Do you have a commercial property as an investment? If so, what has your tenant done to the property over the years or what have you done for tenants as part of landlord works?
Changes to your property often produce a need to change your taxation records and usually warrant more investigation of deductions. A simple example of the difference this makes is where a tenant decides to change floor coverings – does anyone think about the write-off of the old one owned by the landlord? The same applies to all elements including ceilings, partitioning, etc. Good management will always look at this aspect to ensure these extra deductions are captured and new capital works claims are properly analysed and claimed. Particularly important, is any change associated with a make good requirement at the end of a lease or any landlord contribution to tenant fit-out at the start of a lease.
Leaving the assessment of these sorts of activities to the Accountants at tax time will normally see it ignored or poorly dealt with due to time constraints, so make it part of your thoughts and actions whenever capital costs are incurred. Another area to monitor is tenant movements which can give additional entitlements to capital allowances claims by the landlord. This comes about because under Division 43 of the “Tax Act”, you don’t need to have paid for the asset to get a deduction. This is a very under-utilised fact, but can give rise to beneficial deductions and tax reductions. Tenancy fit-outs are often “partly financed” by landlords, which means there is also a benefit which comes from deductions while that fit-out remains in place, so recording and analysis is beneficial.
The more you look at the legislation and options, the more the benefits can enhance your investment, so take the time to check the options with an approved depreciation expert. Once you realise the benefits to cash flow and active management of the property, you will improve the short and long term returns.