Kelvin Grove 07 3369 7145

Blog

Changes to Annualised Wages

Written by Sarah Camm

Important changes to annualised wage arrangements from March 1, 2020.

In February 2020 the Fair Work Commission made determinations that may affect salary arrangements in a wide range of businesses. Employers should carefully consider the changes and ensure that they are complying with their requirements, even where an employment agreement is in place.

What is an annualised salary?

Some employers have arrangements in place with their full-time employees, where their annual salary is calculated to compensate them for all of their entitlements and they do not receive, for instance, overtime, penalty rates or leave loading. The same arrangements cannot be made for part-time or casual workers, who are paid per hour. These arrangements should be agreed in advance, by way of an employment contract, and the annual wage must be high enough to cover the award entitlements.

What could go wrong?

When comparing their annualised wage arrangements with the entitlements they would otherwise have received, some employees have found that if they were simply paid their award wage and overtime payments, they would have been substantially better off. This means that they are being underpaid, resulting in employers having to make substantial back-payments to ensure that the employees received their entitlements.  

What are the changes?

From the first pay cycle after 1 March 2020, employers will be required to: –

  • set out in writing the entitlements that the annualised salary purports to include
  • nominate an ‘outer limit’, or maximum number of penalty or overtime hours the employee can work in a pay period without extra payment;
  • record an employee’s hours, including starting, finishing and break times;
  • have their employees sign their record of hours each pay cycle to confirm that it is accurate; and
  • monitor the arrangements, and conduct an annual reconciliation to ensure employees are being properly compensated for the hours worked.

While the changes do not affect the employer’s obligations or employee’s rights regarding minimum wages, they may lead to realisations of longstanding underpayments. Just Us Lawyers can help you review your employment contracts to ensure that they comply with the Fair Work Act, or can assist you to lodge a claim for unpaid wages.

Contact our experienced employment law team on 07 3369 7145 or via email to reception@justuslaw.com to make an appointment.

(Photo by Ross Findon, Unsplash)

The spread of COVID-19: What does it mean for employees and employers?

Photo by 4330009 Canva

In the wake of the Italian Prime Minister recently extending lockdown to its entire country in an effort to contain the spread of coronavirus (COVID-19), many Australians may be concerned about their employment and leave entitlements, should Australia find itself in a similar position.

Whilst there has only been 80 confirmed cases of COVID-19 (including 3 deaths) in Australia,[1] the World Health Organisation has recommended, for those persons who are in or having recently visited areas where COVID-19 is spreading, that you self-isolate by staying at home if you begin to feel unwell (even with mild symptoms such as headache, low grade fever and slightly running nose). So what does this mean in terms of your leave entitlements?

The National Employment Standards provide the minimum conditions of employment, including leave entitlements for all employees covered by national workplace laws. For every year of service, full time and part time employees are entitled to a minimum of at least 10 days of paid personal (sick)/carers’ leave, 2 days of unpaid carers’ leave (if needed) and 2 days of paid compassionate leave (if needed). It is important to note that whilst registered agreements, awards and contracts can set out different entitlements to paid sick and carer’s leave, these entitlements cannot be less than the minimum, as mentioned above. Casual employees are also entitled to 2 days of unpaid carer’s leave per occasion, and full and part-time employees can take unpaid carer’s leave if they have no paid sick or carer’s leave left.

Key takeaways for employees:-

  1. If you intend to take paid personal leave, then your employer can ask you to provide evidence to show that you took the leave because you were unable to work because of an illness or injury or needed to provide care of support to an immediate family or household member (because of an illness, injury, or unexpected emergency affecting the member). Evidence may include a medical certificate from a doctor, or a statutory declaration.
  2. If you are required to self-quarantine but have used up all your paid personal leave, then you can ask your employer to allow you to take annual leave to cover your absence from the workplace.
  3. The entitlement to long service leave is based on a qualifying period of continuous service. Employees are entitled to take 8.6667 weeks of paid long service leave after a period of 10 years’ continuous service. If your absence from the workplace may be lengthy, you can ask your employer to agree to the taking of long service leave if you have the required period of service.
  4. If you have used up all of your leave entitlements, but you are forced to self-quarantine (for example, by an authority), then you can ask your employer to continue to pay you, however, there is currently no obligation on the employer to do so.

