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AIQS guidelines reinforce BMT’s unwavering commitment to site inspections

BMT team — Mon, 21 Aug 2023 05:18:00 +0000

A paper released by the Australian Institute of Quantity Surveyors (AIQS) has emphasised the importance of completing site inspections in creating accurate and compliant tax depreciation schedules. This supports BMT Tax Depreciation’s unwavering dedication to conducting site inspections, even amid the challenges posed by COVID-19 lockdowns. The AIQS has introduced a clear standard for ethical conduct and collaboration within the industry: “The Quantity Surveyor’s Guide to Residential Tax Depreciation,” which presents a comprehensive framework designed to minimise risks. The guide promotes industry-wide consistency, prevents unethical practices, and ensures the protection of clients, accountants, and quantity surveyors. BMT was consulted during the process. Not all tax depreciation schedules are created equal. This distinction becomes clear when observing the various categories of schedules and the extensive spectrum of expenses presented by quantity surveying companies all over the country. Examples of such variations include the offering of cheap self-assessed schedules, promises of significant deductions prior to schedule preparation, and the utilisation of online property portals as an alternative to site inspection. To complete a comprehensive tax depreciation schedule, it’s essential to conduct a physical site inspection. It’s impossible to identify every depreciable asset, renovation and hidden expenditure like wiring, plumbing and extensions completed by previous owners without a thorough inspection completed by a specialist. This position is endorsed by the AIQS and the National Tax and Accountants’ Association. Notably, according to BMT Tax Depreciations own data from preparing over 800,000 tax depreciation schedules, approximately 66 per cent of investment properties have undergone some form of renovation, underscoring the significance of thorough inspections. BMT’s commitment to accuracy is exemplified through its rigorous site inspection process. BMT conducts thorough on-site assessments to ensure every depreciable item is identified, leading to more accurate and maximised claims for clients. In situations where a site inspection can’t be conducted, as outlined in this guide, the quantity surveyor is required to provide the client with a formal statement detailing the reasons behind this limitation. A disclaimer must be included in the statement, indicating that the report’s accuracy may be compromised, and the author assumes no liability for any resulting inaccuracies. It’s important that property investors recognise the significance of this; once a schedule is finalised, the quantity surveyor responsible for its preparation bears no responsibility or liability for any potential audits or offers assistance in such situations in the event of inaccuracies. When seeking a tax depreciation schedule, investors are encouraged to inquire about how compliance is achieved and the process with the quantity surveyor. In a landscape where collaboration among professionals is common, the guidelines also set a clear standard for ethical conduct when it comes to referral fees. In cases where a quantity surveyor is involved in the exchange of referral fees with an accountant, property manager, or any other third party, this must be disclosed to the client. This principle ensures transparency and integrity, fostering a sense of trust among all parties involved. A hallmark of BMT’s transparent and client-centric approach is the company’s policy of not paying referral fees to third parties. This reinforces BMT’s dedication to providing unbiased advice and ensures that its recommendations are solely based on the best interests of clients. BMT leads the industry in tax depreciation expertise, which is evident in their ability to achieve higher deductions and robust tax depreciation schedules in the event of a client ATO audit. The AIQS’s release of these guidelines signifies a new era of collaboration, transparency, and ethical practices in property depreciation. BMT Tax Depreciation’s commitment to ATO compliance provides investors with a rock-solid foundation. Their expert team meticulously follows the ATO and AIQS guidelines to generate accurate and compliant tax depreciation schedules. This compliance ensures that investors remain on the right side of the law while harnessing the full potential of their property investments. For more information on BMT’s compliant tax depreciation schedules, call the experts on 1300 728 726 or Request a Quote.

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How commercial site inspections maximise claims

