» commercial tax depreciation

Claiming depreciation on medical equipment

BMT team — Mon, 16 May 2022 02:01:28 +0000

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.

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Landlords can save almost $70 per week this Christmas

BMT team — Tue, 10 Dec 2019 21:31:01 +0000

While retail tenants are hoping strong spending in the lead-up to Christmas will boost the coffers after months of tough trading, landlords are looking to depreciation for their holiday bonus. Retail profits generally peak during the holiday season, however it’s common for business owners and landlords to have significant outlays during this period too. With this in mind, it’s important to be aware of the depreciation benefits of owning a commercial property – it could save you almost $70 a week. What is depreciation? Depreciation deductions can be claimed for the wear and tear of a building structure via a capital works deduction and for the plant and equipment assets within the property. The Australian Taxation Office (ATO) allows owners of any commercial property in which construction commenced after 20th July 1982 to claim capital works deductions. If your property was built before this date, there may still be plant and equipment deductions available so it’s important to consult with an expert. Plant and equipment depreciation is calculated based on the individual effective life of each item as well as their condition and quality. Immediate write-off and pooling rules may also apply if an asset is below a certain value. This is particularly the case for small and medium sized business owners and tenants, who are also eligible to claim significant depreciation deductions. Often tenants can claim on any fit-out they install from the starting date of their lease. Depending on lease conditions, a tenant may be required to remove these assets prior to vacating. In this instance, scrapping can be applied in which the tenant can claim any remaining depreciable value. Assets left behind by a previous tenant may also be available to be claimed by the landlord. Given both parties can simultaneously claim deductions, it’s important to contact a specialist Quantity Surveyor to arrange a tax depreciation schedule. Case study: Retail property purchased for $620,000 Let’s look at an example of how a business saved thousands by ordering a tax depreciation schedule. A large business acquired a retail property purchased for $620,000 The property generates an annual income of $52,673 The expenses total $38,021 The following scenario shows the business’s cash flow with and without depreciation. After ordering a tax depreciation schedule, the business was entitled to $12,000 in depreciation deductions in the first financial year. By claiming property depreciation, the business’s weekly cash flow increased from $197 to $266, improving the after-tax position by an additional $69 per week. A BMT Tax Depreciation Schedule lasts forty years, considers industry-specific legislation, provides a range of depreciation methods and includes a property inspection. The schedule is 100 per cent tax deductible. Maximise the cash return from your commercial property or business and Request a Quote today. Continue reading: Tax break continues to help small business owners What’s happening in the commercial property market Is co-working the future of the workplace?

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Energy policy uncertainty sparks debate on ‘the need for more investment’

