Depreciation meaning?

last time I went to a acciuntant she said it might be better next time to get a Depreciation Report especially as i rent out Fully furnished

I pretended i knew what she was on about but i dont .

 

Writing down the value of an item.

 

Yes just looking it up on the web their are Companies advertising from $250 to to do a report ....so i may have to look into this if its any benefit ?

 

Why pay someone for advice when you dont listen to it?

 

When consulting ANY professional, never leave until you understand exactly what advice they have given you. The only stupid question is the one you don’t ask.

Don’t be embarrassed. Keep asking until the advice us given in a manner you can understand. After all, you are paying them.
Marg

 

Next time ask what they meant. Its a valuable question to get clarity on. I regularly have this precise discussion and let clients know what it is and ask specific issues. The value of a QS report can be huge and shouldnt be dismissed as a maybe. I then suggest they call a Quantity Survey firm that specialises in this field to discuss with them as the experts. Only if they tell you not to bother should you ever not get a QS report.

eg Call BMT on 1300 268 222, Depreciator on 1300 66 00 99 or Washington Brown on 1800 043 928

I don't refer people to small time firms as some reports are of dubious standards and the larger firms offer excellent customer support etc.

 

DIY is optional - Can you send me your Depreciation Schedule?

Disclaimer - Not Advice.

 

DIY depreciation is now so much more complex than in the past. I have NEVER seen a client prepared schedule come close to being accurate. They overstate the write off (90% of cases) and use incorrect rates. And miss assets.

I recommend a QS as they possess the skills to identify asset cost, age, value and correct rates.

Make sure when you do speak to the QS that you know how far back you can have the schedule prepared. I guess the tax adviser didnt mention that either - You may be able to backdate and amend either 2 or 4 years depending on dates and timing.

 

hi Paul would you be able to tell me if i could still use the full QS if i contract sign exchanged on 4/5/2017 , settlement 19/6/2017 , put on the rental market 14/6/2017, but did not start renting till 22/7/2017, never lived in it just took a month to get rentals but signed contract before 9th may. Theres some confusion about this even from the QS firms ,cheers

 

Maybe, mabe not. (Love the clarity !!)

First was the property OTP or a older property ? I will assume its older....

The legislation refers to a issue that is a hidden trap that became evident around the time the law was actually tabled in September 2017 long after the budget was silent on the issue. Its essential a tenant occupy prior to 30 June despite rent maybe not first being received until July.

I just had to carefully check this issue for a similar client. They had $0 rent but the tenant moved in on 29th June.

Its a nasty rule IMO but not all tax laws are fair. The legislation doesnt work like other deductions which require the property to be "available to rent".

The issue is a bit open to a ruling IMO since the term USE is a bit of waffle and the timing of assessable income may be subject to dispute if it occurs in a later year... The legislation really says - to produce assessable income. So as you didnt have income or a tenant in the 2017 year its a no I believe. But its also possible that the expectation of income after 1st July is also included. Its more certain if there was occupancy prior to 30 June by a tenant

I remain hesitant to say its a NO since there is scope to seek a public ruling on this issue. Just as the income v expenses matching principle in Steele's decision impact deductions for interest prior to completion of a new IP, this issue needs clarity. A property that is available to rent might be eligible if the ATO agree. I havent seen a ruling (yet) on this issue.

You could ask the Commissioner for a PUBLIC ruling (not a private ruling as it may be declined as it relates to interpretation of statutory law !) if you can demonstrate the property was available to rent. You may need to present arguments such as Steele's and the relevant portions of law eg s40-27 (2) as well as the notes to the amending Bill (which seem to exclude possibility)
http://parlinfo.aph.gov.au/parlInfo/download/legislation/bills/r5963_aspassed/toc_pdf/17191b01.pdf;fileType=application/pdf

I would like to see a QS consider the issue

 

I have had conflicting answers to this question from accountants and from the ATO. It's one of those things that has not been cleared up, so it's hard to get a definitive answer. The people who answer the phones on the front line at the ATO certainly won't know. Closer to June 30 there will be some clarity. I've been tempted to put in a Private Ruling request. As Paul said, it would likely get declined but sometimes it's the best way to get someone to think about it and call back.
Scott

 

Do they still have the 'reply in 5' emailbox?

Is the response a basis for decision making or is a PR the only way to go?

 

Thanks Paul i appreciate the detailed reply

 

Thanks Scott, i spoke to your firm earlier today they are confident it should be okay

 

I use the PR route as a way of getting through to people who know more than the ones who answer the phone. They call back and we have a chat and usually resolve things in the conversation. There is also the 'early engagement' email option. It's pretty good. I have spoken to the depreciation gang, but I find it best to use the PR request or the early engagement email so there is something in writing for them to think about - they hate being put on the spot.

 

I have found a request that asks for both a BRP and a public ruling means its harder to be ignored (which means it lapses and is treated as refused). However a public ruling / determination etc can be refused if its general and not taxpayer specific. Damned ruling system is not taxpayer friendly yet its meant to be.

 

Reply in 5 days - Thats got to be a record. 5 weeks. Maybe, to ask for more information.
5 months - More than likely

 

For newly built homes (i.e. the investor is the first owner) is a site inspection generally recommended? I've been reading reviews and forums on depreciation reports and they strongly recommend a site visit to identify assets to depreciate which may not have otherwise been considered but I'm assuming these typically relate to older properties.

For a brand new home would a contract + any works completed before the house was rented out suffice? Or is an inspection still recommended?

 

It depends. The total build cost must be used as the starting point if it is known - and with a new house it is always known. So then it gets down to the Assets. Some contracts have great information on the Assets, and some don't. Some owners take heaps of photos, and some don't.
When an owner has enough information for us to do a Dep Schedule without a visit, we offer that as an option. But if an owner wants an inspection, we're happy to oblige (and charge more) - our guys love those jobs where the hard work is done for them i.e. the build cost.
I was doing a seminar once and somebody in the audience asked this question and said they thought an inspection was a good idea in case a builder bunged in an Asset without telling the client. I said if I ever hear of a builder installing, say, an extra split system and not charging for it I'll eat a Depreciation Schedule - and I would make it a big one with lots of furniture items.
Scott