With June 30 almost upon us, it’s the perfect time for hoteliers to make the most of the depreciation available. Additional incentives like the temporary full expensing policy are also on offer, so deductions from depreciable assets have the potential to boost cash more than ever before.

What is depreciation?

Depreciation is the natural wear and tear of a property and its assets over time. Hoteliers can claim this lucrative deduction on all eligible plant and equipment assets such as room furniture, cleaning and kitchen equipment.

If they also own the building, they will be able to claim capital works deductions on the building’s structure and fixed assets like walls, doors, stairwells and windows. 

How can hoteliers claim depreciation?

A tax depreciation schedule is essential for claiming depreciation compliantly.

Schedules are prepared by specialist quantity surveyors that hold the skills and qualifications to estimate costs for depreciation purposes. A site inspection is required when preparing a hotel tax depreciation schedule. This ensures that every single depreciable asset is identified and all depreciation claims can be substantiated in the event of an audit.

What happens if a hotelier has never claimed depreciation?

It’s never too late to claim depreciation. Ordering a prepaying for a tax depreciation schedule before June 30 will not only allow a hotelier to claim the schedule fee straight back, but it’ll also unlock depreciation deductions for the lifetime of the property.

In many cases, having a tax depreciation schedule now will allow the hotelier to claim back missed dollars. The schedule will allow the hotelier’s accountant to adjust previous tax returns to ensure all back-claims are fully compliant.

What about the temporary full expensing policy?

It’s important to remember that the temporary full expensing policy is available to business owners this financial year.

Under this lucrative scheme, business owners can instantly write off plant and equipment assets purchased after 7:30pm on 6 October 2020. For example, if the hotelier purchased new beds for the hotel’s rooms worth $50,000 in December 2020, they could claim the full amount instantly.

If a hotelier is classed as a small business and has a pre-existing general business pool, they can deduct the full balance of their pool with temporary full expensing.

For example, if a business pool that held furniture, kitchen appliances and floor coverings had a depreciable balance of $200,000, they could claim this as an instant deduction in their FY 2020/21 tax lodgement. This wouldn’t have been possible under the previous instant asset write-off, as the value exceeded the $150,000 threshold. 

If a hotelier doesn’t already have a tax depreciation schedule, it’s not too late. If they order and prepay for a schedule before June 30, the schedule fee is 100 per cent tax deductible this financial year. To learn more, hoteliers can contact BMT Tax Depreciation on 1300 728 726, 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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