Firstly, if you are owed a substantial refund from the ATO, you can nominate to receive your tax refund weekly, rather than waiting until the end of the financial year. This is done with a PAYG withholding variation application form which you, or your accountant, can submit and sit back and enjoy the new income stream!
Claim depreciation from previous years
On another, taxation related note, you can order a tax depreciation schedule for your property at any time. This schedule outlines all the depreciation deductions available throughout the lifetime of an investment property. Even if a schedule is ordered after the end of a financial year, depreciation can still be back-claimed.
What is a tax depreciation schedule?
A tax deduction can be claimed for the natural wear and tear, or depreciation, of an investment property and its assets over time.
A tax depreciation schedule, as the name suggests, outlines all the depreciation deductions available throughout the lifetime of an investment property (up to forty years).
A tax depreciation schedule is prepared by a specialist quantity surveyor. Once prepared, the investor’s accountant will use the schedule each financial year to determine depreciation deductions.
What happens if a tax depreciation schedule is ordered after June 30?
Let’s say an investor has owned their rental property since February 2019 but didn’t order their schedule until August 2021. In this instance, they can still claim depreciation for FY 2019/20 and FY 2020/21. This is possible because a tax depreciation schedule allows an investor to adjust previous tax returns.
So, what’s the key message here? Even if you missed the June 30 deadline, it’s not too late to claim depreciation. The only difference ordering before June 30 is that the 100 per cent tax depreciation schedule fee can be claimed earlier rather than later.
What if an investor with a schedule made a property improvement last financial year?
In this scenario, the investor must ensure they have their current tax depreciation schedule updated. This is very simple to do and can have them reaping further benefits for years to come.
How can an investor tell the difference between an improvement and repair?
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Improvements must be depreciated, while a repair can be claimed as an immediate deduction. This space can be very grey as sometimes an improvement could be a result of having to make a repair. There’s one fundamental question an investor must ask themselves when determining what something is classed as – “have I improved this beyond its original state?” For example, if an investor replaced their property’s old carpet with new hardwood timber floors it’s likely that this is an improvement and will need to be claimed using depreciation deductions. But if they replaced part of a rusted gutter or a cracked tile, this would generally be classed as a repair.
Investors can easily determine if something is an improvement or repair by having a quick discussion with a specialist quantity surveyor such as BMT or their accountant. These situations are often assessed on a case-by-case basis so it’s important to get the correct advice.
Don't struggle with the complexity of taxation on your own, surround yourself with an expert team, including: an accountant experienced with property investment, a property strategist and a quantity surveyor.
To learn more about depreciation and how it can help you maximise your return come this tax lodgement time, contact BMT.
Article provided by BMT Tax Depreciation,Australia’s leading supplier of residential and commercial tax depreciation schedules. Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation. To learn more about depreciation and how you can claim it, contact BMT for Australia-wide service and request a quote.
This information is provided by DPN Pty Ltd ABN: 94 630 700 186, Australian Credit Licence 514759. DPN Finance Pty Ltd is an authorised credit representative 504129 and a related entity of DPN Pty Ltd. Casa Capace Operations Pty Ltd ABN: 79 624 981 184, NDIS provider Number 4050038018 trading as Casa Capace.