Don’t claim a tax deduction twice for the same rental deductions
Taxpayers can claim a tax deduction for expenses incurred on rental properties for the period the properties were rented out (or available for rent). Examples of such tax deductible expenses include borrowing expenses, interest expenses, insurance expenses, body corporate fees and charges, council rates, land tax, repairs and maintenance, advertising for tenants and property agent fees and commissions.
The ATO has warned that some taxpayers mistakenly claim a tax deduction twice for the same rental expense by incorrectly filling in the expense amount twice under different labels on the tax return (e.g. label for interest deductions and label for other deductions).
Please speak to your Nexia Edwards Marshall NT adviser if you have an investment property and need assistance in completing your tax return – particularly in light of the proposed changes to claiming depreciation deductions and travel expenses relating to residential rental properties.
Can you be released from your tax debts?
The ATO can release individual taxpayers from their tax debts if the payment of the tax debt would expose such individuals to serious hardship (i.e. because of the payment of the tax debt, the individual would no longer be able to provide food, accommodation, clothing, medical treatment and education for the individual or their family).
However, the ATO cannot release a taxpayer’s tax debt if the taxpayer is already in serious financial trouble before the tax debt arises.
Furthermore, a trustee of a deceased estate may apply for the release of the deceased’s tax debt if payment of the tax debt would cause serious hardship for dependants of the deceased estate.
Do you know how to apply the margin scheme to a property sale?
A GST registered entity that sells property as a taxable supply will usually pay GST on 1/11th of the sale price. In contrast, if the margin schemeapplies, the seller will only pay GST on 1/11th of the margin.
The margin is usually the difference between the sale price and the purchase price of the property (if the property was acquired on or after 1 July 2000) or the sale price and the property’s value at 1 July 2000 (if the property was acquired before 1 July 2000).
The seller will only be able to apply the margin scheme if the property was originally bought from someone:
- who sold the property as a taxable supply subject to the margin scheme;
- who sold the property as a GST-free going concern (i.e. GST-free supply);
- who sold the property as existing residential premises (i.e. input taxed supply); or
- who was not registered or required to be registered for GST.
Please contact your Nexia Edwards Marshall NT adviser so that we can determine whether the margin scheme applies to your property sale transaction.
How can Nexia Edwards Marshall NT help you?
For any questions or to discuss any of the above in relation to your personal situation, please contact Sarah McEachern or your Nexia Edwards Marshall NT Adviser.