Case study:
Retail shop purchased for $875,000

The tables below outline Lillian’s scenario before and after she made the depreciation claim.

Retail shop purchased for $875,000
Scenario without depreciation claim
Annual income ($1,340 x 52 weeks) $69,680
Annual expenses $62,024
Pre-tax cash flow (income - expenses) $7,656
Tax expense (pre-tax cash flow x tax rate of 37%) -$2,833
After tax cash position (pre-tax cash flow + tax refund) $4,823
Cash position per week $93
Scenario with depreciation claim of $43,500
Annual income ($1,340 x 52 weeks) $69,680
Annual expenses $62,024
Pre-tax cash flow (income - expenses) $7,656
Cash flow position (pre-tax cash flow – depreciation) -$35,844
Tax refund (pre-tax cash flow x tax rate 37%) $13,262
After tax cash position (pre-tax cash flow + tax refund) $20,918
Cash position per week $402
Weekly improvement in after tax position $309

Simply by claiming depreciation, Lillian was able to improve her after tax cash position by an additional $16,095. This improved Lillian’s cash position from $93 to $402 per week.


Assumptions and disclaimer

Case studies and figures are based upon tax depreciation schedules completed by BMT Tax Depreciation and do not represent any particular person or investment property scenario. The information provided is a general guide and does not constitute financial, legal or taxation advice. All figures are supplied as examples and may not represent your personal circumstances.

You acknowledge and agree you must undertake your own analysis and obtain independent legal, financial and taxation advice before using, relying or acting on any information supplied on this website.

Neither BMT Tax Depreciation, nor its directors, shareholders or advisors make any representation or warranty as to the accuracy or completeness of information found in these typical examples. Nor will they have any liability to you or any other party for any representations (expressed or implied) contained in, or any omissions from, that information.

The tax depreciation deductions in this case study have been calculated based on the diminishing value method of depreciation and are based upon a first full year of ownership. Marginal tax rates relevant to 2014 – 2015 financial year have been assumed.

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