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Get your rental right this tax time

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Get your rental right this tax time

 

Australian Taxation Office

The Australian Taxation Office (ATO) is reminding rental property owners and their tax agents to take care when lodging their tax return this tax time.

ATO Assistant Commissioner Tim Loh explained that the ATO’s review of income tax returns show 9 in 10 rental property owners are getting their return wrong.

‘Landlords and their registered tax agents need to take extra care when lodging this year. We often see rental income being left out, or mistakes being made with property related deductions – like overclaiming expenses or claiming for improvements to private properties.’

‘When you are overclaiming expenses or claiming for improvements to private properties, you are taking money from the Australian community. Money that could have been otherwise used to further increase funding for things like women’s sports, schools and hospitals.’

‘We have a range of resources available on our website https://www.ato.gov.au/Individuals/Investments-and-assets/Residential-rental-properties/

to help you get your rental right this tax time, including our top 10 tips https://www.ato.gov.au/Tax-professionals/Prepare-and-lodge/Tax-Time/Tax-Time-Toolkits/Tax-time-toolkit-for-investors/?anchor=Top10tipstohelprentalpropertyownersavoid#Top10tipstohelprentalpropertyownersavoid

to avoid mistakes,’ Mr Loh said.

Rental income

When preparing your tax return, make sure all rental income is included, including income from short-term rental arrangements, renting part of a home, and other rental-related income like insurance payouts and rental bond money retained.

‘Income and deductions must be in line with a rental property owner’s ownership interest, which should generally mirror the legal documents.’ Mr Loh said.

Rental income must be reported:

  • in the year the tenant pays – not when your agent transfers it to you
  • as the gross amount received (before property manager fees and other expenses your property manager pays on your behalf are taken out).

Mr Loh is reminding rental property owners not to double dip their deductions.

‘Make sure you are declaring your gross income. We have seen some clients declaring their net rental income after the property manager has paid their expenses and then they have claimed deductions like rates and repairs all over again.’

For more information on rental expenses, visit ato.gov.au/rentalincome.

Rental expenses

There are 3 categories of rental expenses:

  1. Expenses where you cannot claim deductions – for example, personal expenses, including expenses arising from your personal use of the property and expenses of a capital nature, such as secondhand depreciating assets.
  2. Expenses where you can claim an immediate deduction in the income year you incur the expense – for example, interest on loans, council rates, repairs and maintenance and depreciating assets costing $300 or less.
  3. Expenses where you can claim deductions over a number of income years – for example, capital works, borrowing expenses and the decline in value of depreciating assets (if specific criteria are met).

For more information on rental expenses, visit ato.gov.au/rentalexpenses.

Interest expenses

The ATO is particularly focused on interest expenses and ensuring rental property owners understand how to correctly apportion loan interest expenses where part of the loan was used for private purposes (or the loan was re-financed with some private purpose).

‘Around 80% of taxpayers with rental income claimed a deduction for interest on their loan, and this is where we’re seeing the biggest mistakes.’

‘You can only claim interest on a loan used to purchase a rental property to earn rental income. If you’ve used any part of your original or refinanced investment property loan to cover private expenses, like buying a new car or renovating the home you live in, you can only claim an interest deduction for the portion relating to producing your rental income,’ Mr Loh said.

Rental tac return time

The Australian Taxation Office (ATO) is reminding rental property owners and their tax agents to take care when lodging their tax return this tax time.

Repairs, maintenance, and improvements

‘When you first acquire a rental property and it needs work done to get tenants in – for example, you need to fix a hole in the wall or some damaged floorboards – these are initial repairs.’ Mr Loh explained

Initial repairs to rectify damage, defects or deterioration that existed at the time of purchasing a property can’t be claimed as an immediate deduction but may be claimed over a number of years as capital works deductions.

If you have owned your rental property for a number of years and perform general repairs and maintenance, these repairs are immediately deductible.

‘You can claim an immediate deduction for general repairs like replacing a broken light globe or window. But if you rip out an old bathroom and put in a new and improved one, this is a capital improvement and is deductible over time as capital works.’

Our factsheet has examples to help you, visit ato.gov.au/Rentalrepairsfactsheet

Short term rentals including holiday homes

‘We know that many people who own a short-term rental property, like a holiday home, rent it out for most of the year and use it occasionally themselves.’ Mr Loh said.

