PROPERTY buyers should be maximising the use of formal tax depreciation assessments, according to Tim Lane from valuer Herron Todd White.
Mr Lane, who is HTW’s national director, said property buyers could essentially pick up the unspent depreciation from the previous owners of the enterprise.
“For a typical mixed farming and cattle or sheep operations, annual benefits could be in the order of $30,000 a year,” Mr Lane said.
“Further deductions are often available for more intensive assets.”
Mr Lane said while the process was relatively straight forward, the assessments could only be completed by a quantity surveyor who is also a registered tax agent.
Herron Todd White is one such company which provided the service, he said.
“The depreciation assessments cover most infrastructure applicable in a purchase as well as plant and equipment,” Mr Lane said. “The list of potentially claimable items is effectively longer than my arm.”
“From 12 May 2015 – budget night 2015 - items of water development, fodder storage and fences were no longer allowed due to the accelerated depreciation that was brought in this budget,” he said. “This means if you bought prior to this date you have extra benefits claimable.”
Mr Lane said the schedule of claim lasted for 10 years.
“So each year your accountant can simply bring across the latest number and add this deduction to your tax return.”
Mr Lane said HTW rural valuers could collect the information required in conjunction with or independently to a valuation assignment.
He said an assessment could generally be made for up to three years after a purchase on the basis that what was on site at the time can be substantiated.
“Imagine three years worth of $30,000 plus benefit in one year as such. Each tax return would require adjustment but you get my point,” Mr Lane said.
“With good seasonal conditions, sound to strong commodity prices and hopefully growing bank balances and profits, this option may prove very beneficial.”
