Different Tax Considerations in Australia

There are other different tax considerations in Australia which will be described by our professional taxation accountants.

CAPITAL GAINS TAX

When you sell (or otherwise cease to own) a rental property acquired after September 19, 1985, you may make a capital gain or loss.

The time of the event in the case of a real estate sale or other disposal is usually when you enter into the contract (generally the contract date), not when you settle. The fact that a contract is subject to a condition, such as financing approval, has no bearing on this date. If there is no contract, the event occurs when ownership changes hands.

When you sell or otherwise cease to own a property you acquired before September 19, 1985, you can make a capital gain or loss from certain capital improvements made after that date.

Record Keeping

Tax agent Melbourne said that when a CGT event occurs, keeping accurate records of all expenditures will assist you in calculating the amount of capital gain or loss you have made. You must keep records of your ownership as well as all costs associated with acquiring and disposing of property. It will also assist you in avoiding paying more CGT than is required.

You must keep records in English (or that are easily accessible or translatable into English) that include the following information:

·        the date of purchasing the asset

·        the date on which you sold the asset

·        the date you got something in return for the asset

·        the parties involved

·        any amount that would be included in the asset's cost base

GENERAL VALUE SHIFTING REGIME

Taxation accountants said that if a continuing right to utilise the property was held by an associate of yours (for example, a 10-year lease granted to your associate instantly before you enter into a sale contract) at the time of sale, a loss you make on the sale of a rental property may be reduced under the value shifting rules. The rules only applicable if the right was originally shaped on non-commercial terms, and the market value of the right was greater than $50,000 at the time.

GOODS AND SERVICES TAX (GST)

Tax accountants near me said that if you are registered for GST and it was due on your rental income, do not include it in your tax return's income.

Similarly, if you are GST-registered and eligible to claim input tax credits for rental expenses, you do not comprise the credits in the amount of expenses you claim. You must include any GST in the amounts of rental expenses you claim if you are not registered for GST or the rental income is from residential premises.

NEGATIVE GEARING

If a rental property is purchased with borrowed funds and the net rental income after deducting other expenses is less than the interest on the borrowings then the property is negatively geared.

A negatively geared property generates a net rental loss as a result of its overall taxation. When you file your tax return for the relevant income year, you may be able to deduct the full amount of rental expenses from your rental and other income (such as salary, wages, or business income). Accounting firm claims that the loss is carried forward to the next tax year if the other income is insufficient to cover it.

The rental expenses you claim in your tax return would result in a tax refund if you negatively gear a rental property, you can lower your rate of withholding to better match the year-end tax liability.

PAY AS YOU GO (PAYG) INSTALMENTS

Our tax agent Melbourne experts said that if you make money from your rental property, you should be familiar with the PAYG instalment system.

This is a method of paying instalments toward your anticipated tax liability for the year. If you earn $4,000 or more in investment or business income, like rental income, and your income tax assessment debt is more than $1,000, you will be required to pay PAYG instalments.

Accounting firm will notify you if you are required to pay PAYG instalments. In most cases, you will have to pay the instalments at the end of each quarter.

Final Say

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