Given it is the season when many flowers come into bloom, we thought we would take a look at some of the deductions florist shop owners can benefit from by claiming depreciation.
Often florist shop owners are unaware they can claim depreciation. Those contemplating opening a new store can use these deductions to offset any initial costs involved in setting up the business and those who own or tenant an existing store considering adding additional items or renovating could also be entitled to additional depreciation benefits.
By taking advantage of depreciation, commercial property owners such as florists can reduce their tax liability. The additional cash flow generated from depreciation could be just what is needed to help boost a business’ budget and help it to bloom.
Before starting business or completing a renovation to any commercial property, including a florist shop, there are some facts to be aware of
1/ Both the building owner and commercial property tenants can claim
While some Florists own the building in which they operate their business this is not always the case. The owner of the building is entitled to claim capital works deductions for the original building structure. They can also claim deductions for any of the easily removable plant and equipment assets contained in the building.
Florist shop owners who rent commercial premises can also simultaneously claim deductions for any of the fixtures and fittings they install within a property in order to make it suitable to operate.
2/ A depreciation schedule should be obtained before any major renovations
If you are planning on giving your Florist shop a fresh coat of paint to blend in with all the beautiful flowers, this probably won’t need a schedule as this work is not considered a capital works improvement. However, if you are removing a wall or adding any structures or assets you should have a depreciation schedule completed before starting work. Once the place is renovated like a fresh posy of daisies, an updated depreciation schedule may be required to outline deductions for any new items which have been added.
3/ Tenants should check what happens when they vacate
Some lease conditions mandate that tenants should return a commercial property to its original condition should they later decide to vacate. Any items removed during a lease due to a renovation or removed on termination of a lease may have a remaining depreciable value. The last thing you’ll want to do is lose money on these items by throwing them away like wilting bouquet of daffodils. Ask a Quantity Surveyor about a scrapping report. This will allow you to claim any remaining deductions in the year the item is removed and you vacate.
The following table provides an example of the deductions a florist shop owner can claim for some of the common assets found within a florist shop.
In the first financial year, this florist owner was able to claim $9,712 in deductions for these items alone. Over five years, their cumulative depreciation claim for these items equated to $39,346.
With these kinds of deductions applied to a tax claim, for those who have spent a large sum of money setting up the store or installing new fit out, you’ll be able to turn any initial losses around and soon everything will be coming up roses.