Accountants

The division is clean in principle. The QS establishes what the building and its assets cost and how they depreciate: the Division 43 capital works entitlement, the Division 40 asset schedule, scrapping values when assets are removed, and reconstructed cost evidence when a client sells with incomplete records. The accountant applies those figures: the annual deduction claims, the s110-45 cost base adjustment on sale, the balancing adjustments, and the structure-level questions of who claims what.

In practice, the friction points are always the same. A schedule arrives and the Division 40/43 split is not carried correctly into the return. A client self-assesses construction costs and creates an amendment exposure. A property sells and nobody holds the capital works history the cost base adjustment depends on. A renovation is demolished without a scrapping schedule, and thousands in residual value deductions lapse unclaimed.

What this category covers

The guides below are written for practising accountants: how to read a Koste schedule line by line, which tax rulings govern depreciation claims, where the ATO is currently focusing audit activity on rental deductions, how the 2017 second-hand plant and equipment changes still shape today's claims, and when to order a CGT Cost Base Evidence Report rather than let a client's assessed gain absorb the missing records. Each guide is scoped to a specific client scenario so you can go straight to the one on your desk.

The QS/accountant boundary

Tax agents cannot estimate construction costs where records are missing (TR 97/25). A Chartered Quantity Surveyor is a qualified estimator; the accountant applies the QS figures in the return.

Division 40 / 43 split

Every schedule separates plant and equipment (Div 40) from capital works (Div 43) because they behave differently at every stage: rates, second-hand restrictions, cost base treatment, and balancing on sale.

Scrapping (residual value write-off)

When depreciable assets are demolished or removed, their undeducted value can generally be claimed immediately — but only if a schedule documented them before removal.

Cost base adjustment on sale

Claimed Div 43 deductions reduce the client’s CGT cost base under s110-45. The capital works history in the depreciation schedule is the source document for this adjustment.

Retrospective claims

Missed depreciation can generally be recovered by amendment within the client’s amendment period, and a schedule can be prepared years after purchase.

How do I read a tax depreciation schedule for my client?

A tax depreciation schedule shows the deductions your client may be able to claim each year for eligible plant, equipment and capital works. The key sections to review are the summ…

What Documents Are Needed for Depreciation Claims?

For depreciation claims, clients need a depreciation schedule, purchase contract, settlement statement, building plans (if available), and records of any renovations. Division 40 a…

When is a CGT Cost Base Evidence Report Required?

A CGT Cost Base Evidence Report is crucial when selling an asset to ensure accurate capital gains tax calculations. It is particularly important for complex ownership histories, si…

Essential Tax Rulings on Depreciation for Accountants

Accountants must understand **Division 40** for plant and equipment and **Division 43** for capital works. Key changes post-2017 impact claims on second-hand properties. These rule…

When to Recommend a Quantity Surveyor to Your Client

Recommend a quantity surveyor to your client when they need a tax depreciation schedule for investment properties, are involved in property development, require construction cost a…

Can I estimate construction costs for a client if the records are missing?

No — TR 97/25 excludes tax agents, accountants and valuers (in most cases) from estimating construction costs. A Chartered Quantity Surveyor is the accepted qualified estimator.

A client has owned the property for six years with no schedule. Is it too late?

No. A schedule can be prepared at any time, and missed deductions recovered by amending returns within the amendment period. The schedule also documents the capital works history needed at sale.

How do I treat the depreciation schedule when the client sells?

Two ways: the Div 43 claims history feeds the s110-45 cost base reduction, and the Div 40 assets need balancing adjustment consideration separate from the property CGT calculation.

When should I order a CGT Cost Base Evidence Report instead of a depreciation schedule?

When the client is selling (or has sold) and the question is substantiating the cost base — acquisition-era construction costs, improvement history, capital works claimed. The Evidence Report is built for the CGT file, not the annual deduction claim.

Do the 2017 changes mean second-hand residential properties are not worth a schedule?

No. Division 43 capital works — usually the larger component — are unaffected, and Div 40 restrictions only apply to previously used assets in residential property. Commercial property is untouched by the change.