The face of retail has changed dramatically in recent years.
With the rise of online shopping, the arrival of international brands, climbing rents and challenging economic conditions, some shopping centres have started to feel the pinch as these factors affect their bottom line.
While consumer spending jumped by 0.7 per cent during the June quarter, household savings was at a nine-year low. This could potentially lead to a decline in retail sales in future.
With these factors in mind, it’s important that retail store owners and tenants manage their money wisely.
One of the simplest but often overlooked ways that shop owners and tenants can improve their cash flow is by claiming depreciation.
The Australian Taxation Office (ATO) allows commercial property owners and their tenants to claim depreciation deductions related to the wear and tear of a building and any existing plant and equipment assets contained within it.
Owners are entitled to claim deductions relating to the building structure and any fixed assets and plant and equipment items they own. This can include assets such as bricks, mortar, roofs, basins and car parks.
Tenants, on the other hand, are able to claim depreciation on any fit out they install after commencing their lease. This can include anything from clothing racks, counters, light fittings, shelving, security systems, mannequins and fitting room chairs.
It’s important for shopping centre owners and their tenants to contact a specialist Quantity Surveyor to discuss what deductions can be claimed. Given that both parties can claim deductions at the same time, both owners and tenants should contact a specialist Quantity Surveyor to each request a depreciation schedule, so each party is maximising the deductions they’re entitled to.
As part of the process of arranging a depreciation schedule for any commercial property – including shopping centres – our specialist staff will perform a site inspection to uncover the structural and fixed items that can be claimed as capital works deductions, as well as all of the removable plant and equipment assets contained within the property.
They will also uncover any renovations that have been completed to the property, even if they were completed by a previous owner.
If a shopping centre owner is intending to undertake any renovations or improvements in the near future, is also important to be aware that they may be able to claim additional deductions for this.
For this reason, a schedule should be completed both before and after an renovation works so the owner can claim deductions for the remaining un-deducted depreciable value of any assets removed during the renovation and also include deductions for newly installed assets.
By obtaining a BMT Tax Depreciation Schedule, owners and tenants will reduce their tax liability and therefore improve their cash flow. The fee for a tax depreciation schedule is also 100 per cent tax deductible.