19 November

Claiming depreciation deductions on holiday parks

With the relaxation of some border restrictions and Australia starting to open back up - many will be flocking to getaway. With no international flights, at the moment, the good old holiday park is the place to be.

As you are aware modern holiday park is no longer a measured out square of turf where your tent or caravan can park. They are now offering a complete getaway within their 5 star facilities.

Deluxe cabins as holiday rentals that can often sleep up to eight people. Sites that have their own ensuites. Facilities that include Indoor-and-outdoor pools, heated with spas, kitchens and communal BBQs’ for visitors to use. The kid’s facilities are at another level all together with numerous play-grounds, equipment, jumping pillows, sand pits, movie theatres, games room, putt-putt golf, basketball courts. Even a tennis court for those travellers that like to have a social or competitive game of tennis. All these built features come at substantial expense, and at times it is not known just how much that is. Which can be problematic because you can typically claim these works as a tax deduction.

If you are an owner or lessee of one of these holiday parks you can claim substantial commercial property depreciation that can be hundreds-of-thousands and even millions of dollars over the course of ownership.

What is commercial property depreciation deduction?

By owning or leasing a holiday park, which is a commercial property, you are entitled to claim depreciation for the wear and tear of the plant and equipment assets within the holiday park, this is known as Division 40. And you can claim depreciation for the capital works, which is depreciation of the structural components within your holiday park, this is known as Division 43.

What can I claim under Division 40 for my holiday park?

Plant and equipment assets that would fall under the Division 40 for your holiday park would be items such as lawn mower, power units for powered sites, jumping pillows, poll cleaning equipment, lighting inside the cabins and around the holiday park ie BBQ areas, air-conditioning in the cabins, furniture, blinds, linen, towels, cutlery, crockery and glassware.

What can I claim under Division 43 for my holiday park?

Capital works, ‘structural items’ that would fall under Division 43 are structures around your holiday park that include: the buildings for the holiday park office, roads, storage sheds, BBQ shelters, communal buildings, pools, outdoor courts, amenity blocks and cabins that the holiday park owner owns.

Here is an example of what one holiday park owner could claim in commercial depreciation deductions in the first full financial year and the first five financial years:

Holiday park table

How do I claim for my commercial property depreciation from my holiday park?

You will need to engage a qualified quantity surveyor who will prepare a depreciation schedule for you. They will inspect your property and will take detailed notes of all assets and structures within your property. By not engaging a quantity surveyor you will potentially missing out on claiming hundreds-of-thousands in depreciation deductions.

‘We engaged Capital Claims Tax Depreciation to complete a depreciation schedule on our eco-friendly park. We had owned the park for a couple of years and only had one prepared this financial year as we completed some major renovations. We added solar panels, new cabins, eco-friendly appliances, roads and new BBQ areas. As you can imagine this wasn’t cheap and when we received our tax depreciation schedule we were astounded by the results. For the outlay of the tax depreciation schedule and what we are able to claim moving forward, we are certainly happy with our investment and would recommend others to have one completed. – Tim and Julie W.

To discuss your holiday park and what you are entitled to claim as an owner or as a lessee give Alex our Senior Tax Depreciation Specialist a call on 1300 922 220 or you can email him at alexk@capitalclaims.com.au.

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About Mark Wilkins

Mark is an expert quantity surveyor, business owner, public speaker and property developer. With 20+ years experience in the construction and quantity surveying industry Mark’s specialist expertise have been sought in consultant capacity by professional bodies such as the National Institute of Accountants and the National Tax and Accountants Association, and he has presented at various property and tax seminars and expos nationwide. Mark holds a Bachelor of Construction Management from the University of Newcastle, is an affiliate member of the Australian Institute of Quantity Surveyors and a Registered Tax Agent.

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