MICHAEL STOUT CASE STUDY: OUTSTANDING DEPRECIABLE TAX SAVINGS ACHIEVED

Over the past 12 months Michael has completed a number of farm depreciation reports for an accounting firm in Narrabri.  In August they referred Michael to Tim, a client of the firm who had purchased a property north of Wee Waa in 2017.

The first step was to have Tim complete the Robinson Sewell Depreciation (RSD) scope of works check list.  Michael could then compare the assets on Tim’s farm with similar farms in the RSD data-set to provide an estimate.  The estimate range was $400,000 – $550,000 in total depreciation.  Based on this, Tim could see the tax benefits in having a depreciation report completed.

Michael carried out the inspection on the property and a report was compiled by our ATO tax compliant Quantity Surveyor.  The total depreciation claimable figure was $507,368.  As the entity that owned the property was a small business and their accountant used simplified depreciation rules, Tim was eligible to claim $158,541 in the 16/17 financial year. This resulted in the accounting firm having his 16/17 tax return amended and a refund from the ATO was then received.  A great boost to cash flow in the current dry times.

Farm Purchase Date Depreciation

estimate

Actual depreciation amount Eligible amount to claim in first year
2017 $400,000 – $500,000 $507,368 $158, 541

 

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