Redcliffe Peninsula physiotherapist and business owner Nick Schuster is taking his push to change commercial fit-out tax rules to Canberra, arguing a 40-year deduction timeframe is out of step with the realities of running a small business.
Schuster, owner of Scarborough and Newport Physio and Health, has launched Federal Parliament petition EN10424 calling for the rules to be reviewed.
The 2017 Moreton Bay Business Awards Young Entrepreneur winner is also the founder of Ultimate Physio, a community of physiotherapy clinic owners across Australia, giving him regular contact with other practice owners navigating the commercial realities of running clinics.
“I’d like to think I run my businesses well and the way fitouts are treated by the ATO made me feel for all of the other small business owners out there that take big risks and put their savings and homes on the line to start businesses that may or may not succeed long term,” Nick said.
His concern about the issue began after opening Newport Physio and Health at Newport Marketplace in 2022.
Schuster spent about $200,000 on the fit-out after negotiating an allowance with his landlord. Despite the clinic growing well during its first two years, he said he could not understand why the business was paying so much tax and retaining less cash than expected.
A conversation with his accountant brought the issue into focus. Schuster said the landlord’s fit-out allowance had been treated as income, while eligible capital works associated with the fit-out were being deducted at 2.5 per cent a year.
On $200,000, that equates to about $5,000 a year.
Schuster argues there is a mismatch between that timeframe and commercial reality. His petition points to businesses occupying premises for five to 10 years while some fit-out expenditure is deducted over 40 years.
He uses the example of a family spending $300,000 to open a café, potentially using savings, borrowing money or leveraging their home. The business carries that upfront financial commitment while also paying rent, wages and operating costs, yet deductions for eligible capital works can be spread across decades.
Schuster also argues a fit-out is different from an asset that can readily be sold to recover close to its original cost.
His petition asks the House of Representatives to allow businesses with aggregated annual turnover of $10 million or less to deduct eligible commercial fit-out expenditure over 10 years or the initial qualifying lease term, whichever is shorter.
It also proposes allowing any remaining undeducted balance to be immediately claimed when an eligible business permanently leaves the premises and the fit-out is abandoned, demolished or removed without compensation.
“This would take significant burden off small business and perhaps even boost their desire to do fitouts more often,” Nick said.
An Australian Parliament e-petition forms part of the formal House of Representatives petitions process. Once presented to the House, a petition may be referred to the relevant federal minister for a response.
The petition had attracted 154 signatures and is open until 11.59pm AEST on September 16.
Schuster is asking City of Moreton Bay business owners and the wider community to add their support before the deadline.
“Please consider signing the petition and sharing it on your socials, so that we have a greater chance at this archaic and outdated tax rule being changed and give your local small business owners a boost,” Nick said.
Support the petition: View and sign Federal Parliament petition EN10424.
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