Commercial Pubs and Clubs
Depreciation on pubs and clubs can vary based on quality, size, age and location, however, MCG has found that typically most pubs and clubs generate a depreciation return of tens of thousands in the first 5 years and continue to be very beneficial to the investor for the term of the depreciation report. As a guide, the median rate for pubs and clubs is between $2,400 p/sqm and $3,400 p/sqm.
Pubs and clubs also generally have a higher apportionment of plant and equipment, also known as division 40. This means that there would be higher returns in the earlier years of the report due to the shorter depreciation periods due to reduced life expectancy on items that would normally be found in a pub or club. Some of the more common items that would add value to a pub/club report can be found below.
- Gambling machines (Poker Machines)
- Floor coverings (Carpet, Vinyl etc)
- Airconditioning equipment
- Glass Washers
- Beer Dispensing Systems
- Freestanding Furniture (Tables, Chairs, Beds, Desks)
- Pool and Billiards tables
- Refrigeration and Cool room assets
Pubs and clubs with an original structure older than 1987 will not qualify for structural depreciation (Division 43) unless renovations or extensions have been added, in which case the total build cost of any additional structure can be included on the report and depreciated accordingly even if the current owner did not complete the renovations themselves as structural depreciation lasts for 40 years. So long as the prior renovations were completed between 1988 and now, then any additions will qualify for inclusion on the depreciation report.
There are typically 2 types of reports based on what entity owns different parts of the pub, but generally speaking there is the land/building owner who leases the physical structure to a business and the business who leases the building off the landowner. There is also rarely the case where the building and business are entirely owned by a single entity in which case deductions would be even higher than usual.
A Quantity Surveyor should be able to answer all of your detailed questions and will ensure that no items are missed, the maximum claim is made and that the report complies with the ever changing rules prescribed by the Australian Taxation Office (ATO).
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