Scrapping Schedules – How to claim those unloved deductions.
Renovating your investment property doesn’t just boost its appeal—it also opens the door to significant tax savings. At Washington Brown, your scrapping schedule will become a true “game changer” when completed by a professional. With our support, you can claim the un-deducted value of replaced assets, from carpets to kitchen appliances.
Here’s a complete guide to how tax depreciation schedule work in regards to scrapping & why they’re essential, and how you can maximise your tax deductions.
What Is a Scrapping Schedule, and Why Do You Need One?
A scrapping schedule is a detailed, ATO-compliant report that calculates the remaining value of depreciable assets you replace during renovations. These assets can include:
- Flooring (e.g., carpets or tiles)
- Kitchen appliances (e.g., ovens, dishwashers)
- Bricks, concrete, tiles, etc
- Curtains and blinds
Instead of discarding these items as a loss, a scrapping schedule lets you claim their residual value as an immediate tax deduction.
Three Reasons Why a Scrapping Schedule Is Essential
- Accurate Tax Deductions: A professional schedule ensures every claim is valid and maximised.
- ATO Compliance: Avoid errors or penalties by meeting all Australian Taxation Office requirements.
- Enhanced ROI: Reduce renovation costs by claiming deductions in the same financial year.
How Scrapping Schedules Work: A Step-by-Step Guide
Step 1: Inventory of Assets to Replace
List all the items you plan to replace during renovations. Common examples include carpets, blinds, and kitchen fixtures.
Step 2: Engage a Quantity Surveyor
Hire a professional to assess and calculate the residual value of these assets. They will prepare an ATO-compliant scrapping schedule tailored to your property.
Step 3: Document Before Removal
Keep records for all items to be scrapped, including:
- Photographs of assets before removal.
- Original receipts or proof of purchase.
- Any prior depreciation schedules you’ve used.
Step 4: Replace and Renovate
After scrapping, install new assets. Retain receipts for these, as they’re eligible for future depreciation claims.
Step 5: File Your Claim
Provide your accountant with the scrapping schedule to claim deductions on your tax return.
Scrapping Schedules in Action: A Case Study
Scenario: Joan Smith purchased a 19.5-year-old investment property for $650,000. She decided to renovate after the tenant’s lease ended, upgrading outdated fixtures like kitchen cupboards, bathroom tiles and wardrobes.
Scrapping Details:
- Assets Replaced: Kitchen ($8,625), tiles ($4,536) & wardrobe ($2,678)
- Total Residual Value Claimed: $15,849 in the 2024/2025 financial year.
New Installations: Joan spent $28,555 on replacements, which can now be depreciated over time.
By using a professional scrapping schedule, Joan maximised her tax savings while modernising her property to attract higher-quality tenants.
The Benefits of Scrapping reports
1. Immediate Tax Savings
Claim the residual value of replaced items as an immediate deduction in the year of renovation.
2. Simplified Record-Keeping
A scrapping report ensures you have clear documentation for your tax return, reducing audit risks.
3. Maximised Depreciation
Alongside scrapping, the new assets you install will qualify for ongoing depreciation, further enhancing tax benefits.
When Are Scrapping Schedules Most Useful?
- Major Renovations: Replacing kitchens, bathrooms, or flooring yields high deductions.
- Commercial property or non-residential Properties: Older assets often have substantial residual value.
- Rental Upgrades: Attract better tenants while enjoying tax savings.
Common Mistakes to Avoid !
- Not Hiring a Quantity Surveyor:
DIY calculations can lead to inaccurate claims or ATO penalties. - Skipping Documentation:
Lack of proof for removed items can result in rejected claims. - Overlooking Small Assets:
Even minor items like blinds and light fittings in non-residential properties add up to significant deductions on your income tax.
Get a scrapping schedule quote today
ATO Rules to Remember
- Scrapping deductions only apply to income-generating properties (not personal homes).
- You must use an ATO-compliant depreciation schedule.
- Retain records for at least five years for audit purposes.
Here is a link to the website to Australian Tax Office to learn more about saving on your investment Property
Frequently Asked Questions….
Q: Can I claim scrapping on partial renovations?
Yes! Even small updates like replacing kitchens and bathrooms are eligible for deductions.
Q: What if I don’t have a prior depreciation schedule?
A quantity surveyor can backdate one to help you claim missed deductions.
Q: Do scrapping schedules cover furniture?
Yes, if the furniture was purchased brand new and is part of an income producing rental property that you are the property owner of.
Q: Does this apply to both Division 40 (Plant and Equipment assets) and Division 43 (Capital work deductions)?
Yes you can claim scrapping for both category of assets in non-residential property, but in regards to the plant and equipment assets, if they are acquired after 2017, they will need to be brand new.
Maximise Your Savings With Washington Brown
Scrapping schedules are a powerful way to unlock thousands of dollars during renovations, but they require expertise to do right. At Washington Brown, we specialise in creating ATO-compliant depreciation schedules tailored to your property.
Don’t leave money on the table! Contact us today to start claiming your tax depreciation deductions.
And remember our fee is 100% tax deductible enabling you to reduce your taxable income.