BMT team — Sun, 09 Jul 2023 17:15:00 +0000

Do you own or rent a commercial property? Make sure you know about one of the biggest tax deductions available – depreciation. What is commercial property depreciation? Commercial depreciation is the natural wear and tear of a commercial property and its assets over time. Depreciation reduces a commercial property owner’s taxable income, meaning they pay less tax. Commercial depreciation can be claimed under two key categories: 1. Capital works: A property’s structure and fixed assets are depreciated using capital works deductions. The rate of depreciation varies between 2.5 and 4 per cent depending on the commercial property’s industry type. Some examples of things that are eligible for capital works deduction include walls, doors, windows and sinks. 2. Plant and Equipment: Easily removable fixtures and fittings are depreciated using plant and equipment deductions. Most of these assets are included in the tenant’s business fit-out, rather than the owner. However, BMT still find many that the owner can claim including smoke alarms, hot water systems and air-conditioning units. The only way to benefit from lucrative depreciation deductions is with a tax depreciation schedule. This schedule only needs to be completed once and can be used each financial year. While all properties need a site inspection, the process is more complex for commercial Site inspections are an essential step to claiming maximum depreciation deductions and having the most comprehensive tax depreciation schedule possible. When a site inspector from a specialist quantity surveying firm physically attends the property they know what to look for. They ensure no stone is left unturned and that compliance is completely maintained. During a commercial site inspection, the inspector will attend the property. They will analyse both the interior and exterior of the property and note down any depreciable assets, workmanship and measure the space. Information gathered from the site inspection is used to complete the most comprehensive tax depreciation schedule possible. The inspection also plays an important role in verifying any claim in the event of an audit. When the commercial property owner and occupant are two different parties, claiming depreciation can be difficult. Each party must only claim what they own, however only one site inspection is needed. This is because the site inspector will make note of who owns what on the property, ensuring both the owner and tenant can claim the most. From this, BMT Tax Depreciation can create separate schedules. If the property is leased by a new tenant, is a new schedule required? While commercial properties are often leased long-term, there are instances where the property will be leased by new tenants. When this happens, the owner doesn’t necessarily need a new schedule. If they make improvements between the tenancies, such as installing new air-conditioning, they can get their current schedule updated. When a lease is changed and the previous tenant leaves their fit-out behind, the property owner may be able to claim scrapped deductions on the forgotten assets upon disposal. Scrapping is a process that allows someone to claim the remaining depreciable value of an asset instantly when it’s removed. The new tenant can’t use the previous tenant’s schedule, so will need a tax depreciation schedule for their own fit-out. BMT Tax Depreciation has been the commercial depreciation specialist for over twenty years. Having completed over 800,000 tax depreciation schedules Australia wide, BMT’s experience spans across all commercial industries from hospitality, commercial offices, to warehouses and medical centres. To learn more about how commercial site inspections maximise claims, contact BMT on 1300 728 726 or Request a Quote.

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Why you need a site inspection for a tax depreciation schedule

BMT team — Wed, 15 Jun 2022 23:35:41 +0000

Most of us wouldn’t purchase a car before seeing it or exchange unconditional contracts for a property without a building and pest inspection. We believe the same applies to site inspections when preparing a tax depreciation schedule. Property depreciation can save you thousands, sometimes tens of thousands, each financial year. A tax depreciation schedule holds the key to unlocking this cash flow. Your schedule lasts the lifetime of the property, so it’s important to get it right from the very beginning. In this article we will explore: What is a depreciation site inspection and what does it involve Importance of noticing improvements during a site inspection Maximising claims while maintaining compliance Support from the industry Site inspections make it easier for you Key points A site inspection ensures your depreciation claims are maximised and are compliant Hard-to-find assets are always found during a site inspection Both the AIQS and NTAA support the requirement of site inspections. What is a depreciation site inspection and what does it involve? A site inspection for depreciation purposes is different to other inspections like building or open houses. To complete a site inspection, a specialist needs to enter the property to find all the items that can be depreciated. During the inspection, you will see them documenting the property’s items, taking measurements and photographs and analysing the workmanship. An inspection is especially important if your property was purchased second hand. The site inspector will make note of all plant and equipment assets in the property. Although some of these assets may be impacted by 2017 legislation changes, they can still be included in your capital loss statement. In some scenarios this can be an important component if or when you decide to sell the property or dispose of the assets. More importantly though, a trained specialist will identify additional works that will qualify for depreciation via renovations or additions completed sometime many years ago. Importance of noticing improvements during a site inspection Renovations and additions completed to a property over many years ago can be hard to find and are often missed by the untrained eye. For example, if your investment property originally had a gravel driveway and if anyone concreted the section where cars are parked, it may not seem like a qualifying addition, but that driveway will increase your claim. In this scenario, you wouldn’t be able to claim depreciation on the gravel as it is soft landscaping. But you can still claim capital works deductions on the newly concreted section for up to forty years. A specialist site inspector will identify any renovations completed by the previous owner. This means that if the original structure of the building is too old and ineligible for capital works deductions, you can still reap returns from any recent renovations completed in the last thirty plus years. Data shows that of all the schedules completed by BMT, 66 per cent have been for properties that have undergone some kind of renovation or addition. Maximising claims while maintaining compliance Knowing what to include in a tax depreciation schedule can seem straight forward. You look at the property and include what’s there, easy right? However, a specialist knows what to look for during a site inspection to ensure that your claim is maximised correctly. For example, a ducted air conditioner has division 40 and division 43 components. The ducting needs to be valued separately and added to the capital works deduction while under TR2021/3 the packaged unit is considered plant and equipment and depreciated using its unique effective life. Another example might be properly using immediate deductions that allow the owner to instantly deduct qualifying assets in the year of purchase. While knowing the cost of the asset may appear to be the only thing required to claim the deduction, this isn’t the case. An asset must meet four important steps to be eligible. Support from the industry The Australian Institute of Quantity Surveyors (AIQS) is the peak professional standards body for build environment cost professionals. The National Tax and Accountants’ Association (NTAA) is the representative voice for the tax community. Both the AIQS and NTAA support the requirement of site inspections. They know that when site inspections aren’t completed, deductions are missed, and costly errors are made. Some of the most common errors that happen is incorrectly claiming capital works deductions and misusing depreciation incentives such as the immediate deduction. When errors such as these are made, you can come under Australian Taxation Office scrutiny. Site inspections make it easier for you As a property investor, you are already juggling many things from work to tracking your cash flow to mapping out your future investment strategy. When a site inspection isn’t conducted, it means you must do a lot of the heavy lifting, from organising stacks of paperwork to providing the property’s structural information that you have never needed to think about before and not being a specialist yourself things will get missed. A site inspection takes the guess work out of preparing your schedule. BMT Tax Depreciation can make it even easier by organising the inspection directly with your property manager. BMT has been conducting site inspections on properties for over twenty years. A BMT Tax Depreciation Schedule has never failed an audit and is the preferred supplier to thousands of accountants across the country. To learn more about depreciation and how a site inspection can ensure you claim the most from your investment, Request a Quote or call BMT on 1300 728 726.

