Statistics compiled by the Australian Taxation Office (ATO) confirm that investors are missing out on claiming a couple of very significant depreciation deductions. I am talking about the capital works deduction and the plants and equipment deduction here.
Investors missing out on claiming important deductions
It is a pity that only 40% of the 2.5 million investors claimed the capital works deduction in 2011-12. For the same period, 67% claimed the plant and equipment deduction. Residential investors have made an average claim of $3,168 which is also a great deal below the anticipated standards.
Too often only a subset of depreciation is claimed
While taking care of their annual IT assessments, investors who rent out their properties keep an eye on the council rates, body corporate fees, borrowing expenses, and repairs and maintenance, among other things. They however are failing to take good care of the above mentioned depreciation deductions.
While missing out on ‘capital works’ deduction can still be understood- ATO compliance is mandatory- nothing explains missing out on the plant and equipment deduction.
Investors using self-judgment tend to under-claim
It is seen as a rule (with marked exceptions) that those investors who post their claims themselves or use their personal judgment to tackle the process end up under-claiming.
In the same vein, your SMSF is also self managed and while this fact allows you greater control over your money, you can also end up missing out on the claims. After all, you are using your own judgment and with due respect it may not match up to the opinion of an expert.
