Get the Max from your Tax
Variation of income tax
If you have a negatively geared rental property, you can apply to have your weekly or monthly PAYG income tax reduced. This can help you to repay your loans faster as you can apply the reduced tax directly to your loan.
It takes a number of weeks for the ATO to approve the variation in your tax and get it in place even if you have already had an application approved in the last financial year. If you wish to do it yourself, go to www.ato.gov.au. Or you can contact Easy Tax, and we can assist you with this for a fee.
Here is the information Easy Tax needs to assist you:
- Your expected rentals next over the coming12 months
- Your expected property expenses over the next 12 months
- Your interest payments to bank for the next 12 months
- Your weekly, fortnightly, or monthly salary and the current tax paid on this.
- Your budgeted depreciation.
Repairs
You should consider getting those repairs for your rental property done and paid for before the 30th of June. This helps reduce your rental income to give you a possible refund. Repairs which are considered maintenance or relate to wear and tear are deductible, but the costs of improving, adding to, or altering a rental property are of capital nature. These are not immediately deductible. Instead, these capital costs may be depreciated. Make sure you keep the receipts to help you determine the exact amount claimable.
Deductions
You can also prepay expenses over $1,000 up to twelve months in advance (including the cost of interest for your mortgage). That would help you with an immediate reduction in your tax and will probably help you get a hefty refund!
Put big dollars into your Super before the 30th June.
This month there is a one-off opportunity to put up to a million dollars into super. Fantastic if you have just won lotto or if you have inherited a cool million! One client who is nearing retirement and wants to downsize to a smaller property has sold his large family home to drop money into super. That is a smart move as the sale of your home is capital gains free. But, before you start thinking of selling rental properties or shares to dump money into super, it is wise to check carefully so you don’t end up being caught by the capital gains tax.
Records to keep
You have to keep records of everything that affects your tax for at least two years if you have a simple tax return. But with an investment property you need to keep your records for at least five years. For purchase of property or capital additions to your property, you need those old stuffy records until you dispose of them. Those old records may help you reduce tax that is the result of a capital gain. So go carefully when you are cleaning out your papers.
Above we’ve talked about getting the Max from your Tax for yourself. How about giving the Max to get more Tax?
Donations
Now is also the time to make sure others benefit. Make your tax-deductible donations now so you can claim your donation in your 2007 tax return. To be tax deductible, tax deductions must be to eligible gift recipients. This means your donation must truly be a gift (i.e, you can’t receive something for it), and the donation must be to a registered organization.