Hi All,
Quick Q:
I need to pump approx $10k worth of concrete onto a sub division project (half going into the driveway for the back block, half going into a new driveway for the existing house – my PPOR).
I don't have a business created just yet, this will all be done in my own name. With this in mind, I'm wondering what my best approach is – Am I better to pay with Cash (financial saving) or pay an Invoice (Tax benefit).
Cash is my preferred option, saves my hip pocket – but at the end of the day, I'm sure it'd be best to use the $10k as a tax write-off against the project build for the back block.
Your thoughts ??
I can't see it mattering whether you had a business created or not, the deduction will be with the owner of the land.
I assume only half of it would be deductible anyway since part is used for the PPOR, and even then it may be a capital cost which means you could only claim 2.5% pa or off the CG when you sell.
Why not just pay cash and claim it too? just get their ABN and make a diary entry and claim it.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Can you claim Cash Payments ????
I've always been under the impression that you can't, and if you do, you jeopardise the business you received the service from ??
I've still got alot to learn about Tax and Benefits, but are you able to elaborate any more on this ??
Thanks Terry.
Cheers,
Darren
You certainly can claim a cash payment.
I assume you also mean there is no invoice. I would still claim it. write down diary notes of as much as you can about the transaction, things you would have received on the invoice. Claim it and argue it if audited.
If the other company wants to avoid tax it is up to them and they may get into trouble if audited.
see this from ATO
How does the Tax Office deal with missing or invalid tax invoices?
In November 2004, we issued a practice statement that explains when we will treat a document that is not a tax invoice as a valid tax invoice.
If you claim a GST credit without a tax invoice or with an invalid tax invoice, we may:
- treat your tax invoice as being valid or
- treat some other document as a valid tax invoice.
Our decision to allow your claim will depend on the details you provide.
For more information about how we deal with GST credits claimed with invalid or missing tax invoices, refer to PS LA 2004/11 The Commissioner’s discretions to treat a particular document as a tax invoice or adjustment note.
http://www.ato.gov.au/businesses/content.asp?doc=/content/50913.htm
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks Terry…
I'll be honest, it still seems like it's a little grey to me, mainly because the nasty 'Fraud' word pops into my mind…
Claiming GST when GST was never paid sets off alarm bells…
Is there something i'm missing here ??
How do you know it wasn't paid?
You are buying an item. This is normally GST inclusive. Whether the seller is doing their bit is up to them, not you.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
So this is perfectly legal ??
What are the requirements, just a Diary entry and the businesses ABN ??
Where would I stand if I was investigated – or worse, if the provider completely denied doing the work altogether ??
Look at the stuff from the ATO above
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Consider the other side of the coin, if you pay cash & don't include the expense in your cost base, then you will be up for the cgt on the value of the work, it will come out of your pocket at some stage. (Just like the owner-builder who does a heap of work on their own house, which they have not lived in. When it comes to the sale, there is all of this unpaid work which adds to the capital value but there is no expense to reduce your profit).
Terry, dnh83 might take a diary note of the advise you gave.
that would not be good if he gets auditeddnh83, I always pay by cheque but if i pay cash i want a receipt, its upto them if they do not put the money threw the system but thats not your problem you have a receipt you done it correctly, you payed cash to get a slightly cheaper deal but you still got an invoice for the job done
You must be logged in to reply to this topic. If you don't have an account, you can register here.
