The top Christmas tax questions
Every year, we are asked about the tax impact of various Christmas or holiday related gestures. Click below to read the most frequently asked Christmas tax questions: The Top Christmas Tax Questions
Every year, we are asked about the tax impact of various Christmas or holiday related gestures. Click below to read the most frequently asked Christmas tax questions: The Top Christmas Tax Questions
In early November, the Commonwealth Bank announced that it is now Australia’s first bank to offer customers the ability to buy, sell and hold crypto assets, directly through the CommBank app. You know when the banks come on board, cryptocurrency has become normal.
But cryptocurrency is only one part of the blockchain universe. Non-fungible tokens or NFTs (fungible means interchangeable) are one-of-a-kind digital assets which are part of the Ethereum blockchain. An example is the CryptoKitties game that allows players to purchase, collect, breed, and sell unique virtual cats – and, before you laugh, the game transacted over $1 million in virtual cats in its first few days of launching.
NFTs are also rapidly rising in popularity in the art world because ownership of the asset is on the blockchain and in some cases, the artist can take a percentage of every transaction of that artwork – so, no more starving artists because they can generate an income from the asset over time not just on the first sale. A stellar example is the sale of an NFT artwork by the digital artist Beeple, which was sold at auction by Christies in March 2021 for $69 million (USD).
Let’s look at what the Australian Taxation Office has to say about some of the commonly asked questions about the implications of investing in blockchain.
Have you got a rental property and overwhelmed at tax time knowing what you can and can’t claim? It’s not uncommon for landlords to feel this way with what makes sense in the real world often not making sense for the Australian Tax Office (ATO).
Tax deductions in general can only be made in the period that you rented the property or during the time it was genuinely on the market for rent and actively looking for a tenant. If you are renovating for example, then you may not be able to claim expenses during this period, with some exceptions. A few common problem areas include;
Interest on bank loans
Only the repayments for the investment are deductible and not the loan itself, with some exceptions.
The sharing economy
The deductions made for renting out a room are like that of a rental property with tax deductions claimable for expenses such as the interest on your home loan, professional cleaning, council, insurance etc. However, these need to be in proportion to the lease period and in proportion to proportion of your house rented.
Repairs or maintenance?
Currently the ATO is looking very closely at deductions claimed for repairs and maintenance and is an area of major confusion. Repairs and maintenance can often be claimed independently with the deduction for capital works spread over several years. Repairs are defined as the wear and tear of the property as a result of being tenanted such as replacing fence palings or fixing a broken toilet. However, if looking to replace a whole fence, water system, improvements and extensions this falls under capital works as it goes beyond the general wear and tear.
However, with that said Australia’s renovation industry is profiting from weakened economic conditions and tighter lending standards. The Australian Bureau of Statistics (ABS) December building activity data showed a 6.6 per cent increase in alterations and additions in 2018, with renovation spending in the December quarter alone reaching $2.27 billion.
This indicates homeowners and investors are seeking to improve capital values and increase rental income, rather than purchasing anew. According to Corelogic’s quarterly rental review for 2019, gross rental yields are currently sitting around 4 per cent. In some scenarios however, renovators can achieve a 13 per cent return on their renovation investment.
Sounds a lot right? Let’s look at a case study by BMT Tax Depreciation, where an investor completed a $60,000 renovation.
Investor X purchased a $410,000 residential property in January 2018, originally built in 2004 and producing a rental income of $18,720 a year ($360 per week), producing a rental yield of 4.6 per cent.
In 2018 Investor X installed a new kitchen and appliances, split system air conditioner, blinds, lights, carpets and bathroom.
Post-renovation the property was now worth $565,000 and the rental income is now $26,520 per year ($510 per week).
Prior to the renovation Investor X was experiencing an annual cash loss of $1,207. Now, they have increased their rental income by $150, achieving a 13 per cent yield to their renovation costs and have a positive cash flow of $5,261.
This example shows the dream, it is important to be aware of some tips and traps. Choosing which assets to install can make a huge difference to what can be claimed upon completion of the renovation. Investors should stick to a budget when selecting items as it is easy to overcapitalise.
If all this just got you more confused, don’t hesitate to speak to your PrimeAccountant and make your property work for you, 02 9415 1511 or email us.
There is only a short time before the Federal Election on 18 May 2019, and there’s a lot of wild speculation and “fake news” in the media.
We’re not trying to recommend who you should vote for, but instead we believe that it is vital that our clients understand how they will be affected by the result of the Election.
Here are some of the key ways you may be impacted:
A note of caution here, as there is little detail associated with some of the proposed changes. While we have listed below the main policy announcements, the detailed legislation might differ substantially, so we encourage you to be mindful of this!
This is what we know so far (at time of writing):
LABOR’S TAX POLICIES
THE COALITION’S TAX POLICIES
The government will no longer proceed with implementing its plan to have a 25 per cent tax rate apply to all companies;
CONCLUSION
It’s hard to imagine not being impacted in any way.
There are many other election issues that will influence a voter’s preferences and, at the end of the day, it is about making informed choices.
Please contact us anytime if you would like our advice (before and after the Election) about these proposed tax policies and how they may affect you. We’re here to help you!
Recently we’ve been contacted by a number of clients who have received suspicious calls and messages from people claiming to be from the Australian Taxation Office (ATO) and Medicare. It’s important that you are aware of some recent scams.
The Australian Taxation Office (ATO) has warned about the emergence of a scam where “…scammers are using an ATO number to send fraudulent SMS messages to taxpayers asking them to click on a link and hand over their personal details in order to obtain a refund.”
The refund scam follows a more sinister four phase scam stating there is a warrant out for your arrest for unpaid taxes in prior years. The scam starts with a text message purportedly from the Australian Federal Police (AFP). Within minutes, your mobile rings and the caller identifies themselves as being from the AFP and working with the ATO. They then ask for your accountant’s details. You then receive a call purportedly from your ‘accounting firm’ asking you to verify the AFP/ATO claims. Finally, you are provided with a way, if you act quickly, to make the AFP go away by paying a fee before your ‘imminent arrest’.
The ATO states that it will not:
A new phishing scam sent text messages purportedly from Medicare advising the recipient that they are owed a $200 rebate from Medicare. Once the person clicks on the reclaim link, they are asked to provide their personal details including bank account details for the ‘rebate.’
If you are uncertain about any suspicious messages please contact the registered office of the “sender” or alternatively speak with your accountant or advisor.