Budget Changes to Depreciation

Proposed budget changes: some key points

On Friday the 14th of July 2017 the Australian Government released draft legislation Treasury Laws Amendment (Housing Tax Integrity) Bill 2017. Section two of the exposure draft outlines proposed changes to limit deductions for plant and equipment assets in residential premises.

The following points provide a summary of the key facts property investors should be aware of regarding the changes proposed:

  • The Australian Taxation Office allows owners of income producing properties to claim depreciation deductions for the wear and tear that occurs to a building’s structure and the plant and equipment assets within
  • Currently, investors are eligible to claim qualifying plant and equipment depreciation on assets found in an investment property they purchase, even if they were installed by a previous owner
  • Under the new rules which are yet to be legislated by parliament, investors will be able to depreciate new plant and equipment assets and items they add to their property, however subsequent owners will not be able to claim depreciation on previously used plant and equipment assets found in second hand properties
  • Owners of new properties will still be able to continue depreciating plant and equipment as they did previously
  • Investors will still be able to claim capital works deductions including any additional capital works carried out by a previous owner
  • Existing investments will be grandfathered. This means that anyone who has purchased a property up until the 9th of May 2017 will be able to claim depreciation as per normal
  • If a property investor exchanges contracts to purchase a second hand property after 7:30pm on the 9th May 2017, different depreciation rules will be applicable to their scenario should the legislation pass

The government has provided the public with an opportunity to have their say on the proposed new measures, with public consultation open until the 10th of August 2017.

BMT Tax Depreciation will be making an official submission outlining our concerns along with suggestions of alternative methods to better resolve the Government’s integrity issue. To learn more visit www.bmtqs.au/budget-2017.
Article provided by BMT Tax Depreciation.
Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation.
Please contact 1300 728 726 or visit
www.bmtqs.com.au for an Australia-wide service.