7 Vital Facts You Should Know about Tax Depreciation Reports But Don't

1. The main purpose of a Tax Depreciation Report is to save you money.

A Tax Depreciation Report should help you save money, often thousands of dollars, over the life of the property. You will pay less tax as the report takes into account the general wear and tear on your building and its contents. The result?  Huge savings for you.

Tax Depreciation Reports are for any income producing building, be it residential, commercial or industrial. And it's important to know that it doesn't matter the age of your property, a Tax Depreciation Report can still be viable on older buildings.

A misguided fact Is that there is no depreciation available for older properties. This is not true, please allow me to explain:

Depreciation on buildings in calculated on 2 aspects:

Firstly, Capital Allowances (Building Cost and Renovations) and,
Secondly, Plant/Articles (carpet, hot water system, etc.)

It is true that the cost of the Capital Allowances is based upon the construction date of the property, but what is often forgotten is that any renovations that have occurred on the property since that date are depreciated from the time they were carried out.

For example, let's say your property was constructed in1955, but in 2006 you redecorated and made some structural improvements. The redecorations and structural improvements are depreciated from 2006.

Plant and Articles are calculated from the date of purchase, and a second hand value is assigned to these based upon their condition.

With in-depth experience in saving property-owners money, TSL Project Services Pty Ltd guarantees that unless they save you double the cost of their fee, in depreciation in the first full year, you'll receive your report for free.

It is imperative that your chosen Quantity Surveyor is qualified to prepare your Tax Depreciation Report.

Make sure that company that you use is a member of the Australian Institute of Quantity Surveyors, and that have both Professional Indemnity Insurance and Public Liability Insurance.

According to a recent article in Australian Property Magazine (March 2006), ?Investors are advised to research the representative actually preparing their Depreciation schedule and to ensure the Company was suitably qualified before hiring it.?

The article also said, :The Australian Institute of Quantity Surveyors has stated that the highest numbers of complaints they receive are from people who have used non members to undertake their Tax Depreciation Reports and as a result have had very unsatisfactory service. Companies whose representatives are not members of any professional body are not bound by any code of professional conduct.?

TSL Project Services are members of the Australian Institute of Quantity Surveyors and are fully insured.

If your chosen Quantity Surveyor asks you to undertake the inspection yourself or says that no inspection is required, they are not working within the Australian Institute of Quantity Surveyors Guidelines. Be careful also if they ask you to complete the work for them and they just prepare the report - with no liability, as you have provided the information. The reason the ATO has specified that Quantity Surveyors prepare the Tax Depreciation Reports is because of their qualifications and knowledge of buildings. Just think; would you know the total m2 area of carpet in a 30 storey building?

Thoroughly review any marketing material you receive from the Quantity Surveyor you are considering. Make sure the marketing material gives you the Company's full contact details including a physical address, phone number and contact names. You want to be able to contact the person working on your project at any time during the process.

5. A compromise on your Tax Depreciation Report will not withstand an ATO Audit.

A good quality, comprehensive Tax Depreciation Report should:

? Include photographs of your  building and plant
? Contain an indicative plan of the building
? Have a breakdown of Capital Allowances
? Have a breakdown of Plant and Articles
? Have backdated reports to the date of purchase (although you can only claim previous four years)
? Include a full 40 year schedule
? Be fully certified by a member of the Australian Institute of Quantity Surveyors.

Your report should be more than a few pages of figures. Anything less than above is both a compromise and unlikely to withstand an ATO Audit. How much would it cost for your accountant to chase up any information if you are audited at $200 to $300 per hour?

Quotes for Tax Depreciation Inspections and Reports vary from company to company. It has been known for a report on a single house in Brisbane to range from $250 to $750. This is a dramatic fluctuation - you may think it too high a range. But remember, cheapest is not always best; compromise today can lead to pain tomorrow. The middle road is quite possible a good route to take.

As a guideline to you, TSL Project Services' standard fee for residential properties in Sydney, surrounding areas, Brisbane, Gold Coast, Sunshine Coast, Ipswich, Townsville and surrounding areas is $540 inclusive of GST.

These fees are fixed and include a bound, fully certified report of approximately 16 pages. And remember, TSL's guarantee to you: unless TSL Project Services saves you double the cost of our fee, in depreciation in the first full year, you'll receive your report for free.

7. Avoid paying upfront for your report.

How often do you pay upfront for a service, only to find yourself unhappy with the time it takes to receive the service?

Unfortunately, many Quantity Surveying Companies will insist on payment upfront and ten take their time to get your report completed. There is little incentive for them to hurry or even provide you with quality services; they already have your money. Some will complete the report then refuse to release it to you until their fee has been paid. And still others have been known to suddenly increase their fee before handing your report over.

When you engage TSL Project Services Pty Ltd you know in advance what the fee is, and what's more you can choose not to pay until the report is in your hands. Now isn't this a great incentive for TSL to deliver you a quick and high quality service?

Information supplied courtesy of Tracey Lunniss- Director of TSL Project Services. Charted Quantity Surveyor.