Joe Hockey delivers early Xmas present to Fit-out Contractors
Joe Hockey delivers early Christmas present via tax deductions for small businesses.
Small businesses with a turnover of less than $2m can now claim an immediate tax deduction when purchasing plant and equipment valued under $20,000.
This new tax break will deliver an early Xmas present to fit-out contractors who specialise in restaurant and small office refurbishments.
I was expecting a tax break but was surprised by the quantum of the tax break.
I think $20,000 as an immediate tax deduction for individual items is a huge amount and an incredible incentive to bring that fit-out forward.
Fit-out contractors now believe in Santa Claus and he’s taken the form of Joe Hockey.
Washington Brown recently refurbished our office for a cost of $202,000 and were able to claim $35,000 in depreciation in the first year. If we’d carried out the same fit-out today our first year depreciation would’ve been over $123,000. That’s a HUGE difference.
Quantity Surveyors are experts in breaking down the overall construction cost into individual items and now has never been a more appropriate time to do this.
There are four main points to consider:
Small businesses should ensure a detailed report of any fit-out costs be carried out.
When acquiring any new asset, small businesses should try to keep the costs below $20,000.
This generous bonus has an expiry date of June 30, 2017.
Assets costing over $20,000 can still be depreciated but not claimed as an outright deduction.
Some examples of what may qualify for an immediate tax deduction include carpet, desks, blinds, work stations and a lighting upgrade.
Now has never been a better time to upgrade that office or refurbish your restaurant.
One of our clients recently purchased of a block of 6 units in Port Macquarie and initially I thought “Wow, what a good deal.”
The client had purchased 6 units for a total of $550k and according to RP Data each unit was renting for $130 per week. So that’s $780 a week in rent which equates to roughly a 7.5% yield. Not too bad and he was obviously chasing a high yield property.
We were engaged to prepare depreciation schedules on the 6 units, so we inspected the property and gathered the relevant data and inspection photo’s.
When I reviewed the job and the photos it was clear the client had purchased an incredibly run down block. In my opinion, this block was in need of major capital improvements in the coming years.
I think the client could be facing repair work in the region of $30,000 per unit – that’s $180,000 – in order to make them fit for occupation in the near future. That will certainly eat into what looks like a very good yield on paper.
So the moral to the story is that property investors should always consider future upkeep into the real investment yield equation when doing their figures. Sometimes there is a reason a property is showing a high yield – and the future capital expenditure may play a part in that.
If you have bought an investment property and need a quote for a depreciation schedule – click here or try and work out how much you can save using our free depreciation calculator
Speaking of maximising investments – here’s a video I made on a similar topic that you might enjoy…
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Washington Brown are the industry leaders offering residential property depreciation advice. For me personally the process for receiving the depreciation report for my property was hassle free & affordable. I...read moreWashington Brown are the industry leaders offering residential property depreciation advice. For me personally the process for receiving the depreciation report for my property was hassle free & affordable. I highly recommend Washington Brown to property investors seeking an ATO compliant reliable & professional service for arranging their depreciation schedule/s.read less
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Very professional and fantastic customer service with quick responses. Fast turnaround on a depreciation schedule for my apartment which was comprehensive, clear and easy to understand. The report came in...read moreVery professional and fantastic customer service with quick responses. Fast turnaround on a depreciation schedule for my apartment which was comprehensive, clear and easy to understand. The report came in a number of handy formats. I am confident that my claimable depreciation costs are maximized. The cost of this represents excellent value for money. Very highly recommended.read less