BMT team — Tue, 19 Nov 2019 21:40:14 +0000

The Australian energy industry is in a state of transformation. Innovative technologies have presented alternative power generation opportunities, old operations like Liddell power plant are approaching closure and new development applications such as the Adani Carmichael coal mine have been approved. As the industry changes, the cost of electricity remains high for consumers. A review by the Australian Competition and Consumer Commission (ACCC) last year found a lack of competition in the energy sector, stating that more needed to be done to lower bills for consumers. The Federal Government has been promising to neutralise the market with a “big stick” energy policy. The ultimate goal is to combat anti-competitive behaviour and bring down prices. It would also enable the government to force divestment of energy company assets and compel companies to supply electricity at a fixed rate for up to three years. The cornerstone energy policy failed to gain momentum during the 2019 federal election campaign, with the Liberal Party reintroducing it last month. Key mining industry players have noted that policy uncertainty has discouraged investment in the necessary assets to modernise operations and lower the cost of electricity. ACCC chairman Rod Sims, as quoted in The Australian, also noted that ‘household electricity bills have increased by 50 per cent in the past decade and this has sparked a debate on the mix of generation in the electricity sector and the need for more investment.’ While the policy debate continues, energy companies should consider ways to boost cash flow and reinvest in necessary assets and operations. Depreciation is one aspect of taxation that facilitates greater investment and could potentially lower costs in the long-term. Depreciation for mining operations Depreciation refers to the natural wear and tear that occurs to a building and its assets over time. The Australian Taxation Office (ATO) allows this wear and tear to be claimed as a deduction. Mining companies can use either the prime cost or diminishing value method to work out the decline in value for all equipment and structures. Under the prime cost method, the deduction for each year is calculated as a percentage of the cost. You receive the same deduction each year for the asset’s effective life. The diminishing value method is calculated as a percentage of the balance you have left to deduct. This means you receive larger deductions in the early years of the asset’s effective life. There are also specific rules for depreciating mining exploration. Eligible depreciating assets used for exploration or prospecting for minerals or quarry materials are 100 per cent deductible in the year in which you start to use them. An immediate deduction may also be available for capital expenditure that doesn’t form part of the cost of a depreciating asset but is incurred on mining exploration or the rehabilitation of your mining or quarrying sites. Eligible commercial investors and tenants are also able to recalculate the effective life of mining equipment if there are changed circumstances. According to the ATO, examples of circumstances that could cause a variation include: a considerable structural price change for the mineral being extracted which leads to the mine’s premature permanent closure previously uneconomically mineable geologies becoming economically mineable a noticeable improvement in extraction methods or transport arrangements from the mine which leads to faster extraction of the mineral and a consequential shortening of the remaining life of the mine new information becoming available as a result of further exploration or prospecting which leads to an increase in the remaining life of the mine a change to the accepted industry practice that affects the estimation of the life of the mine. Case study: mining depreciation Let’s look at an example. A mining company organised to have a tax depreciation schedule prepared for its mine site. To operate successfully, the company uses assets like magnetic separators, conveyors, underground haulage trucks and dozers, all of which have significant depreciable value. The table below outlines 10 plant and equipment assets found on site and their original value at the time of purchase. It also highlights the first year and cumulative five year depreciation deductions available. As the table shows, the 10 plant and equipment assets assessed entitle the company to claim $1,859,955 in the first financial year alone. In the cumulative five years, this figure rises to more than $6,601,729. Given that the mining operation would have several other assessable items, it’s likely that the company would be entitled to millions of dollars more. The millions of dollars saved through depreciation can be used to invest in new mining equipment, to pay for outstanding business costs or even to expand operations. To find out more about depreciation for commercial property, Request a Quote or contact our expert staff on 1300 728 726.

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Is co-working the future of the workplace?

BMT team — Wed, 18 Sep 2019 07:10:22 +0000

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 $150,000 until 31 December 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.

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Australian winemakers uncork hidden cash flow

BMT team — Tue, 06 Aug 2019 00:01:49 +0000

With some of the oldest grapevines in the world, the Australian wine industry has a rich and vibrant history. Winemakers work with the elements to create quintessentially Australian flavours and the industry continues to thrive both domestically and globally. According to Wine Australia, more than 80 per cent of the wine consumed in Australia is locally produced. On a global scale, export opportunities for Australian wine are the strongest they’ve been for more than a decade, with favourable trading conditions and increased investment providing extra incentive. As the Australian wine industry continues to grow it’s important for viticulturists and winemakers to understand their tax entitlements, including depreciation deductions. Contents: Depreciation for winemakers Winemaker case study Depreciation for winemakers As a building gets older and items within it wear out, they depreciate in value. The Australian Taxation Office (ATO) allows commercial property owners and tenants, such as winemakers, to claim deductions related to the building and the plant and equipment items within it. These deductions can help boost your cash flow and alleviate pressure during low yield periods. Small and medium business owners can also use the instant asset write-off rule for any depreciable plant and equipment asset or fit-out installed with a value of less than $150,000. Along with small to medium business rules, there are specific depreciation rates for winemakers. Grapevines that are planted and first used in a primary production business before 1st October 2004 can be claimed as a special depreciation deduction. According to the ATO the decline in value of a grapevine is worked out at a rate of 25 per cent, provided you own the grapevine, the grapevine is established on land that you either own or lease and that it’s used in a primary production business. The deduction is based on the capital expenditure incurred in establishing the grapevines. This can include preparing the land, planting the vines, and the vines themselves. Winemaker case study Let’s take a look at an example of how claiming depreciation can boost a winemaker’s cash flow. This winery in this scenario features assets such as oak barrels, barrel racks, crushers, grape harvesters, irrigation systems and silos, all of which have significant depreciable value. The table below outlines the first financial year, the cumulative five years and the total depreciation deductions available to the winemaker. In the first financial year, the owner is able to claim $257,015 worth of depreciation deductions, a total tax saving of $70,679. In the cumulative five years, the depreciation claims increase to $823,968, a total saving of $226,591. Over the lifetime of the winery, the owner will be able to claim over two million dollars in depreciation deductions which will improve their after-tax position by $576,077. As you can see, property depreciation can make a significant difference to a winemaker’s cash flow each financial year. To find out the depreciation deductions available on your winery, Request a Quote or call our expert team on 1300 728 726 today.

