Mining companies and property developers could reap millions of dollars in tax relief courtesy of an innovative builder’s decision to launch a depreciable housing product that qualifies for a much-lauded Covid-19 stimulation measure.
In April’s Federal budget, treasurer Josh Frydenberg announced that businesses with aggregated turnover of less than $500 million could deduct the full cost of eligible depreciable assets with a value of less than $150,000 in the year they are first used or installed.
The measure, which was aimed to boost capital investment, fast-track projects and create jobs, was extended in October to include all businesses with less than $5 billion in turnover, with no limit on asset value.
The initiative has proven to be an unexpected win for Volo Modular, whose range of custom and architecturally designed modular constructions can qualify for depreciation under section 42-15 of the Income Tax Assessment Act 1997 because they are not permanently attached to land.
Having launched late last year, Volo Modular builds each dwelling at its Gold Coast factory before transporting the builds to site, where it takes less than three weeks to complete final installation.
Volo Modular marketing director Ashley Glenister said the Federal Government’s instant asset write-off announcement had played a key role in opening up new markets for the business.
“We knew our product was ideal for the bulk home sector, including over-50s living projects, education facilities and government housing, but the potential tax benefits have inspired interest from industries we didn’t initially target,” he said.
“Rather than boxy, kit builds that many people associate with modular constructions, we deliver a fully completed building with all the design features and structural integrity you would expect from a regular build.
“Better still, they can now be instantly written off from a tax perspective in the right circumstances because they are not permanently attached to the ground.
“We have met with mining companies, fuel companies, retailers and property developers who are excited by the potential tax benefits they’ll receive from using modular for their retail front or as their land sales offices.”
PKF Australia Gold Coast managing partner Matt Butler said eligible businesses would be able to deduct the full cost of each Volo Modular dwelling in the year they were first used or installed.
“When you consider a mining company might purchase multiple dwellings for their on-site employees or temporary workers, we are talking tax deductions in the millions of dollars,” he said.
“That is a huge advantage over a traditional build that needs to be written-off over 20 to 30 years, making eligible projects extremely cashflow efficient and much cheaper than if the company commissioned attached dwellings.
“The other advantage is that when the project is completed, the modular homes can be sold or repurposed because they are not attached to the ground.
“While not a direct tax advantage, it is a chance to deliver another financial return through sale.”
Butler said the instant asset write-off stimulation measure was scheduled to run until June 30, 2022.
“Between the pandemic and launch of Volo Modular, this combination of events and timing has opened the door for many large corporations to drastically reduce the cost of their projects,” he said.
Employing unique building techniques including hebel concrete, an innovative building material used for floors, facades, and walls, all Volo Modular builds are constructed with steel frames and termite-treated throughout.
Mr Glenister said homebuyers, lifestyle communities and even fully designed and constructed schools could expect durable and streamlined building designs, with plumbing and electricity installed and ready to be connected.
Volo Modular are also fully compliant under the Manufactured Homes (Residential Parks) Act 2003 and approved under the National Disability Insurance Scheme (NDIS).
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