Depreciation Myths – Part 4: “My Accountant will look after my Tax Depreciation”

I often get asked “why can’t my Accountant do the depreciation schedule for me?”.

I work alongside Accountants every day and what we do as Quantity Surveyors (QS) enhances and positively accompanies what your Accountant will produce. There are a few key differences between what your Accountant and what we as QS’ can do for you and your investment property.

As QS’ we are experts in construction costs and are recognised by the Australian Taxation Office (ATO) as the most suitably qualified profession to estimate the depreciable expenditure spent on the property prior to your purchase as well as the value of the fittings and equipment within the property. Even if it was constructed 25 years ago we can estimate the construction cost using our historical data therefore increasing your depreciation entitlements. In accordance with ATO Tax Ruling 97/25 , if your investment property was constructed after September 1987 and/or construction costs are unknown, you must engage a registered and qualified QS to produce a depreciation schedule. Your Accountant can’t do this for you, if you haven’t paid for it or if you weren’t the original Owner you will need a QS involved to be able to maximise your depreciation.  

Another scenario in which a QS can maximise your depreciation compared to an Accountant is when you have built the building and you know how much it cost but you don’t have a sufficient break-up of items to be able to accelerate the depreciation. Can you show your Accountant how much was spent on Air-Conditioning, light fittings, appliances, carpet, blinds etc.? In 99% of cases the Builder will not break up this expenditure up for you. We as QS’ can again estimate the cost of each Asset and accelerate your depreciation. It is very typical for a QS to be able to double your depreciation in the first full financial year by undertaking this exercise. This results in a saving of thousands of dollars which would have otherwise been paid in tax.

For more information please don’t hesitate to email me on [email protected], visit gqs.com.au or call 1300 290 235 to speak to a tax specialist today!