Check Out These Tax Tips – Get Planning For Next Year

Check Out These Tax Tips – Get Planning For Next Year

So Tax time is upon us again (where has the year gone?!) If you have been following our blog posts you will have used all our Tax tips throughout the year to maximise your returns and be smiling all the way to the tax man. As it’s fresh in your mind we thought it would be a good time to refresh you on how to make the most of your tax return for the next financial year  and share some tax tips – it’s never to early to start. If you get all your ducks in a row starting from now by June 30 2018 you’ll be cool calm and collected and maximising your returns with very little effort. Tax planning should be done on a regular basis throughout the year. Imagine what you could do with tax saved? Here’s some tax tips my accountant shared with me this year and I want to share them with you too. • Reduce your home loan • Top up your super • Have a holiday • Deposit for an Investment Property • Upgrade your Car Here’s a guide to the strategies you can use to minimise your business tax. IS YOUR BUSINESS A “SMALL BUSINESS ENTITY”? Small businesses can access a range of tax concessions from the ATO. To qualify as a “Small Business Entity”, the business must have an aggregated turnover (your annual turnover plus the annual turnover of any business connected / affiliated with you) of less than $2 million and be operating a business for all or part of the 2017 year. In the 2016/17 Budget, the Government...
Tax Depreciation Schedule – What is it & Should I Get One?

Tax Depreciation Schedule – What is it & Should I Get One?

Lets start with what Tax Depreciation actually is??  It is what happens to an item over time – the item looses its value due to wear & tear. This can be from household appliances to the actual house itself. Just like you claim depreciation on your car for business purposes – you can also claim depreciation on your investment property. Unfortunately not on your owner occupied home – this tax deduction is for investment properties only. A Depreciation Schedule is a report that breaks the property down into different categories, determining the building write-off claims and depreciation of your investment which goes as a deduction against your taxable income. Based on your allowances the report determines how much you can deduct each year as part of your tax return. The Schedule is conducted by a Quantity Surveyor and is designed to ensure that you are getting the most possible cash return from your investment property. There are 2 elements to a Depreciation Schedule, the Capital Works Allowance (Structural & Irremovable Assets ie brickwork) and the Plant & Equipment (Removable Assets that depreciate at a faster rate than the irremovable assets ie dishwashers). Why get a depreciation schedule on your investment? It will save you money on your tax each year. It is a one off report and will save you much more money over time than the cost of the report itself. In fact our referred agent guarantees if you don’t cover the cost of their schedule in your first return they will refund you the cost of your report. “If we can’t get you more depreciation than our fee in the first full year...
The Budget 2017- What Investors Need To Know

The Budget 2017- What Investors Need To Know

This is a great article by the Australian giving a summary of the budget 2017 and what it means to the Property Investor. For the active investor this week’s federal budget hits a remarkable spectrum of issues: few stones were left unturned by Treasurer Scott Morrison as he issued a range of amendments that will ­affect tax, super, property and shares. This year’s budget lacked the surprise — some might say consternation — around large-scale superannuation changes we got last year. But Morrison did cast the net wide with a significant number of changes, which every investor must get to know. Some of these changes are ­positive — in super and in home ownership and many are negative such as sharp cutbacks on property tax breaks and targeted ­measures against key investment sectors such as the banks. Crucially, there are also a ­number of political dimensions to the ultimate delivery of this budget, which must be kept in mind: it has yet to be passed and some compromises on budget details are inevitable in the weeks ahead. This year the budget item that would appear to be in jeopardy is the planned removal of the so-called Temporary Budget Repair Levy — the extra 2 per cent individuals have to pay on annual earnings above $180,000 — which is due to be scrapped by June 30. It has been reported the government may be put under pressure to extend the application of this tax into the future in order to get other budget measures passed. Here are the ten things from the budget 2017 every ­investors should know: 1. Tax...
Here are 10 Tips To Help You Prepare For Tax Time

