SMSFs still missing out on property tax break

Written by Katarina Taurian Friday, 18 March 2016

ATO figures suggest property investors are failing to claim their depreciation correctly, resulting in thousands of dollars in unclaimed tax entitlements.

Recent figures from the ATO indicate 2.8 million property investors claimed deductions relating to their rental property in the 2012/2013 income year.

Analysis of these figures by BMT Tax Depreciation suggests that property investors, which chief executive Bradley Beer is confident includes SMSF property investors, are missing out on significant tax deductions

“Of these investors, just over one million received an average capital works deduction of $2,113 while almost two million investors claimed an average deduction of $1,179 for depreciation of plant and equipment, making the total average depreciation claim made by property investors who claim both in the 2012-2013 income year $3,292,” BMT stated.

“When compared with statistics released by the ATO for the 2011-2012 income year, there was an increase of almost 100,000 in the total number of investors claiming deductions for their rental properties.

“Despite this, there was very little change in the average deductions claimed for capital works or plant and equipment assets.”

Speaking to SMSF Adviser, Mr Beer said although SMSF trustees are typically “a little more” sophisticated than an average property investor, they’re often not entirely across the depreciation benefits they can claim.

Further, he expressed concern about the change in the knowledge levels of SMSF investors over time.

“Since the borrowing rules over the last number of years have been relaxed around property for SMSFs, even though they’ve tightened them up again now, people were probably putting properties into SMSFs [who shouldn’t]” Mr Beer said.

“They’re probably less sophisticated than what they were in the past but possibly a little more sophisticated than the general investor into property,” he said.

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0 #5 Jimmy Neutron 2016-03-22 09:19
But that's not what you said George, you stated "why worry about a $493 refund". Which is what drew my comment.

Who knows what you might charge for SMSF accounts, but a refund of this level might account for a fair chunk of your fee.

Whether the overall number reported in this article might be low, due to a whole range of issues including pension phase and some accountants not claiming, it doesn't change your opening line of 'why bother...'
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+1 #4 George 2016-03-21 10:20
Quoting Jimmy Neutron:
Glad you're not my accountant George...
I think you missed the point Jimmy. A professional adviser will know what to claim and when. The grouped statistics doesn't show the funds where tax isn't an issue, so of course the claims will look low. They report one part of the puzzle not the whole landscape.
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0 #3 Jimmy Neutron 2016-03-21 08:39
Glad you're not my accountant George...
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0 #2 Bruce4Tax 2016-03-18 13:30
Perhaps SMSF property depreciation is being claimed properly
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0 #1 George 2016-03-18 10:57
Why worry when the tax rate is 15c. the refund due on a these figures of $493. And we can assume a lot of funds are in pension phase at 0% why is this even worth the point of publishing? Professional advisers will know what to do with their clients property claims.
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