I am an Accountant and registered tax agent and i was wondering how many property investors (that earn salary and wages, not in business) realise that there is an ATO form (the old 221D form) that can be completed to vary the tax withheld from wages. This is basically getting tax refunds upfront to help out cash flow. It is quite a lengthy process whereby you basically do a pre estimate of your next years tax return including absolutely everything (Cost would be say $120-$200 per form, like a tax return a form is required each year). The ATO then gives you a rate to provide to your employer/payroll department to order them to withhold less tax.
I understand some investors probably like the refund at tax time but to me it makes no sense. New investors on there first rental property should definately do it.
Anyway i am thinking of marketing this service so any thoughts would be appreciated.
Considering this forum is for obtaining cash flow positive properties, a 221D is probably not going to be much help for most here. The forum is also not the place to advertise for new clients .
Amanda
“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”Sorry, that wasn’t my intention at all, just after feedback. I am new to this web site, sorry if i am on the wrong area.
$120-200 to fill out the form sounds a bit rich. The form is relatively sraightforward and any investor can fill in their details and send it to the tax office and reap the benefits.
I would guess the form takes about 30 minutes to complete max.
This post, by Property WA, has been cut and pasted from another, since deleted, thread.
Hi Qinvest,
We have two clients do the Variation method and one swears by- so for some it works.
Two things that I have found to way up –
1)The Variation allows you to put the ‘extra’ money into an investment now rather than wait for the Lump Sum return at the end of the year for which you incurr oppurtunity cost.
2)Those that use the Variation must be dedicated enough to use the money along the way for an investment (or another useful purpose) and not just pilfer it here and there. With the Lump Sum after your tax return its like a forced savings plan coming to fruition.
If you get $100 worth of silver coins over the year chances are you’ll loose half and waist the other on misc. You get a $100 note and I bet its used more rewardingly.
Just food for thought – and don’t get me wrong I think its a great idea to market.
Originally posted by Qinvest:Sorry, that wasn’t my intention at all, just after feedback. I am new to this web site, sorry if i am on the wrong area.
Hi Qinvest,
In my experience there are many Mum and Dad investors who are not aware of section 15.15 of the tax act and the capacity to forward adjust tax paid.
I tend to agree with NATS – the form is very simple and anyone who has done their own tax, or who has a sense of numbers can work their way around the form.
In general terms once someone has been shown once (and provided they know their ins and outs) it is a relatively straight forward process.
PS Your post did come across as a trawl for clients.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Qinvest,
Should not every good accountant be working to aide their clients anyway?This year I changed accountants because the last accountant had some paperwork and had done nothing with it in a week.
When I kicked up a fuss I was told they had bigger clients.
Funny how its then that you notice the office has 30 odd people working there and you have to wait for one person to feel like working.My new accountant has found many things and been very helpful.
A small office of 5 but all have been introduced to me.
I have only needed to make one appointment and can walk in anytime I feel like it and will be greeted by name and a cold drink.
Funny how waiting up to half an hour is no longer a problem.On reflection my first accountant gave great personal service and the elderly gentleman was eager to help out a young teenager willing to get ahead and learn.
When he passed away he had made provisions for all his clients to be looked after (he was diagnosed with liver cancer but worked by choice anyway).
I knew him for 2 years.My next accountant was more knowledgeable but had to be booked a week in advance into 1/2hr sessions.
A few years and their business with 3 accountants were merged with another office and next day appointments were normal.
However as they grew I became just a number and felt that I was not being looked after so I switched.The next accountant was a two man team and they were full of excitement and could not do enough to help.
These fellas would find something go through all their clients files and contact all that they could help with what they had found.
It made them successful.
Over the years I was passed from one assistant to another until nothing had been done in a week, phone calls were not returned etc.Each time I change I find the smaller business appreciates me and is willing to work with me.
And the new accountant with out fail always finds something, which can benefit me.Why can’t all accountants do this as standard practice?
Just my thoughts regarding service Colin.
Gandhi’s belief
“Consciously or unconsciously, every one of us does render some service or
other. If we cultivate the habit of doing this service deliberately, our
desire for service will steadily grow stronger and we will make not only
our own happiness, but that of the world at large.”Email [email protected].
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Mobile 0425201055.
For all your CLEANING and GARDENING work.I understand some investors probably like the refund at tax time but to me it makes no sense.Absolutely 100% agree with you on that. Getting a refund at tax time obviously means you’ve paid too much during the year or you’ve made a whopping great loss somewhere along the line.
Give the refund the flick – I’d much prefer to have investments flinging off so much income every day you’d be forced to, and quite happy to pay the tax owing.
As for paying someone $ 200 to fill out a measly form so you can claim back your losses trickled over time – goodness me….let me guess, that cost is also is tax deductable ????
To my mind, anyone getting a tax refund isn’t playing “the game” too well. [blush2]
I have to disagree regarding the tax refund. I do my tax as soon after June 30 as I can and having prepaid interest for the year (plus rates, land tax and anything else I can prepay) the refund then comes as a lump sum and sits in our housing loan to reduce that interest. We then redraw it to prepay interest the next June and get another tax cheque. It works for us.
Personally, if I did a variation (and we have done it in the past), we would just increase our living expenses – it is human nature.. Statistics say that people live up to their incomes, so we’d rather keep our income lower and get the bonus at the end.
Our trouble is that with boys 17, 14 and 10, they would eat through any extra on a weekly basis. If there is more money, the temptation is there to be a bit more extravagant with the groceries. Anyone who grocery shops knows that some of those extras cost big.
For me (everyone is different) getting that tax cheque is a huge incentive to tuck it away.
That is what works for us, but everyone has their own level of discipline and priorities.
Wylie.
I’ve completed the Income Tax Wages Variation in the past through an accountant..
Learnt that you can do it yourself very easily..download the form from the ATO site
I’m quite happy getting my refund at the end of the year as Wylie has said, we pre-pay a lot of items for the preceeding yearand drag them into this FY, my Tax is done in the first week of the new FY and two weeks later I’ve got a great refund
the S15-15 ITWV doesnt help my serviceability (current bugbear) so I’m in no hurry to get it done..plus all loans are FI-IO (I have ability to pay additional though if needed..my thoughts are best time for this is with tax chq)
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorAs someone who hasn’t really done too much re: PI, how do you actually prepay interest, or prepay outgoings vis a vis documentation, proof etc
Sorry if this seems like a really obvious question..
In our case with Westpac, we advise them (via our broker) early June that we want to prepay. They do up loan documentation which in effect fixes the IO loan for one year and we sign and return. We are given a day on which to transfer the funds (we do it via internet banking). This year, the rate was better for a two year fix so we did this.
As far as rates are concerned, we contact Brisbane City Council who work up a figure which we pay before June 30.
Last year I was told we couldn’t prepay land tax. I called again and was told I could, so I did.
Good luck, Wylie.
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