BMT Tax Depreciation have been providing depreciation services to hotel operators for over twenty years. During this time, the team has ensured these businesses maximise their returns through claiming millions in tax deductions.

Despite being the only non-cash deduction available, BMT still find that many hotel operators aren’t making the most of it or not claiming it at all.

What is it and how does it work?

Property depreciation is the natural wear and tear of a property and its assets over time. Hotel operators can claim this depreciation as a tax deduction each financial year and pay less tax.

To claim depreciation, hotel operators that are either the tenants of the property or own it need a tax depreciation schedule prepared by a specialist quantity surveyor. A schedule makes sure that everyone involved claims the most depreciation deductions possible.

How does depreciation work when there’s one building, but a different tenant and owner?

Commercial investors aren’t always business owners. This means that at times the owner of the commercial property may be a different entity to the business operating from it.

Unlike residential tenants, commercial tenants can claim depreciation on their entire fit out and other assets they purchase for the property. These deductions can be claimed in conjunction with the owner claiming deductions on the property’s structure and any assets they own.

But how do they make sure there’s no doubling-up in their claims?

When completing commercial tax depreciation schedules, a specialist quantity surveyor should always complete a physical site inspection. Doing so ensures they can split the schedules appropriately.

Partial year deductions can boost cash

If a hotel operator is only new to the scene, the end of the financial year can come around before they have been operating for a full twelve months. It’s important to remember that this doesn’t mean they have to wait until the next financial year to claim depreciation.

BMT has seen partial year deductions boost hotel operators’ cash flows by thousands, even only after a few months. Therefore it’s very important to organise a tax depreciation schedule sooner rather than later and claim every dollar possible.

Incentives explained

The current incentives available to hotel operators are bigger and better than ever before.

Temporary full expensing is in place until the end of the 2021-22 financial year. This incentive allows businesses with an aggregated turnover of up to $5 billion to instantly deduct eligible assets.

For example, if a hotel operator decided to purchase new room furniture worth $600,000 in total in the 2020-21 financial year

In addition to the temporary full expensing, the loss carry-back measure allows hotel operators to claim back their total losses sooner rather than later. Usually, if a hotel operator makes a loss in a financial year, they must wait until they return to profit to claim this loss in their tax return. Loss carry back essentially reverses this arrangement and allows them to apply this loss to previously taxed profits.

BMT is here to help hotel operators to make to most out of lucrative depreciation deductions. To learn more about BMT’s additional commercial services, visit www.bmtqs.com.au or Request a Quote.

The views expressed in this article are an opinion only and readers should rely on their independent advice in relation to such matters.

This is a sponsored feature article.

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