Hey guys,
I understand all about finding and purchasing positive cashflow properties to use as passive income. However, as this becomes your income, when do you pay tax – just at tax time in a lump sum. As with a regular working wage, tax is paid every pay cheque as such. I hope this question isn’t too silly and makes sense??
Cheers.
[
]Hi Ernest,
Whether you use an accountant or not, you submit your return at the end of the financial year. Keep all your records of income and related expenditure for your IPs. This will help you keep track of what you may be up for at the end of the financial year.
We use an accountant, because the tax laws are hard to keep up with!
The ATO does have some excellent information regarding IPs – booklets that they will send out. Just contact your local office or go to their website.
Hope this helps.
Cheers
[8D]Hi Earnest,
When we first became self-employed, the biggest worry for us was being left with a huge tax bill at the end of the year.
So what I did was place 20% of our Gross income into an ING Direct account. Now, we have done our tax for the this year and we find we have a good deposit left over for an IP! And the interest was a nice little bonus too!
So, if you are earning income that you are not paying immedite tax on, put some aside because you’ll need it, and it won’t hurt to over estimate.Keep smiling,
Sue [
]Be careful not step on the flowers when you’re looking at the stars
Hi Ernest
Even with a positive cashflow property, there are other non cash expenses such as depreciation and capital write offs which will reduce your taxable income.
If you do have tax to pay, and lodge your return through a tax agent, you should have until May the following year to pay your tax debt. The ATO will then send you quarterly IAS forms with a quarterly instalment to be paid.
Cheers
]Hi Ernest,
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