Here are 10 Tips To Help You Prepare For Tax Time

It is fast coming up that time of year again! There are many items and or situations that are tax deductible that you may not know about. These can save you precious pennies come tax time! Here are just a few tips we thought we would share with you all on saving the most you can come tax season. 1. PREPAYING EXPENSES Determine if you have any ongoing expenses that you can pay in advance. For example if you have any insurances that are tax deductible e.g. Income Protection or Health Insurance. If you are on a monthly payment plan you could pay the annual balance before June 30th and claim a deduction for this final year. 2. CAR LOG BOOK Always keep your car log book up to date. If you are using your car for work related purposes then you must keep a record of all the kilometers travelled. If you keep a detailed log book with all work related kilometres recorded you have the ability to claim the highest deduction. 3. HAVE A GOOD FILING SYSTEM This can be hard copy or digital. We always recommend taking either a scanned copy or even a photo on your smartphone of all receipts as these tend to fade over time. You need to record all tax deductible receipts and invoices as the Australian Tax Office will not allow a deduction without a copy of the receipt. This is not the case for items under $100 but it is always good to have these on file in case they are asked to be produced. Make sure your files are well labelled, easy to find and ready to go to the accountant. 4. SALARY SACRIFICE...
Depreciation – What, When & How

Depreciation – What, When & How

Every year there are millions and millions of dollars in unclaimed tax deductions for depreciation. That might make the ATO happy, but as a savvy investor you should be making sure that you are not one of those contributing to these unclaimed tax dollars when they could be in your pocket. Firstly let’s start by explaining what exactly is Depreciation? It is – put simply – compensation for wear and tear. Buildings being rented out suffer wear and tear, so do the assets (fixtures & fittings, or chattels – including appliances, floor coverings, hot water system etc). It is a tax deduction. Depending on the property, it can easily exceed $10,000 in a single year. Even older properties usually have something worth claiming. It is definitely worth finding out if a Depreciation Schedule is viable for your investment property. It is treated by your accountant as just another tax deduction. Every year you probably claim on interest payments, council rates, water rates and property management fees as tax deductions against your investment property and depreciation should be another. Secondly what is a Tax Depreciation Schedule? Again, put simply – this is a document that sets out how much depreciation you can claim on your property every year from when it was first available to rent. People also use different terms for ‘Tax Depreciation Schedule’ like the shortened ‘Depreciation Schedule’ or a ‘Quantity Surveyor Report’ or a ‘Capital Allowances Schedule’…… or sometimes people just say, ‘my accountant said I need a building tax report thingy’. Title aside if you are an investor you should have a building report tax thingy for...
It’s Creeping Up Again – End of Financial Year!

It’s Creeping Up Again – End of Financial Year!

The end of June is getting closer, and with that comes the end of financial year. So you will more than likely need to lodge a tax return at some stage over the next few months. It is also a good opportunity to get your finances in order for the year ahead. Here are four things you can do now to get ready for end of financial year.   1. Know what you will need for your tax return Avoid any last minute hassle by finding out which documents and information you’ll need before hand – so when it comes to gather everything you are already sorted. This includes things like receipts if you’re claiming deductions, your payment summary from your employer,  your car log book and records of interest earned on your bank accounts.   2. Decide how you are going to lodge your tax return Do some research into the different options as there are a few different ways to lodge your tax return, the one you choose will depend on your circumstances. Some of the options include: myTax – For most individuals with simple to complex tax affairs. This option caters for basic wage earners with no additional claims to more complex situations including investment properties or share portfolios. e-tax – This used to be an option for people with more complex tax affairs but this year they have merged everyone to use the myTax system Via a registered tax agent or accountant – For people who want to save time by having their tax return filled in for them, and can afford the agent’s fee Via the ATO’s...
Stamp duty explained

Stamp duty explained

So following on from my other home loan experiences (yes – I’m all moved in and nicely nested in my new home – thanks for asking) –  I thought I would talk about stamp duty. Stamp duty was another small bump in my road to home ownership and unless you know about it it can come as an un-favourable additional expense. Stamp Duty is a charge which is applied by state governments in Australia on transactions relating to the transfer of real estate, cars and other assets belonging to a business. It can also be imposed on home loans, gifts and some insurance. It is paid upfront and needs to be budgeted for in addition to your loan and deposit to avoid a nasty surprise come settlement time! The amount of duty you will need to pay differs in each state, however there are three factors, along with the value of the property, that determine how much stamp duty you will pay. whether or not the property is a primary residence or investment property whether or not you are a first home buyer if you are purchasing an established home, a new home or vacant land. There are a number of stamp duty calculators available online (or see below) that take the guesswork out of budgeting for a property. Factoring in this additional cost should not be overlooked when you are working out your capacity to repay a loan, it can however be added to your loan so you don’t have to come up with the additional funds. However, in a bid by state governments to stimulate home ownership...
Negative Gearing – what is it and why it is a stupid idea to scrap it!

