ASSESSMENT OF CAPITAL ALLOWANCES AND TAX DEPRECIATION For The Purchase Of 2 bedroom apartment 01-December-2016 A6128
This Assessment of Capital Allowances and Tax Depreciation has been compiled by Gray Robinson & Cottrell in accordance with the Australian Income Tax Legislation and Rulings at the date of this report Should you have any queries relating to this report, please contact the author who is a registered tax agent Prepared By: Matthew Brown Signed: Date: 01-Dec-16 Apex On Donaldson - Residential - Post 10 May 2006 to Presentxls
CONTENTS PAGE 100 INTRODUCTION 1 200 PURCHASE DETAILS 1 300 SOURCE OF INFORMATION 4 400 DISCLAIMER 4 500 DIVISION 40 ALLOWANCES 5 DEPRECIATION OF PLANT PRIME COST METHOD 600 DIVISION 40 ALLOWANCES 6 DEPRECIATION OF PLANT DIMINISHING VALUE METHOD 700 DIVISION 43 ALLOWANCES 7 DEDUCTIONS FOR CAPITAL WORKS 800 YEARLY SUMMARY OF CAPITAL ALLOWANCES 8 Apex On Donaldson - Residential - Post 10 May 2006 to Presentxls
100 INTRODUCTION APEX ON DONALDSON, GREENSLOPES As instructed by Mosaic Property Group, we have assessed the Capital Allowances and Tax Depreciation available due to the purchase of Apex On Donaldson The assessment of Capital Allowances and Tax Depreciation is inclusive of Goods and Services Tax (GST) The Australian Tax Office is referred to as the ATO throughout this report 200 CAPITAL EXPENDITURE DETAILS 201 Capital Expenditure Incurred This Capital Allowance and Tax Depreciation Report has been prepared based on purchase details provided as listed below: Purchase Price $ 520,00000 Estimated Stamp Duty Paid $ 16,62500 Estimated Legal Fees Paid $ 1,50000 Other Acquisition Fees $ - Post Purchase Expenditure $ - TOTAL CAPITAL EXPENDITURE ANALYSED $ 538,12500 202 Capital Expenditure Apportionment Based on the information provided and calculations we have undertaken, we have attributed the following breakdown of the Capital Expenditure included in this purchase Eligible Items a) Plant $ 124,05678 b) Building $ 186,38111 c) Structural Improvements $ 4,02403 Sub Total $ 314,46192 Non Eligible Items d) Land $ 78,80978 e) Non-qualifying $ 144,85331 TOTAL CAPITAL EXPENDITURE ANALYSED $ 538,12500 Apex On Donaldson - Residential - Post 10 May 2006 to Presentxls Page 1
a) Plant Division 40 of the New Business Tax System (Capital Allowances) Act 2001, defines and overviews the key operative provisions for calculating depreciation deductions We have used this division to calculate the cost of plant, effective life of plant, depreciation rates, depreciation deductions and to assess the pooling of depreciable plant The effective lives of plant used in this report, are those set down by the Commissioner of the ATO This period of time is generally considered to be the effective life of an asset in its particular location and for purpose of use A self assessment can be made by the owner of an item, if they disagree with the Commissioner's opinion This self assessment must be backed by expert advice nominated the particular result in Sections 5 and 6 of this report Where this is relevant, we have The amount of a depreciation deduction has been calculated by applying both the formula for the Diminishing Value and the Prime Cost Method per current tax legislation The first year claim is based on the number of days in the current tax year that the taxpayer was the owner of the plant, or in this case, Settlement Date to the end of the initial tax year Plant items have been pooled in accordance with current tax legislation Pools have been created which include similar items of individual plant which are generally stated under headings set out in Tax Rulings issued by the ATO Plant, which cost the owner less than $1,00000, installed in position, is allocated as "low-cost plant" to a "low-value pool" Depreciation deductions for plant in