There’s an overwhelming amount of information out there, making June 30 sound like doomsday. But there are some very simple steps investors can take to significantly reduce the tax they pay, one of which is prepaying expenses. 

A prepaid expense is a future expense paid in advance. Examples of expenses that can be prepaid include loan interest, levies and insurance. The cost of a tax depreciation schedule is another example. 

What is a tax depreciation schedule? 

A tax depreciation schedule is a report that outlines all available depreciation deductions for a property. These deductions are for the property’s natural wear and tear and can be claimed on eligible structural elements (capital works) and the easily removable or mechanical assets (plant and equipment). 

The schedule lasts the lifetime of the property and must be completed by a specialist quantity surveyor to maximise deductions and maintain compliance with the Australian Taxation Office. Once the schedule is prepared, an accountant will use it each tax time to determine the annual depreciation deduction a property investor can claim. 

How does depreciation help investors pay less tax? 

Property depreciation works like all other tax deductions – it reduces an investor’s assessable taxable income, so they pay less tax.

Depreciation is different from other deductions in that it’s the only ‘non-cash’ deduction available. Other than the cost of the schedule (which is tax deductible), investors don’t need to spend money to claim it. It can put thousands of dollars back in an investor’s pocket every year.

What happens if the schedule isn’t completed before June 30? 

As long as the schedule is ordered and prepaid before June 30, the investor can claim 100 per cent of the schedule fee straight back in this year’s tax return. 

Plus, the schedule starts from the property’s settlement date, not the schedule order date. This means if the schedule isn’t ready until after June 30, for example August 2021, depreciation deductions can still be claimed for the 2020-21 financial year. A schedule will allow the investor to adjust previous tax returns too, so they can claim back missed dollars. 

How does an investor know that a tax depreciation schedule is worth it? 

Specialist quantity surveyors, such as BMT Tax Depreciation, always ensure that a schedule is worthwhile before any work commences. BMT also provides a guarantee that if they don’t find double their fee in first full year deductions, they will refund the entire cost of their schedule. 

If you’re an investor and you’re still uncertain, you can ask BMT for an obligation-free depreciation estimate to help make your decision. The team can provide a preliminary estimate over the phone and go from there. To learn more, contact BMT on 1300 728 726 or Request a Quote.

The views expressed in this article are an opinion only and readers should rely on their independent advice in relation to such matters. 

This is a sponsored feature article. 

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