Page 14 - PR Mag Nov18

THE TAX EFFECTS OF
Storm Damage Northern Business Consultants

07 3862 8777
Mango Hill Marketplace,
Halpine Drive, Mango Hill

Last month’s North Lakes Now cover warned readers of the If you conduct a project that includes both repairs and
damaging effects storms could have. This prompted us to think improvements to your property, you can only claim an income
we should write an article on how the taxation system treats tax deduction for the cost of your repairs if you can separate the
money spent on damages when businesses or rental properties cost of the repairs from the cost of the improvements.
are affected. If you hire a builder or other professional to carry out these
Tax law essentially breaks rectification work into two broad works for you, we recommend you ask for an itemised invoice to
categories: Repairs or Improvements. Repairs are generally fully help work out your claim.
tax deductible. Improvements generally aren’t. Also damages to The cost of both repairs and improvements generally includes
Plant and Equipment (like machines) and Fixtures and Fittings GST so if your Business is registered, it gets to claim the GST
(like carpets and desks) differ under tax law to damage to credit on the repair invoice(s).
buildings. Finally, if you’re going to claim the cost of storm damage on your
So, what’s a repair? Generally if something is damaged and insurance, then that’s a whole new set of tax rules.
you replace like with like, that’s considered a repair. If a storm It can sometimes become very tricky working out how
damages a tiled roof and its then fixed with the same or similar rectification costs should be classified so as always, before
tiles, that’s a repair and is fully tax deductible. But if its replaced undertaking any work, check with a qualified Accountant, Tax
it with a colour bond or tin roof, that’s an improvement and may Agent or Lawyer for the correct treatment before you start.
need to be depreciated. Good advice will save you a fortune in tax.

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