Fitout - depreciation

Discussion in 'Accounting & Tax' started by qak, 5th Sep, 2019.

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  1. qak

    qak Well-Known Member

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    If you fitout a shop or office premises before you start trading, and the works are done and invoiced separately by various trades: when it comes to depreciation can you treat the items separately (ie plumbing, electrical, partitions, painting) or should they be treated as one total?
     
  2. BMT Tax Depreciation

    BMT Tax Depreciation Chris Business Member

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    If I understand you correctly, you seem to be asking whether they belong in different categories. All of what you mentioned (except for perhaps the partitions, depending on the type) would count as capital works. Given that it would all depreciate at the same rate, it's generally represented together in depreciation schedule. You can depreciate them separately but I don't see an immediate advantage in doing so. Are you able to clarify your aims here? If you want to keep them separate, what are you hoping to achieve?
     
  3. qak

    qak Well-Known Member

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    Trying to keep under the $20/25/30K limit to allow immediate write off. But yes more investigation needs to be done regarding whether items are capital works or P&E.
     
  4. BMT Tax Depreciation

    BMT Tax Depreciation Chris Business Member

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    Not much that you've done there sounds like it will qualify for the immediate write-off (which is only available on plant and equipment), but with a bit more detail on what you've done, I'll be able to confirm. Plant and equipment items are treated separately (unless they're part of a set).
     
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  5. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    We often find fitout for shops include capital items eg icemaker, fryer. Its important that the cost of the article and its installation, wring, plumbing etc all be individually itemised or a QS will need to be involved. The "start date"is also relevant and not the date of actual installation in many cases. The costs will comprise Div 40 for plant & equipment incl potentially written off item as well as capital works.

    In many cases the choice to write off may not be practical. There can be good reasons NOT to write off plant items. eg If the business is planned to be sold in 2 years
     
  6. BMT Tax Depreciation

    BMT Tax Depreciation Chris Business Member

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    Yes, indeed. It's still quite possible that "plumbing" and "electrical" might contain some plant items, so it's important to check how detailed the costs/invoices are.
     
  7. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    A common investor one is a new IP kitchen. Packaged up at a cost of $13,500 and it includes appliances (depreciable Div 40), new cabinets etc (Div 43) and install costs etc. None of it broken down.

    I can only then recommend a QS or 100% of it is Div 43 (2.5% pa). As an accountant my hands are tied. And if there was a former QS report it may or may not have elements of the old kitchen to write off ? Worth discussion with that QS before starting any changes. The QS may ask for photos etc and identify some scrapping.
     
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