Mica's Money Advice

Key Considerations When Purchasing a Tax Depreciation Schedule

When it comes to improving the bottom line, a business venture has many avenues. However, tax is the last thing most business owners think of when considering savings and profits. Notably, tax has everything to do with savings if you claim refunds by depreciating your assets. That said, a company can only claim a refund once they prepare and submit a tax depreciation schedule with the Australian Tax Office (ATO). Generally, a tax depreciation schedule outlines building costs and asset values. It also includes the annual depreciating value of the assets resulting from tear and wear. That said, companies can buy tax depreciation schedules from service providers, and most reports differ significantly. This article highlights factors you must consider to purchase the right depreciation schedule.

Use a Specialist Provider -- One of the requirements given by the ATO regarding tax depreciation schedule reporting is that a qualified quantity surveyor must prepare it. However, that does not mean that all quantity surveyors can prepare a tax depreciation schedule. The reason is that some depreciation areas are not the core business of all quantity surveyors. For instance, a quantity surveyor might decide to specialise in capital allowances. Thus, it is essential to use a quantity surveyor who specialises in tax depreciation. They are better positioned to interpret legislation and tax rulings to maximise your claims. A specialist quantity surveyor also keeps up-to-date with new tax legislation.

Ensure QS Is a Registered Tax Agent -- Another area of consideration when purchasing a depreciation schedule is the registration status of a quantity surveyor. Ideally, only quantity surveyors registered as tax agents with the Tax Practitioners Board of Australia can prepare a tax depreciation report. This is crucial for your company because a QS registered as a tax agent is responsible for the accuracy of the information contained in a tax schedule. If you do not use the services of a quantity surveyor registered as a tax agent, you might have to hire a tax accountant to defend the information in your tax schedule in case of discrepancies.

Depreciation Method -- Quantity surveyors use different depreciation methods when preparing a tax depreciation schedule. The methods include straight line, double declining balance, sum-of-the-years'-digits, and the modified accelerated cost recovery system. Each depreciation method has its pros and cons; hence, the type you choose should depend on your needs. Notably, most tax depreciation schedules feature at least two modes of depreciation. Thus, a quantity surveyor should help you select a schedule whose depreciation method meets your company's needs.