Business Owners & Developers – Tax Depreciation Strategies

1. Can Business Owners Claim Tax Depreciation on Their Property?

Short Answer:

Yes! Business owners who own or lease commercial property can claim tax depreciation on both the building structure and business assets.

What Can Business Owners Claim?

✅ Building Structure (Division 43) – 2.5% per year on capital works.
✅ Business Assets (Division 40) – Equipment, office fit-outs, IT infrastructure, and furniture.
✅ Leasehold Improvements – If a tenant pays for improvements, they can claim depreciation.

📌 Get a Business Property Depreciation Report: Request a Quote

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2. How Does Tax Depreciation Work for Property Developers?

Short Answer:

Property developers cannot claim tax depreciation while holding unsold stock, but can pass on depreciation benefits to buyers.

Key Depreciation Considerations for Developers:

✔ No depreciation claim while stock is held as inventory.
✔ Buyers of new properties receive full depreciation benefits.
✔ Developers can use depreciation reports as a selling point to investors.

📌 Need a Tax Depreciation Strategy for Your Development? Speak to an Expert

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3. Can Business Owners Use Instant Asset Write-Offs?

Short Answer:

Yes, under the ATO’s instant asset write-off scheme, eligible business assets can be fully deducted in the year of purchase, instead of being depreciated over time.

Key Instant Asset Write-Off Rules:

✔ Applies to new and second-hand assets used in business.
✔ Eligibility depends on the business’s turnover and asset cost.
✔ Koste ensures accurate categorisation of assets for maximum deductions.

📌 Find Out If Your Business Qualifies: Book a Consultation

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4. What Happens If a Business Sells Its Assets? (Balancing Adjustments & CGT)

Short Answer:

When a business sells, scraps, or upgrades assets, there may be a balancing adjustment or Capital Gains Tax (CGT) implications.

Key Considerations:

✔ If an asset is sold for more than its written-down value, a taxable gain may apply.
✔ If an asset is sold for less, the business may be able to claim a deduction.
✔ Koste provides asset write-off reports for businesses restructuring or selling equipment.

📌 Need Help With Business Asset Depreciation? Get a Report

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5. Can I Claim Depreciation on a Fit-Out if I Lease My Premises?

Short Answer:

Yes! If you lease a commercial space and pay for a fit-out, you can claim depreciation on those improvements.

How It Works for Tenants:

✅ Division 40 – Furniture, IT equipment, signage, and lighting are depreciable assets.
✅ Division 43 – Structural changes (e.g., partitions, new flooring) can be depreciated over time.
✅ When the lease ends, abandoned assets may be written off.

📌 Maximise Your Fit-Out Depreciation: Request a Quote

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6. How Does Depreciation Work When Buying a Business?

Short Answer:

When acquiring a business, assets should be properly valued and separated to maximise tax benefits and avoid overpaying on goodwill.

What Can Be Depreciated When Buying a Business?

✔ Equipment, machinery, vehicles, and IT infrastructure.
✔ Fit-outs and leasehold improvements included in the purchase.
✔ Goodwill is not depreciable, so correct asset valuation is key.

📌 Get an Expert Business Valuation for Depreciation: Speak to Koste

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7. Can Depreciation Be Used for Business Tax Planning?

Short Answer:

Yes! Tax depreciation is a critical cash flow tool that helps businesses reduce taxable income, reinvest savings, and plan for future asset replacements.

How Businesses Use Depreciation for Tax Planning:

✅ Identify underperforming assets & write them off.
✅ Use instant asset write-offs to reduce tax liabilities.
✅ Plan asset replacements in line with tax strategies.

📌 Book a Tax Planning Strategy Call: Speak to an Expert