The healthcare industry has been under immense pressure in recent years. An increase in chronic disease, an ageing population, and the recent emergence of COVID-19 have all resulted in growth in demand for medical services.
BMT Tax Depreciation has prepared numerous depreciation schedules for medical centres across Australia. Medical centre operators can benefit from highly advantageous tax deductions that are available to be claimed as depreciation on medical equipment.
With the Health Services industry in Australia to have an estimated market size of over $170 billion dollars, it’s crucial that all available depreciation deductions are claimed.
- What is property depreciation?
- Claiming depreciation on medical equipment
- Case study: Depreciation on medical centre
What is property depreciation?
Depreciation is the natural wear and tear of a building and the assets within it over time. The Australian Taxation Office (ATO) allows owners of income producing properties to claim this depreciation as a tax deduction.
There are two types of deductions available to claim. Capital works deductions (Division 43) is the building’s structure and the assets that are permanently fixed to the property. And plant and equipment deductions (Division 40) are assets that are easily removable from the property or are mechanical in nature.
Claiming depreciation on medical equipment
The definition of a healthcare centre is broad. It can include general practitioners (GPs), dental surgeries, imagery and radiology centres, hospitals and so much more. For the purpose of this article, we will focus on general practitioners.
Medical equipment is one of the more costly expenses in opening and operating a GP centre. Some medical equipment commonly found in GP centres include examination beds, defibrillators, ECG machines, medical refrigerators, reception furniture, photocopiers, privacy curtains and telephone systems. These assets all hold lucrative deductions that can be claimed each financial year.
Case study: Depreciation on medical centre
‘ABC Medical Centre’ is a private general practice medical centre operating in Melbourne. It has six consulting rooms and provides a variety of medical services. The centre was purchased in 2018 for $2,800,000 and is owner operated.
Because this business owns the building as well as occupies it, it is entitled to claim the capital works deductions as well as plant and equipment depreciation.
The following table demonstrates the five-year cumulative depreciation deductions claimed by ABC Medical Centre for capital works (Division 43) and plant and equipment (Division 40).
This table indicates the top depreciable assets claimed by Business ‘ABC’ over five years.
As we can see there are significant deductions available on these assets for ABC Medical Centre, helping to recoup the cost of expensive medical equipment and boost cash flow. Depreciation found on medical equipment alone is a substantial deduction and shouldn’t be missed. Missing these deductions can result in losing thousands of dollars.
BMT Tax Depreciation has optimised its commercial process to ensure clients claim the most deductions possible. BMT utilises legislation to maximise depreciation deductions and to ensure compliance and applies various business incentives currently available including temporary full expensing, backing business investment and others. To learn more about depreciation on medical equipment or how to claim, Request a Quote online or contact BMT Tax Depreciation on 1300 728 726.
Disclaimer: The information provided in this article is based on medical centre size, date of acquisition, size of business entity etc. This information is not to be used as a quote or guaranteed tax depreciation amount. Contact BMT for a specialised tax depreciation schedule.