a low-value pool for the first tax year are calculated by claiming 1875% of the costs of low-cost plant allocated to the pool for that year (or part thereof) and 375% of the sum of the diminishing remainder for each tax year thereafter Where applicable we have allocated plant items to an "Immediate Deduction" section where the item's installed cost is less than $300 In order to qualify, such items must be individual and not part of a purchased set This applies only to individually owned items and not common items Section 8 of this Report summarises the calculation of both the Diminishing Value and Prime Cost Methods of Capital Allowance and Tax Depreciation The taxpayer can choose between either method Once a method is selected by the taxpayer, it remains in force for the duration of ownership of the whole asset Apex On Donaldson - Residential - Post 10 May 2006 to Presentxls Page 2
b) Building Capital Allowances for buildings are defined within Division 43 of the ITAA 1997 - Deductions for Capital Works The key operative provisions applied in calculating the total amount eligible for Division 43 write-off is as follows For a capital works deduction to be available, Section 43 requires that the capital works have a "construction expenditure area", there is a "pool of construction expenditure" and the taxpayer uses the capital works area in a deductible way for the purpose of producing assessable income Construction expenditure is determined on the basis of the actual cost incurred in relation to the construction of the building including preliminary expenses such as design fees, building fees, costs associated with obtaining the necessary building approvals and the cost of foundation excavations The preliminary expenses have been apportioned between the construction capital and the construction of plant The types of capital costs identified as not being included in construction expenditure are listed under Clause 2(e) of this report The construction commencement date is relevant for determining the taxpayers eligibility for a capital works deduction The capital works deduction rate is also calculated by this date Another factor in determining the rate is the intended use when construction is completed Section 43 prescribes the rates at which a capital allowance deduction can be claimed on capital works expenditure For post-16 September 1987 capital works, the rate of deduction is 25% for capital works used in a deductible way c) Structural Improvements Structural Improvements are a part of Division 43 and are detailed in subsection 43-20(2) To qualify these works must have been constructed after 26 February 1992 d) Land Like plant, where land is purchased with the overall asset, the cost of the land is essentially the part of the purchase price that is reasonably attributable to the land For the purpose of this report, we have obtained market information on the value of the land and have included it accordingly Apex On Donaldson - Residential - Post 10 May 2006 to Presentxls Page 3
e) Non-Qualifying Items of non-qualifying capital expenditure include: Soft landscaping Bulk civil works All Division 43 allowances built before 18 July 1985 All external works built before 27 February 1992 Developers margin and overheads on Division 43 203 Contract and Settlement Details Purchasers Name: Real Property Description: Property Address: Contract Date: Settlement Date: Not Available 40 Donaldson Street, Greenslopes 300 SOURCE OF INFORMATION 301 Information Provided The following information was provided which forms a basis for our calculation: Property details 302 Scope of Property Inspection For recording and dissection of existing assets as detailed in this report, we conducted a site survey of the property and noted all relevant items This record is