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This feature suggestion is very useful for improving SMSF reporting accuracy and saving accountants valuable time. Automation in financial tools can really simplify complex calculations. Discussions around smarter systems also encourage sustainable thinking, including simple everyday questions like can you recycle ziploc bags to reduce waste.
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This idea is important to me. It's annoying to have to come up with a workaround when this situation arises.

Add Capital Works Worksheet to SMSF Tax – Deductions

Problem
In the SMSF tax return, the Capital Works (Division 43) deduction does not include a worksheet. While users can manually enter a total amount, there is no built‑in worksheet to calculate or track the capital works deduction.
This creates a gap in functionality, as accountants must maintain a separate external worksheet to calculate capital works depreciation and then manually transfer the result into Xero.
Why this matters
Capital works deductions are very common and material for SMSFs that hold property. Without an integrated worksheet:

Calculations are more time‑consuming
There is a higher risk of errors or inconsistencies
Review, audit, and year‑to‑year comparison is harder
Documentation is kept outside Xero, reducing data integrity and efficiency

A capital works worksheet is just as important as other depreciation schedules for SMSFs investing in real property.
Suggested improvement
Please add a Capital Works (Division 43) depreciation worksheet within the Deductions section of the SMSF tax return, similar to other tax calculation worksheets.
Ideally, the worksheet would allow users to:

Enter construction cost and dates
Automatically calculate deductible amounts
Track opening balance, additions, deductions, and closing balance
Carry forward balances year‑to‑year

Benefit
This enhancement would significantly improve accuracy, efficiency, and compliance for SMSF accountants and advisers, especially for funds holding property.

Hi Xero Team,

It would be highly beneficial if Xero allowed users to record Capital Works Deductions directly in the Rental Schedule for Income Tax Returns (ITR). Currently, this critical aspect of rental property deductions has to be entered manually, which defeats the purpose of using accounting software to streamline and automate tax compliance.

Including this feature would:

- Improve accuracy and efficiency.
- Reduce manual effort and the risk of errors.
- Make Xero a more comprehensive tool for rental property management and tax preparation.

Please consider implementing this functionality in future updates. It would significantly enhance the user experience for accountants and property owners alike.

Thank you for your consideration!

Capital works is different to Capital Allowance but it should be able to be tracked in the same way. Company, Trust and Partnership tax returns should all have the ability to add Capital Works assets separately in a property schedule that calculates the amount to claim and integrates to the correct field in the entity tax return.