06 November

Get more from your hotel restaurant with depreciation

Hotel restaurants have come a long way from pub grub! Many are turning into five-star restaurants with exceptional chefs that create amazing menus with all types of cuisines. However, you always seem to find the good old chicken schnitzel in there somewhere.

With hoteliers making an emphasis on their diners having a great experience that delivers exceptional food, they are upgrading their restaurants to deliver such a service for their patrons and this can be costly for hoteliers.

On the flip side by upgrading their restaurants by installing new gas ovens, fridges, cooking equipment, changing the layout of the restaurant or even adding a restaurant to the hotel, they are entitled to claim commercial property depreciation for the cost of their fit-out. The service and experience that their patrons receive, will have them coming back and they will tell others about it.

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What is hotel restaurant depreciation?

Hotel restaurant depreciation is part of the overall hotel depreciation which is a tax deduction that you are entitled to claim for the wear and tear of your plant and equipment assets known as Division 40 and for the capital works – structural - known as Division 43.

Examples of Division 40 plant and equipment assets found in restaurants are: glassware, cutlery, chairs, tables, range hood, gas stove, fridges, coolers, ovens, chef knives, linens.

Examples of Division 43 found in a restaurant are: the walls, ceiling, structural partitions, tiles and hard flooring.

By claiming this depreciation, which can total tens of thousands and in some cases hundreds of thousands, this can help greatly reduce the taxable income for hotel owners and hotel lessees.

I purchased a hotel that doesn’t need a restaurant fit-out can I claim for the existing restaurants fit-out?

Yes you can. You are entitled to claim for the previous owners fit-out, as long as it was completed after 20th of July 1982. And that ruling is for any commercial property renovation that has been completed by the previous owners.

How many years can I claim for my restaurant depreciation?

Depending on when your restaurant fit-out was completed, depreciation is claimable for up to 40 financial years.

The structural component (Division 43) generally depreciable over 40 years whereas each plant and equipment asset within your restaurant (Division 40) can have a different effective life.

It is also important to note that the Australian Government has announced new rules regarding small business instant asset write-off. Click here for more information.

How much depreciation do you think I would be able to claim?

It all depends on the cost of your fit-out or when the renovation was completed by the previous owners.

Our client Steve purchased a hotel back in November 2019. He completed a restaurant fit-out that cost $155,450. The renovation included second-hand and brand-new plant and equipment assets as well as structural changes to the layout. Here is what he was entitled to claim:

Restaurant claims table

How do I claim for my restaurant depreciation?

You need to engage a quantity surveyor like us who are experts in restaurant depreciation. We will generate a commercial depreciation schedule by completing a thorough inspection and capturing your restaurant’s plant and equipment items as well as the structural components.

We are qualified by the ATO to estimate works completed by previous owners, so you can claim all of your commercial deprecation that is available to you.

To discuss your restaurant depreciation, give our expert Alex a call on 1300 922 220 he will be very happy to have a conversation with you. Or you can email him at alexk@capitalclaims.com.au. If you would prefer an online quote click here.

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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.

View all posts by Mark Wilkins

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