Are shop Fitouts capital works?

Shop fitouts can be considered Capital Works when the work involves permanent or structural improvements to the building. These items are generally claimed over the long-term Division 43 schedule.

A shop fitout may include Capital Works when it involves:

• Structural or fixed elements like walls, ceilings, flooring, and built-in plumbing or electrical
• Work that becomes part of the building’s fabric rather than being removable
• Improvements that add to or upgrade the base building rather than standalone assets

In simple terms: some fitout items are Capital Works, while others are depreciating assets, and each needs to be assessed separately.

Capital Works and repairs are treated differently because one improves the building, while the other restores what already exists. Understanding the distinction helps determine how expenses are claimed for tax and depreciation.

The difference comes down to:

• Capital Works - permanent or structural improvements that upgrade, extend, or create new parts of the building (claimed over long-term depreciation).
• Repairs - work that fixes, restores, or replaces existing components without improving them beyond their original condition (often deductible in the year incurred).
• Purpose of the work - if it enhances the space or adds new functionality, it’s Capital Works; if it brings something back to working condition, it’s a repair.

In simple terms: Capital Works improve the building; repairs maintain what’s already there.

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Commercial fitouts can qualify for Division 43 deductions when the work involves structural or fixed building improvements. Division 43 covers the long-term depreciation of building elements that form part of the structure.

A commercial fitout may fall under Division 43 when it includes:

• Permanent building elements such as walls, ceilings, floors, and built-in plumbing or electrical
• Works that become part of the building’s structure rather than removable items
• Construction that improves, extends, or creates new fixed features within the tenancy

In simple terms: yes, certain parts of a commercial fitout qualify for Division 43, while removable items fall under asset depreciation instead.

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• Are shop fitouts Capital Works?
  Only the permanent, structural parts of a fitout count as Capital Works; removable items are treated as assets instead.
• What’s the difference between Capital Works and repairs?
  Capital Works improve or create new building elements, while repairs simply restore existing components to their original condition.
• Do commercial fitouts qualify for Division 43?
  Yes, structural and fixed fitout elements can be claimed under Division 43, while non-structural items are depreciated separately.

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