National News Australia

Tax time focus on rental property income and deductions

Published

1 year ago

1 August 2022

JeffG

Tax time focus on rental property income and deductions

AUSTRALIAN TAXATION OFFICE

Income and tax deductions from rental properties is one of the four key areas the Australian Taxation Office (ATO) is focusing on this tax time. It’s an area that’s easy to get wrong, and needs extra care when lodging. The ATO Random Enquiry Program has found that nine out of ten tax returns that reported rental income and deductions contain at least one error, even though most of those property owners were assisted by a registered tax agent.

The ATO is therefore urging rental property owners to ensure they carefully review their records before declaring income or claiming deductions this tax time, and for registered tax agents to ask a few extra questions of their clients.

Assistant Commissioner Tim Loh explained “Registered tax agents can only work with the information they gather from their clients, and we know some clients won’t know everything they need to tell their agent. We don’t expect agents to be Sherlock Holmes, but we do expect them to ask the right questions to ensure their client’s return is right.”

Mr Loh said that rental property owners are urged to ensure they know what income they need to declare and what can be claimed as a deduction.

“We are concerned about mistakes, and in particular, leaving out income or deliberate over-claiming of rental property deductions this year.”

“Getting it right the first time, will ensure you receive the tax refund you are owed, and avoids us knocking on your front door down the track.”

INCLUDE ALL RENTAL INCOME

The ATO receives rental income data from a range of sources including sharing economy platforms, rental bond authorities, property management software providers, and state and territory revenue and land title authorities.

“The amount of data we access grows each year, making it easier and faster for us to spot any rental income that you have charged your tenants, but haven’t declared,” Mr Loh said.

When preparing tax returns, make sure all rental income is included, such as 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.”

GET YOUR EXPENSES RIGHT

Not all expenses are the same – some can be claimed straight away, such as rental management fees, council rates, repairs, interest on loans and insurance premiums. Other expenses such as borrowing expenses and capital works need to be claimed over a number of years. Capital works can include replacing a roof, or a new kitchen renovation. Depreciating assets such as a new dishwasher or new oven costing over $300 are also claimed over their effective life.

Refinancing or redrawing on a rental property loan for private expenses such as holidays or a new car, means that the amount of interest relating to the loan for the private expense can’t be claimed as a deduction.

If income from a rental property in a holiday location is earnt, it needs to be included in tax returns.

“You can claim expenses for the property to the extent that they are incurred for the purpose of producing rental income, not where your family and friends stayed in the property for a mini getaway at mate’s rates, you use it yourself, say at Christmas, or you stopped renting the property out,” Mr Loh said.

“Other circumstances where deductions cannot be claimed include pretending that your property is available for rent when it really isn’t, for example you advertise significantly above a reasonable market rate compared to similar properties or you place unreasonable restrictions on potential tenants.”

“Our 2022 Tax Time Toolkit for Investors also contains a number of fact sheets for landlords, including Top 10 tips to help landlords avoid common tax mistakes. These tips will help you avoid common mistakes and save you time and money.”

SELLING A RENTAL PROPERTY

When selling a rental property, capital gains tax (CGT) needs to be considered and any capital gains or capital losses need to be reported.

When calculating a capital gain or capital loss, it’s important to get the cost base calculation right. Cost base is usually the cost of the property when purchased and any costs associated with acquiring or selling it. These can be things like stamp duty, legal fees, valuations and real estate sales fees. Any capital works claimed as deductions may also need to be subtracted from the cost base.

“If you’ve sold a rental property that was once your home, you may be entitled to partially claim the main residence exemption. You will need to claim this exemption in your tax return when you lodge.” Mr Loh said.

Records of all income and expenses relating to rental properties, including purchase and sale records, must be kept. This ensures all eligible deductions are captured when preparing tax returns and capital gains tax can be calculated correctly when the property is sold.

“It’s also important to note that when selling any property for more than $750,000, vendors / sellers must have a clearance certificate otherwise 12.5% will be withheld.” Mr Loh said.

Clearance certificate applications can take up to 28 days to process so to avoid delays, sellers should apply as early as practical using the online form. Having tax affairs up to date, including all lodgments, helps speed up the assessment of an application and a certificate being issued. The certificates last for 12 months and if selling more than one property in the year, it can be used for multiple sales. Foreign residents are generally not eligible for a clearance certificate but may apply to vary the withholding amount.

Apply for a certificate and find out more at ato.gov.au/FRCGWcertificate

KEEP GOOD RECORDS TO PROVE IT ALL

Records of rental income and expenses should be kept for five years from the date of tax return lodgments or five years after the disposal of an asset, whichever is longer.

“Get your books in order and start keeping records as soon as you make the decision to earn rental income. It makes tax time so much easier for you and your registered tax agent” Mr Loh said.

Adequate records should demonstrate how the expense was incurred for the rental property and the extent they relate to producing rental income. They must include the name of the supplier, amount of the expense, the nature of the goods or services, the date the expense was incurred, and the date of the document.

“We can ask for proof of any claim that you make, so good record keeping is the only way to ensure you can claim everything you are entitled to.”

“Remember, when your return is lodged, you are on the hook for the claims you are making, not the registered tax agent.”

