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You can apply for an ABN without registering for GST. When you think your business income – including commercial rent – is over $75,000, you will then need to register for GST. This will save putting in the nil BAS returns.
There can be CGT liability even if the investment property was a previous PPOR, if they are currently claiming the main residence exemption for another property. The six year rule is only valid if there is no other property where main residence exemption is being claimed.
Tax is like swings and roundabouts; what you get in one area, they take back in another. I would say you would be up for stamp duty on the transfer of the investment property title, and your wife could be up for capital gains tax on her share of the investment property.
Another way you could do it is get divorced, as CGT on property settlements in a family breakup is generally deferred until the asset is sold. (But this is a pretty drastic step to save some tax!)
K, this case is different, because it mentions in the article that this loan was a variable interest loan, and RHG had raised the rates. They couldn't have done this if it was a fixed rate loan.
Ms Hamilton was keen to refinance to a more-competitive loan after RHG increased her variable interest rate well above Reserve Bank of Australia (RBA) rate rises, Consumer Action Law Centre (CALW) spokeswoman Nicole Rich said.
“After she entered into the loan in July last year, RAMS, later RHG, started raising her interest rate to a point where now, even after recent RBA rate decreases, her rate is sitting at 0.99 per cent higher than when she signed, while the official RBA rate is two per cent lower,” Ms Rich said.
She said Ms Hamilton considered switching loans, but was faced with an “excessive” early termination fee of more than $12,000.
This is very different to people complaining because they fixed in at the wrong time.
If you decide on loaning the money to the trust, get a loan agreement drawn up. It will be relatively inexpensive, and shows the ATO that the loan is legitimate.
I wouldn't gift the money to a relative; this could end in tears. For $50k, the interest you would earn would be $4k at 8% for a full year, so it's definitely not worth the hassle, or the worry of hoping you keep in the good books with the relative. And besides, if you have $50k to put in, you are probably earning interest on that money at the moment anyway, so your increase in income will not be $4k, but $4k less the interest you are currently earning.
I don't think it's time to store the tinned baked beans just yet.
There are so many factors to consider when trying to predict the economic future. No-one knows what will happen, and the range of predictions from trained economists shows that they don't know either. What we do know is the Australian system of borrowing for real estate is vastly different to the US, and their 'non'recourse' system, so the amount fo defaults here will be much less than the US.
A lot of areas will suffer losses of value, some much worse than others, but some of that will just be a regression to the mean. Some areas, like Western Sydney, grew at a ridiculous rate during the earlier part of the decade and this was clearly not sustainable. Other areas that have grown at a more steady rate may not see much of a loss at all.
If the governments decided not to spend, things would get much much worse, very quickly. Unemployment would go through the roof, household spending would grind to a halt, and we would have a deep recession / depression. The stimulus package, like the one Paul Krugman calls for in the US, keeps people in jobs.
The problem we had in Australia was that when the economy was strong, we didn't save any, and the government of the day couldn't spend it's gains fast enough. They blew it all on middle class welfare, and didn't have the foresight to see that one day the boom would end.
It sounds like a pyramid scheme, pure and simple, but good luck with that 'personal growth', FarmBoss. You could develop some personal growth by volunteering at a nursing home, or helping old ladies cross the street, rather than flogging overpriced merchandise to your mates.
Thanks for the 'clarifications', but I think I'll steer clear anyway.
The test for deductibility of interest is what are the funds used for. If you have a $150,000 loan, put $30,000 into it, then redraw that $30,000 for your IP deposit, only the interest on the $30,000 is deductible (or 20% of the interest).
After you sell, I believe there would be no interest deduction, as there is no asset, or income, to deduct the interest against.
For a definitive answer, go see your local accountant, who will be able to go through all the scenarios with you.
Timing the settlement means that you would have settlement date as close to the end of the quarter as possible (end of March, June, September or December) so you can then lodge your BAS for that quarter, and claim your refund as soon as possible.
If you are lodging BAS's quarterly, and you settle at the end of January, you woiuld have to wait at least two months to get the GST refunded. Settling at the end of March means you could lodge your BAS on April 1st, and get your refund much sooner.
I'm not sure why you would want to do it, but you can, in limited circumstances, borrow by using instalment warrants to purchase an asset for your SMSF. The borrowing has to be non-recourse, so the amount you could borrow would be limited. This change is faily new, and could be a potential minefield. Have a look at this Q&A from the ATO.
Make sure you get good, written advice before you do this, as the consequences of mucking it up are severe.
For tax purposes, a trust is the way to go, as any Capital Gains, after 12 months, will be taxed in the hands of the beneficiary at a maximum of 23.25%, compared to 30% in the company. If you are concerned about asset protection, you could set up a trust with a company as the trustee.
Before setting anything up, best to see your accountant, as they know your situation, and can explain the pros and conc of all the different ways t oset up your new entity.
The young ones vote it down because of the perception that the CA's have to work harder to get their designation, compared to the CPA's. That was certainly true in the past, but the CPA's have caught up. From people in the know, the CPA designation is easier to attain. CA Program takes about 2 1/2 years to finish.
Your salary will definitely be limited if you don't get either one. Most employers out of the profession don't differentiate between the two, but if you are in practice, especially bigger firms, would want you to do the CA Program.
It's not a requirement to join either body to be a tax agent, but it would definitely help in marketing and attracting clients.
It's hard work, but it's worth it in the end. Good luck!
My advice is get professional advice, do not rely on a real estate agent for tax advice.
Your first step is to determine whether the purchase is a taxable supply, or what portion is a taxable supply, because of the split use. Also, determine if the seller is using the margin scheme. If he/she is, you won't be able to claim any input tax credits on the purchase anyway. Also, if it is a sale of a going concern, there is no GST on the transaction
You must register for GST when your turnover reaches $75,000, but this does not include the residential rent, only the commercial rent.
Is the $140 free of GST, or does that include GST. If it includes GST, the current owner is really only charging $127.27 per week, as he is sendin 1/11th off the ATO. If you don't register, the tenant will effectively be paying an extra 10% if you continue to charge $140, as they don't get the GST dcredit. (If it is $140 + GST, and you will continue to charge $140, this is irrelevant)
But first, check the contract for mention of the margin scheme and / or going concern, and when your real estate agent starts talking tax, BLOCK YOUR EARS!!
On a personal level, this is pretty much true, but we are yet to see the effects of the global slowdown. Unemployment will rise, growth will slow and Australians as a whole will be worse off.
On the micro level, some people will lose their jobs, which could be devastating for them, some will not be able to afford the repayments on their house. For others, particularly those in 'recession proof' industries, they will fell minimal effect, or, as you say, the effect will be positive, as interest rates are low and petrol is down 33%.
