Some people wildly overprice their products. The more common mistake though by those just starting out in businesses is to be too cheap. As a freelance copywriter and web marketing guy who’s been around a few years, I’ve seen the effects of this both in my own business dealings and in those of clients.
My Early Mistakes
My first venture into selling web marketing services was selling cheap and cheerful search engine optimisation plans to local businesses. Years of experience writing and promoting web content on my own websites meant I knew the work backwards, but that didn’t mean I was totally new to dealing with clients.
The iPhone resale market in Australia is thriving through marketplace sites such as Gumtree & eBay raising the question of whether you should sell your old handset and splurge on Apple’s latest version each year, or hold on to it for a few years until technology changes make it worthwhile to upgrade to the next model.
It’s smarter to buy your phone outright
Many of us lock ourselves into financing plans with the major telcos so we can get our hands on the latest phone for “free”, but there is a smarter way to go about it. Tying yourself to a financing plan means you lose the flexibility to decide how often you upgrade to a new phone and in reality, that latest phone isn’t really “free”. You’re paying the mobile service provider a lot more for that handset over the course of your contract; instead, you can pay less overall and recoup some of your cost by buying the new phone outright and selling your old one online when you’re ready for an upgrade.
Commercial building owners remain unaware of the taxation benefits their property can generate. One of the most beneficial, yet often missed deductions available is building depreciation.
As a building gets older and items within it age, they depreciate in value. The Australian Taxation Office (ATO) recognises this and allows property investors to claim deductions relating to the wear and tear on buildings and the fixtures and fittings within.
According to Bradley Beer, property expert and Managing Director of BMT Tax Depreciation, “claiming depreciation is the key to increasing cash flow on commercial properties.”
Building write-off can be claimed on the structure of a commercial building so long as construction commenced after the 20th of July 1982. In cases where construction commenced before this date, depreciation can still be claimed on fixtures and fittings.
“Many commercial property owners assume they are unable to claim depreciation on their property, or receive significant deductions because it is too old. However, there are still significant depreciation deductions available on the fixtures, fittings, plant and equipment contained within the property,” says Bradley.
Starting a new business can be quite daunting, particularly if you’re trying to do so within a strict budget.
On top of other initial start-up costs such as purchasing stock or merchandise, arranging insurance, budgeting for staff overheads and (if you don’t own the building) allocating funds to pay rent, there are often costs involved in installing assets to fit-out the new space before you can open the doors for business.
What commercial property tenants are often unaware of is that they are entitled to claim deductions in the form of depreciation for many of the assets installed during the fit-out of a property.
What may commercial properties be hiding from tenants?
Property depreciation is mostly claimed by the owner of an income-producing property. It is for this reason that many commercial tenants often miss out on the hidden cash available to them through depreciation.
Commercial tenants can claim depreciation deductions based on any fit-out or plant and equipment assets that they add to the property.
Tenants can claim depreciation deductions on all fit-outs while the owner of the commercial property is simultaneously able to claim a deduction on the building and any plant and equipment items that they own.
Dependent upon lease conditions, if a tenant vacates a building and does not remove the fit-out from the building at the end of their lease, the owner of the property may be able to claim any remaining depreciation. However if a tenant’s lease stipulates that the property must be returned to its original condition at the end of the lease, then the tenant can benefit from claiming any remaining depreciation on the items removed and scrapped.
It is important to consult a qualified Quantity Surveyor when dealing with commercial property depreciation to ensure that not only are maximum deductions achieved but that they are claimed correctly.
For more information on commercial property depreciation, visit BMT Tax Depreciation’s new commercial depreciation page by clicking here.
Bradley Beer (B. Con. Mgt, AAIQS, MRICS) is the Managing Director of BMT Tax Depreciation. Please contact 1300 728 726 or visit www.bmtqs.com.au for an Australia-wide service.
Did you know you can claim deductions in the form of property depreciation for an industrial property?
Legislation set by the Australian Taxation Office (ATO) allows the owners of any income producing property to claim depreciation.
Depreciation deductions are due to the decline of a building and apply to both the structure of the building (via a capital works deduction) and to any plant and equipment assets contained within the property.
An investor’s depreciation benefits will vary depending on the type of building, its age, its use, its size and its fit out. In commercial and industrial buildings a tenant is also entitled to claim depreciation for any fit out they install in the property once their lease starts. For these reasons it is very important to consult with an expert to find out what deductions are available.
Crunch the numbers for your commercial property and save
Before purchasing a commercial investment property, make sure to crunch the numbers correctly. That next bargain may actually be more affordable if property depreciation is claimed.
Astute investors will usually consider the potential return of the property, surrounding commercial infrastructure along with rental vacancy rates in the immediate area. They may also like to factor the current tenancy contract in place with historical growth.
They should also work out the tax deductible costs and other deductions involved in owning the property, such as property management fees when required, rates, interest, repairs, maintenance, fit-out costs and property depreciation.
These deductions add to the investor’s net cash return and every deductible dollar comes back to the owner at the marginal tax rate.
Plastic fantastic – Flexible ways to reduce your credit card bill faster
Credit cards. Our plastic friends that are great at getting us out of a tight squeeze when we need them; like helping fill the car with petrol when cash is tight or picking up the weekly shopping if the pay transfer hasn’t hit the account yet! But these good mates can turn into nuisances when the amount owing has grown and you find yourself struggling to keep up with the minimum payments let alone trying to knock down the overwhelming balance.
So, when the bill has ballooned and you find yourself staring credit card debt in the face, what’s the best way to start paying off that balance? Follow these tips and you’ll see that figure falling before you know it.
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