Key takeaways for employers:-

  1. If an employer has a reasonable concern that an employee is sick (for example, that employee has recently travelled to or returned from a country or region that is at high or moderate risk for COVID-19 and are displaying symptoms of the virus), then they can:-
    • direct that employee to obtain a medical clearance before returning to work; or
    • direct that employee not to work during the risk period.

Where an employee is unable to provide a medical clearance, then that employee is considered unfit for work. In this situation, an employer can reasonably direct that employee to take sick leave. If the employee has exhausted their sick leave, then the employee should be entitled to unpaid personal leave. 

  1. If an employee requests to stay home from work as a precaution against being exposed to COVID-19, then these requests are subject to the workplace’s normal leave application processes.
  2. If an employee has used up all their leave entitlements, then you should consider whether to pay the employee their annual leave entitlements in advance (i.e before they have accrued any entitlement to the leave). Most modern awards provide that an employee can take a period of annual leave in advance if there is a signed written agreement in place between the employee and employer regarding the taking of annual leave in advance, specifying:-
    • the amount of leave to be taken; and
    • the date on which the leave will commence.
  3. The Australian Government Department of Health advises that employees who have returned from a country or region that is at high/moderate risk for COVID-19 cannot attend work if they work in a setting with vulnerable people. The Department of Health have advised that from previous experience with other coronaviruses, categories of people at most risk of serious infection include:-
    • people with compromised immune systems (e.g. cancer)
    • elderly people
    • Aboriginal and Torres Strait Islander people
    • people with diagnosed chronic medical conditions
    • very young children and babies
    • people in group residential settings
    • people in detention facilities
  4. Employers should provide information and brief all employees on relevant information and procedures to prevent the spread of coronavirus. Such information can be obtained from the Department of Health website.
  5. If an employer suspects that an employee has returned from a country or region that is at high or moderate risk for COVID-19 or they think they have been in close contact with a confirmed case of COVID -19, then they should inform that employee to remain isolated in their home.
  6. An employer can only direct an employee to take annual leave in some situations (for example, where an employee has accumulated excess annual leave or during a shutdown period). The rules about when and if an employer can direct an employee to take annual leave is set out in awards, registered agreements and employment contracts.
  7. Section 524 of the Fair Work Act 2009 (Cth) provides that an employer may stand down an employee, without pay, during a period where the employee cannot be usefully employed because of, for example, a stoppage of work for any cause for which the employer cannot reasonably be held responsible. The most common situation is severe and inclement weather.
  8. Other alternatives may include a work from home arrangement for at-risk employees.

Conclusion

Employers have certain obligations under work health and safety legislation to safeguard the health of all employees. In a situation where an employee has:-

  1. recently returned from a high or moderate risk area for COVID-19;
  2. is not displaying symptoms of the virus, and
  3. is able to produce a medical clearance,

but the employer seeks to take a cautious approach, the employer can direct the employee not to return to work for a certain period of time (the Australian Government Department of Health recommends 14 days from the date of leaving the high/moderate risk country/region). Where an employer directs an employee not to return to work for a specified period of time, an employer is unable to force the employee to take annual leave and the employee would be entitled to be paid ordinarily, whilst subject to the direction.

Employers should continue to take care by conveying to any employee who is directed not to attend work, that:-

  1. such approach is a precautionary one, and
  2. that the direction has not been given for any discriminatory reason.

Should you require any assistance with a workplace health and safety or employment issue, please don’t hesitate to contact Just Us Lawyers on 07 3369 7145 or via email to reception@justuslaw.com for further advice.

Written by Natalie Smyth


[1] Data obtained from the Australian Government Department of Health as at 11.00 hrs on 9 March 2020.


Casual Employment – means what it says on the box

Casual (adj): not regular or permanent. See also, chance, random, occasional, offhand, spontaneous.

