It’s the time of year when we take a deep breath and reflect on the tax season that was. The highs and the lows, and the strange requests. We thought we would share a few with you.
Not that tax season is completely over. If you need a Depreciation Schedule, we can jump on it straightaway. Our always speedy turnaround time is even speedier right now. You can book a new enquiry here.
But back to those strange requests.
Most of the Depreciation Schedules we do are on what we think of as ‘vanilla properties’. That doesn’t refer to the colour, more that they are standard residential or commercial properties with few surprises.
Then there are the properties we do that are less vanilla, and more the sort of whacky flavours that ice cream shops dream up these days. When you’ve been doing Depreciation Schedules for over 20 years, the odd strange request comes in.
Our favourite this year was the boat. A big one.
We also had a client who won a beachfront block of apartments in a lottery. Yes, it really does happen.
There was the fish farm.
And the property that consisted of a reception area and numerous rooms each with an ensuite bathroom and generous bed – one of them circular.
Key Points
- Our client with a commercial charter boat was pleasantly surprised to learn the boat is considered plant and equipment.
- We had a lucky lottery winner come to us with a beachfront block of apartments he won requiring Depreciation Schedules.
- There is more depreciation in a Fish Farm than you would expect – it’s all in what you can’t see that makes the depreciation here worthwhile.
- A house of ill-repute – one with lots of beds and lots of bathrooms – can have a big Capital Works claim.
The Boat…
Ah, the boat. The job is still pending and we have our fingers firmly crossed that we get to do it. It’s a large, company owned charter boat. The sort of boat that can roam the world. The sort of boat that makes quantity surveyors wistfully ponder their career choices.
The enquiry came in from a long term client who had recently completed a $400K refurbishment on what we initially thought was a commercial property.
It turned out to be a yacht that their company had purchased last year and was intending to use for charters.
All the costs are available for the refurb, so we can use them. What may surprise the client, though, is that the boat itself is regarded as an Asset, and item of Plant and Equipment.
An item that cost millions of dollars.
Imagine the depreciation on that, with the depreciation on the $400K refurb being the icing on top.
We’ll take our time with that inspection and perhaps look for somewhere to stow away.
The Lottery…
You know those lotteries where people can win a house and a boat and goodness knows what else for a $10 ticket?
They have always seemed a bit ‘out there’ and improbable.
They’re not.
We know because a very nice client bought a couple of tickets in one of those lotteries and won it.
They got a brand new block of apartments on the beach, furniture, some beach toys, and strangely $500K in gold bullion. Surely that bullion was in a bank vault and not sitting on the coffee table when they gave him the keys?
It all made our fee seem embarrassingly modest.
We did Depreciation Schedules on the properties that the client was renting out. They had sought advice on that. And they had the properties valued individually to establish a cost base should decide to sell a couple down the track.
Maybe they’ll buy a big boat then.
Are you thinking about buying a ticket in a lottery next time an offer comes into your inbox?
The Fish Farm…
We do lots of Depreciation Schedules on commercial properties. Mostly they are warehouses. But we have done a few fish and prawn farms over the years and did another one recently.
According to our quantity surveyors, they’re more pleasant than doing a chicken farm – better smell.
They don’t look terribly substantial from a depreciation perspective – not surprisingly there are huge ponds and just a few buildings.
But these operations can have huge depreciation claims.
There is the odd modest boat and some portable machinery, but it’s what you can’t see that holds the depreciation. Those huge ponds are lined and that liner has an Effective Life and can be depreciated.
There are also inevitably submerged pumps. Big ones. And plenty of them.
And the buildings that sometimes appear a bit ramshackle from the outside often conceal substantial freezers and cold processing rooms.
Depreciation is often not obvious.
The House of Ill Repute….
We’ve also done a few jobs in establishments where a building, often a commercial building, has been converted to a property with multiple bedrooms. All with ensuites.
Bathrooms are an expensive room and when a property has over a dozen with lots of marble and gold plated tapware, there can be a big Capital Works claim.
Lots of money in those beds, too. And the many mirrors.
One client not so long ago argued that they thought he should be entitled to claim the Capital Works deduction at 4% under the short term traveller provision. We told them that probably would not wash with the ATO. Their argument was that people rarely stayed longer than an hour in their establishment. They were going to seek advice and we told them we could adjust the Depreciation Schedule down the track.
We also had a client recently who needed us to break down the fitout on their recently and expansively renovated ‘adult’ store.
We suggested to our reluctant QS that it might be an idea to show up brazenly at opening time carrying a coffee and wearing a hi vis vest perhaps to avoid being mistaken for a customer – he was going to need to spend a fair bit of time there.
We’re looking forward to some more strange requests next year, but if we can help this year with new enquiries, free updates, questions about depreciation, please get in touch.
You can make an enquiry here, or call us on 1300660033.