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Site inspections are a must for depreciation schedules

BMT team — Wed, 08 Apr 2020 23:55:11 +0000

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.

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What you should know about the role of a Quantity Surveyor

BMT team — Tue, 05 Feb 2019 04:12:55 +0000

Do you know what the role of a Quantity Surveyor is? It’s a title that causes confusion, with many people associating the job with the Cadastral Surveyors you sometimes see measuring angles and distances with tripods on the side of the road. Quantity Surveyors play a different role and are qualified professionals specialising in building measurement and construction cost estimation. Quantity Surveyors are required at various stages throughout a building’s construction. However, some specialise in calculating construction costs of residential and commercial buildings for property depreciation purposes. This includes measuring and calculating historical construction costs for claiming building write-off based on the cost of the structural element of buildings. Their skills are so valued that Quantity Surveyors are recognised under Tax Ruling 97/25 as one of the few professions with the ability to calculate costs for the purposes of depreciation. Quantity Surveyors are also required to be registered tax agents. When an investor engages BMT Tax Depreciation for a depreciation schedule, we will carry out a site inspection of the property to identify and record the contained assets to calculate their deductions. A specialist Quantity Surveyor documents every qualifying asset in a property and calculates their depreciable value to ensure that the investor maximises their deductions. This includes measuring rooms with a laser measurer, recording assets’ brand or model numbers and photographing improvements at the property. Quantity Surveyors ensure full compliance with Australian Taxation Office (ATO) regulations, meaning all deductions are accurately evidenced in the event of an audit. BMT Tax Depreciation CEO Bradley Beer says that the most rewarding aspect of the job is showing investors the difference that claiming depreciation will make to their bottom line. “Investors are very happy when they learn they will save thousands of dollars each year by claiming depreciation,” Bradley said. “There are so many property investors who simply aren’t aware of depreciation or don’t maximise their claims.” Bradley and the team at BMT have completed site inspections on all property types ranging from residential houses and apartments to commercial properties such as hotels, industrial warehouses, farms and even multimillion-dollar wineries. No stone is left unturned when it comes to recording and valuing assets. “I did a site inspection for The Block 2018 apartments at The Gatwick and recorded every light fitting, smoke alarm and piece of furniture,” Bradley explained. “Investors are often surprised by what they can claim and the lucrative deductions that can be found at their properties.” The thoroughness of BMT’s Quantity Surveyors helps investors to capture every asset and ensure they maximise their depreciation deductions. BMT Quantity Surveyors specialise in tax depreciation and have a detailed knowledge of current ATO Tax Rulings. They are members of the Australian Institute of Quantity Surveyors (AIQS), ensuring compliance with industry regulations and Australian Standards. BMT Quantity Surveyors are also registered tax agents with the Tax Practitioners Board (TPB). The TPB is the national body responsible for the registration and regulation of Tax Agents ensuring compliance with the Tax Agents Services Act 2009 (TASA). For more information on the role of a Quantity Surveyor, contact the expert team at BMT on 1300 728 726 or request a quote today.

