The end of the financial year is a timely opportunity for commercial property owners to review their assets and ensure they’re maximising available tax deductions. One of the most effective, and often underutilised strategies is leveraging a professionally prepared tax depreciation schedule.
What Is Tax Depreciation?
Tax depreciation allows property owners to claim deductions for the decline in value of their building and its assets over time. For commercial properties, this typically includes:
- Capital Works: Structural components such as walls, roofs, and concrete foundations.
- Plant & Equipment: Items like air conditioning systems, lighting, office furniture, and technology.
These deductions can significantly reduce taxable income, improve cash flow, and enhance the overall return on investment.
Why It Matters
Many commercial property owners miss out on substantial deductions simply because they haven’t had a depreciation schedule prepared. A professionally prepared report identifies all eligible assets and applies the correct depreciation rates, ensuring compliance with ATO guidelines and maximising claims.
Even older buildings or previously owned properties can benefit. Depreciation can be claimed retrospectively, and missed deductions may be amended for up to two years.
EOFY Timing
With the end of the financial year upon us, now is the ideal time to:
- Review your property portfolio
- Identify eligible assets
- Engage a qualified quantity surveyor to prepare or update your depreciation schedule
Understanding Division 43; The 4% Depreciation Rate
While most commercial and residential buildings qualify for a 2.5% annual capital works deduction, certain property types are eligible for an accelerated 4% rate under Division 43:
Short-Term Traveller Accommodation: Hotels, motels, guesthouses, and similar properties used exclusively for short-stay guests.
Manufacturing Facilities: Buildings used primarily for manufacturing operations.
Build-to-Rent (BTR): Recent legislative updates now allow BTR developments to claim 4% on the building fabric — doubling the previous rate and improving long-term cash flow.
This higher rate applies for 25 years, offering a meaningful boost to annual deductions for qualifying properties.
Instant Asset Write-Off
The instant asset write-off has undergone significant changes over the past 5 years, with particularly dramatic shifts during the COVID-19 stimulus period. Designed to encourage business investment, the scheme has seen thresholds rise from modest levels to uncapped full expensing, before returning to more conservative limits in recent budgets.
If your business incurred capital expenses during this time, it may not be too late to claim deductions, especially if assets were installed and used within eligible timeframes. Understanding the historical changes can help you identify missed opportunities and ensure you're making the most of available tax benefits.
| FY | THRESHOLD | ELIGIBILITY CRITERIA | NOTES |
| 24-25 | $20,000 | Small businesses with turnover < $10M | Applies to assets first used or installed between 1 July 2023 and 30 June 2025 |
| 23-24 | $20,000 | Small businesses with turnover < $10M | Same threshold and eligibility as 2024–25 |
| 22-23 | Temporary full expensing | All businesses with turnover < $5B | No threshold — full cost of eligible assets could be deducted |
| 21-22 | Temporary full expensing | All businesses with turnover < $5B | Continued from previous year |
| 20-21 | $150,000 | Businesses with turnover < $500M | Applies to assets first used between 12 Mar 2020 and 30 June 2021 (if purchased by 31 Dec 2020) |
Is Your Property Eligible?
Eligibility for depreciation depends on several factors:
Ownership: You must own the property or hold a leasehold interest.
Income Use: The property must be used to generate income, through rent or business operations.
Construction Date: Capital works deductions generally apply to buildings constructed or improved after 16 September 1987.
Asset Types: Properties with fit-outs, machinery, or equipment often have more claimable items.
Even older buildings may qualify if renovations or upgrades have been made.
EOFY Depreciation Checklist
- Have you ordered a depreciation schedule for your commercial property?
- Are you claiming all eligible capital works and plant & equipment?
- Have you reviewed recent tax changes that may affect your claims?
- Are you working with a qualified professional to ensure accuracy?
Get Expert Help
Tax depreciation is a powerful tool, but only when used correctly. At Acumentis our team of qualified valuers and Quantity Surveyor partners can help you unlock hidden value in your property and ensure you’re claiming everything you’re entitled to.
Contact us today to arrange a depreciation assessment and make the most of your EOFY strategy.
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