We have just got a depreciation schedule done on 2 of our properties and today hubby went to the accountant to ammend the taxes for the last few years.
He said the schedule was unacceptable and would put us on the radar for the ato to audit us and spend an hour changing it.
He used to work for the ATO and says that the schedule is claiming way too much. Basically it would be acceptable if the unit was new but not as the units are older (16 and 30ish years)
For example they have valued a crumby old dryer at $396 and depreciated the lot and there is no way the dryer is worth that. To be honest it would be worth about $50 and has died since the schedule was done, so it was pretty well at the end of its life.
Hubby rang the company that did it and they said you revalue everything from as new cost and then depreciate that, so they are standing by their report.
The way of claiming also switches between low pool and under $300 and our accountant said it needs to be the same the whole way thru.
Hubby has spent an annoying afternoon trying to clear it up.
After hours on the phone to the ATO they are saying they agree with the accountant and the schedule isn't work the money we spent on let alone the $550 we spent on each schedule or the accountant fees.
We have asked for a written statement from the ATO, who are meant to be getting back to us tomorrow.
So who is right ? What kind of claims do you get on an old unit ?
If the schedule is so bad who would you recommend ?
I do a few schedules in western VIC for and use the services of Depreciator who is regular on this forum but Scott is on Holidays until Monday.
Whilst not my career speciality as the computer program does the number crunching I would say: you are right. The QS should value items at the today rate not the new rate unless new. Dryer was good example.
It is very easy to schedule new homes. Very hard to do old ones with extensions. I would get a second opinion.
To save costs, may I suggest you consider that Depreciator have a web link to do a quick one called the estimator. I use it as a guide at:
For $45 you get an expert estimate to what you should claim. If should be worth a look. You don’t pay until the end if you don’t have the data.
It assumes you know:
- age of house (when built)
- age of appliances
- floor covering
- any services like air con or heating
- other special stuff
I have enough confidence to use it as guide to purchase so I am pretty confident. Should tell you if the first one is wrong for little outlay.
Regards, Peter 14.7
Thanks for your reply Peter.
I may try contacting the company we used tomorrow and speak to some one else. My understanding was that their reputation is as good as the depreciators but maybe not.
If they can't help us I will do an online estimation.
I will definately use the depreciators for our new property.
They should be worried that you are saying it appears wrong. Most clients want to beef it up.
As a QS I pay a small amount each schedule to insure my professinal risk so I would want to know. May be they puched in built 2006 instead of 1986?
If you contact Scott with PM via SS he will most probably give you (as he does most SS forumites) a good deal. Love a visit to Tassie to do yours for ya. Buyt the good deal would cut my fee.
We do want to claim as much as possible ( we actually thought the report was awesome until seeing the accountant today)but in no way want to get audited or in trouble with the ATO which is what our accoutant indicates may happen if we claimed it all.
It would be great to meet you in Tassie but to be honest it is so cold at the moment I don't even want to be here.
I will call again tomorrow. My husband didn't actually speak to the person who did the report but someone else.
Its hard to say who is wrong in your situation. I think your accountant may be a little off on his comments about the depreciation, but without looking at the report and the house it is difficult to say.
I have looked at depreciation reports in the past that I thought were wrong but I always talk it over with the QS if I feel there have been errors. I hope you have a good QS as there are some really shoddy ones out there, and you have made them aware of what you consider to be some danger areas. If they are a good firm like Depreciator, Napier and Blakely, Washington Brown, BMT and Associates etc, you have discussed the danger areas and they still stand by their report, I'd have to ask why your accountant was unwilling to follow their report.
It is one of the above mentioned companies so I will call tomorrow and try to talk to the person who did the report and have it double checked.
After discussing it with dh it is very generous, we would love it to be correct. If so do we go back to our accountant again or is it time to change our accountant ?
At $350 an hour we don't want to be wasting his time if he doesn't see our point of view.
Again the QS may be right but if a date is entered wrong that is critical to the schedule.
Without seeing it, and being an older house that would be my question.
Hope this helps.
Well, wasting time benefits no one. If it was one of the firms I mentioned, I would have a very hard time believing after a second review that a mistake was made by them. No one stays in that type of business issuing shoddy reports. If you tell them about how old and beat up the dryer was, how it failed after the schedule was written and they tell you that under tax law as they know it you can go ahead and make the claim and they give you that guarantee in writing, I'd tell your accountant to make the claim since they will be liable to you for costs if they are incorrect.
Your statement you made in the first post "our accountant said it needs to be the same the whole way thru" is not correct. You can put things in the low value pool when the opening written down value is below $1,000 and it was depreciated under the diminishing value method. I would also remind your accountant of this section in Tax Ruling 97/25
"27. Unless they are otherwise qualified, valuers, real estate agents, accountants and solicitors generally have neither the relevant qualifications nor experience to make such an estimate.
28. Appropriately qualified people might include:
·a quantity surveyor, who has expertise in the relevant type of construction;
There's no way I as an accountant would go around changing report values on the purchase of a property. That's a QS's job.
I have lots to say on this topic but wont! Some things are best left off forums.
I will say this however:
MRY - those paragraphs relate to the Sect 43 allowance only - not plant and equipment. No profession has been identified to appropriately assess the plant items.
CAZ - if its my firm - please contact me directly and i will review privately.
Must admit though...one of the few times i have heard an investor arguing the case down!
I re read your last post and noticed I missed your invite. Let me tell you, here in the Ranges we had a snow storm Tuesday. Lasted all day and snow stayed until the next. I am told even Sydney is cold. Or it's version (less than 15 degrees) anyway
Please don't feel our posts are questioning you. It is prudent to question any report produced and especially for tax. The rules are YOU as the tax payer, sign off on your return. Not your accountant and not some distant building assessor.
Sure, legally if they stuff up and you get fined you can sue them but at how much cost, worry, and time? And it there anything to sue other a $2 company?
You are wise to check as we all should. Mistakes happen everyday, in every field, and white collar professionals are under just as much pressure to get it done quick as are mechanics, teachers, etc..
Sounds to me like there might be a misunderstanding. I can't imagine any of those companies doing this.
Hubby rang the company that did it and they said you revalue everything from as new cost and then depreciate that,Click to expand...