Forum Replies Created
Yes you will need a receipt for any aggregated claims totally over $200. If the aggregated claim is under $200 and the individual item to be claimed is under $10 the requirement to obtain a tax invoice from the supplier does not apply.
You will also need to make sure that the receipt has the words TAX INVOICE otherwise it is considered by the tax office to be an invalid receipt and your claim will be disallowed. Note that all suppliers must provide TAX INVOICES for any amounts over $50.
If you don’t have receipts the claim will be rejected . And this year the tax office DOES have the staff and budget to focus on individual returns. I expect within the next 6 months to see a number of postings regarding audits. Property audits are being targeted and they have the resources and technology to do these audit so don’t be surprised if you get one.
As long as you have kept all your receipts, listened and acted on your accountants advice then there really is nothing to worry about.
Oh people may be interested to know that the ATO now has the software to match transfer of titles to company and individual tax returns. If there has been a transfer of title in your company or individual name and no gain has been included in your tax return then expect a visit. The software matching technology is highly sophisticated and is part of the ATO’s new arsenal. This software also takes into account your PPOR. The wonders of computers.
Why do i support those who are fortunate contributing a fair share to taxation to assist those who are not. Well it is probably because I am a socialist at heart.
I am one of the few fortunate souls whose parents benefited from family benefits while I was growing up (which enabled my mother to stay at home and raise a family) because my father was earning a very very low wage. Austudy also allowed me to go to university and obtain a degree, gain knowledge and work hard in my chosen profession to become one of those fortunate ones. Happy for my funds to be used to help people like me in my same position.
Would this have been possible without government funding. Well that could be debated.
But am I happy for my taxes to assist those who are disabled and unable to work (you bet I am), am I happy for my taxes to go towards medicare so that someone in a horrific car accident who doesn’t have private health insurance can get the best care possible (anyday). Am I happy that my funds are squandered on superannuation pensions for politicians that are inequitable to the rest of the community (no – and im glad that they are addressing it – albeit slowly)
However I am oppossed the very high levels of taxation we have in Australia. I have no problem with a GST and a corresponding low tax rate. That way if you consume more then you pay more. I think excluding food, rent, etc from GST is the right thing to do. But other services should be taxed. If i decide to eat at Aqua every night then why shouldn’t I pay for that consumption to assist those who cannot do so. Mind you a GST, plus high tax rates, plus stamp duty, plus petrol levies, plus medicare levies, plus tobacco taxes, plus hotel bed taxes, well yes this is ridiculous.
Enjoying the DaVinci Code at the moment. I have a passion for conspiracy theories fiction. Also a great fan of Patricia Cornwell (crime novelist).
Sounds like Greed may just be a disgruntled retrenchee having finished there time in the transit lounge.
We are all public servants in some form (i provide management consulting advice to clients – so i serve my clients – who happen to be part of the public). lol.
Or maybe Greed is Henry Kaye who is disappointed that the current market is not providing the same opportunities to fleece the general public from their hard earned funds.
Either way it did provide some comical relief. And I’m not quite sure where it came from either. Now go take your Prozac and breathe deeply.
Yes it is sad but the government taxes us soo much it is incredulous. I have already made my plans to move to New York City in 2006. Finish up my current projects and then move to a city that offers the same money, same rental (income % wise to Australia), but much lower taxes. And then save and convert my USD to Aussie dollars.
My plan is to live and work in the States and take advantage of the Australian medical system when I get ill (come back here for any major treatment), hopefully be able to apply for a government pension (look at structures for divesting assets and be able to comply with the Australian requirements – the joys of a wife who is a US citizen) and try to recoup some of the proposterous taxes I have paid over the last 10 years.
I am all for taxation and distribution of wealth from the fortunate to those less fortunate but over the last 10 years I have paid for a lot of children who I have not sired. Time to get some of that back.
I don’t think the government will touch negative gearing as it caused too many problems the last time it was done under the Keating Government. Negative gearing is also allowed for other types of investment such as shares so I doubt whether they would try anything.
However I do think that the 2.5% capital allowance could be scrapped. I think the capital allowance was designed to provide an incentive for investors to invest in new properties or alternatively demolish and build to stimulate the construction industry. Well this have been achieved so I would not be at all surprised if the 2.5% was either scrapped or at least reduced. I’m speculating this will be the next change following the report from the Productivity Commission.
