Archive for the ‘Property’ Category

GST property settlement online forms available

Thursday, July 5th, 2018

From 1 July 2018, purchasers of newly constructed residential properties or new subdivisions must pay the related GST directly to the ATO as part of the settlement.
The ATO says property transactions of new residential premises or potential residential land that involve GST to be paid directly to the ATO on or before settlement will require purchasers or their representatives to use the following online forms:
• Form one, GST property settlement withholding notification, is used to advise the ATO that a contract has been entered into for new residential premises or potential residential land that requires a withholding amount. This form can be submitted any time after a contract has been entered into and prior to the settlement date.
• Form two, GST property settlement date confirmation, is used to confirm the settlement date and can be submitted at the time of settlement and when the payment has been made to the ATO.
Depending on which state or territory the property is acquired in, the purchaser’s representative can include a conveyancer or a solicitor.

Issues for property owners

Thursday, July 5th, 2018

There have been recent changes to:
• the tax treatment associated with residential rental properties (eg travel deduction and depreciation changes);
• CGT and GST withholding tax obligations for purchasers of property;
• superannuation measures impacting home ownership (eg the first home super saver scheme and the superannuation downsizer incentive); and
• stamp duty and land tax, which varies from state to state.
The government has also proposed to abolish the main residence CGT exemption for taxpayers who are no longer Australian tax residents at the time they sign a contract to sell their home, regardless of how long the home has actually been used as a main residence.

Residential rental property travel expense deduction changes

Friday, May 11th, 2018

Recent changes to Australian tax law mean that individuals, self managed superannuation funds (SMSFs) and “private” trusts and partnerships can longer claim tax deductions for non-business travel costs related to their residential rental properties. Such costs also cannot form part of the cost base or reduced cost base of a CGT asset.
The ATO has issued guidance to make it clear that tax deductions are only permitted for taxpayers who incur this kind of travel expense as a necessary part of carrying on a business such as property investing, or providing retirement living, aged care, student accommodation or property management services.
TIP: The ATO will consider a range of factors, such as number of properties leased, time and expertise needed for their maintenance, and taxpayer record-keeping, when deciding if someone carries on a business that requires travel expenditure related to their residential properties.

CGT main residence exemption to disappear for non-residents

Friday, May 11th, 2018

A person’s Australian tax residency status may be about to assume a whole new meaning. Currently, both residents and non-residents qualify for a full or partial exemption from capital gains tax (CGT) when they sell a property that is their home (main residence). But if a Bill that is currently before Parliament is passed, that will change, and any individual who is a non-resident for tax purposes at the time they sign a contract to sell their home – for example, if they have moved overseas before signing the sale contract – will no longer qualify for the full or partial main residence exemption, regardless of how long the home was actually their main residence when they were an Australian tax resident.
TIP: If you’re considering selling your home and moving or travelling overseas, talk to us to find out how this could affect your Australian tax residency and CGT costs.

Reduce Tax with an Investment Property

Thursday, March 16th, 2017

The most common question being asked by the majority of clients today of MDB is “HOW CAN WE REDUCE OUR TAX??”

As we all know with the advent of the computer age the Australian Taxation office is now very aggressive scrutinising client taxation affairs.

There are only a few true safe harbour ways to legitimately reduce your tax and create wealth for you and your families future at the same time.

These two methods are Superannuation and also Negative Gearing by reducing your Tax and building a great property portfolio.

Most times client say to us that they have no idea where to commence looking for investment properties and what is suitable to their situation.

We have partnered with Nyko to assist client to look at opportunities.

Frank Pana from Nyko property is willing to have a one on one meeting with you, to discuss the merits and suitability of investing in property.

Nyko property has done substantial research into the property market are a willing to share this information with you. Armed with this information I am sure you can make a better investment decision.

If you would like us to organise a meeting here at MDB please let us know.

An example of an Investment Property now available: Retreat Elsternwick. Great location which has recently been rezoned so there will be very little development in the surrounding areas.

There are only 3 apartments left:

Developers Price Valuation and Nyko’s Sale Price Estimated Rental BMT Depreciation Estimate 1st Yr Deduction
Apartment 3 Ground 1 Bed 1 Bath 1 Car $512,500 $487,500 $400 – $420 pw $13,700
Apartment 4 Ground 2 Bed 2 Bath 1 Car $770,000 $750,000 $610 – $620 pw $15,800
Apartment 13 Level 1 2 Bed 1 Bath 1 Car $689,000 $675,000 $540 – $560 pw $17,590

Primary producer income tax averaging

Thursday, October 27th, 2016

Legislation has been introduced in Parliament that proposes to allow primary producers to access income tax averaging 10 income years after choosing to opt out, instead of the opt-out choice being permanent. The Federal Government says this will assist primary producers, as averaging only recommences when it is to their benefit (ie they receive a tax offset) and they can still opt out if averaging no longer suits their circumstances. The changes are proposed to apply for the 2016–2017 income year and later income years.

TIP: Primary producers have to meet basic conditions to be eligible for income averaging. Please contact our office for further information.

Property developers denied GST margin scheme

Friday, February 22nd, 2013

The AAT has affirmed GST assessments levied at two property developers associated with the sale of real property between 2008 and 2009. The taxpayers had purchased property, which was eventually subdivided and on-sold. The taxpayers said they “never had an intention of not including GST in returns or defrauding the Commissioner” and that “they wanted their returns to be correct”.

However, the AAT affirmed the Commissioner’s assessments. It also decided that the margin scheme could not apply in the circumstances as there was no agreement in writing between the vendor and purchaser that the margin scheme was to apply to the property transaction.

TIP: The use of the margin scheme can provide a lower GST cost to the supplier than would normally be the case under the general GST rules. However, in addition to meeting various eligibility requirements, there must be an agreement in writing between the supplier and recipient that the margin scheme is to apply. Please contact our office for further information.

ATO focus on property developers

Friday, April 29th, 2011

The Tax Office has issued an information sheet entitled “Tax avoidance on property sales – don’t risk it” which is directed at trying to keep property developers on the straight and narrow.

The information sheet says that property developers who try and avoid declaring tax on the sale of property are more likely than ever to be contacted by the ATO.

The ATO is matching information provided on Business Activity Statements and income tax returns with information from the Office of State Revenue and Land Titles Office to ensure property developers are correctly reporting GST and income tax (including CGT) on property sales.

In a recent case, a taxpayer was identified as a developer of subdivisions who purchased rural farmland and then subdivided it into residential lots. Through data matching, the ATO identified over 100 sales made by the taxpayer.

The taxpayer had not reported the property sales and was charged the highest penalty applicable – amounting to approximately $4.5 million.


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