Determining the Taxation Depreciation Deduction
To determine the Division 43 deduction for your building you will need to know:
the dates on which construction on your property commenced and finished;
the building's original construction cost in the format required by the Australian Tax Office (ATO).
Division 43 calculations must be based on the original builder's or developer's cost to construct the property. The cost must exclude land price, site clearance and preparation costs, bulk excavation, soft landscaping, developer's profit and marketing and legal transfer fees. For buildings constructed before 27th February 1992, external structural elements (fences, roads, paving, etc.) must be excluded.
Items of depreciable plant and equipment should be costed separately and depreciated at the higher rates set by the ATO. These items can include carpet and vinyl floor coverings, white goods, light fittings, air conditioning and security systems.
Preparing the Estimate
If you are unable to contact the property's original builder, or he is unwilling to provide you with his information, the ATO will accept an estimate prepared by a quantity surveyor (IT2640). Estimates prepared by valuers, real estate agents, accountants or solicitors are not acceptable (DT 94/83).
Maximising the claim | Taxation Depreciation for building owners