Australian employment law contemplates three categories of employment status: full-time, part-time and casual, and to determine which category you fall in, it is usually as straightforward as checking your employment contract – or at least it should be.

While determining whether or not you are a full-time employee is usually straight-forward, the difference between part-time employment and casual employment is not so clear cut. The court will often look further than just the employment agreement to consider how the actual employment should be categorised.

For example, when I worked in retail I was hired as a Christmas casual. My employment had no end date, and my employer would change my shifts from week to week depending on the needs of the store, sometimes calling me in for additional shifts or letting me leave early if it was quiet.

After Christmas, I was kept on (yay!), still on a casual basis, and for a year or so I worked as many shifts as I could fit between study and sport. Over time, the days and times I worked became more regular, until I was working the exact same three shifts each week. It was around this time that I signed a new employment contract and was classified as a part-time worker. While my hourly rate was cut down a little, I was now guaranteed a minimum number of hours per week (but could still work more if necessary) and was entitled to paid sick leave and annual leave (including leave loading).

The above worked perfectly for me – I lived at home while I was a casual, but shortly after being made part-time I had moved out and started renting. I’m not sure that I would have been confident doing this without the security of part-time work, knowing that I had guaranteed income, even if I couldn’t work a shift and a minimum notice period in the end.

Importantly, even if I hadn’t signed that new employment contract once my hours became regular, I may have been properly classified as a part-time employee. The Full Federal Court has said that determining whether an employee is a casual employee ‘depends upon an objective characterisation of the nature of the particular employment as a matter of fact and law having regard to all of the circumstances’.[1] Such circumstances include the regularity of hours, and the anticipation of ongoing employment. The result in Skene was that, on termination of the Plaintiff’s employment the court found that they were entitled to be paid out their accrued leave entitlements.

Employers should therefore be careful to consider the actual needs of their business when deciding whether to classify an employee as casual. If the employer is satisfied that the employee will truly be employed on a casual basis, the hourly rate paid to the employee should compensate them for their lack of certainty and leave entitlements (and their contract should reflect this).

Casual employment can be beneficial to both an employee and an employer, however if you feel that the circumstances your employment fits better into the part-time category but being categorised as casual is enabling your employer to avoid giving you certain entitlements, please get in touch with our experienced employment solicitors by calling 07 3369 7145 or emailing reception@justuslaw.com.


[1] Workpac Pty Ltd v Skene [2018] FCAFC 131 (16 August 2018) at [159].

Written by Sarah Camm

(Image by “Oh Tilly”)


Things you need to know about the new GST Withholding Laws

BY NATALIE SMYTH

 

The Treasury Laws Amendment (2018 Measures No. 1) Bill 2018 received royal assent on 29 March 2018. The bill amends various tax legislation and requires some purchasers of real property to collect a seller’s GST liability at settlement and remit it directly to the ATO.

The bill was introduced following the 2015 senate enquiry on ‘Insolvency in the Australia construction industry” in an effort to reduce illegal phoenix activity by property developers. “Illegal phoenix activity is when a new company is created to continue the business of a company that has been deliberately liquidated to avoid paying its debts, including taxes, creditors and employee entitlements.”[1]

When did the new GST withholding obligations take effect?

The changes brought about by this new GST withholding legislation primarily affects Contracts entered into from and after 1 July 2018. The GST withholding requirements do not apply to Contracts entered into prior to 1 July 2018 provided that the consideration for the supply (other than a deposit) is first provided before 1 July 2020. Off the plan contracts entered into prior to 1 July 2018 could be affected if construction/plan registration is likely to be completed after the 1 July 2020 deadline.

What types of transactions are affected?

A Purchaser will have a GST withholding obligation if:-

  1. The supply is by way of sale or long-term lease; and
  2. The supply is of New Residential Premises or Potential Residential Land.

The withholding obligation will not apply, however, if the purchaser is registered for GST and acquires the property for a creditable purpose.

What is a Creditable Purpose?