Marisa,
That to me would be a sign to stay cautious. The majority of NSW property investors (in fact I could probably make the same comment about property investors in general) are like lemmings. When one decides to jump over the cliff the rest follow. Sounds like the cliff has moved from the eastern seaboard to the western one.
GMH,
I agree. I used to live in Dural before moving into the CBD and I have a lot of friends out that way and every time I am out there I am amazed at the number of for lease signs. I thought the Castle Hill, Glenhaven, Cherrybrook area was the sort of place for ones PPOR but the number of for lease signs has me perplexed. Loved the area but it took too damn long to get to the Opera. Certainly haven’t regretted the change.
Melbourne apartments.
Enough said.
Initially I had just written the first two lines but thought I should expand. The latest statistics are showing a decline in apartment prices in Melbourne and this has been happening for a short time now.
For a property in the high 300’s you are going to be struggling to get a positively geared property. The tip for today is soo appropriate “your deal’s in trouble if the difference between making and losing money is claiming a tax deduction for depreciation”.
I think now is the time to be sitting it out and waiting for property to decline even further. Every talks about the property decline and then say “gee in 2 weeks I’ll make a killing”. Well look at the ABS statistics. Over the last 20 years we have two period of negative returns (someone correct me if there are more I am working from memory). Anyway these downturns lasted for 2 years before an upturn. However this market is a lot different in that we have had 5-7 years of positive growth. So my thoughts are that based on historical cycles property will either correct itself by 20-30% or it will decrease by a lesser amount but stay flat for 5-7 years.
There are much better yields to be made from other investments. Remember there is a time for sowing and a time for reaping. This is the time for sowing. So plants those seeds (cash) and wait for when it time to sow (invest in property). Hmmm i like that….i’m claiming intellectual property rights on that in case I decide to write a book [biggrin]
The ATO’s current ‘Rental Properties’ guide states (at page 4) that the costs of acquiring or disposing of a rental property (including stamp duty on the property transfer) are not deductible (but may be included in the property’s cost base for CGT purposes).
However, it also notes that the costs of preparing and registering a lease and the cost of stamp duty on a lease are deductible to the extent that you use the property to produce income. As properties are commonly acquired in the ACT under a 99 year crown lease, these costs (including stamp duty) are deductible to the extent that you use the property as a rental property (refer pages 4 and 14).
Yep the case has been decided by the High Court and has been held to be an illegal tax scheme.
Anyone who has split loans and capitalised the interest on their home against their investment property and claimed the total as a deduction will need to make amended returns.
Another hit for the investors.
GreatPig,
The last paragraph of my response answers your question. “Although, arguable, this may constitute a breach of duty by the trustee and the appointer could change the trustee, it is best not to give the trustee in bankruptcy the opportunity. The shareholders could be your children (if aged 18 or over), your wife or parents, or maybe even a discretionary trust.”
Even if a company is the trustee, the directors of the company can be made personally liable for the liabilities of the trust under S 197 of the Corporations Act 2001 where, for some reason, the company is not entitled to be fully indemnified out of the assets of the trust (for example, where the company acts beyond its powers)
A director may also be personally liable under S 588G of the Corporations Act 2001 if the company incurs debts while it is insolvent. A director of a trustee company has a positive duty to prevent the trustee company from incurring debts while it is insolvent.
Futher, directors and officers of trustee companies can be held personally liable for taxation offences of that trustee (S8Y of the Taxation Administration Act)
Even though there are circumstances in which a director of a trustee company may be personally liable, a corporate trustee still offers the greatest protection than an individual being the trustee.
For ultimate asset protection, you should consider not being a shareholder of the corporate trustee. If you are bankrupted, the trustee in bankruptcy could take control of the corporate trustee and distribute income or capital to you as a bankruptee which would then be used to pay your creditors.
Although, arguable, this may constitute a breach of duty by the trustee and the appointer could change the trustee, it is best not to give the trustee in bankruptcy the opportunity, The shareholders could be your children (if aged 18 or over), your wife or parents, or maybe even a discretionary trust.
Again best to consult your accountant and/or lawyer for this advice.
