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Chris Brodie
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Porky, post: 147958 wrote:
Hi everybody

I am new to this forum and I must say it is very informative.

So I was hoping that someone maybe able to assist me in terms of some tax questions that I had.

I have my own company within the entertainment industry which registered as a “company” and for GST for tax purposes.

About 9 months ago I had a fire at my home (ie. my garage burnt down). As a result I decided to rebuild and utilise the space that once was the garage to form part of my home.

Essentially now I use that new room (ie. the one constructed as a result of the fire) as my home office.

So I was wondering in terms of tax. Am I able to claim the entire cost of building that room all in the one year within my companies tax return (ie. as a deduction).

Example the construction cost’s were 80K so can the company claim the entire amount as a deduction.

Alternately given that all the construction cost’s associated with the rebuild (ie. to all the tradesman) were paid out of my company bank account. The tradesman charged GST as part of those services. Would I be correct to assume that my company can claim the GST that was paid to those tradesman from the ATO via the lodgment of its BAS statements.

Look forward to your replies and thank you for the assistance

Hi Porky

Firstly did you make an insurance claim after the fire? If you have then you really have not paid for the cost of the repairs if they were covered by the insurance.

If there was no insurance then you could be in a position to make a claim. However you need to consider the following:

1)Was there damage done to the rest of the house and if so you will need to separate these cost out.

2)You have replaced a garage with an office which will be considered an improvement and therefore a capital item to be written off. Had you rebuilt the garage or replaced the garage with a similar structure then you may have been in a position to claim a deduction for repairs.

3) Is the garage attached to your house which you intend to claim a principal place of residence exemption (i.e. capital gains tax free status)? If so then once you start to claim your office cost beyond simple ancillary costs like light and power and instead claim the cost of the building / rates / home loan interest etc you will lose the capital gain exemption on that part of the house. i.e. if the office makes up 10% of the house then 10% of any gain at the time of sale is taxable (NB: This calculation will change depending how long you have owned the house against how long you claim office costs).

4) You also need to consider the problem that the company is making a claim for something that it does not own (and I make an asumption here that you own the house, that it is insured in your name and that the builders invoiced you personally even though the company made the payments). This will become a legal issue and you may need to have agreements drawn up.

Another option you may have (and this depends on how your were invoiced) is to ignore the cost of the construction of the building, but make a claim for the fit out internally i.e. shelving, wiring, lighting, flooring and all other fixtures and fittings.

Sit down with your accountant and nut out the best way forward for yourself. Also if you wish to make GST claims you should get it sorted out sooner rather than later as you may need to amend BAS returns.

All the best,