Hi Kay,
I love this question, alrightie then, remember all my properties are offsetting against each other,
(+ve + -ve = 0) so any real money i make is neutralled out.
This then shows that i only really do have income from my job (but yes, i will admit i do have +ve cash flow coming in, as the amount of cashflow coming in is greater than, all the expense in total.) Showing that just my own income from my job is what i am only really earning. Plus only a little bit each week from the +ve cashflow.
With all expense and cost against the properties, im still able to claim a large amount of deductibles, (which is a major cause of offsetting)
So this still leaves me in a position of my job producing well over the HECs threshold.
With the benefits of some expenses, that can be claimed against my earnings, again this will show as a loss against my wage, meaning on paper that i have lost money and further reduce my taxable threshold.
With about 5 of the properties being able to claim depreciation, my taxable threshold still decreases, while my income from my jobs still remains the same, with full tax refund, but at the same time able to roll over alot of tax losses into the next financial year.
for eg.
lets say i have $100k coming in and $95k going out, it shows that i have a cashflow of an extra $5k a year, but lets add in all the added expense that are claimable and that can reduce my tax threshold + my job earnings, i am making profit on paper and in the bank, but these extra expense like depreciation, will show that i have a tax benefit of claiming large amounts of losses, which show up on paper that im losing money but reducing my tax threshold were its roughly saying that i lost more than enough, that i had made no earnings but a loss and that my paper deductions are showing im earning $0 dollars but have been able to claim tax benefits, showing i have a -ve income of about $15k.
What i mean is, when i sit down with the accountant, my earnings for the year look like i have a -ve earnings of $15k under $0 (again showing, i have no income at all,) yet i have expenses and tax benefits that show a paper loss, but an actual profit in hand(bank).
Being able to do this, im showing no income on paper but complete losses, while in hand and in bank, im truly earning, which proves and provides to the ATO, i can’t pay HEC’s cause i have no income coming in due to, the expense and depreciation, that is claimable but lowered my on paper losses under $0 dollar earnings.
Ok, im not sure if you understood it all, but ill try to keep explaining, so you can see how it works.
Cheers,
sis
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