COVID-19 and tax depreciation reports – are physical inspections necessary?

COVID-19 and tax depreciation reports – are physical inspections necessary?Property investors and businesses will often engage a specialist quantity surveyor to prepare a tax report on capital works and depreciation deductions available to them under the tax law in respect of their income-producing properties – for example, a rental property, office building or factory.

A thorough physical inspection of the property by a quantity surveyor plays a vital role in this process in order to, amongst other things:

  • identify all possible deductions available under the tax law;
  • provide accurate valuations of qualifying plant and building works;
  • provide supporting documentation of a taxpayer’s claims for depreciation and capital works deductions, which is prudent in the event of an ATO audit.

We have become aware that some quantity surveyors are promoting tax depreciation reports that do not include a physical inspection of the property due to COVID-19 precautions.

Usually, the reports are provided, with an offer to do an inspection at a later time when it is possible to do so.

However, in some cases, no offer of a site inspection is made at all.

Where a physical inspection of premises is not performed, this increases the risk of deductions being missed or errors being made. This could result in costly adjustments if a taxpayer has to subsequently amend their tax return or is audited.

Editor: Please contact our office if you require more information about using quantity surveyor tax depreciation reports.

If you’re unsure about how to make sure you get the right tax depreciation report for your property, please contact us for a FREE Covid-19 Tax Session.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.