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POLICE MINISTER REFUSES TO BACK RURAL CRIME INQUIRY

Published

3 weeks ago

15 November 2023

Liam

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POLICE MINISTER REFUSES TO BACK RURAL CRIME INQUIRY

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Shadow Minister for Police, Paul Toole, expressed his astonishment at the Minister’s response.

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“This Minister seems to be neglecting the prevailing problems, particularly if they don’t pertain to metropolitan areas. She was even unaware of a police station’s two-week closure until she read it in the Daily Telegraph!

Police Minister Yasmin Catley

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“We require a bipartisan-supported inquiry to address the growing problem of regional and rural crime; it’s a straightforward necessity.”

Supported by the NSW Country Mayors Association, the NSW Police Association, and NSW Farmers, recent findings reveal that crime, law, and order have ascended to the top five emerging concerns in New South Wales. Their research illustrates that up to 90% of crimes, including vehicle theft, break-ins, sexual assault, and domestic violence, are occurring within our regional communities.

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Local News

Inflation and Government Policy: A Growing Concern

Published

4 weeks ago

8 November 2023

Liam

people protesting for inflation and government policy as it is a growing concern.

Inflation and Government Policy: A Growing Concern

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The clarion call is evident – it’s high time for state, local, and federal governments to re-evaluate and scale back these escalating charges. Concerned citisens are making a simple plea: no more rate hikes. This sentiment stems from the belief that such increases primarily bolster bank profits rather than the welfare of the general populace.

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The first step in this direction could involve alleviating cash flow difficulties, offering much-needed relief to businesses and individuals grappling with escalating costs. By addressing these concerns collaboratively, the government and financial institutions can tackle the root causes of inflation and usher in much-needed economic stability. The time has come to transition towards fiscal responsibility and create a more consumer-friendly economic landscape.

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National News Australia

Five charged after investigation into “rip on, rip off” method of accessing drugs concealed in shipping containers

Published

2 months ago

20 October 2023

JeffG

Five charged after investigation into “rip on, rip off” method of accessing drugs concealed in shipping containers

Drug and Firearms Squad detectives have charged five men following an ongoing investigation into the supply of large commercial quantities of drugs concealed in shipping containers.

Strike Force Biles was established by State Crime Command’s Drug and Firearms Squad in May 2023 to investigate a criminal syndicate allegedly using a method commonly referred to as “rip on, rip off” to access prohibited drugs concealed in legitimate shipping containers.

To date, strike force detectives – with assistance from the Australian Federal Police (AFP) and Australian Border Force (ABF) – have seized 201kg of cocaine from three containers, with a street value of $105m.

Six people have already been charged for various related offences, which remain before the courts.

Following further inquiries, just after 6am yesterday (Thursday 19 October 2023), strike force detectives – with assistance from the Public Order & Riot Squad and Raptor Squad – executed eight search warrants across Woodpark, Rydalmere, Wentworthville, Plumpton, Merrylands, St Clair, and Seven Hills.

At the Woodpark address, police arrested a 18-year-old man who they will allege directed the local criminal syndicate in ‘ripping off’ the containers.

He was taken to Granville Police Station where he was charged with 12 offences including knowingly/recklessly direct criminal group, take part in supply large commercial quantity of prohibited drugs, manufacture prohibited drug, knowingly deal with proceeds and property proceeds of crime, and possessing ammunition, DECCD, housebreaking implements, and means of disguising face with intent to commit indictable offence.

The man was refused bail to appear in a Children’s Court today (Friday 20 October 2023).

A 28-year-old man was arrested at the Plumpton address and taken to Blacktown Police Station, where he was charged with eight offences including participate in criminal group, take part in supply large commercial quantity of prohibited drugs, possess ammunition without holding a licence or permit, and possessing housebreaking implements and means of disguising face with intent to commit indictable offence.

He was refused bail and appeared in Blacktown Local Court yesterday.

In Merrylands, police arrested an 18-year-old man who was taken to Granville Police Station, where he was charged with 11 offences including participate in a criminal group, take part in supply of large commercial quantity of prohibited drugs, knowingly deal with proceeds of crime, and possessing an unauthorised pistol, DECCD, housebreaking implements, and means of disguising face with intent to commit indictable offence.

He was refused bail to appear in Parramatta Local Court today.

Another 18-year-old man was arrested in Bondi and taken to Bondi Police Station, where he was charged with seven offences including participate in criminal group, take part in supply of large commercial quantity of prohibited drugs, knowingly deal with proceeds of crime, and possessing housebreaking implements and means of disguising face with intent to commit indictable offence.

He was refused bail to appear in a Children’s Court today.

In Seven Hills, police arrested a 25-year-old man. He was taken to Blacktown Police Station where he was charged with participate in criminal group, deal with property proceeds of crime, and possessing ammunition without holding a licence or permit, and identity info to commit indictable offence.

The 25-year-old was refused bail and appeared in Blacktown Local Court yesterday.

During searches of the properties, police located a number of items relevant to their investigation including $37,000 cash, 4kg of methylamphetamine, 3kg of cocaine, a replica firearm, ammunition, electronics and luxury jewellery and watches.

All the items were seized to undergo further forensic examination.

Police will allege in court the 18-year-old Woodpark man received contracts alerting him to a shipment of drugs and directed the group to identify and then break into the containers concealing the prohibited substances.

Those drugs – usually cocaine – were then supplied to a nominated recipient before the group would receive a payment.

Investigations under Strike Force Biles continue.

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.