EOFY Tax Tips

EOFY TAX TIPS Subject to cashflow requirements, consider holding off raising invoices until after 30 June, especially if you expect lower income in 2016/17 compared to 2015/16. In order to claim a superannuation tax deduction in the 2015/16 tax year, the contribution...

Benchmarks

BENCHMARKS The ATO considers ‘cash economy’ businesses high risk. These include cafes, hairdressers and cleaners. Many customers of these businesses pay by cash, and, if this income is not included in the tax return, the ATO misses out on tax and GST. One way that the...

Motor Vehicle – cents per km

MOTOR VEHICLE CENTS PER KM The cents per km method of claiming motor vehicle expenses can be a lucrative claim, but you can only claim up to 5,000kms. No substantiation is needed, just a reasonable basis for the claim - e.g. 3 times a week from Mitchell to Woden for...

Motor vehicle logbooks

MOTOR VEHICLE LOGBOOKS The ATO requires a logbook be kept for a continuous 12 week period. It needs to be started in the year that you are claiming the expenses for.  This means that a logbook for a car bought in January can be started as late as 30 June. As long as...

Running Expenses

BUSINESS RUNNING EXPENSES If you have a sole purpose office at home, you can claim electricity, gas, and water consumption, on the same % as the office to the total floor size. Claiming running expenses does not lead to Capital Gains Tax (CGT) when the house is sold....

Offset vs Deduction

OFFSET VS DEDUCTION A deduction reduces your taxable income, whereas a tax offset (sometimes referred to as a rebate) directly reduces the amount of tax payable on your income. For example, tax payable on an income of $110k is $30,297. If you have a deduction of $1k,...

Adjusted Taxable Income

ADJUSTED TAXABLE INCOME A question that we are quite often asked, is "What is the adjusted taxable income line in my tax return?"  Your adjusted taxable income (ATI) is the sum of taxable income, adjusted fringe benefits, tax-free pensions or benefits, target foreign...

PAYG Instalments

PAYG INSTALMENTS When you have a substantial tax payable amount during a tax year, in order to pre-empt your tax payable the following year, the ATO places you in the PAYG Instalment system.  This means that you pay an amount to the ATO each quarter, to ensure that...

ATO Data Matching

ATO DATA MATCHING The ATO uses data matching to determine whether or not an audit is required.  Data matching compares data from different sources against lodged tax returns.  If there is a discrepancy, the ATO may escalate the tax return for further investigation....

Inheriting Property

INHERITING PROPERTY There are no death taxes in Australia. This means that if you receive a property from a deceased estate, no tax is payable on that transfer. However, tax may be payable if you sell it down the track. If the property was a main residence before...

Property Loans

PROPERTY LOANS Interest on a loan to buy or build a rental property is tax deductible. While the property is rented, or available for rent, you can also claim interest charged on loans taken out to purchase assets, for repairs and for renovations. So far, so good. If...

Rental Property Ownership

RENTAL PROPERTY OWNERSHIP If a property is owned by 2 or more people, it can be owned as joint tenants or tenants in common. If joint tenants, then the obligations are joint and several, so that even if only one of the owners is sued, the creditor can take assets from...

Capital Gains Tax Rate

CAPITAL GAINS TAX RATE Contrary to popular belief, there is no specific capital gains tax rate. If you sell a property then the profit, plus or minus a myriad of adjustments, is added to your taxable income and taxed accordingly. So, if you income is $100k, and you...

Claiming Travel to your Property

CLAIMING TRAVEL TO YOUR PROPERTY I am often asked ‘Is it true that I can claim 2 trips per year to visit my rental property?’ No, in fact there is no limit to how many trips to a rental property you can claim, providing they are legitimate trips and not just drive-by...

Land Tax on Canberra Property

LAND TAX ON CANBERRA PROPERTY All states and territories impose quarterly land tax on residential rental properties except the Northern Territory. In the ACT, there is no land tax exempt lower threshold, meaning that you pay land tax from the first dollar of land...

What is Negative Gearing?

WHAT IS NEGATIVE GEARING? Negative gearing is the claiming of the loss from a rental property against your other income. The result is that you pay tax on a lower taxable income. Let’s break it down. Your income is $100k. You have rental income of $20k, and rental...

Asset Definintion

ASSET DEFINITION When is an expense not an expense? When it is an asset. The accounting definition of an asset is an item that has a life of more than 12 months. The ATO has reams of tables concerning the effective life of assets. This then dictates the depreciation...

Property Seminar Deductions

PROPERTY SEMINAR DEDUCTIONS The ATO is becoming increasingly concerned about the rise in claims associated with attending property seminars. Property seminar costs are only deductible if they are concerned with how to manage your EXISTING rental properties. For...

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