Before June 30, it’s usually clients asking us questions. Lots of them. 

Then after June the pendulum swings and it’s accountants asking us questions, while clients scurry off and leave you to it – assuming they have given you everything you need to do their tax return.

We’ve grown accustomed to the rhythm over the 20 plus years we have been doing Depreciation Schedules, but the questions do vary sometimes. This is the time of year when we get a chance to look back over the last few months and search for trends.

Turnaround time for Depreciation Schedules is a big trend this year. We suspect a lot of people have been let down by other providers. Have you been let down? Do you need a Depreciation Schedule in a hurry? Use your booking link to make an enquiry. 

We have also had a number of accountants asking us to help their clients with CGT problems. 

Another trend has been an increase in requests for Depreciation Schedules on commercial properties, everything from shops to farms. We have always done these, but there are more coming through of late. We’ll take a look at an interesting job we recently took on at a yoghurt and juice bar in a shopping centre.

And the confusion around the treatment of Special Levies is still happening.

Key points

1. We can turn around Depreciation Schedules quickly if you have a client up against a deadline – even overnight if required. 

2. If you have a client with a CGT problem, let us know. We can produce a letter that estimates the cost of the initial build and any subsequent improvements to help reduce the CGT payable. 

3. We prepare Depreciation Schedules for all types of commercial properties, from yoghurt and juice bars through to farms.

4. To claim a Special Levy as a repair, the problem must have arisen AFTER your client started to rent out the property.

How quickly can you turnaround a Depreciation Schedule?

This is the most common question from accountants this year. It’s usually asked with a deep sigh. 

We know exactly what has happened. A client has come to their accountant to get their tax done and unbeknownst to them they have bought a rental property during the year. They have lobbed everything they can think of onto their accountant’s desk but omitted a Depreciation Schedule – often because they’ve never heard of them.

That’s when we get the call and invariably come to the rescue.

So how quickly can we do a Depreciation Schedule? Overnight sometimes. We have even done same day turnarounds on occasions. 

These are usually jobs where we don’t need to inspect the property. Perhaps it’s an apartment and we have already been into the building a few times. Or it might be a brand new house and the construction cost is known and there is a contract listing all the Assets.

There have even been occasions where we have inspected a property the day the enquiry has come in and turned the Depreciation Schedule around overnight.

We always look for the best solution for your client and you. Don’t hesitate to lob any urgent requests on us. You can do that right now using your booking link.

Can you help my client with a CGT problem?

We have also had a run of accountants asking us to help their clients with CGT problems. 

Just this week there have been three of them – all accountants of baby boomers reluctantly giving up their holiday homes.

You would be familiar with the scenario. Somebody bought a block of land on the coast decades ago and built a holiday home for themselves. And then over the years, they improved it. Maybe a second storey to get the view. Perhaps a garage and a shed or two for toys. 

Then somewhere along the line, maybe when the kids stopped wanting to holiday with them, they started renting it out. You probably mentioned the CGT consequences at the time, but the lure of summer rent would have clouded their judgement. They’re not distracted now – a big CGT bill can focus the mind.

With enough information, it’s not hard for our Quantity Surveyors to estimate the cost of that initial build and the cost of subsequent improvements. We produce a letter for these jobs, as opposed to a Depreciation Schedule, but the cost is similar. The resulting decrease in the CGT can be significant and make the exercise well worth doing.

What about commercial properties? Do you look after those as well?

Yep, we had an interesting commercial job just last week (NB When you work in depreciation, the threshold for ‘interesting’ is pretty low.)

It was a client who had just set up a frozen yoghurt and juice outlet in a major shopping centre. You know the sort of thing. Most shopping centres have open spaces they rent to food and beverage outlets. Tenants are lured by the promise of enormous passing trade and charged rents that seem commensurably enormous considering they are not getting any walls.  

This client spent $232,000 setting up their outlet. A staggering amount of money to recoup on top of the monthly rent given frozen yoghurt is so 2010. 

These types of fitouts are non invasive. Nothing is permanently attached to the floor. Counters are all portable – some are often on wheels to facilitate cleaning and access for staff. These entire installations tend to all be Plant and Equipment and the resulting high depreciation can be a godsend for harried operators.

Of course, we prepare Depreciation Schedules for all types of commercial properties, everything from simple warehouses to farms. You can read more on commercial properties here.

How should my client handle a Special Levy?

There have also been a lot of Special Levies imposed on clients over the last year or so – on the East Coast, it’s mostly a consequence of all that rain a year or so ago. We have written before here on Special Levies.

Most clients assume all Special Levies can be expensed, but you know better than that and often have to rain on their parade.

The way you need to treat them depends on two things: firstly the nature of the work, and secondly when your client started to rent out their apartment. 

If a Special Levy was imposed to improve a property, it needs to be claimed at 2.5%. That’s pretty clear. This year, we have seen Special Levies imposed to add an extravagant BBQ area to a communal garden and even a building where a rooftop has been turned into a productive garden. Those are improvements for sure.

Of course, down the track when the membrane on the roof fails and floods the top floor apartments, there will be another Special Levy that some owners might be able to expense as repairs.

Why only some? If an owner is renting out their apartment and that membrane fails, they can likely claim the fix as a repair. But if the membrane is already starting to show signs of failure before somebody rents out their apartment, they will likely not be able to claim the fix as ‘repairs’.

As with all repairs, the timing dictates how they are treated. To claim work as a repair, the problem must have arisen AFTER your client started to rent out the property. It cannot be a pre-existing issue.

Enquire now for a property-specific assessment

Has this article reminded you about a client’s investment property? Residential properties, commercial properties, even farms, we do them all.

If you want us to talk to a client about a Depreciation Schedule, make a no-obligation enquiry and rely on our 20-plus years of experience in estimating depreciation returns.