As a hotel owner you are entitled to claim commercial property depreciation under two different categories:
- Division 40 – Assets / Plant and Equipment
- Division 43 – Building / Construction/ Capital Works
Division 40 – Assets/Plant and Equipment are (individual or grouped) assets within your hotel that can be removed easily or are electronic in nature or soft furnishings. Examples of Division 40 Assets include: Ice making machines, lighting, refrigeration – cool room panels, beer dispensing system, closed circuit television, gaming machines, glass washer machines, blinds, fire hoses and nozzles, crockery, cutlery and glassware.
Hotel owners (commercial property owners) are entitled to claim commercial property depreciation for brand-new and second-hand assets.
Division 43 – Building /Construction/Capital Works is the remaining structural component of your hotel. Some examples of Division 43 components include: bricks, framing, weatherboards, hard landscaping, pavers, concrete, walls, foundation, piers, storm water, roof tiles/colorbond fence.
When you combine Division 40 and Division 43 together the hotel depreciation results for owners can be in the hundred-of-thousands. This will reduce your taxable income and help you with cash-flow allowing you to inject monies elsewhere into your hotel.
For hotel owners who have completed a fit-out and removed and disposed of the old assets, they are entitled to claim for another commercial property depreciation component which is called “Scrapping”.
What is scrapping?
Hotels are known to have a refurb completed by owners due to being owned for many years. Out with the old and in with the new. Sometimes there can be multiple fit-outs completed by the one owner. Hotel owners who complete fit-outs are entitled to claim for the residual value that is left in the assets that have been thrown out. This can total thousands and some cases hundreds-of-thousands in tax depreciation deductions for hotel owners.
Here are one of our client’s hotel depreciation results for their large country hotel:
How do I claim for my hotel depreciation?
You need to engage a qualified quantity surveyor who has experience in claiming depreciation for hotel owners. They will complete a thorough inspection of your hotel and produce a high quality tax depreciation schedule.
Unfortunately, hotel owners have missed out on claiming their available depreciation deductions by either not knowing about it, their accountant having a crack at it, or have gone with a cheaper tax depreciation provider who has missed out on claiming all of their entitlements.
Capital Claims Tax Depreciation are experts in the hotel field and have completed many commercial property depreciation schedules for hotel owners. Our expert team together has over 35 years-experience in working in the hotel depreciation industry.
“Well, what can I say? Capital Claims helped me no end and were absolutely fantastic with the service. I could not believe what I have not claimed since I have owned the hotel. I would highly recommend people to do this for their business. The cost and what you save! First year I saved $17,000 straight up by doing this. What a great service. Thank you once again.”
Luke Noble, Imperial Hotel, Wee Waa
What is a depreciation schedule for a hotel?
A hotel depreciation schedule is a comprehensive report that itemises details regarding the plant and equipment assets of a hotel (asset values, effective lives and annual depreciation claimable), as well as the structure of the hotel building (total build costs, effective life, depreciation claimable).
By using this comprehensive report, that has been prepared by a quantity surveyor, hotel owners and hotel lessees can claim depreciation as a tax deduction when they lodge their financials to the Australian Taxation Office each financial year. These tax deductions reduce taxable income and reduce the tax payable by the business. In short, a hotel depreciation schedule helps improve the cash flow position of a hotel each year.
How much is a hotel depreciation schedule for my hotel?
Every hotel is different. The size of a hotel varies. Some are one level, two levels or three levels. They may have out-door spaces such as beer gardens or accommodation or restaurants attached. It also depends on what assets are installed and how many as they need to be recorded. And if a fit-out has been completed.
Taking this all into consideration, a depreciation schedule for a hotel can cost from a few thousand dollars for a simpler hotel and up to $10,000 for a large establishment that includes accommodation, restaurants.
Your return on investment is huge with most schedules reporting hundreds of thousands of dollars in deductions in just the first few years.
How much can a hotel owner expect to claim in tax deductions
Available deductions depend on the size of the hotel and what type of fit-out there is – hotel depreciation deductions can vary significantly depending on these factors. For example, a small country hotel that has a basic fit-out could receive yearly deductions in the tens of thousands of dollars. A large CBD hotel with a top-end fit-out could receive yearly deductions in the hundreds of thousands in the first few financial years.
If you are a hotel owner and would like to speak to our expert team about your commercial property depreciation call Alex Konjarski our Senior Tax Depreciation Specialist on 1300 922 220. Or you can email Alex at alexk@capitalclaims.com.au. Alex will give you a free quote and discuss what you are entitled to and answer any questions you should have. Or you can visit here to receive a free online quote.
