Parliament has passed fit-out pool legislation that will allow
owners of commercial buildings to deduct 15 percent of the cost of
their buildings as a proxy for the cost of fit-out in certain
This Brief Counsel looks at the key aspects of the fit-out
pool. Chapman Tripp can assess how the fit-out pool will
affect you, and help you get the best fit.
While most buildings will not be depreciable from the 2011/12
income year, amendments passed by Parliament last week:
confirm that commercial fit-out is separate from buildings for
depreciation purposes, and
allow a deduction spread over 50 years for 15 percent of the
cost of commercial buildings acquired before the 2011/12 income
year, provided that no fit-out acquired at the same time as the
buildings has been separately depreciated. Officials describe
this provision as the "non-residential fit-out pool"
In response to submissions, the fit-out pool has been extended
so it can apply to persons who acquire and separately depreciate
fit-out after a building is acquired.
Whether the fit-out pool is a good fit for you depends on the
cost of fit-out that you:
have not separately depreciated, and
acquired at the time the building was acquired
relative to the cost of the building. For many taxpayers,
the cost of such fit-out will significantly exceed 15 percent of
the opening value of the fit-out pool. For other taxpayers
the fit-out pool may generate a windfall.
The drafting of the fit-out pool provision allows some scope for
manoeuvre. We can assess how the fit-out pool will affect
you, and help you get the best fit.
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
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The article discusses the legislative requirements and then provides some comments on common mistakes made by caveators.
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