How Australia's pet care industry boom creates lucrative opportunities for property owners

Australia's love for pets is unparalleled. According to RSPCA data, nearly 70 per cent of Australian households own pets, accounting for an astonishing 29 million pets in a population of 26 million. This deep bond has transformed the pet care industry into a 14 billion dollar economic powerhouse and it's only growing.

The pet care sector is incredibly diverse, encompassing veterinary services, pet daycare, grooming, training and retail. Veterinary services alone command $3.2 billion annually, forming the cornerstone of this industry. Technological advancements like telemedicine consultations and state-of the-art diagnostic tools, have further boosted the appeal and profitability of veterinary clinics.

For investors and business owners, properties used as veterinary clinics offer the combined advantages of long-term tenancy and steady cash flow due to sustained demand, as well as the added benefit of substantial opportunities for property depreciation deductions.

In addition to veterinary services, the rising popularity of pet daycare and boarding facilities presents another lucrative avenue for property owners. These establishments often cater to pet owners seeking reliable care options during workdays or holidays and include features like climate-controlled kennels, spacious leisure areas with swimming pools and equipment for formal training and grooming services. These comprehensive facilities are highly appealing to busy pet owners who are not only willing to pay for top-tier medical care but are also increasingly drawn to other premium pet care services.

Investing in pet care facilities requires a thorough understanding of state-specific welfare codes and building regulations. These standards ensure the health, safety and comfort of the animals and include considerations like adequate shelter and climate control, noise reduction measures and proper ventilation and drainage systems to ensure a hygienic and safe environment.

Meeting these requirements is not only a legal necessity but also a competitive advantage. Facilities that comply with or exceed these standards are more likely to attract premium tenants and loyal clientele. The property owner, as well as the veterinary clinic - or pet accommodation operator, can all claim property tax depreciation on these facilities.

Capital works deductions can be claimed for the wear and tear on the structural elements of the building, including the partitions, required plumbing and drainage systems, as well as purpose-built kennels and enclosures with fences and walkways.

Plant and equipment refers to the deductions available on the wear and tear of assets that are easily removable or mechanical in nature. These assets depreciate at a faster rate than the building itself and each asset has its own individual 'effective life' as determined by the ATO.

Industry-specific assets with depreciation value include medical equipment, climate control systems and pet grooming baths and pet-specific spa equipment. More general assets with depreciation value will include furniture, light fittings, office equipment and security systems.

Optimising these deductions can significantly improve the cash flow of the property owner as well as the veterinary clinic or pet accommodation operator.

The following pet care industry case study showcases an owner-operated veterinary clinic and boarding kennel that requested a depreciation schedule to maximise deductions for their capital works and plant and equipment assets.

Table 1: Capital works and plant and equipment deductions available

Whether upgrading properties to meet the needs of a veterinary clinic or developing facilities for premium pet daycare, Australia's thriving pet care industry offers a wealth of opportunities for property owners. Furthermore, tax benefits through property tax depreciation can enhance cash flow for both property investors and veterinary or pet care service operators, making these investments even more attractive.

To further explore the potential of property tax depreciation in the pet care industry, contact BMT Tax Depreciation on 1300 268 628 or request a quote.