.) Note: $300 items only apply to non-business depreciating assets.
When owner/s of a property pay a high price for that property relative to market value then a greater portion of the purchase price of that property is allocated to plant assets thus maximising up-front deductions & after tax return cash flow. Plant assets depreciate at a high rate thus giving larger early after tax cash flow deductions.
By updating the movement of plant to Low Value Pool as plant depreciates to less than $1,000 I can increase the up-front deductions & cash flow.

Balancing Adjustment Reports

For when a property owner or business asset holder sells, disposes or no longer holds or uses the property or business asset. See Home page for further information.

Business & Rental Property Claims for Flood/Cyclone Damage