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Understanding the depreciation process for landlords and tenants

BMT team — Wed, 19 Oct 2016 23:08:35 +0000

As a central point of contact for property investors, property managers play a vital role in educating them about the benefits of claiming depreciation deductions. This often results in them referring landlords to a specialist quantity surveyor who will provide a comprehensive tax depreciation schedule outlining what depreciation deductions can be claimed for their property. Given the property manager is entrusting their clients to a third party, they may still receive questions from both landlords and their tenants about what is involved throughout the process of completing the schedule. Property Managers may like to know what steps will be involved so they can reassure their clients along the way and ensure that the depreciation schedule provided is both comprehensive and maximises the investor’s claim. With this in mind, let’s take a look at what’s involved in the process: Pre-purchase estimates Initial enquiry Confirmation and collection of information Site inspection Completion of the depreciation schedule Providing the schedule to the client and their nominated Accountant 1/ Pre-purchase estimates An investment property doesn’t have to have been purchased by an owner in order for them to discover its depreciation potential. Specialist quantity surveyors can provide tax depreciation estimates for any property listed for sale. By the same token, if an investor is looking for a Property Manager to find an appropriate tenant and to oversee the rental of a new purchase, a depreciation estimate will be a valuable tool to help secure new listings. 2/ Initial enquiry It’s recommended that property investors contact a specialist quantity surveyor to obtain a depreciation schedule after the settlement of a property. Often investors delay getting a schedule until closer to tax time or wait until the following year because they have only owned the property for a short time. There are benefits to getting in early. Partial year deductions can be maximised and even if the end of financial year is a long way away, investors can speak with their Accountants about the option of submitting a Pay As You Go (PAYG) withholding variation. 3/ Confirmation and collection of information Once an investor decides to go ahead and engage a Quantity Surveyor to complete a depreciation schedule, they will collect all of the relevant information about the property required. This includes the address, suburb and state; the name/s the schedule is to be made out in for tax purposes; the purchase price, land value, settlement date and age of the building; and details if the owner has ever lived in the property. The quantity surveyor will ask whether the property will be rented furnished or unfurnished and if there are any renovations which have been completed prior to or after purchase. Finally, they’ll ask for details of whom to contact in order to arrange a site inspection. 4/ Site inspection A quantity surveyor should always complete a site inspection as part of the process of providing a depreciation schedule, as this allows them to gather sufficient information in order to prepare the report. The quantity surveyor will make it easy for the property manager by contacting the tenant on their behalf to arrange the inspection when required. Once a suitable time has been arranged, a depreciation expert will visit the property to take detailed notes, measurements and photographs. They will use a laser measurer to gather details about room sizes to later help calculate construction costs and the depreciable value of flooring. Photographs will be taken of each individual plant and equipment asset, including curtains, dishwashers, smoke alarms, garbage bins and light fittings to name just a few. For certain items, for example the rangehood and oven, they’ll note the specific brand. This will help them later to establish the depreciable value of the items. Installation dates on appliances can also be useful, as can information on whether the property operates on gas or electricity and whether the air conditioning is ducted or a split system. 5/ Completion of the depreciation schedule All information gathered during the site inspection will be used by the quantity surveyor to prepare the depreciation schedule. Sometimes additional research will need to be undertaken, for example contacting local councils for more information about renovations completed by a previous owners contained in a DA approval. The quantity surveyor will then prepare the schedule using depreciation methodology outlined in tax legislation. For any residential property in which construction commenced after the 15th of September 1987, there will be capital works deductions available for the building structure. For properties older than this date, renovations completed within the legislated dates may entitle the owner to capital works deductions too. Each of the itemised plant and equipment items found during the site inspection will depreciate based on an individual effective life set by the Australian Taxation Office. This is where the accuracy of the information collected is crucial. 6/ Providing the schedule to the client and their nominated Accountant The final step involves sending an electronic or hard copy of the schedule to both the landlord and their nominated Accountant. The investor can then visit their Accountant who has all the information on hand to include the depreciation claim in the client’s annual income tax assessment. A schedule should last forty years, with the deductions the owner can claim each year outlined. Deductions will also be provided in both the prime cost and diminishing value method. Some tenants may not understand, given that the depreciation deductions won’t benefit them and the site inspection may be an inconvenience, but it helps to explain that it is a once off occurrence and that the owner usually requests a schedule because they are looking to benefit from their property for the long term. For landlords, ultimately the deductions outlined in the schedule will provide valuable additional cash flow which can be used to help maintain the property and complete necessary repairs when required. This can have a flow on affect by helping to keep the tenants happy and encouraging them to stay longer, […]

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