In 2019 technology is like a new religion. Users are relentlessly wired in and logged on, consuming terabytes of data on devices small enough to slip into their pockets. Wi-Fi is omnipresent, catering to our every need and keeping us connected. It’s changed the way we live, from retail and transportation to communication and relationships.
It’s unsurprising then that the power of technology has changed the way we work. The fast pace of new technologies, automation and industrial shifts has seen developments in the types of work we engage in. We’ve seen the emergence of the ‘gig economy’, characterised by short-term, temporary work contracts, and a notable shift in working arrangements to meet the demands of a millennial workforce.
With cloud-based software and smart technology, a growing number of workers are ditching the traditional nine-to-five work week for a more flexible, remote based roster.
What are co-working spaces?
Co-working spaces, also known as flexible office spaces, are tapping into this changing work dynamic. Co-working refers to a shared space where multiple businesses work while operating separately. Essentially, your office becomes a hub for businesses, entrepreneurs, creators and freelancers.
Coworking spaces offer flexible leasing options, so tenants can rent a desk once or twice a week, a dedicated space that’s accessible 24/7 or a private office for a five-year period depending on their needs.
According to a report in the Sydney Morning Herald, the number of co-working spaces has risen from about 78 sites six years ago to more than 400 in Australia’s two main capital cities.
The obvious space and cost efficiencies of co-working spaces are also driving growth and present landlords with ample opportunity to capitalise on what would otherwise be unused floorspace.
Shared office spaces represent the evolution of the workplace and experts are predicting significant growth in the coming years. With this in mind, we delve into co-working and why it’s worth considering for your commercial property.
How to create a co-working space
Modernising your office space can seem like an overwhelming and expensive task but it’s actually very simple and can save you thousands in the long term.
As we’ve mentioned, the days of cubicle offices with harsh artificial lighting are long gone. Modern employees want a space that’s open and flexible so your property should support free communication, movement and unhindered productivity.
To create a co-working space, you may need to knock down a few walls to open up the area. Having an open plan floorspace will allow you to create a hot-desking environment and allow plenty of natural light to enter the interior. It will also make any future remodelling a quick and easy process.
Once you’ve implemented the open plan design, it’s time to incorporate modern technology. This can include equipment like USB charging stations, laptop docks, hard drives, smartboards and video conference gear. Technology is an integral part of our working lives so it’s essential to have updated technology in your office.
Another hallmark of a good co-working space is a ‘hang-out’ area where workers can take a break and network with others. This can be anything from a space with lounges and televisions to an in-house café, depending on the scale of the building.
While this all sounds costly, there’s a way to reduce the expenses involved in upgrading your property. It’s called property depreciation.
Depreciation for an office space
As a building and its assets age, they depreciate in value. The Australian Taxation Office (ATO) legislation allows owners of income producing properties to claim deductions for this wear and tear.
In any commercial property, the owner of the building can claim capital works deductions for structural assets as well as depreciation deductions for any of the plant and equipment assets or fit-out they own in the property.
For most commercial buildings capital works deductions can only be claimed if the property commenced construction after the 20th of July 1982. Plant and equipment assets, on the other hand, are calculated based on the individual effective life of each item as set by the ATO.
If you upgrade your office building to a co-working space by renovating or installing a new fit out, you can claim depreciation deductions. You may also be eligible to claim scrapping deductions. Scrapping applies when removed assets and structural elements within a building have a remaining un-deducted value. At the time of removal, the owner of the structure or asset can claim the remaining depreciable value as an immediate deduction in that same financial year.
It’s important to note that tenants can also claim depreciation on any fit-out they add from the starting date of their lease. If a tenant removes items at the end of their tenancy, they may also be able to claim any remaining depreciation for assets that are removed and scrapped when they vacate the premise. A fit-out installed by tenants can also be structural in nature and can therefore be claimed as capital works deductions.
Small to medium business owners may also be eligible to claim concessions under the instant asset write-off rules. To learn more, read Instant asset write-off increased to $30,000 until 30 June 2020.
To find out more about how depreciation deductions can help you if you own a co-working space, Request a Quote or contact the expert team at BMT Tax Depreciation on 1300 728 726.