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Sunshine Coast Tax Depreciation
ACCORD Quantity Surveyors

Tax Depreciation Small Business EOFY Assets Sunshine Coast

For the Sunshine Coast, Tax Depreciation is the formula used to account for fixed assets and property that are reduced in value over time. For small business owners in the Sunshine Coast area and across Australia, effective use of the depreciation formula for end of the year or EOFY assessments may save hundreds, if not thousands of dollars on their taxes. Please see our Quantity Surveyor Frequent Questions.

However, the overall concept of tax depreciation can be difficult to understand and employ. This is because depreciation occurs at a rate which is separate from cash flow. So, while depreciation may match expenses over a given year, it is a link that is not always consistent. That is why so many small business owners hesitate to include depreciation of fixed assets in their tax statements.

How Tax Depreciation Works

The basic concept of depreciation is easy enough to understand. When you purchase an asset such as vehicle, device, or other physical property, it loses its inherent value over time. In other words, that car you purchased ten years ago is most likely not going to fetch the same price today. But there are different formulas used to gauge how much depreciation has occurred.
There are 3 main types of property tax deductions.

Complete a claim on Residential rental Property - Houses.
Use this link to complete a claim on Units and Apartments.
Use this link to complete a claim on Shops, Sheds and Offices.

Straight-Line Tax Depreciation

This is the simplest method. You subtract the salvage value estimate from the asset when it reaches the end of its useful life. Then, you divide that value by the useful life of the asset. For example, if you purchase an item for $260,000, you calculate how many years you will use that item. If you anticipate that its scrap value is $20,000 at that time, then the value would be $240,000 that drops by equal amounts until it reaches the end of its useful life.

Production Tax Depreciation

This is the number of items produced and the life of the asset in units multiplied by the cost of the asset which removes its scrap value.
For example, If the machine you purchase is anticipated to produce a pre-set number of units over its lifetime, then you will calculate its depreciation based on the units it produces each year.

Double Declining Tax Depreciation

This is used when the asset is anticipated to be more valuable early on, then decline rapidly as it ages. This is a more complex method of tax depreciation, but it simply means that once you calculate the length of its useful life, you then double the rate of depreciation as it ages.

Sum of Year’s Depreciation

Similar to double declining, the calculation is made on the years the item has remaining regardless of its use. While any of the four methods can be used, most small business owners will only record the depreciation itself as calculated by the accountants they use. in this manner, the figures will match the tax returns that are sent in and make it simpler to verify the accuracy of the statements that were made.

We have some tax depreciation explainer videos as well.

Effective use of tax depreciation by small business owners in the Sunshine Coast can help them save a considerable amount of money. By employing the proper depreciation formula for EOFY assessments, they can pay the proper amount of taxes on the fixed assets they own.

Contact Bobby. Bobby is a qualified tax professional with local knowledge.

For more information you may check this resource. https://en.wikipedia.org/wiki/Depreciation