Running a successful business requires some level of ingenuity, particularly when it comes to saving money. It is mainly the case today when you consider the amount of money companies spend to sustain operations. A tax depreciation report comes in handy by helping firms claim depreciation on investments or commercial property. Such claims can add up to thousands of dollars, money that a business could use to improve operations. Many companies allow accountants to prepare tax depreciation reports; however, they should avoid the mistake by giving the task to a qualified quantity surveyor. Here is why.
Ensures Maximum Entitlements
If you want to save money for your business by claiming deductions, you need to reduce the company's taxable income as much as possible. It means that a depreciation report must include maximum entitlements related to your property. While a tax accountant will do their best to calculate depreciation on every asset and property in your business, they may not know how to work out wear and tear on some assets. For instance, an accountant might struggle to calculate depreciation on unique assets, such as paintings and murals. Therefore, the assets are likely to be left out of a depreciation report, reducing your claims. On the other hand, a qualified quantity surveyor will ensure that every depreciable item on your property is included in the report, maximising depreciation deductions.
When filing business tax returns with the Australian Taxation Office, you must submit a depreciation report. It is critical to understand that under the ATO Ruling 97/25, the taxation office is only required to approve depreciation reports prepared and signed by a qualified quantity surveyor. Therefore, if you are comfortable with a tax accountant preparing your business's depreciation report, the ATO will not process it. Besides, you risk missing out on all claims since you might not prepare the report in time for filing.
While preparing a tax depreciation report is easy for a qualified quantity surveyor, it is crucial to begin the process early. It allows a surveyor enough time to work out accurate estimates even if they do not have all documents and receipts. Moreover, the ATO allows businesses to file tax depreciation estimates as long as they are close to the accurate figures. However, if you hire a tax accountant to prepare the report, the chances are high that the estimates might be off by a significant margin. It is because an accountant might miss out in several areas. Therefore, the ATO might penalise your business when you go back to correct the estimates after the deadline.