Perth, Western Australia & Nannup, South West WA – Tax Choice

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Did You Know?

Investment Properties

Are You Claiming Depreciation on Your Investment Property?

You may not be aware that as an investor, you can claim depreciation on many aspects of your property such as plant and equipment including ovens, light fittings, blinds and carpet. You can also claim depreciation on the construction costs of the building itself. Chances are your property is eligible. Each property is different but historical evidence suggests that more than 98% of investment properties can be depreciated. So just about anyone who buys a property as an investment is eligible for a tax benefit.

It’s simple to find out what you are entitled to. Contact our office and we can recommend a reputable Quantity Surveyor that may be able to assist.

Investing in Property

Investing in property can be an ideal tax deduction, however correct bookwork is imperative to make the most of your deductions. Before buying an investment property it is crucial you talk to your accountant to discuss your options and the records you will need to maintain.

What is Gearing?

Gearing is another term for borrowing.

Negative gearing means the income from the investment is less than the expenses incurred.

Structure

Deciding on the person or entity in which the property should be purchased is very important and should be discussed with your accountant prior to signing the offer and acceptance.

Typical Tax Deductions

  • Advertising
  • Interest
  • Agents Fees
  • Maintenance
  • Bank Charges
  • Postage
  • Borrowing Costs Rates & Taxes
  • Depreciation
  • Stationery
  • Gardening
  • Telephone
  • Insurance
  • Travelling

What Records Should I Keep?

All documents relating to:

Acquisition

  • Offer & Acceptance
  • Borrowings
  • Settlement Statements
  • Travel Diary

Rental

  • Estate Agents Statements
  • Rental Receipts
  • Bank Statements
  • Expense Receipts
  • Cheque Butts
  • Travel/Telephone Diary

Who Can Manage the Property?

A real estate agent can be appointed to manage the property (usually for a percentage of the rental income plus inspection and leasing fees).

The investor can self manage the property, however, in the case of a residential property it is absolutely necessary for the investor to be aware of the requirements of the Residential Tenancies Act 1987.

Capital Gains (for individuals)

Investment properties when sold will be subject to Capital Gains Tax.

For properties acquired after 21/09/1999 and held for at least 1 year, 50% of the capital gain is exempt.

For properties acquired before 13/05/1997, the special building write-off deduction results in a “bonus” to the taxpayer by reducing taxable income each year but with no corresponding reduction to the cost of the property for CGT purposes.

Tax Variations

Should you require a Tax Variation please contact your accountant & we will be happy to assist.

Variations can be applied for Negative Gearing, Motor Vehicle expenses or for other investment deductions.

Truck Driver Overnight Allowance

Truck Driver Overnight Allowance 2014/15

Employee truck drivers

Salary range

Food and drink

$112,610 and below

B’fast    Lunch    Dinner
$22.70    $25.95    $44.75
$93.40 per day

$112,611 and above

B’fast    Lunch    Dinner
$25.35    $25.95    $50.55
$101.85 per day

Long distance truck drivers in receipt of an allowance may claim for food and drink up to the reasonable daily travel allowance.  A travel diary is needed to show the number of nights away from home if more than five.

No Allowance Received

If the employee long distance truck driver does not receive a bone fide travel allowance then full substantiation applies.  The reasonable daily travel allowance rate cannot be used.  Owner-drivers must also substantiate all claims.

Summary

The travel allowance MUST BE a Bona fide travel allowance

A ‘bona fide travel allowance’ is an amount that could reasonably be expected to cover accommodation, or meals or expenses incidental to travel.  This does not require that the amount paid by the employer must equate dollar for dollar to the employee’s actual expenditure.  However there must be relativity between the amount of the travel allowance and the purpose for which it is said to be paid.

Taxpayer’s Responsibilities

The ATO is placing increasing reliance upon self-assessment by taxpayers and anticipates auditing all taxpayers at some stage. Most claims lodged in your return are accepted on lodgment but are potentially subject to later review with increased penalties being applied should there be an underpayment of income tax, even if it is unintentional. As a result, a greater onus is placed on taxpayers to ensure that Income Tax Returns are accurately prepared and contain no misleading statements or information.

We therefore request that before signing, you carefully review each return to ensure that, to the best of your knowledge, the following have been addressed:

  • That all the claims for deductions and rebates that have been included, are based on your instructions
  • That all deductions claimed can be sustained by the required records and receipts
  • That all statements are correct, complete and not misleading

Further, the Income Tax Assessment Act requires that where items are used for both business and private purposes, appropriate apportionment documents to verify business usage need to be kept and that written evidence must be kept for at least five years.

If an answer to a question or any statement made in an Income Tax Return, or an attached schedule, appears to be incorrect, incomplete or misleading, please advise us so the return can be amended before lodgment.

Should you require any further explanation of the above, please do not hesitate to contact our office.

Handy Links

Australian Securities & Investments Commission (ASIC)
www.asic.gov.au

Australian Taxation Office
www.ato.gov.au

Australian Business Register – register for GST and ABN Applications
www.abr.business.gov.au

Centrelink
www.centrelink.gov.au

Exempt Fringe Benefits

The following list are examples of exempt Fringe Benefits. Feel free to discuss your Fringe Benefits options with your accountant.

  • Superannuation contributions
  • Mobile phones and car phones primarily for use in the employee’s employment
  • An item of protective clothing required for the employment of the employee
  • A briefcase
  • A calculator
  • Tools of trade (generally confined to hand tools)
  • Work related computer software for use in the employee’s employment
  • An electronic diary or similar item
  • A notebook, laptop or similar portable computer predominately used for work purposes
  • A portable printer designed for use with a notebook computer, a laptop computer, or a similar portable computer

Medicare Levy Surcharge

Income Thresholds &  MEDICARE LEVY SURCHARGE
  Unchanged Tier 1 Tier 2 Tier 3
Singles $90,000 or less $90,001 – $105,000 $105,001 – $140,000 $140,001 or more
Families $180,000 or less $180,001 – $210,000 $210,001 – $280,000 $280,001 or more
Medicare levy surcharge rate 0% 1% 1.25% 1.5%
  • For families, the income thresholds increase by $1,500 for each MLS dependent child after the first.
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