Adding existing depreciation schedules, new builds and renovation projects for a property is relatively fast and painless. The better news, once added the schedules automatically allocate to future years to ensure nothing is missed year after year.
Step 1 - Select the Method
By default, we've selected the 'Diminishing Value' method which is the most common method for property investors to amplify depreciation claims in the first few years.
However, if you have previously been using the prime cost method, or just prefer this method, you can update to this method.
The method chosen will be applied to all plant & equipment depreciation, with just a few exceptions that we'll explain shortly.
Not sure which method to use? Don't worry, the method can be updated at anytime by you or your accountant ;)
Step 2 - Add Depreciation
From the property select the depreciation tab, and then select the 'Add' button.
Step 3 - Choose Plant & Equipment
Choose 'plant & equipment' from the switcher to add all depreciation items that are not capital works (ie. not the building & structural improvements).
Step 4 - Add Depreciation
There are a few 'rules' when it comes to depreciation so we break plant & equipment down into 3 categories:
Plant & Equipment - Useful Life
The ATO prescribes the useful life of all plant & equipment items, and updates the list annually. So we have incorporated these rates into TaxTank so we can calculate accurate claims in line with the ATO's expectations (keeps them happy..).
The first step is to select the item from the category dropdown, and then complete the remaining fields as follows;
Category - Select the item from the dropdown (ie. oven, carpet etc)
Amount - Enter the purchase price
Completion Date - Enter the purchase date, or the date installed and ready for use if not the purchase date.
Description - Usually the item name but whatever works for you
Closing Balance - For existing schedules, confirm the closing balance is correct. If not, untick the 'Is this correct?' box and adjust the amount so the schedule can be correctly calculated going forward.
Upload Receipt - If its a new purchase you can upload a receipt. Otherwise, a depreciation schedule can be added directly to the spare tank.
WATCH VIDEO
Plant & Equipment - Low Value Pool
Items costing between $301 and $1,000 will be allocated to a low value pool to to depreciate at 18.75% in the first year and 37.5% each year thereafter.
What's better, we will automatically move diminishing items when they fall below $1,000 to the pool as well to maximise depreciation claims year after year.
WATCH VIDEO
Plant & Equipment - Write Off
New items costing below $300 will automatically be written off in the year of purchase, which means the purchase price is treated like a normal expense (not claimed over multiple years).
If the prime cost method is being used, we will automatically write off diminishing items when they fall below $300 to maximise depreciation.
And finally, if an item is replaced or obsolete (for example you replaced a dishwasher or no longer needed one) you can select the 'write off' button next the replaced item to claim the balance of any remaining depreciation in the current financial year.