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Help your clients to get the most out of their commercial investment properties

BMT team — Wed, 11 Jul 2018 01:46:17 +0000

Many commercial property investors are unaware that they can claim lucrative tax depreciation deductions on their properties and therefore miss out on thousands of dollars each year in unclaimed deductions. To avoid this, it is important that investors get a commercial tax depreciation schedule from a qualified Quantity Surveyor. However, not all Quantity Surveyors are made equal and when it comes to an ATO-compliant depreciation schedule that maximises claimable deductions, it is crucial that investors engage a specialist organisation. What is BMT Tax Depreciation’s point of difference? With more than twenty years of experience, BMT Tax Depreciation set themselves apart from their competitors by conducting their own comprehensive property inspections, rather than outsourcing inspections or using generic information to inform a schedule. Depreciation schedules are BMT’s specialty and all resources are focused on creating an all-inclusive schedule to secure investors every possible deduction. Using their detailed knowledge of all relevant taxation legislation, specialist Site Inspectors visit the property and take measurements and detailed photographs of fixtures, fittings and appliances to document assets that attract depreciation deductions. They use a laser distance measurer device and record data on a specially designed application developed by BMT to ensure compliance. Site Inspectors will also uncover any renovations that have been completed to the property, even those completed by a previous owner, which can be claimed by the current owner. BMT Tax Depreciation are able to secure more deductions for investors than their competitors because of their experienced in house Site Inspectors and thorough inspection and data collection processes. What commercial sectors do BMT Tax Depreciation service? BMT can prepare a depreciation schedule for any commercial investment property and have experience working across many commercial sectors. Farms, beauty clinics, ice creameries, cinemas and hotels are just some examples of commercial properties BMT can service with a depreciation schedule. Servicing a large range of residential and commercial property owners across Australia has meant working with some diverse, and sometimes unusual, buildings in the process. Some of the unique schedules we have completed include the iconic Melbourne Star “Observation Wheel”, the Sydney Polo Club and the world’s largest rocking horse in South Australia. There are sizeable deductions available to the owners of any commercial investment property and it is essential to contact a specialist Quantity Surveyor such as BMT Tax Depreciation to arrange a tax depreciation schedule to ensure the available deductions can be claimed. What is included in a commercial tax depreciation schedule? A commercial tax depreciation schedule prepared by BMT Tax Depreciation is a comprehensive document covering all aspects of a property’s depreciation. It includes a summary of capital expenditure and a capital allowance and tax depreciation summary outlining the 40 year deduction forecast for the property. The document also includes a breakdown of the diminishing value and prime cost methods as well as individual schedules comparing the two methods. You will also find pooling schedules and grouped depreciation rates in the document. Tax depreciation schedules include simple tables and graphs to help investors understand the presented information. There is also a glossary of terms included at the back of the document for reference. To learn more about claiming depreciation for any commercial property, visit our commercial tax depreciation page.

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