E-tax - Insurance Claim

Discussion in 'Accounting & Tax' started by orangestreet, 29th Jun, 2015.

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  1. orangestreet

    orangestreet Well-Known Member

    18th Jun, 2015
    We have an investment property in the Newcastle region which had extensive damage during the recent storms that hit the Central Coast. The total damage came up to approximately $20,000.

    We put in our claim through our buildings and landlord insurance and all but $200 (excess) was paid out to my property managers.

    With regards to e-tax, my question is:

    1) How do I declare the funds from claim payment made by the insurance company within e-tax? Should it be included as (other) income?

    2) How do I treat the expenditure of $200 (excess) within e-tax? As repairs or under insurance costs?

    3) Do I need an updated depreciation schedule now that building works are complete? Or will it be considered repairs as work should be conducted to restore the building back to its original state?

    4) To make things complicated, some of the tradies have not completed their (final bits and pieces) work and my property managers have (understandably) not released payments to them. Would that have a bearing on what I can / should claim in this financial year? Or do we follow the accrual system of accounting where income and expenditure incurred in the current financial year is declared / claimed in the same year even if actual cash payments are made in the next financial year?

    Thank you for your help.
  2. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Member

    18th Jun, 2015
    There should be little or no tax impact unless you didn't rebuild within 2 years and then its assessable. Since its asset replacement and the insurer paid to reinstate the property this is generally a "rollover" event so that one depreciable / cap allowance asset is replaced by another. You did not incur a loss or have a cost base change as such. The insurance covered it all.

    It may be worth having a chat with your QS provider to have the schedule looked at and updated to claim enhanced annual deductions.