Negative Gearing – what is it and why it is a stupid idea to scrap it!

There has been a lot of talk in the media lately about Negative Gearing. You are probably asking yourself – what is this negative gearing? How does it work? How will it affect me? Well I am going to explain. All the pollies are happy to go on about this Negative Gearing, but not once have any of them stopped to explained what it is or how it works, and to be honest I don’t even think they understand it themselves. So…. what is Negative Gearing? Negative Gearing is when an asset you purchase costs you more to own than the revenue or cash coming in to cover its expenses.  This provides a loss on the property / asset. You then get to claim that loss against your income.  Now this is where it gets complicated as the amount you get back from the loss on the property depends on what tax bracket you are in. If you are on the top marginal tax rate i.e. over $180,000pa then you pay $0.47c in every dollar you earn. So if you have a loss on your investment property of $10,000pa you would then be able to claim that loss against your income – therefore dropping your gross taxable income by $10,000. So say you earn $200,000 with the negative gearing loss from the property of $10,000 your new taxable income would be $190,000. So because you would have already paid tax on $200,000 you would then get a $4,700 tax refund from the ATO.  Now it gets less if you earn say $80,000 as you only pay $0.30c in the dollar...
Tax Depreciation Schedule – What is it & Should I Get One??

Tax Depreciation Schedule – What is it & Should I Get One??

Depreciation is what happens to an item over time – they loose their value due to wear & tear. This can be from household appliances to the actual house itself. Just like you claim depreciation on your car – you can also claim depreciation on your investment property. A Depreciation Schedule is a report that breaks the property down into different categories, determining the building write-off claims and depreciation of your investment which goes as a deduction against your taxable income. Based on your allowances the report determines how much you can deduct each year as part of your tax return. A Depreciation Schedule is conducted by a Quantity Surveyor and is designed to ensure that you are getting the most possible cash return from your investment property. There are 2 elements to a Depreciation Schedule, the Capital Works Allowance (Structural & Irremovable Assets ie brickwork) and the Plant & Equipment (Removable Assets that depreciate at a faster rate than the irremovable assets ie dishwashers). This one off report will last 40 years on the property. Why get a depreciation schedule on your investment? A depreciation schedule will save you money on your tax each year. It is a one off report and will save you much more money over time than the cost of the report itself. Depreciation allowances combined with additional negative gearing factors such as interest on a mortgage and repairs and maintenance will help investors reduce their taxable income, pay less tax and create positive cash flow. Contact us at info@bluewaveproperty.com.au and we will put you in touch with same great companies that can organise a Tax Depreciation Schedule...
Rental Expenses – What investors need to know!

Rental Expenses – What investors need to know!

What are the rules about rental expense claims? The Australian Tax Office offers attractive incentives to a property investor.  IF you are an investor, or considering purchasing an investment home, you need to be informed on what rental expenses you can claim at tax time.   What can you claim? You can claim expenses in the year that you incurred these expenses. For example:  advertising for new tenants, Insurance, council rates,  pest control, mowing and gardening expenses, accounting fees related to the property and any bank charges related with the property. Further, depending on the type of property, body corporate fees, depreciation schedules, repairs and maintenance, interest on mortgage and travel expenses.  However, due to variables, it is best to check with the ATO, as often there are rules that apply in order for you to claim such items.  ( for example  travel costs incurred to visit your investment property). Your accountant should be able to advise you further on the specifics.   What you cannot claim: The ATO states that certain costs associated to buying and selling the property are not tax deductable. For example: expenses that the tenant pays on behalf of the property ie: electricity or water bills or any related expenses incurred by yourself,   if / when you use the property yourself and not the tenant.  What about repairs and maintenance? Certain repair costs and property maintenance may be tax deductable, however be sure the cost is related to a repair and not a revamp!  The costs must be directly related to wear and tear associated with the renting out of the property. For example if there...