available for any future audits Date of Inspection : 14-October-2016 400 DISCLAIMER This report is for the use only of the party to whom it is addressed and shall be used for no other purposes without the written consent of Gray Robinson & Cottrell No responsibility is accepted for any third party who may use or rely on the whole or any part of the contents of this report We have prepared this Assessment of Capital Allowances and Tax Depreciation Report in accordance with current Australian Income Tax legislation and rulings applicable as at the date of this report Different taxation inspectors may interpret various aspects of the Act differently It should, therefore be noted, that items within this schedule may be subject to queries from the Australian Taxation Office We are always available to assist you in responding to such queries Apex On Donaldson - Residential - Post 10 May 2006 to Presentxls Page 4
50 DIVISION 40 ALLOWANCES DEPRECIATION OF PLANT - PRIME COST METHOD DIVISION 40 TOTAL TAX CLAIM WDV PLANT AND ARTICLES DESCRIPTION CAPITAL RATE 28-Oct-16 @ VALUE PCM to 30-Jun-17 30-Jun-17 $ % $ $ Air Conditioning Plant Mini split systems 21,11651 1000 1,41741 19,69910 Door Accessories Automatic garage door motors 54294 1000 3644 50650 Door closers 1,42640 1000 9574 1,33066 Fire Control and Alarm Assets EWIS systems 3,10251 833 17347 2,92904 Hoses and nozzles 58948 1000 3957 54991 Pumps - diesel and electric 3,10251 400 8330 3,01921 Floor Coverings Carpet 3,86900 1000 25970 3,60930 Floating timber 14,80990 667 66276 14,14714 Hot Water Systems - excluding Piping Gas 11,98965 833 67039 11,31926 Irrigation Plant and Equipment Control panels 62050 2000 8330 53720 Timing devices 37230 2000 4998 32232 Kitchen Accessories Cook tops 2,12582 833 11886 2,00696 Dishwashers 3,54304 1000 23782 3,30522 Microwave ovens 2,12582 1000 14269 1,98313 Ovens 5,24370 833 29319 4,95050 Range hoods 3,54304 833 19810 3,34493 Laundry Plant Clothes dryers 1,21881 1000 8181 1,13700 Security Systems and Fittings Security system control panels 54294 2000 7289 47005 Security system detectors 1,86151 2000 24990 1,61161 Sound Processing Entrycom system assets 1,51247 1000 10152 1,41095 Tanks Reinforced concrete or masonry 8,09259 200 10864 7,98395 Telecommunication Assets Complete telephone system - switchboards, instruments, cables, etc 2,69271 500 9037 2,60234 Transportation Systems Lifts - electric 11,32417 333 25312 11,07105 TV Equipment MATV system 1,55126 1000 10413 1,44713 Ventilating Plant Bathroom exhaust fans 5,52714 500 18550 5,34164 Apex On Donaldson - Residential - Post 10 May 2006 to Presentxls Page 5
50 DIVISION 40 ALLOWANCES DEPRECIATION OF PLANT - PRIME COST METHOD DIVISION 40 TOTAL TAX CLAIM WDV PLANT AND ARTICLES DESCRIPTION CAPITAL RATE 28-Oct-16 @ VALUE PCM to 30-Jun-17 30-Jun-17 $ % $ $ Low Value Pool Items Door accessories - automatic garage door controls 38394 1875 7199 31195 Electrical - ceiling fans 2,33841 1875 43845 1,89995 Fire control - detectors - all types 2,62543 1875 49227 2,13316 Fire control - extinguishers 29862 1875 5599 24263 Fire control - hoses and nozzles 34128 1875 6399 27729 Window and door treatments - blinds 5,62238 1875 1,05420 4,56818 TOTAL 124,05678 7,98750 116,06928 Apex On Donaldson - Residential - Post 10 May 2006 to Presentxls Page 6
