In recent weeks, the Covid-19 pandemic has raised questions about the necessity of a site inspection when preparing a tax depreciation schedule. At BMT Tax Depreciation, we have always believed that having a thorough site inspection is essential to achieve the highest possible deductions, while maintaining full compliance with the Australian Taxation Office (ATO).
This position is endorsed by the Australian Institute of Quantity Surveyors. Click here to read more.
During this time of uncertainty, we want to assure you that we are taking every precaution to ensure the health, safety and wellbeing of our clients and staff during our site inspections.
All BMT site inspectors are required to carry safety equipment including masks, gloves and hand sanitiser, and adhere to social distancing rules. Where possible, they will also remove their shoes. Along with this, we ask all occupants to open doors and turn on lights during the inspection, so that our specialist site inspector doesn’t need to touch anything.
We are staying updated on the latest government requirements and are adapting our operations to abide by these rules and regulations. Rest assured that safety is our top priority during these unprecedented times.
Having prepared tens of thousands of depreciation schedules every year, we know that a site inspection plays a vital role in the depreciation process, particularly when it comes to supporting your claim in the event of an ATO audit. We have a well-established and long-lasting relationship with the ATO, and they often require evidence to justify the deductions in a depreciation schedule. It is important that we can directly give feedback based upon the inspection that we completed, regardless of how long ago that was.
Our site inspections also ensure accuracy. Our specialist site inspector will measure the building and floor coverings, note down the construction method, workmanship, materials used and condition of the property. We will look for any evidence of works completed, both recently and anything that might have taken place in the last 30-40 years. The current owner of an income-producing property can often claim deductions for work that was completed by previous owners. We document everything that we can, making notes and taking photographic records.
In the case of residential apartments or office towers and industrial complexes with a strata plan, the site inspector will assess all common property items. Each owner has a right to depreciate a portion of the common areas based up their percentage of ownership, which is usually outlined on the strata plan our building unit plan.
Rest assured that safety is our top priority during these unprecedented times.
Another important step during the site inspection is to identify as much qualifying plant and equipment within a property as possible. This includes all removable or mechanical assets like hot water systems, stoves, floor coverings and so on. The higher the ratio of plant and equipment in a claim, the higher the deductions will be in the earlier years of ownership.
The full site inspection only takes around 30 minutes to complete. BMT will even organise the inspection with the property manager and tenant directly at their convenience.
For commercial property, the process is much the same. We will document any new fit-out installed or assets removed during an upgrade or tenant change. When construction work or assets are removed from a property during its income production period, there is often remaining unclaimed depreciation that can be written off. BMT staff are experts at determining how much of the existing claim can be written off and will make the necessary adjustments to your depreciation schedule.
While not all depreciation schedule suppliers include site inspections as part of their service, we believe it’s necessary in order to claim the maximum deductions possible, ensure accuracy and maintain tax office compliance. We know that when an inspection isn’t performed, depreciation deductions get missed and amendments inevitably need to be made to your schedule. These amendments cost you money.
The same applies if the site inspection is not completed by a specialist. Contracting or outsourcing the inspection is very risky. BMT will only ever use specialist staff to ensure quality, accuracy and accountability if the ATO ever conduct an audit.
At this current time, BMT continues to inspect properties to provide quality depreciation schedules. As a valued member of the BMT community, we thank you for your continued support.
For our latest position on the developing Covid-19 pandemic please visit https://www.bmtqs.com.au/covid-19.