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:
relative to the cost of the building. For many taxpayers, the cost of 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.