Removal of commercial building depreciation
The depreciation rate for commercial and industrial buildings will revert back to 0% from the 2024-25 income year. Commercial and industrial buildings are buildings with an estimated useful life of 50 years or more, based on their whole-of-life basis rather than end-of-life basis. These buildings will remain ‘depreciable property’ which means historical depreciation deductions remain recoverable when the building is sold.
Commercial and industrial building fit-out will remain depreciable, but at a 1.5% straight-line rate, and will be included when calculating depreciation recovery when the building is sold.
The removal of depreciation deductions for commercial and industrial buildings should be factored into provisional tax calculations for the 2024-25 income year, especially for the third instalment where your residual income tax is expected to be greater than $60,000.
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