Australian Taxation Depreciation

The Australian Taxation Office defines Tax Depreciation as: “The value of an asset that gradually reduces over time as they approach the end of their useful life. Assets, which lose value in this way, are said to depreciate. In recognition of this fact, the cost of capital assets used in producing assessable income can be written off over a period of time as a tax deduction. Under income tax law, the term ‘Depreciation’ is applied to plant – for example, motor cars and machinery.” The ATO introduced this ruling for deduction for capital works and plant in 1985. Put simply, it is a method used to capture the reducing value of an asset for tax-saving purposes.

There are two types of Tax Depreciation that you should know about. The first is Capital Works Depreciation, and the second is Depreciation on Plant. Capital works allowance (sometimes referred to as building allowance or special building write off) allows the actual building to be depreciated and is based on its historical building cost. Depreciation of plant is where items such as carpets, curtains and many more items can be depreciated and claimed as deductions against rental income.

The Capital Works Depreciation is a set annual allowance and is usually 2.5% of what the building “originally” cost to build.

Unlike the other depreciation allowance, Depreciation on Plant is different in many ways in that it is not based on historic values but is re-valued each time a property is purchased. Regardless of when the carpets, curtains or other items of plant were purchased, they are given a new value at the date of property settlement. Some items that can be claimed under ‘Depreciation on Plant’ include hot water services, garden watering systems, cook tops, range hoods, swimming pool filtration and air-conditioning systems.

First Home Owners Grant and Stamp Duty Exemptions

Buying your first home should be an exciting and satisfying experience and with a little knowledge and preparation there is no reason why it shouldn't be. There are a number of things to be aware of ranging from the various government benefits for first home buyers to understanding the requirements the various lenders place on you before they will give you a loan. Don’t be worried about the number of things to consider … that's where we come in and we provide high grade professional assistance the whole way through the entire buying process.

We'll explain to you how government grants and stamp duty exemptions can save you up to $26,000.00 off the cost of your new property in some states. So clearly these benefits are worthwhile if you're eligible!