Office fit-outs often contain a mix of depreciating assets and capital works.
Typical office fit-out items include:
- Workstations
- Loose furniture
- Built-in joinery
- Partitions
- Carpet tiles
- Vinyl or other floor finishes
- Blinds
- Lighting
- Electrical works
- Data cabling
- Security systems
- Air conditioning works
- Kitchen appliances
- Meeting room equipment
- Signage
- Reception counters
- Storage units
The important question is ownership.A landlord may own the base building. A tenant may pay for the fit-out. Sometimes a landlord contributes through a lease incentive. Sometimes both parties pay for different parts of the works.
A depreciation schedule helps separate:
- Tenant-owned plant and equipment
- Landlord-owned assets
- Leasehold improvements
- Division 40 assets
- Division 43 capital works
- Items that may be claimed over shorter or longer periods
- Assets that may be scrapped or abandoned later
Without a proper breakdown, a business owner or accountant may treat the entire fit-out as one broad cost. This can lead to missed deductions or incorrect treatment.Koste.ai can help business owners and accountants identify the key information required before a formal office fit-out depreciation report is prepared.
Frequently Asked Questions
Can a tenant claim depreciation on fit-out they paid for?
Yes. A tenant who pays for and owns the fit-out assets may be able to depreciate them over their effective life, depending on ownership and use.
What happens to fit-out deductions when a lease ends?
Assets that are abandoned or removed at the end of a lease may be eligible for a scrapping deduction if there is remaining written-down tax value.
Does a lease incentive affect the depreciation claim?
Yes. If a landlord contributes to the fit-out through a lease incentive, the ownership and cost attribution of assets needs to be reviewed carefully.
Do I need a quantity surveyor for a fit-out depreciation report?
A quantity surveyor can prepare a cost breakdown for depreciation purposes if the original builder invoices do not provide sufficient asset-level detail.
Is a fit-out depreciation claim different for a landlord versus a tenant?
Yes. Landlords claim deductions on assets they own, while tenants claim deductions on assets they funded and control. A depreciation schedule should clearly separate the two.
Written by Koste Team · Koste Chartered Quantity Surveyors · AIQS Member · RICS Member · TPB Registered · 1300 669 400 · info@koste.ai