“You acquire or import a thing for a creditable purpose if you acquire or import it in carrying on your enterprise (including acquiring or importing it in the course of the commencement or termination of your enterprise)” [2] If the property is acquired for private or domestic purposes, then it will not be acquired for a creditable purpose.[3]

What types of real property will be classified as New Residential Premises and Potential Residential Land?

Residential Premises will be New Residential Premises if they:

  1. have not been sold previously as a residential premises and have not been previously the subject of a long-term lease; or
  2. have been created through substantial renovations of a building – i.e whereby all (or substantially all) of a building is removed or replaced; or
  3. if they have been built to replace demolished premises on the same land.

Potential Residential Land means “land that it is permissible to use for residential purposes, but that does not contain any buildings that are residential premises.”[4] The withholding obligations only apply to Potential Residential Land if the land is created by a property subdivision plan and the land is zoned for residential use under the local government planning schemes. If the planning schemes permit a number of uses for the land, and one of those uses is residential, then the land will be classified as Potential Residential Land.[5] Potential Residential Land does not include land that contains any buildings for a commercial purpose.

When must the GST withholding amount be paid?

It must be paid to the ATO on or before the day that the consideration for the taxable supply is first provide.[6] Generally, the consideration is first provided on the Settlement Date.

How much is the withholding amount?

The withholding amount is generally 1/11th of the Contract Price, however, if the margin scheme applies, then the withholding amount will be 7% of the Contract Price. The Contract Price is the GST inclusive price stated on the Contract and does not take into account any normal adjustments to the Contract Price (for example, for rates or water).

If the parties had negotiated a reduction in the Contract Price, for example, in exchange for the satisfaction of a building and pest condition, then the Contract Price, for the purposes of calculating the GST withholding amount, would not be discounted by the agreed reduction.

Sellers Notification and Purchaser Notification Obligations  

Seller’s Notice

All sellers of residential property must issue a notice to a purchaser advising the purchaser whether they must make a GST withholding payment. This notice is not required, however, for supplies of New Residential Land or Potential Residential Land if the purchaser is registered for GST and is acquiring the property for a creditable purpose.

Sellers will need to conduct an A.B.N. search of the purchaser to confirm whether or not the purchaser is registered for GST, however, a seller can rely on a purchaser’s statement in the Contract as to whether the purchaser is acquiring the property for a creditable purpose.

If the purchaser is required to withhold the GST amount and pay it directly to the ATO, then the seller’s notice must state:

  1. the seller’s name and ABN;
  2. the dollar amount to be paid by the purchaser;
  3. when the amount must be paid; and
  4. the GST-inclusive market value of any non-monetary consideration.

The notice must be provided by the seller prior to the seller making the taxable supply. Even if the seller fails to notify the purchaser, the purchaser will still have a GST withholding obligation and must withhold the GST amount and remit it to the ATO on or before settlement.

Purchaser Notice

Purchasers also have an obligation to notify the Commissioner of Taxation of the GST amount payable on or before the due date for payment, and this is done via approved forms that are accessible via the ATO website.

What are the main implications for property developers and purchasers?

  • Property Developers will need to consider the cash flow implications resulting from the new GST withholding laws. Previously, developers enjoyed the benefit of retaining the GST component from settlement as cash, as the GST liability was not required to be remitted to the ATO until lodgement of their next BAS.
  • If a purchaser fails to comply with their GST withholding obligation on reliance of a seller’s incorrect notice and the ATO later deems that the supply was a taxable supply and that the purchaser should have withheld the GST and paid it to the ATO at the time of settlement, the purchaser could still be liable to pay the seller’s GST liability. It is therefore important for a purchaser to undertake reasonable enquiries as to whether the withholding obligations apply to the transaction and must not blindly rely on a seller’s notice in circumstances where it is evident that there is a GST withholding obligation.

If you are a property developer requiring assistance with contract drafting to ensure that your sale contracts cover the new GST withholding law notification requirements, then please don’t hesitate to contact our commercial solicitor Natalie via reception@justuslaw.com.

