Tax time tips for Sydney City Fringe commercial property owners

Tax time is just around the corner, and if you own commercial property on the Sydney city fringe, now’s the time to get organised. While this isn’t financial advice, it is a handy guide to help you tick all the right boxes and avoid last-minute stress. Here’s what you should be doing now to get tax-ready – just in case the ATO decides this is your year for an audit.

Note: You should speak to your financial adviser or accountant before acting on any information in this article.

1. Get your paperwork in order

The golden rule? Assume you’ll be audited every year. That means keeping clean, clear records of all your property’s ins and outs. Start by having a chat with your property manager; they can usually generate detailed income and expense reports for you, and they may also have copies of essential documents like lease agreements or maintenance invoices.

Make sure you’ve gathered:

• Rental income statements
• Outgoings (council rates, strata fees, water rates, insurance premiums)
• Receipts for maintenance or upgrades
• Utility bills (if you pay them directly)
• Loan interest statements

Store everything securely, digitally or physically or both, and make sure all the documents are easy to access later.

2. Don’t forget your depreciation schedule

A depreciation schedule prepared by a quantity surveyor is one of the most valuable tools in your tax kit. It allows you to claim deductions on your building and its fittings over time, sometimes adding up to tens of thousands in savings.

If you don’t have one, or it hasn’t been updated in years, this could be the moment to act. Check with your accountant whether it’s still relevant or if a new one is needed (especially if you’ve renovated recently).

3. Know what’s deductible now versus over time

The ATO distinguishes between immediate deductions and those that must be written off over time. This is where things can get a little murky, and we always recommend seeking professional advice when preparing for EOFY.

In general:

• Immediately deductible: Repairs, maintenance, council rates, water rates, insurance premiums, property management fees, loan interest.
• Claimed over time: Capital works (like building extensions), major upgrades, new structural elements.
• Understanding the difference will help you maximise your claim and avoid any surprises down the line.

4. Stay informed about this year’s financial rules

Tax laws change, and what was deductible last year might not be this year. Do a quick search online or visit the ATO website to find the most up-to-date rules for commercial property owners. It’s also worth checking if any temporary measures or incentives (such as those introduced during COVID-19, for example) are still in place.

5. Check the ATO website for news

We read this ‘news’ every year: the Australian Taxation Office (ATO) has intensified its scrutiny of property investors. This year, be prepared. General areas of focus include:

• Interest expense claims: The ATO will scrutinise returns to ensure that interest deductions are claimed only for the portion of the loan used for income-producing purposes
• Depreciation claims: You should engage a quantity surveyor and tax adviser to make sure you don’t overstate depreciation deductions.
• Record keeping: It’s vital you, your property manager or your tax adviser maintain accurate records to substantiate claims.

This year the ATO announced a major compliance crackdown. What does this mean? The ATO now has access to rental bond data and will be cross-checking this data with returns, focusing on any underreporting of rental income. The ATO will also ensure repairs are not listed as capital works and vice versa. You can see why it’s so important to keep accurate records.

The bottom line

Taking the time now to get your tax affairs in order will make life easier when preparing your tax return or dealing with your accountant. When you’re confident you have everything in order, you’ll have peace of mind if the taxman does come calling. Start with what you know, lean on your property manager for support and find out what reports they can provide, and don’t be afraid to ask your accountant questions (they’ve heard them all before).

Let us help you with your Sydney city fringe commercial property

As dedicated local commercial real estate agents, we can help you extract more value from your commercial property. Please get in touch to discuss your circumstances and assets so we can give you personalised advice. Whether it’s commercial leasing, management or sales, we’re here to help you with your Sydney-based commercial property.

Contact us at Ray White Commercial Sydney City Fringe