Tax Shield

What is Tax Depreciation and a Tax Depreciation Schedule ???

Date: Published Article - 14 December 2009 Source: TaxShield Pty Ltd

Tax depreciation and property depreciation on a residential or commercial investment property is a legitimate deduction against assessable taxable income allowing the property investor to reduce the amount of taxation payable.

A tax depreciation schedule or a tax depreciation report may be prepared by a suitably qualified specialist quantity surveying professional in tax depreciation and property allowances such as a Quantity Surveyor. Appropriately Qualified & Experienced Quantity Surveyors should be ASSOCIATE Corporate Members of The Australian Institute of Quantity Surveyors.

To Find A Corporate AIQS Member or Firm:

A Property Investor is able to legitimately claim for two distinct types of depreciation allowances on an investment property, where applicable.

Capital Works Allowance (Division 43)

This deduction is based on the historical construction costs of the property which may include surveying, engineering, architectural and building fees. However, this cost does not include the land acquisition cost, site preparation and other defined ineligibles. For residential property the property has to be built after 17 July 1985 and commercial properties 20 July 1982. The rate of depreciation is fixed over either 25 or 40 years as determined by ATO Legislation.

Plant and Equipment (Division 40)

Plant and equipment depreciable assets items are depreciated at a various and much higher applicable rates than that applied to the capital work allowance or building depreciation. Eligible depreciable assets are defined by ATO Legislation and the recommended rates of depreciation are determined by the Commissioner of Taxation. The rate of depreciation reflects the Commissioners interpretation on the effective life of the asset to produce assessable income.

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