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From the 2020-2021 income year onwards we're changing depreciation for commercial and industrial building. Previously, tax depreciation on all buildings was at 0% because of 2011 tax changes.

Now if your business is eligible you'll be able to claim depreciation deductions in your tax return for commercial and industrial buildings. These changes are to help:

  • you with your business cash flow in the short-term
  • economic recovery long-term by encouraging you to invest in new and existing buildings. 

The applicable depreciation rates introduced are 2% DV and 1.5% SL.

Residential buildings are not part of these depreciation changes. This is because they depreciate at a much slower rate. 

Depreciation for short-stay accommodation and residential buildings

Whether you're able to claim depreciation on property used for short-stay accommodation depends on if it's seen as residential or commercial.

Generally speaking, if there are 4 or more separate units within the same property and they're used for short-stay accommodation (such as AirBnB), they can be depreciated. 

Low-value asset threshold for depreciation

The Government has temporarily increased the low-value asset threshold for depreciation from $500 to $5,000 for assets purchased on or after 17 March 2020 until 16 March 2021. This will allow you to deduct the full cost of your business assets with a value of less than $5,000 in the year they were purchased. This is instead of having to spread the cost over the life of the asset.

For assets purchased on or after 17 March 2021, this threshold will be permanently increased from $500 to $1,000.

Depreciation

Depreciation and commercial fitouts

Commercial property - renting it out, buying and selling

GST and renting out residential property