You will need to apportion your deduction for rental expenses when the property (or part of it) is not being used to produce rental income, such as when you:

  • use it personally or reserve it for friends or family, or
  • when you place unreasonable conditions that restrict the likelihood of the property being rented (for example, excessive rates, requiring prospective tenants to give references for short holiday stays, or conditions like ‘no children’ in a family friendly destination)

‘You need to make sure you have the records to demonstrate you incurred expenses for your rental property and the extent they relate to producing rental income.’

‘If you’ve charged a mates rate, you can only claim for expenses up to the amount of income you’ve received.’

‘This is an area that we are paying close attention to this year. If you’ve made genuine mistakes, we encourage you or your registered tax agent to fix any errors or omissions in your tax return as soon as you can. If you are deliberately overclaiming, it is un-Australian and penalties will apply,’ Mr Loh said.

For more information on holiday homes, visit ato.gov.au/holidayhomes.

Data matching

The ATO has sophisticated data matching capabilities which include rental property-related data and has recently implemented new residential investment property loans https://www.ato.gov.au/General/Gen/Residential-investment-property-loan-2021-22-to-2025-26-data-matching-program-protocol/  (RIPL) and landlord insurance https://www.ato.gov.au/General/Gen/Landlord-insurance-2021-22-to-2025-26-data-matching-program-protocol/  (LI) data matching programs.

‘This new data provides us with crucial intelligence to paint a picture of what’s true and accurate in tax returns, and we continue to expand our data-matching capability to ensure income and deductions are correctly reported,’ Mr Loh said.

The RIPL and LI programs are part of a broader suite of data-matching programs that includes property management, rental bond and property transaction data, allowing us to address several taxation risks in the investment property market.

Around 87% of taxpayers who own rental properties use a registered tax agent to lodge their return. It is important taxpayers provide their registered tax agent with the right information to prepare their return correctly and for registered tax agents to ask the right questions of taxpayers. Taxpayers are responsible for what they include in their tax return, even when using a registered tax agent.

For more information on rental properties, visit ato.gov.au/rental.

 

For more real estate news, click here.

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LISMORE MAYOR ELECTED NEW CHAIR OF REGIONAL CITIES NSW

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LISMORE MAYOR ELECTED NEW CHAIR OF REGIONAL CITIES NSW

Regional Cities New South Wales (RCNSW) has elected a new Chair and Deputy Chair for a two-year term.

Lismore City Council Mayor, Cr Steve Krieg was elected as Chair and Cr Russell Webb, Mayor of Tamworth Regional Council, was re-elected Deputy Chair at a board meeting in Sydney yesterday.

Steve Krieg

Steve Krieg the new Chair of NSW Regional Cities

The new leadership will lead the organisation post-NSW local government elections, which took place in September.

Cr Krieg said he was proud to lead Regional Cities New South Wales as it advocated for a fair share of investment and population growth to ensure regional cities continued to thrive.

“Regional Cities New South Wales is an important advocate for its members and has a proven track record as a valuable partner for the State Government,” Cr Krieg said.

“I am passionate about the work of Regional Cities NSW. Our members are a similar size and are facing similar issues. Together, we are stronger.

“We have much work to do as we are on the frontline of change in New South Wales. This includes growing populations, energy transition and climate impacts.

“Our cities are also highly liveable and we know regional living is on the minds of many Sydneysiders. We want our cities to retain their liveability as new residents continue to make the move.

“As chair, I will be a strong voice for our member cities as we meet these opportunities.”

Cr Webb retained his position as Deputy Chair.

“I’m very happy to be reappointed as Deputy Chair,” Cr Webb said. “It has been fantastic working with Mayors, General Managers and CEOs of Regional Cities New South Wales.”

“Cr Krieg will lead us in the right direction and I am looking forward to working in partnership as we continue to build our strong network of relationships in Macquarie Street,” Cr Webb said.

Cr Krieg also noted the work of Cr Mathew Dickerson, who stepped down as Chair after the New South Wales local government elections.

“Cr Dickerson has left a great legacy as I take the reins of Regional Cities NSW,” Cr Krieg said.

“Cr Dickerson has led us through the many challenges we have encountered over the past few years, particularly as our members faced natural disasters, housing availability and growing skills shortages.

“Regional cities have received key support in these areas due to his leadership and advocacy. There is still much to do, but the impacts in these areas have been meaningful for our communities,” Cr Krieg concluded.

