Claiming depreciation on retail fit out

BMT team — Fri, 15 Oct 2021 23:10:25 +0000

The retail industry is in state of transformation, especially given the advancements in technology and the introduction of online shopping. Retail stores are having to adjust to new trends in order to stay relevant to the modern-day consumer. As online shopping becomes more prevalent and consumer demands grow, it’s important to ensure your retail space is designed to engage customers and optimise their shopping experience. Fortunately renewing or redesigning your retail fit out doesn’t have to cost you a fortune, particularly if you’re claiming depreciation correctly. In this article we will look at: What is retail fit out? What is depreciation? What is scrapping? How to claim depreciation for your retail fit out What is retail fit out? Retail fit out refers to the assets installed in an income-producing retail property. Examples of common retail assets include carpet, air-conditioning units, firefighting equipment, blinds, shelving and security systems. Property owners and tenants are both entitled to claim depreciation deductions for these assets. When an owner upgrades their property’s fit-out prior to putting it up for lease it has a number of benefits, including higher negotiated lease arrangements and in turn, rent return. What is depreciation? Depreciation is the natural wear and tear that occurs to a building and the assets within it over time. Legislation allows the owners of any income-producing property to claim this wear and tear as a tax deduction. For some commercial properties, depreciation deductions can total to hundreds of thousands of dollars, reducing tax liabilities and boosting cash return. When depreciation is being applied to removable plant and equipment assets like retail fit out, it can become complicated. This is because both the owner and the tenants of the property can claim deductions for the depreciation of items. Commercial tenants are able to claim depreciation for any retail fit out they add to a property once their lease starts. The owner can also simultaneously claim deductions for any plant and equipment items originally contained within the property. Each plant and equipment item should be depreciated based on its individual effective life as set by the Australian Taxation Office. Some assets will also entitle the owner to claim an immediate write-off or to add them to a low-value pool to increase deductions sooner. The rules surrounding who can claim what and when applies to all commercial industries and building types. Including hospitality, manufacturing, healthcare and logistics. It’s also important for building owners and tenants to be aware of the financial benefits of scrapping existing retail fit out as this can significantly increase the deductions available. What is scrapping? Scrapping refers to the removal and disposal of depreciable assets from an income-producing property. When these assets are scrapped, the owners and tenants may be eligible to claim the remaining depreciable value as an immediate tax deduction. Depending on lease conditions, if a tenant vacates a building and does not remove the retail fit out from the building, the owner of the property may still be able to claim the remaining depreciation for these items. However, if a tenant’s lease stipulates that the property must be returned to its original condition at the end of the lease, the tenant can benefit by claiming any remaining depreciation on the items that are removed and scrapped from the property. How to claim depreciation for your retail fit out Given the complexities around scrapping and depreciation for retail fit out, both owners and tenants should contact a specialist Quantity Surveyor to prepare a depreciation schedule. Quantity Surveyors are qualified professionals who specialise in building measurement and estimating the value of construction costs. They use their skills to ascertain the costs of building works on any project. At BMT Tax Depreciation, our qualified Quantity Surveyors can help you uncover every depreciation deduction you’re entitled to. BMT can provide separate depreciation schedules for owners and tenants that outline the deductions available for each party. These deductions can be beneficial in improving cash flow and reducing the annual costs of renting or holding the property. To find out the depreciation deductions available to you, Request A Quote or contact one of our expert staff on 1300 728 726.

The post Claiming depreciation on retail fit out appeared first on .

Help your florist shop bloom by claiming depreciation

BMT team — Fri, 17 Feb 2017 01:03:48 +0000

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 many business 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 a small 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. Example deductions 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.

The post Help your florist shop bloom by claiming depreciation appeared first on .

» Fit out

Claiming depreciation on retail fit out

Help your florist shop bloom by claiming depreciation