Setting up any new business brings with it a significant number of expenses, some of which can even be claimed as tax deductions.

There are of course the obvious ones like rent, lending costs, accounting and legal costs but have you considered depreciation?

Knowing what items can and cannot be depreciated, as well as when and how, could potentially save you a tidy sum. Money you have spent installing new assets, such as equipment and fittings, could make a real difference to your business' bottom line if your depreciation claim is handled correctly.

So, how does it work?

If you are starting out in new business premises as a tenant, the assets you add to the premises may be depreciated over time. Of course, if you are also the owner of the property then you can include the building structure and any already installed plant or equipment in your claim as well.

Items such as signage, lights and light fittings, as well as air-conditioning units, window dressings, security systems and fire-fighting equipment can all be depreciated if you have paid to have them installed. In fact, most new equipment and fittings that you install can be included. Basically if you have installed it and it will suffer wear and tear over the coming years then you should consider depreciating it.

Claiming your depreciation

The first thing you need to do if you wish to claim depreciation on your assets is to engage a reputable surveyor to prepare a tax depreciation report. This will list all your qualifying assets and detail how much of their value may be depreciated each year until the asset reaches the end of its life from a depreciation perspective.

Claiming depreciation can be done is two ways and your surveyor will usually provide you with both costings. Before selecting which method you wish to use, check with your accountant to find out which method will work best for your specific circumstances.

The benefit

There are significant taxation savings if you depreciate your assets and equipment. There will be a cost to have the depreciation report prepared, but this cost will very quickly be recouped as you save as a result of depreciation – it will only take one or two years. Of course, you will then continue to enjoy these savings for several more years more depending on the items.

And here's a bonus; as an owner/tenant you get to enjoy both lots of depreciation and will only need to get one schedule rather than separate schedules. It's a great way to save on setup costs and keep your money in your pocket rather than in that of the tax man!

More information

Stone Accountants & Advisors are taxation experts and can provide you with loads of information about depreciation, depreciation schedules and whether or not it is something your business would benefit from. Give us a call on (03) 9870 7247 or drop us an email at for more information.