Alternatively, if you are a purchaser or seller of residential or commercial property in Queensland and you require advice with respect to the application of the new GST withholding laws, please don’t hesitate to contact our Residential or Commercial conveyancing departments via email on reception@justuslaw.com.

[1] https://www.ato.gov.au/General/The-fight-against-tax-crime/Our-focus/Illegal-phoenix-activity/

[2] Paragraph 26 of the GSTR 2006/4 Goods and Services Tax Ruling Goods and services tax: determining the extent of creditable purpose for claiming input tax credits and for making adjustments for changes in extent of creditable purpose

[3] Ibid, paragraph 27.

[4] Section 195-1 A New Tax System (Goods and Services Tax) Act 1999 (Cth).

[5] Paragraph 24 , LCR 2018/4  Purchaser’s obligations to pay an amount for GST on taxable supplies of certain real property.

[6] Subsection 14–250(4) Taxation Administration Act 1953 (Cth).


Cyber scams and Conveyancing

By Remy Forster

Recent news of scammers hacking into the software system of PEXA to divert funds from a MasterChef star have made gripping headlines, see Dani Venn: MasterChef star hacked out of $250,000.00. Cyber scams are not a new development – after all, it would be difficult to find a member of Generation Y who hasn’t heard of Nigerian princes. What has emerged over the past few years is a worrying trend of cyber scams targeting the legal arena, and specifically targeting conveyancing transactions. So far 2018 has included numerous incidents of cyber scams affecting conveyancing transactions, including Buyers transferring deposits to incorrect accounts and sale proceeds being deposited into incorrect accounts.

It is an obvious trend that cyber scams which affect law firms and their clients would most often be associated with conveyancing transactions. Conveyancing transactions are easy targets mostly due to:

  1. They comprise the most common legal transactions,
  2. They involve large sums of funds being transferred to multiple parties,
  3. A majority of the communication in the transactions are via email, with little telephone communication or face-to-face contact, and
  4. Online programs for the transactions being relatively new and still in the process of being established.

Fraudsters are now taking advantage of these risks to try to defraud clients in conveyancing transactions through a variety of methods.

The first method used by hackers is to intercept deposit payments made by Buyers to real estate agents. Hackers attempt this by accessing a real estate agent’s emails, waiting until the agent has sent their account details to a potential Buyer, and then sending a “follow up” email to the Buyer advising the original account details were incorrect and supplying alternate account details. The Buyer then transfers the deposit funds to the alternate account, not being aware that they have sent their deposit funds to the fraudster instead of the real estate agent. Cases of this fraud have emerged steadily over the past twelve months [1] and will no doubt continue to rise.

A second method is to intercept settlement payments made by Buyers to their legal representatives. Hackers use the same method described above, but instead access the legal representative’s emails and contact clients following the legal representative requesting their client transfer them funds for their property settlement. Incidents of clients losing funds to these instances of fraud have also increased over the past 12 months [2].

Finally, the third method is to intercept the disbursement of funds from a property settlement. This method is more sophisticated, and generally requires the property settlement to be settled using an online system such as PEXA. Hackers access the legal representative’s emails, use their emails to set up a new user on the representative’s PEXA system, change the entered account details for a PEXA transaction from the Sellers’ account details to the hacker’s account details, and hope that the legal representative doesn’t notice the change in account details prior to the transaction settling [3]. Instances of this type of fraud are becoming more prominent as use of the PEXA system increases.

All three methods rely on some form of access to the emails of the real estate agent or the legal representative, and that the parties involved in the conveyancing transaction won’t verify the information they have received through a secondary method. Law firms do have a responsibility to alleviate as much of the risks with conveyancing transactions as possible by implementing the following: [4]

  1. Requiring staff to delete emails from any suspicious email addresses without opening,
  2. Requiring staff to use secure passwords, and to change these passwords regularly,
  3. Ensuring accounts for any inactive staff are deleted, and monitoring established accounts to ensure no unauthorized accounts have been set up,
  4. Requesting that any potential clients contact the office via telephone before being engaged for legal services,
  5. Warning clients of potential fraud risks, and requesting that clients telephone their office if they receive a request by email to transfer funds,
  6. Where possible, encouraging clients to hand over funds as cheques in place of EFTs,
  7. Requesting clients provide their account details on physical documents instead of emailing account details, and
  8. For PEXA settlements, requiring staff to not enter in client account details in advance of the settlement and to triple check the entered account details match their client’s details before signing off on the property settlement.

