IN NOVEMBER 2010, a bottle of Chateau Cheval Blanc sold at auction for over $335,000.
However, many winemakers and vineyard owners are currently unaware that they could be sitting on a similar amount of cash in the form of property depreciation.
Like fine wine, great wineries also age and this process can be just as lucrative as it is for a good vintage.
By claiming depreciation deductions due to the gradual wear and tear of the building structure and the plant and equipment assets within a winery, owners can receive substantial returns from the Australian Taxation Office (ATO).
The following table provides an example of the depreciation deductions one vineyard owner could claim for a winery established in 1990:
As the table shows, the owner was able to claim $89,190 in depreciation deductions in the first full financial year alone.
Over the life of the property (forty years), depreciation deductions amounted to a whopping $1,284,240.
To ensure that depreciation deductions are maximised, winery owners are encouraged to enlist the services of a specialist Quantity Surveyor to prepare a tax depreciation schedule.
The tax depreciation schedule will outline all of the deductions available for capital works (the structural elements).
The schedule will also show the plant and equipment items contained for the winery owners Accountant to lodge their claim with the ATO at tax time.
Accounting for Assets
During the process, a site inspection will be performed to ensure all of the plant and equipment assets found in the property are accounted for.
Some of the common plant and equipment found in wineries which can be claimed include oak barrels, fences, grape bins, presses, barrel racks, barrel washers, signage, carpet and corkers.
Bottom Line: Winery owners who would like more information about the depreciation deductions they are entitled to should contact one of the expert staff at BMT Tax Depreciation.