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How do I dispose of an Asset in my tax return?

Discussion in 'Accounting & Tax' started by James Bond, 26th Oct, 2015.

  1. James Bond

    James Bond Well-Known Member

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    Hi

    I have just replaced a carpet in an investment property and scrapped the old carpet. I have a depreciation report produced during the last tax year, and the carpet has a value as follows -

    Cost Element - $1454
    Depreciation >>> 30/6/15 - $162.53.

    Given that I have already claimed depreciation of $162.53 in my 2015 tax return, do I subtract the $162.53 from $1454 and claim the difference ($1291.47) as a deduction in my 2016 tax return?

    Thanks

    JB
     
  2. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Possibly. Any income from the tenant for damage or insurance to compensate for the loss may also reduce the scrapping deduction. If the carpet was not replaced or if the property was not continually tenanted either side of the event then a deduction may not be available.
     
  3. James Bond

    James Bond Well-Known Member

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    Thanks - the property was continually tenanted and there was no insurance claim or claim on the tenant.

    The carpet was assigned a value. Then I tossed it out, put down a different floor covering, mid-lease of the same tenant.

    The carpet had a written-down value of $1,291.47 when I disposed of it.

    My question is where does that $1,291.47 deduction go on my tax return.

    Thanks

    JB
     
    Last edited: 27th Oct, 2015
  4. James Bond

    James Bond Well-Known Member

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    Can anyone confirm - is this accounted for as a simple one -off cost?

    Thanks

    JB
     
  5. BennEznElle

    BennEznElle Well-Known Member

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    Yeah, its a balancing adjustment on the disposal. The new carpet gets depreciated as normal.

    We usually just put it in the sundry expenses part in the relevant rental property schedule.
     
  6. kristaje

    kristaje Member

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    I was told by BMT that I could dispose the balance, as long as asset hasn't got into pooling.
     
  7. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Hint : Its is still a depreciation cost. Its not a sundry expense or a repair either.
     
  8. James Bond

    James Bond Well-Known Member

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    Paul - are you saying that an asset should still be mentioned on a depreciation report even after it has been disposed of?
     
  9. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    The scrapping deduction is a depreciation deduction. If its a printed report it will still show as a asset in the QS report. You need to adjust for that in future years and not double dip. If you scrap it its the residual deductions that are claimed (bought forward). Don't then claim in future years also.
     
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  10. James Bond

    James Bond Well-Known Member

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    OK got it, and the residual deductions can be claimed immediately as a one-off cost I assume?