From Capital Works to Fit-Outs, Maximise Your Returns with ATO-Compliant Depreciation Reports
Why Service Stations Are Ideal for Tax Depreciation
Service stations are unique properties with high-value, rapidly depreciating assets. With depreciation rates ranging from 35% to 50%, depending on ownership structure, they present significant tax-saving opportunities. However, without expert guidance, these valuable assets are often misclassified or overlooked, leading to missed financial benefits.
At TDQS, we specialise in identifying every eligible asset in service stations to ensure our clients maximise their returns.
Commonly Missed Depreciable Assets in Service Stations
1. Fuel Infrastructure
- Underground Fuel Tanks: Often undervalued due to their complexity in valuation but represent a substantial portion of depreciation potential.
- Bowsers and Pumps: High-cost, rapidly depreciating assets that are central to operations.
2. Shop Fit-Outs
- Refrigeration Units: Includes coolers and freezers used for beverages and perishables.
- Shelving and Displays: Essential for product storage and presentation.
- Countertops and Register Systems: High-value assets that are often overlooked in depreciation assessments.
3. Mechanical and Electrical Systems
- Air Conditioning Systems: Critical for maintaining customer comfort and operational efficiency.
- LED Signage and Lighting: Includes internal and external fixtures, often depreciating rapidly.
- Backup Generators: Installed for operational reliability but frequently forgotten during assessments.
4. External Features
- Car Wash Facilities: Includes high-value equipment with rapid depreciation potential.
Driveway and Forecourt Areas: Paving and other structural elements qualifying for capital works deductions under Division 43.
Case Study: Maximising Depreciation for a $5 Million Service Station
Overview
A client invested $5 million to construct a modern service station. With TDQS’s expert assessment, the client identified significant tax-saving opportunities, achieving a full first-year depreciation deduction of $445,000. This included maximised claims under both Division 40 and Division 43, ensuring immediate and long-term financial benefits.
Depreciation Breakdown
- Division 40 (Plant and Equipment): $2.4 million
- First-Year Deduction: $379,000
- Division 43 (Capital Works): $2.6 million
- First-Year Deduction: $66,000
Total First-Year Deduction: $445,000
Total Depreciation Identified: $5 million.
The Challenge
Service stations include a variety of complex, high-value assets that require precise categorisation to maximise tax savings. The client needed:
- A comprehensive assessment to identify all depreciable assets.
- A tailored depreciation schedule to capitalise on first-year deductions.
- A fully ATO-compliant solution for long-term financial planning.
Our Approach
- Detailed Asset Identification:
- Conducted a thorough review of all plant and equipment assets under Division 40, including:
- Fuel infrastructure (underground tanks, pumps, bowsers).
- Retail fit-outs (refrigeration units, shelving, countertops).
- Mechanical systems (air conditioning, LED signage, backup generators).
- Evaluated structural elements under Division 43, such as:
- Walls, flooring, roofing, and forecourt paving.
- Conducted a thorough review of all plant and equipment assets under Division 40, including:
- Optimised Depreciation Schedule:
- Allocated assets to their respective depreciation categories to ensure full utilisation of first-year deductions.
- Maximised Division 40 deductions using accelerated depreciation rates.
Key Outcomes
1. Full First-Year Deductions
- Division 40 (Plant and Equipment):
- Depreciation Claimed: $379,000
- Major assets included fuel pumps, refrigeration units, shelving, and air conditioning systems.
- Division 43 (Capital Works):
- Depreciation Claimed: $66,000
- Covered structural components like walls, roofs, flooring, and paving.
- Total First-Year Deduction: $445,000
2. Long-Term Tax Savings
- With $5 million in total depreciation identified, the client secured substantial deductions for future tax years, enhancing cash flow and reinvestment opportunities.
3. Comprehensive Asset Categorisation
- Accurate classification of high-value assets ensured maximum tax benefits without missing any eligible deductions.
Key Depreciable Assets Identified
Division 40 (Plant and Equipment): $2.4 million
- Fuel Infrastructure: Underground tanks, bowsers, pumps.
- Retail Fit-Outs: Refrigeration units, shelving, countertops.
- Mechanical Systems: Air conditioning, LED lighting, backup generators.
Division 43 (Capital Works): $2.6 million
- Structural elements including walls, roofing, flooring, and forecourt paving.
Conclusion
This case study demonstrates the importance of professional tax depreciation services for service station owners. By partnering with TDQS, the client achieved a first-year tax deduction of $445,000, unlocking immediate cash flow benefits and securing sustained savings on their $5 million investment.
How TDQS Maximises Depreciation for Service Stations
- Comprehensive Asset Assessment:
- In-depth reviews of all assets, including complex infrastructure and external features.
- Identification of commonly missed items like car wash facilities and underground tanks.
- Optimised Depreciation Schedules:
- Tailored reports that categorise assets under Division 40 (Plant and Equipment) and Division 43 (Capital Works).
- Strategies to prioritise high-depreciation-rate assets for immediate tax benefits.
- ATO-Compliant Reporting:
- Ensuring all claims meet Australian Taxation Office (ATO) guidelines.
- Providing audit-ready documentation for peace of mind.
Key Benefits of Choosing TDQS
- Maximised Tax Savings: Ensure no asset is overlooked, from fuel tanks to LED signage.
- Tailored Solutions: Customised schedules to fit the unique features of your service station.
- Proven Expertise: Decades of experience in tax depreciation for service stations and industrial properties.
- Peace of Mind: Fully ATO-compliant reports ready for tax filings and audits.
Features of TDQS Service Station Depreciation Services
- Comprehensive Asset Identification: From mechanical systems to forecourt features.
- Customised Depreciation Schedules: Tailored to your ownership structure and property specifics.
- First-Year Optimisation: Maximise deductions with accelerated depreciation strategies.
- Nationwide Support: Serving service station owners across Australia.
