can ATO check depreciation report?

[vbplease]

Don't mean to sound dodgy... but

My recent depreciation report estimated some of my furniture to be 10x what i paid.. for example a $70 ikea picture was estimated to be worth $700... most other things came up double.

I know if you have the receipts available they should be used, which I will probably do. But what are the chances of the ATO going into a property and checking if the furniture corresponds to the dep report?

Another q for another property, I've obtained a dep report for a neighbouring townhouse which is identical in every way to mine. My accountant says I can't use it, but It's in the same complex, built at the same time, and has the same fixtures.. why should I get another dep report done? Reason being, if a new report comes up any different to the neighbours, I'd be asking questions..

 

[Leikela]

I'm no expert in how quantity surveyors come up with their figures, but I do have dealings with the ATO in my work and I wouldn't want to get an audit with those figures. I may be wrong, but I thought the idea of a quantity surveyor was to put together a report on a new building, or a building purchased by you for the existing building and fittings etc. where you are not sure of the costs. If there were any additions since you bought it, I thought you were supposed to advise the quantity surveyor of these items and the cost of them. I'm not sure the ATO would like you depreciating items purchased during your time of ownership without receipts. And if you do have receipts I would have thought you should be depreciating them at their actual cost. But as I said, I am not an expert, but my feeling is it wouldn't be right.

 

[vbplease]

You're right. Where I have receipts I will use them..

 

[Pushka]

I always use receipts and dont get the items 'valued'. Cant go wrong doing that.

 

[depreciator]

We had the opposite problem last week. Client booked a job with us for a furnished property. She gave us a furniture list that had costs against dozens of items. Her costs are in some cases 10 times the value of what our QS would put on the items.
We could use her costs. It's no skin off our nose because she is the ATO's client and the buck stops with her. But we won't - for her benefit more than anything. We'll advise her that her accountant might do something.
There will be tears.
Scott

 

[depreciator]

Another q for another property, I've obtained a dep report for a neighbouring townhouse which is identical in every way to mine. My accountant says I can't use it, but It's in the same complex, built at the same time, and has the same fixtures.. why should I get another dep report done? Reason being, if a new report comes up any different to the neighbours, I'd be asking questions..

VB, just speak to the QS who did that other Schedule. Your acquisition and letting date will differ which will change the figures, but they could do a Schedule easily for you. Suggest $100 as an appropriate fee.

Scott

 

[vbplease]

Scott, if I could ask another q please..

I obtained a new depreciation report and compared it to the one I have for a identical prop, (purchased 3yrs before mine). There is a big difference in the capital works allowance. 3yrs ago the construction cost was estimated at $100k, now it's estimated at $57k

Is this the reason?

Where it has been unable to obtain the actual construction cost, an estimate of works de-esculated to the date of construction has been used

Why is the construction cost de-esculated?

 

[depreciator]

Uh oh, I hope it wasn't us?


Was it the same company that did the second report?

If the property was absolutely identical and built at the same time, the capital works estimate should logically be about the same.

I think what that phrase about de-escalation may mean is that they estimated the cost to build that structure today and then factor it back to arrive at a cost when it was built.

Scott

 

[vbplease]

Thanks Scott,
No it wasn't it wasn't depreciator..

yes it was the same company that did the identical prop 3yrs ago.. I'll see if they can just put the same construction cost in for my report.

It's a shame they wouldn't accept the initial report - it would have saved them a bit of work, possibly given me a discount, and not short changed my yearly dep amount by $1K. Goes to show we're all human

 

[Rob Williams]

I don't know much about the whole depreciation deal, when it comes to using a QS, but is the property in question part of a body corp with significant common areas?
My understanding is that the depreciable values of these areas gets apportioned to individual items on the schedule, effectively bulking them up.
I've seen this done and assumed it was common practice.

 

[vbplease]

Rob,
yes there are common areas and these were included in the "Plant" items (gym, pool, other misc). Interestingly the "Plant total" came out the same in my report and the other..

 

[Peter 14.7]

Don't mean to sound dodgy... but

My recent depreciation report estimated some of my furniture to be 10x what i paid.. for example a $70 ikea picture was estimated to be worth $700... most other things came up double. ..

I do reports for Scott and had shocker recently where client advised 4 x value for washing machine. I said no way and they accepted it. I think client had been "misinfomred by builder" or confused by Prime Cost list

Anyhow.... on art ( ikea pic) that is impossible to value unless you see it for sale and even then art is often very negotiable.

In the end you personally take the hit from the ATO so get report amended is my advice.

Or provide a list of items with costs.

Peter

 

[julia]

So if the taxpayer relies on the QS report and the ATO doesn't accept these amounts can the taxpayer sue the QS?

 

[Peter 14.7]

So if the taxpayer relies on the QS report and the ATO doesn't accept these amounts can the taxpayer sue the QS?

Yes.

but as in all things legal, nothing is clear cut and costs are high. Better to simply get it right the first time IMO. I cross check everything my accountant does, they are not perfect.

Peter