Discussion in 'Real Estate' started by Alan, 21st Oct, 2006.
This sound familiar?
Taxman to blitz property investors - National - smh.com.au
This statement was a little dodgy.
If a property investor claims a deduction due to negative gearing, it doesn't mean that other tax payers have to pay more tax. It just means that this investor will get some of the tax which they have already paid back or not need to pay as much tax (depending on how they pay their tax). So less money raised by the goverment, but not an expense that must be met by anyone.
You are so right, Leandro, but unfortunately the media has a way of twisting words to sell the story. The old battler footing the bill for the so called "property rich" is a mentality alive and kicking. However misguided and incorrect an article may be, there are still those who still believe everything they read!
It also doesn't mention the massive amounts of state taxes paid by property buyers. Sheese, I've contributed a fortune in state taxes due to property purchases.
I am one of those being blitzed. At this stage my tax return has been escalated and the ATO has contacted my accountant and asked for copies of loan statements, depreciation schedules, etc. I have always received a fairly substantial refund due to 3 negative geared IPs but this year was about 10K more (due to investing in an agribusiness product - thanks Steve . Maybe there is an amount which if exceeded, pops your name up on the radar for a close look.
Keep us updated with what happens and what info the want etc....Interesting stuff this.
Just dropped off all the documents the ATO requested, at my accountant. Pretty much the usual big ticket items - loan statements supporting interest claimed, depreciation schedules, agribusiness supporting documentation, margin loan documents. My accountant asked the person from the ATO if there was a refund size that triggers the requirement for supporting doco and the answer is 40K. So if your refund comes in under that, payment will be made no questions asked by the sounds of things (unless they do a full audit down the track).
Interestingly enough the ATO guy is based in Perth (I am in Canberra) and didn't have any idea about the agribusiness product which ironically is trees planted in WA run by a SP200 listed company whic I would think has millions of dollars invested in this sort of thing each year.
Hi ,I thought it may have been your investment in the Agri Business that triggered the Audit rather than just the property activities . ATO seems to have a history of allowing these then withdrawing the ruling that they are acceptable. But who am I to try to understand the workings of the Bureaucratic mind. Anyway, all the best with the Audit.
The worst thing is they waste so much time getting an extra few bucks out of someone who probably has the most honest intentions and is 99% doing the right thing, and seem to completely forget people blatantly doing the dodgy with main residence exemption - doing a few each year, building a house and selling it a month later with full MR exemption, etc.
If the ATO concentrated on this and the abuse of the FBT system, and keep up a bit of GST compliance, and leave the buggers who are just trying to do the right thing for their future alone, the coffers would be overflowing.
The trees do have a product ruling in place (wouldn't have done it otherwise) and although that doesn't guarantee anything, it does mean the ATO have approved the scheme as long as it run the way things were set out in the PDS. It's the first time I have invested in something like this and although as I said I normally get a refund of around 30K, I believe it was the extra 1Ok+ from the trees that took me over the 40k refund threshold.
Good news, the ATO tax refund cheque cleared overnight. So some 4 months after lodging my tax return I have my refund. As an added bonus it included over $400 of interest due to the long period of assessment. Other than providing all the required doucmentation to support all my claims, there were no other questions or requests for information (other than the ATO guy taking a long time with my accountant to get a handle on the agri business product). I guess the lesson in all this is to ensure your record keeping is as accurate and detailed as it can be. In my case I have a LOC that I have used for multiple IP transactions as well as shares & managed funds, all of which have been purchased in my name or my wife's or in joint with varying percentages, so I keep a spreadsheet for the LOC which tracks the purchases as well apportions the interest I claim. This was one of the items provided to the ATO.
Well done Gaz.
Did your Accountant charge you a "nominal" fee for the xtra work. Mine has offered a policy this yr that will cover this exact scenario.... $200 well spent for peace of mind.
Merry xmas. My accountant is pretty good, generally doesn't charge for this sort of thing (nor emails which I sent a lot of to him). My previous accoutant offered an audit insurance policy which I took up but that I think was for a full scale audit (he would defintely of charged extra for clarifying things with the ATO).
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