Too good to be true

Investment property owners often ask me “will I get greater deductions from another company whose fees are significantly higher”.

There are numerous Quantity Surveying (QS) companies out there claiming that they will give you more bang-for-your-buck so to speak. Most often this is their catch cry to lure you to accept their excessive fees, which can be up to twice that of other competitors.

Some of these companies work on the notion that depreciable values for plant and equipment (assets) can be inflated based on the purchase price and/or they use current day replacement costs for assets that could be of limited value based on their age, condition, etc. If I was to tell you that you could claim $2,000 as a tax deduction for the 20 year old Simpson oven in your investment property what would be your reaction? I’m guessing you would be thinking that this sounds too good to be true? Well, you know what they say…“when it sounds too good to be true, it normally is”. And, what do you think the ATO’s reaction will be if they discover that you are claiming a depreciation deduction up to 10 times what would be considered a reasonable depreciable value?  If you’re lucky you might slip under the ATO’s radar because the alternative is an invasive Tax Audit of your entire Tax Return, penalties and repayment of the amount(s) claimed PLUS interest!

Now, I know these companies are self-confessed experts in the field and they claim to have prepared thousands of Tax Depreciation Schedules. However, driving down the highway at 150km/hr every day and not getting a ticket does not make it legal. All it means is that you have not been caught yet!