09 Jul 10 More on quantity surveyorsMEMBER 205, who is an ATO officer, writes in response to Member 195's comments in last week's TAXVINE - 2010 TAXVINE No 27 (2 July 2010) - about the practices of certain quantity surveyors:
"Member 195 asks a good question.
Quantity surveyors are recognised, practically, by the ATO as among those who can advise on what was the original cost of construction (or reconstruction) of a building subject to write-off under Division 43 of the Income Tax Assessment Act 1997 (and its predecessor provisions). Taxpayers will probably pick this up from one or other of the ATO guides, such as the Rental properties guide.
Neither the law nor any authoritative statement by the ATO gives quantity surveyors any authority over valuing (rather than costing) depreciating assets - at which their professional training and experience give them no particular competence. When taxpayers acquire many depreciating assets together, or acquire depreciating assets together with other things, all for an undissected purchase price, that purchase price has to be apportioned to work out how much the taxpayer has paid for each depreciating asset. The ATO says in many places, such as the Guide to depreciating assets, consistently with pretty clear law, that the apportionment depends on the relative values of each of the things acquired for that undissected purchase price, creating a total value of which each depreciating asset has a proportion that is then applied to the undissected purchase price. Quantity surveyors are not valuers and neither have, nor are treated by the ATO as having, any expertise in valuing the different things acquired for an undissected purchase price. Their expertise is in working out the actual overall cost of some significant capital work, and for building write-off purposes doing so as at a relevant time.
Maybe, for things commonly included in the capital work they are qualified to survey, they have expertise about their cost in particular periods. But they have no general valuation competence as quantity surveyors. They can't be expected even to cost, far less to value, things that are not elements of the capital work they survey. So apportioning an undissected sum for things that include anything else is likely to be beyond their field.
So why has this common practice come about of getting quantity surveyors to do depreciation reports for rental properties which simply assert a 'value' of depreciating assets, rather than working out an apportionment of an undissected price based on the individual values of all the things acquired for that price? And what tax agent would advise a taxpayer to rely on a depreciation report like that?"