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 circumstances.
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" (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.