IN the current climate I would keep doing what you are doing and save, save, save. Look at getting rid of your car if you don’t need it and then sit on your cash for at least another year. The market has peaked and now is not the time to be buying property. There is always a time to sit on the sidelines and watch the game unfold. Now is this time. So keep up the good habits and in a year or two time you will have the foundations for a good property millionaire start.
I don’t see value in Kellyville to be honest. There are some things going for it and that is particularly the Norwest Business Park which is attracting a number of large businesses and the associated employment opportunities. The M2 has also reduced the travel time to the City which has also bought with it the associated benefits.
I personally think that if you are looking in that area then you will get better value for money in places like Glenhaven and Castle Hill. These markets are already experiencing price declines and so for a PPOR I think you would buy in a better established area.
I don’t disagree that Kellyville will be a nice suburb in the future. It’s a bit bland at the moment. But at an average price of around $500 – $600K i think Castle Hill and Glenhaven are much nicer areas to live.
Kellyville has big new homes but not much around it. Castle Hill and Glenhaven are established areas with good infrastructure and offer the same advantages as the Ville.
Anyway just my thoughts. As a PPOR I am of the view that it doesn’t matter how much you spend as long as you can afford it and like the area.
Just be careful of the value shifting provisions. If a taxpayer operates a business through a company, unit trust or hybrid trust and a family member (or any other person) is admitted to the business, then the general value shifting rules may apply. Generally, the GVS rules will not apply where the business is carried on through a discretionary trust.
Sebastian,
No problems. The world of companies and trusts are actually quite complex. Some people think they are simple but then add a family member later on and get caught out by the value shifting provisions. Nasty.
Ok. Let’s assume you want to create a family trust then http://www.lawcentral.com.au has a good family trust deed that you can use to take along to your accountant. He may make no changes to the document (in fact he probably won’t) but it will be a good start and I think it will set you back around $200-$300 from memory. Cleardocs may also have one as well. You want to discuss a discretionary trust (operating as a family trust) with your accountant.
$2,000 would be about right. To establish a company with ASIC will cost you about $1,900 and a trust deed will cost about $300. However I doubt that this would also include advice regarding income streaming, asset protection, etc. This would only be the cost of establishing a company and trust deed.
Sebastian,
Basic means just that. They cover general situations. You will fill out information as you go along. However if you know nothing about trusts then I suggest you see an accountant and/or lawyer. These documents will be effective for most individuals but without knowing your personal circumstances it is difficult to know whether they would be effective for you.
As an example they offer a basic will kit. For most people this is great but if you want to create a testamatory trust to handle your estate on your death then that needs to be included in your will. A lot of basic will kits do not include that provision. So like I said it will fit most people but may not be the best for your situation.
The structure depends on your circumstances and only a qualified accountant and/or lwayer can work through this with you. However establishing a discretionary trust with a company as the corporate trustee will provide both income distribution and asset protection. If the trustee is a company then the discretionary trust will have limited liability. If the business (operated through a trust with a corporate trustee) fails, the creditos of the business will sue the trust (technically they will sue the trustee as trustee of the trust – that is why you want a company as the trustee). The personal assets of the individual are protected.
If the individual is bankrupted for some reason other than to do with the business, the business itself will be protected as the individual does not own in interest in the trust.
However in some circumstances the individual may be personally liable if they are a director of the corporate trustee or if they have given negligent advice as an employee of the company.
If you have a negatively geared property and are a high income tax earner then note that for tax purposes it would be better to have the asset in your own name rather than through a trust. All losses must be retained in the trust and cannot be distributed to the beneficiaries.
However if you have positive income then a distretionary trusts can provide the following income streaming advantages:-
1. Capital gains to beneficiaries with capital losses. A greater benefit is obtained when the capital gain is not eligible for the 50% CGT discount or active asset reduction. If the 50% CGT discount or active asset reduction applies, the distributed capital gain must be grossed up in the hands of the beneficiary before being offset against the beneficiary’s losses.
2. Capital gains to beneficiaries on low marginal tax rates. Unfortunately this is not as effective as it was when averaging was applied.
3. Link personal-use capital gains to beneficiaries with listed personal-use capital losses.
Be careful however if you plan on transferring assets to establish a trust as it may trigger stamp duty or CGT, as there is a change in ownership.
Because of the complexity of the issues you need to discuss your personal situation with your accountant and/or lawayer to determine the income streaming, asset protection and/or both that you require.