Unfortunately, as outlined in the above items, there is also a partial responsibility on clients in conveyancing transactions to remain vigilant throughout their transaction for potential fraud. This by no means implies that clients are entirely to blame if they are the victim of a fraudulent action, and in some cases (such as PEXA fraud), clients have limited or no actions they can complete to prevent these actions. However, for instances of fraud to decrease, all parties involved in conveyancing transactions should complete the transaction with no presumptions and with secondary verification of crucial information.

PEXA settlements are not mandatory in Queensland, and if you are concerned about your transaction proceeding via PEXA we recommend you contact your legal representative no later than 10 business days prior to settlement to request that your settlement proceed via the traditional paper settlement method. Just Us Lawyers are registered for PEXA settlements, but still conduct a majority of their conveyancing transactions using the traditional paper settlement method. For more information on how PEXA settlements work, see PEXA’s website[5] and our previous blogs about our experiences settling through the PEXA system[6]

For the best Conveyancing lawyers in Brisbane call/email Just Us Lawyers or complete our enquiry form for a quote today

[1] https://www.smartcompany.com.au/industries/property/consumer-affairs-victoria-warns-real-estate-agencies-and-buyers-over-new-email-scam/

[2] http://www.abc.net.au/news/2017-10-25/scam-targets-conveyancing-clients-in-sa/9086172 and http://www.abc.net.au/news/2017-09-19/elderly-woman-loses-more-than-half-a-million-in-property-scam/8959218

[3] https://www.propertyobserver.com.au/forward-planning/advice-and-hot-topics/85862-pexa-warning-as-conveyancing-fraud-funds-end-up-in-thailand.html

[4] http://www.qls.com.au/Knowledge_centre/Ethics/Resources/Cyber_security

[5] https://www.pexa.com.au/buyers-sellers

[6] https://justuslaw.com/advent-e-conveyancing/ and https://justuslaw.com/e-conveyancing-reality-follow/


Depreciation – The property investor’s friend

By Skye Nicholson

Don’t be another property investor who forgoes thousands of dollars of unclaimed money, simply for being none the wiser! This tax time, we look into claiming depreciation deductions for your investment property.

In recent data released by SQM Research this week, it is noted that the national vacancy rate sits at 2.1%, with Brisbane specifically siting at 2.9% [1]. This reflects 9,331 rental vacancies, and, as a direct result, tenants are more inclined to request rent reductions. At a time where vacancy rates in investment properties are ever-so-prominent and asking rent is decreasing, investors should be maximising tax breaks where possible.

Every investor has an “Investment Property Strategy”, increasing the amount of return you receive on your investment property at tax time is a crucial element to be included in that strategy. While depreciation tax breaks are predominately greater on newer properties, they are applicable for all investment properties and should be incorporated into your Strategy irrespective of a property’s construction date and construction type. The process of claiming depreciation directly improves your cash flow by reducing your taxable income or assessable income, and accordingly, increases the potential to expand your portfolio further.

The table below highlights the average depreciation deduction for investors who requested schedules during the financial year 2015-2016.

AGE OF RESIDENTIAL PROPERTIES SELECTED: 2015-2016 FINANCIAL YEAR [2].

Description: Construction dates: Percentage of total:  Average first full year deduction
Old Pre 1987 22.3% $4,899
Pre 2000 1987 – 2000 16.9% $7,543
Up to 15 years old 2000 – end of 2012 26% $11,303
Fairly new 2012 – 2015 13.3% $12,316
Brand new  Built after 1/3/2015 21.5% $12,680

It is clear that, regardless of the age of the property, it is worthwhile to speak with a specialist quantity surveyor on exactly what can be claimed with respect to your investment property. As demonstrated in the above, residential properties that have been constructed prior to 1987 can receive an average depreciation deduction of $4,899.00 in the first financial year alone. This means investors in those circumstances could pocket roughly $94.00 a week! Even those who have a depreciation schedule set up may be underestimating just how much they could be claiming. We note also, these figures are merely indicative on investors who requested depreciation schedules.

