For Australian property investors, a depreciation report can be a game-changer when it comes to maximising tax benefits and managing investment returns. However, one question often arises: who is responsible for preparing a depreciation report? As a Quantity Surveyor, I can provide clarity on this topic and explain why choosing the right professional for this task is crucial.

Understanding the Role of a Depreciation Report

Before diving into who prepares a depreciation report, it’s essential to understand its purpose. A depreciation report, or tax depreciation schedule, details the depreciable assets within a property and calculates the allowable deductions for tax purposes. These assets typically include plant and equipment, such as appliances and air conditioning units, as well as structural components like walls and roofs.

The Role of a Qualified Quantity Surveyor

**1. **Who Should Prepare the Report?

In Australia, the responsibility for preparing a depreciation report lies with a qualified Quantity Surveyor. Here’s why:

• Expertise in Construction and Costing: Quantity Surveyors are professionals trained in the measurement and valuation of construction work. They have a deep understanding of building components, construction methods, and cost estimation, making them well-equipped to assess and value depreciable assets accurately.
• Accreditation and Compliance: To ensure the report meets Australian Taxation Office (ATO) requirements, it must be prepared by a Quantity Surveyor who is a member of a recognised professional body, such as the Australian Institute of Quantity Surveyors (AIQS) or the Royal Institution of Chartered Surveyors (RICS). These accreditations ensure the Quantity Surveyor has the necessary qualifications and adheres to industry standards.

**2. Responsibilities of the Quantity Surveyor

A qualified Quantity Surveyor is responsible for several key tasks in preparing a depreciation report:

• Inspection and Assessment: They conduct a detailed inspection of the property to identify and document all depreciable assets. This includes plant and equipment, as well as structural components.
• Cost Estimation: The Quantity Surveyor estimates the original cost of each asset, which is crucial for calculating depreciation. This involves reviewing invoices, receipts, and construction records.
• Depreciation Calculation: Using established methods such as the Prime Cost Method (Straight-Line) or the Diminishing Value Method, the Quantity Surveyor calculates the depreciation for each asset and provides a detailed breakdown in the report.
• Report Preparation: They compile the findings into a comprehensive depreciation report that includes asset schedules, depreciation calculations, and supporting documentation. This report is designed to be clear and compliant with ATO regulations.
• Advice and Recommendations: Beyond the report, a Quantity Surveyor can offer advice on how to optimise your depreciation claims and manage your property’s financial performance effectively.

Why Choose a Qualified Quantity Surveyor?

**1. Accuracy and Compliance

A professionally prepared depreciation report by a qualified Quantity Surveyor ensures accuracy in the valuation and calculation of depreciation. It also guarantees compliance with ATO guidelines, reducing the risk of issues during tax audits.

**2. Maximising Tax Benefits

An experienced Quantity Surveyor knows how to identify all eligible depreciable assets and calculate deductions to maximise your tax benefits. This can lead to substantial savings and improved cash flow.

**3. Peace of Mind

Engaging a qualified Quantity Surveyor provides peace of mind knowing that your depreciation report is prepared by a professional who understands the complexities of depreciation and taxation.

Are there alternative Options?

While a qualified Quantity Surveyor is the recommended choice (and as per the ATO are suitably qualified) some property owners may consider alternative options, such as:

• Accountants: While accountants can offer general tax advice, they are not typically trained to prepare detailed depreciation reports. Furthermore, they are not experts in building & construction estimating, costing and measuring. Their expertise is more focused on tax compliance and financial planning.

In conclusion, the preparation of a depreciation report is a specialised task that should be undertaken by a qualified Quantity Surveyor. Their expertise ensures that the report is accurate, compliant with ATO regulations, and capable of maximising your tax benefits. If you’re considering a depreciation report for your property, engaging a professional Quantity Surveyor is the best way to ensure a thorough and effective process.

If you have any questions or need assistance with preparing a depreciation report, don’t hesitate to reach out. Here’s to making the most of your property investments and optimising your financial strategy!

Happy investing!

Mathew Kulkewycz
BWK Group
Senior Quantity Surveyor