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Detectives release CCTV appeal following ram raids and arsons of Northern NSW tobacconists

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Detectives release CCTV appeal following ram raids and arsons of Northern NSW tobacconists

PLEASE NOTE: CCTV vision of the ram raids vehicle of interest is available via Hightail – https://spaces.hightail.com/receive/RhBnymtkWg

© State of NSW (NSW Police Force). For editorial use only. No sublicensing of any NSW Police Force supplied image or footage allowed on a standalone basis without the express written consent of NSW Police Force. NSW Police Force attribution notice and logo to be retained on all copies of supplied images or footage with the moral rights to no false attribution and of integrity in all its images and footage asserted.

Financial Crime Squad detectives have released CCTV as they appeal for information following the ram raid and arson of two tobacconists in Northern NSW.

About 4.30am on Sunday 22 September 2024, police were called to a tobacconist on Minjungbal Drive, Tweed Heads South, following reports of a crash.

Officers attached to Tweed/Byron Police District arrived to find a Toyota Corolla sedan, believed to have been stolen from Queensland, driven into a tobacconist, before two unknown males entered the business destroying several displays and stealing large amounts of cigarettes.

A crime scene was established, and police commenced an investigation into the incident.

A month later, about 2.40am on Tuesday 22 October, police were called to the same tobacconist, following reports a car had driven into a neighbouring business.

Police arrived to find a MG SUV had driven into the store – as bollards had been placed in front of the tobacconist – before two unknown men poured fuel inside the business and fled without setting it alight.

A crime scene was established, and police commenced an investigation into the incident.

About 3.30am the next day (Wednesday 23 October 2024), emergency services were called to River Street in Ballina, following reports of a building fire.

On arrival, officers attached to Richmond Police District located a silver Mercedes sedan inside the shopfront of a tobacconist, well alight.

Police were told the sedan drove into the business before the vehicle caught fire, with the occupants of the vehicle leaving the scene prior to police arrival.

Fire and Rescue NSW attended and extinguished the blaze; however, the building was extensively damaged.

Surrounding units were evacuated and two other vehicles were damaged by the blaze.

No injuries have been reported as a result of the incident.

A crime scene has been established and an investigation into the incident has commenced.

Following initial investigations linking all three incidents, detectives attached to State Crime Command’s Financial Crime Squad’s Arson Unit commenced Strike Force Albany to investigate the incidents.

As part of investigations, strike force detectives have released CCTV of the two ram raids at the Tweed Heads South tobacconist.

Detectives are also hoping to speak to the driver and passengers of a dark coloured sedan seen leaving the scene of the second ram raid.

Anyone with information about any of the incidents are urged to contact police or Crime Stoppers on 1800 333 000.

Anyone with information that may assist investigators is urged to contact Crime Stoppers: 1800 333 000 or https://nsw.crimestoppers.com.au. Information is treated in strict confidence. The public is reminded not to report information via NSW Police social media pages.

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NSW SES Reflects on Storm Response and Urges Preparedness

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NSW SES Reflects on Storm Response and Urges Preparedness

As the recent storms impacting the Northern Rivers, Clarence Valley, and Coffs Coast regions briefly subside, the NSW State Emergency Service (SES) is taking a moment to acknowledge the tireless efforts of its volunteers who have responded to over 159 storm-related incidents since Sunday.

The severe weather, which struck on Sunday through Wednesday evenings, left widespread damage across communities including Federal, Tweed Heads, Grafton, Coorabell, Richmond Hill, and Lismore. The majority of incidents involved fallen trees, blocked roads, and property damage, creating significant safety hazards.

Proactive Storm Preparation Urged

With clear weather providing a temporary reprieve, Superintendent Scott McLennan encourages residents to use this time to prepare for further storms expected today and next week.

“Check your gutters and drains for leaves, branches, or debris that could block water flow and exacerbate flooding during the next storm,” Superintendent McLennan advised.

He stressed the importance of vigilance, noting that saturated catchments could lead to flash flooding even with light rain.

“We are still in a volatile weather pattern, and taking precautions now can significantly reduce risks to homes and properties,” he added.

Motorist Warnings

The SES also issued a stern warning to drivers about the dangers of navigating flooded roads.

“We’ve seen vehicles speeding through flooded causeways, which is not only dangerous but also risks becoming stranded or causing further damage to roads,” Superintendent McLennan said.

Motorists are urged to exercise caution and avoid flooded areas entirely to protect themselves and others.

Stay Prepared

Residents and visitors are reminded to:

  • Clear gutters and drains of debris.
  • Secure outdoor items that could become projectiles in strong winds.
  • Monitor local weather updates and SES warnings.
  • Avoid driving through floodwaters under any circumstances.

The NSW SES remains on alert and ready to assist communities as the region navigates this challenging weather period. For emergency help in floods and storms, call 132 500.

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