Practical Aspects

Maximising property depreciation requires a thorough understanding of the legislation surrounding depreciation deductions, and how to structure your depreciation report so that deductions are utilised to their full potential. In the following paragraphs, we look into the practical aspects for you.

The Australian Taxation Office (ATO) sanctions depreciation of assets that have “a limited effective life and can reasonably be expected to decline in value over the time it is used” [3]. Further, the two main types of expenses that can be depreciated for investment properties at tax time are as follows:-

  1. Wear and Tear of Fixtures and fittings – Plant and equipment (Division 40); and
  2. Capital Works expenses – Capital Works Allowance (Division 43).

The ATO recognises that the ageing of investment properties, and items within the property that suffer wear and tear, cause a decline in overall value. In light of same, the ATO allows investors to claim this financial loss as a tax deduction each financial year against their assessable income.

Noting the above, deductions can only be claimed for the period during the financial year that the property is rented or is available for rent. This means that if you live in a property and intend to rent it out in future, investment property depreciation is not available to you until the property is used specifically for the purposes of rent generation, whereby providing an investment return/benefit to you.

1. Plant and equipment depreciating assets (Division 40).

Division 40 of the Income Tax Assessment Act 1997 (Cth) (“the Act”) provides that an amount that is equal to the decline in value of the “Depreciating asset” is claimable at tax time. As a result, lowering your assessable income, and which in turn provides you with a greater tax return.

In accordance with section 40-B of the Act, “Depreciating Assets are assets with a limited effective life that are reasonably expected to decline in value” [4]. In other words, depreciating assets are plant and equipment items within the property that have a limited “effective life” as determined by the ATO. The depreciation deduction available on that item is then calculated with respect to said effective life.

These items are removable fixtures generally described as ‘not structural’. Items for example include, carpet, blinds, kitchen appliances, light shades, security systems, elevators, air conditioners, hot water systems, etc.

The depreciation deduction available on these items is calculated with respect to the specified “effective life”.  Accordingly, this forms one significant aspect of an investor’s depreciation schedule. We refer you to section 40-30 of the Act for a more definitive list of the claimable assets.

2. Capital Works Allowance (Division 43).

Division 43 of the Act, more commonly referred to as “Capital Works Allowance” covers deductions available to investors for fixed items/assets and the structural elements of the property. Essentially, this division provides a system of deducting capital expenditure incurred by the investor in respect of the construction of a building, and other capital works, to lower assessable income, similar to the purposes of Division 40 of the Act.

The age and type of fixed assets and construction determine the allowance provided under the Capital Works Allowance division. This can be complex and we recommend you engage a Quantity Surveyor to provide advice over the allowable deductions.

At Just Us Lawyers we strive to understand your investment strategy and to help you fashion legal solutions to achieve your property goals – from discussing and advising on property holding entities, planning issues and objections, and contract design, to helping you with your conveyancing needs.

For the best Conveyancing lawyers in Brisbane call/email Just Us Lawyers or complete our enquiry form for a quote today

[1] Vacancy Rates Steady In May, Asking Rents Dip (2018) Sqmresearch.com.au

[2] Maverick, BMT Quantity Surveyors. 2017. Depreciation data highlights investment trend www.bmtqs.com.au

[3] Guide to depreciating assets 2017, Page 3, Australian Taxation Office, “a limited effective life and can reasonably be expected to decline in value over the time it is used.”

[4] Income Tax Assessment Act 1997 Federal Register of Legislation, Division 40 Capital allowances, Section 40-10, “Depreciating Assets are assets with a limited effective life that are reasonably expected to decline in value.”


Page 1 of 4123...Last »