60 DIVISION 40 ALLOWANCES DEPRECIATION OF PLANT - DIMINISHING VALUE METHOD DIVISION 40 TOTAL TAX CLAIM WDV PLANT AND ARTICLES DESCRIPTION CAPITAL RATE 28-Oct-16 @ VALUE DMV to 30-Jun-17 30-Jun-17 $ % $ $ Air Conditioning Plant Mini split systems 21,11651 2000 2,83482 18,28169 Door Accessories Automatic garage door motors 54294 2000 7289 47005 Door closers 1,42640 2000 19149 1,23491 Fire Control and Alarm Assets EWIS systems 3,10251 1666 34695 2,75557 Hoses and nozzles 58948 2000 7914 51034 Pumps - diesel and electric 3,10251 800 16660 2,93591 Floor Coverings Carpet 3,86900 2000 51940 3,34960 Floating timber 14,80990 1333 1,32552 13,48439 Hot Water Systems - excluding Piping Gas 11,98965 1666 1,34077 10,64887 Irrigation Plant and Equipment Control panels 62050 4000 16660 45390 Timing devices 37230 4000 9996 27234 Kitchen Accessories Cook tops 2,12582 1666 23773 1,88810 Dishwashers 3,54304 2000 47564 3,06740 Microwave ovens 2,12582 2000 28538 1,84044 Ovens 5,24370 1666 58639 4,65731 Range hoods 3,54304 1666 39621 3,14683 Laundry Plant Clothes dryers 1,21881 2000 16362 1,05519 Security Systems and Fittings Security system control panels Security system detectors Sound Processing Entrycom system assets Tanks Reinforced concrete or masonry Telecommunication Assets Complete telephone system - switchboards, instruments, cables, etc Transportation Systems Lifts - electric TV Equipment MATV system Ventilating Plant Bathroom exhaust fans 54294 4000 14578 39716 1,86151 4000 49980 1,36171 1,51247 2000 20304 1,30943 8,09259 400 21728 7,87531 2,69271 1000 18074 2,51197 11,32417 666 50624 10,81793 1,55126 2000 20825 1,34301 5,52714 1000 37100 5,15614 Apex On Donaldson - Residential - Post 10 May 2006 to Presentxls Page 7
60 DIVISION 40 ALLOWANCES DEPRECIATION OF PLANT - DIMINISHING VALUE METHOD DIVISION 40 TOTAL TAX CLAIM WDV PLANT AND ARTICLES DESCRIPTION CAPITAL RATE 28-Oct-16 @ VALUE DMV to 30-Jun-17 30-Jun-17 $ % $ $ Low Value Pool Items Door accessories - automatic garage door controls 38394 1875 7199 31195 Electrical - ceiling fans 2,33841 1875 43845 1,89995 Fire control - detectors - all types 2,62543 1875 49227 2,13316 Fire control - extinguishers 29862 1875 5599 24263 Fire control - hoses and nozzles 34128 1875 6399 27729 Window and door treatments - blinds 5,62238 1875 1,05420 4,56818 TOTAL 124,05678 13,79812 110,25866 Apex On Donaldson - Residential - Post 10 May 2006 to Presentxls Page 8
70 DIVISION 43 - CAPITAL ALLOWANCES CONSTRUCTION ESTIMATED ORIGINAL TAX ANNUAL WDV CLAIM WDV EXPENDITURE DATES COST RATE CLAIM @ to @ AREA START FINISH 365 days 28-Oct-16 30-Jun-17 30-Jun-17 $ % $ $ $ BUILDINGS Original 21-Jan-16 18-Oct-16 $186,50886 250 4,66272 186,38111 3,12977 183,25134 STRUCTURAL IMPROVEMENTS Original 21-Jan-16 18-Oct-16 $4,02679 250 10067 4,02403 6757 3,95645 TOTAL $190,53565 $4,76339 $190,40514 $3,19734 $187,20780 Apex On Donaldson - Residential - Post 10 May 2006 to Presentxls Page 9
800 YEARLY SUMMARY OF CAPITAL ALLOWANCES FINANCIAL YEAR PRIME COST METHOD Tax Division 40 Division 43 TOTAL CLAIM Year Year Plant & Articles Allowances $ $ $ 1 (245 days) 2016-2017 7,98750 3,19734 11,18484 2 2017-2018 12,19407 4,76339 16,95746 3 2018-2019 10,86753 4,76339 15,63092 4 2019-2020 10,03844 4,76339 14,80183 5 2020-2021 9,52026 4,76339 14,28366 6 2021-2022 8,74033 4,76339 13,50372 7 2022-2023 8,31454 4,76339 13,07793 8 2023-2024 8,18803 4,76339 12,95142 9 2024-2025 8,10896 4,76339 12,87235 10 2025-2026 8,05954 4,76339 12,82294 Balance 32,03757 144,33728 176,37484 TOTAL 124,05678 190,40514 314,46192 FINANCIAL YEAR DIMINISHING VALUE METHOD Tax Division 40 Division 43 TOTAL CLAIM Year Year Plant & Articles Allowances $ $ $ 1 (245 days) 2016-2017 13,79812 3,19734 16,99546 2 2017-2018 18,70698 4,76339 23,47037 3 2018-2019 14,64748 4,76339 19,41087 4 2019-2020 11,65581 4,76339 16,41920 5 2020-2021 9,40670 4,76339 14,17009 6 2021-2022 7,68429 4,76339 12,44768 7 2022-2023 6,34309 4,76339 11,10648 8 2023-2024 5,28329 4,76339 10,04668 9 2024-2025 4,43516 4,76339 9,19855 10 2025-2026 3,74900 4,76339 8,51240 Balance 28,34686 144,33728 172,68414 TOTAL 124,05678 190,40514 314,46192 $25,000 $20,000 $15,000 $10,000 $5,000 $0 1 2 3 4 5 6 7 8 9 10 YEARS PRIME COST METHOD DIMINISHING VALUE METHOD Apex On Donaldson - Residential - Post 10 May 2006 to Presentxls Page 10