Sertori & Co is a CPA Practice
Q? WHAT SERVICES DO YOU OFFER?
A. Sertori & Co offer a full range of accounting and taxations solutions.
Our Services Include:
Individual, Partnership, Company, Trust and SMSF Tax Returns
BAS & IAS preparation
Business Planning, Structuring, Reporting and Coaching
Self Managed Superannuation Fund Compliance
Self Managed Superannuation Fund Audits
Accounting Software Training (MYOB, Reckon, Xero, Cashflow Manager)
Maximising Accounting Software Solutions (Cloud)
Q? I HAVE MOVED, CAN YOU STILL DO MY TAX RETURN?
A. Sertori & Co have clients from all around Australia, and we are able to provide our services to you. It is important to remember that we like to provide a personalised service and where possible we like to talk face to face or at least by phone. Most of the return is completed electronically via email.
Q? WHAT RECORDS DO I NEED TO BRING FOR MY TAX APPOINTMENT?
A. This depends on the type of tax return you require, generally we need:
Any Loan documents, Hire Purchase and Lease Documents relating to your
Investments or Businesses
Any income received. PAYG Statements, Investments ( Dividends, Interest, Trust
Distribution, Rent) Capital Gains, or Business Income
Details of any expenses relating to your income
Private Health Insurance details
Q? HOW MUCH IS CAPITAL GAINS TAX?
A. A capital gain or a capital loss is the difference between the cost of acquiring an asset and the proceeds you receive when the asset is disposed of.
In calculating a capital gain there is a CGT concession which allows a 50% reduc-tion on the gain (difference between the cost and disposal price). The net capital gain is then added to the individual’s taxable income and is taxed at their marginal tax rate. This discount only applies to assets held longer than 12 months.
An example of the calculation of a capital gain is as follows:
Capital Proceeds $100,000
Less: Cost Base of Property $(50,000)
Capital Gain $(50,000)
50% Discount $(25,000)
NET CAPITAL GAIN $ 25,000
The net capital gain of $25,000 is added to the individual’s taxable income and taxed at their marginal tax rate.
Q? WHAT CAN I CLAIM AGAINST MY RENTAL PROPERTY?
A. The most common rental expenses include:
Interest paid on a loan on a property
Real estate agent fees
Council and water rates
Strata levies and body corporate fees (if applicable)
Repairs and maintenance
Further deductions apply for depreciation. Depreciation is a non cash de-duction for the decline in value of depreciating assets such as carpet, furni-ture and appliances. For assets that cost less than $300, an immediate de-duction is allowed. However, for assets that cost more than $300 a deduc-tion is claimed based on the effective life of the asset. The effective life of a depreciating asset is how long you can use it for a taxable purpose. This is calculated in line with ATO guidelines.
The deduction for the decline in value of building construction costs and improvements are known as capital works deductions, and is based on the type of construction and the date in which construction was completed. In some cases the cost of construction can be written off over a period be-tween 25-40 years and is most beneficial on new residential homes.
Rental property investors are encouraged to enlist specialist quantity sur-veyors such as BMT Tax Depreciation to calculate personalised deprecia-tion schedules that outline the deductions available.
Q? HOW DOES A POSITIVELY OR NEGATIVELY GEARED PROPERTY AFFECT MY TAX?
A. The rental income minus rental costs of a positively geared investment property will be taxed at the individual’s marginal rate.
The tax result of a negatively geared property is a net rental loss, which you can claim as a deduction against other income such as wages, busi-ness income or other investments. This strategy can reduce your taxable income and therefore reduce your tax payable.
While achieving a reduction in tax can look attractive, any investment strategy should not be undertaken for the sole purpose of minimising tax.
Creating wealth is about building assets and generating income.
Q? WHAT’S THE DIFFERENCE BETWEEN POSITIVELY AND NEGATIVELY GEARED PROPERTIES?
A. A positively geared property is where the property generates a profit as the rental income is greater than all the eligible deductions.
Negative gearing occurs when the cost of owning the rental property is greater than the rental income you receive.
Q? CAN I BUY A RENTAL PROPERTY FOR MY SELF-MANAGED SUPERFUND?
A. As with any investments, it is important to have an investment strategy to ensure diversification. Buying a rental investment property in your self-managed super-fund is possible though there are many regulations and restrictions enforced.
Firstly, self-managed superfunds are allowed to borrow money to purchase an investment property. However, the funds must be used to purchase a single asset only.
It is also important to note that if you plan to build the investment property, banks only allow two payments of funds; being the deposit and at the end of construc-tion. One strategy around this is to borrow against personal equity and make a non-concessional contribution of cash into the fund to use for construction (being mindful of superannuation contribution caps).
Finally, there are also stringent restrictions relating to who can rent the property, in particular no related parties can be tenants.
Q? DO YOU ONLY SERVICE STAWELL AND ARARAT
A. Our services are provided to a diverse clientele Australia wide so call us today for a review of your individual and business needs.