» Accountant advice

How to choose your Accountant

BMT team — Mon, 25 Feb 2019 04:58:55 +0000

One of the most important people to have on your property investment team is a trusted Accountant. An Accountant should keep you up to date with any tax changes that could impact you, offer tailored accounting and tax advice and help you to manage your tax liabilities. As Accountants play a vital role for investors, it’s important to choose the right person to join your investment team. Here are some helpful tips on how to choose your Accountant. Are they a property specialist? Choosing an Accountant who specialises in property will make life a lot easier if you own an investment property and have any difficult questions down the track. Accountants who specialise in property have a solid understanding of laws that impact your investment and ways you can claim all tax deductions that you are legally entitled to. Don’t be afraid to ask questions specific to your investment property. Importantly, ask the Accountant about depreciation. Accountants who specialise in property have a good understanding of the benefits of claiming depreciation and should refer you to a specialist Quantity Surveyor to maximise your depreciation claim. Are they registered? Investors should choose an experienced Accountant who is registered with an association such as CPA Australia or Chartered Accountants Australia and New Zealand (CA ANZ). This ensures a high standard of practice and knowledge. To complete your tax return, an Accountant must be registered with the Tax Practitioners Board (TPB). You can check their TPB registration here. In most cases, they must also have an Australian Financial Services (AFS) licence. Are they a good match? If you are satisfied the Accountant is sufficiently qualified and has the required knowledge to manage your investment property, ask yourself if they are a good match for you. It’s important to have a good working relationship with your Accountant as they form part of your investment team. If your personalities clash and it will be uncomfortable to work with them, they are not the right Accountant for you. Consider how quickly they respond to your calls and emails. Good customer service is a sign they will make your requests their priority in future. Do they go the extra mile? Accountants are highly skilled professionals who should be able to provide you with expert advice when buying a property. Specialist Accountants have a network of property professionals at their fingertips and should refer you to their contacts for further assistance.

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Key things to consider when choosing a Tax Accountant

Chan Naylor Team — Tue, 20 Mar 2018 00:20:29 +0000

When you’re a property investor, it’s common to work with a number of experts during the time you hold your investment. It’s likely that one of these will be an Accountant. While hiring a Tax Accountant comes with a fee, this is often a small price to pay when you think about the unforeseen and hefty taxes they may help you avoid and the strategies they can put in place to help you get the most from your investment. While there are a lot of Accountants out there, you should do some preliminary groundwork to ensure you choose the right one for you. Firstly, check they have expertise in the areas relevant to you. Your Accountant should have a good deal of experience working with other clients in the same or a similar situation to yours. This means that the Accountant has worked on complex situations before and has already been exposed to a broader set of issues relevant to your situation. You should also know the number of years the Accountant has been in the field. Ideally, you’ll want them to have at least five years of experience doing individual tax returns. It is also better if your Accountant has a certified public accountant license, even if it isn’t necessarily required. There are many Accountants who do tax work even without special training in tax, so it is preferable that you choose one with more advanced training. Experience is good but a formal education is better as this may offer a broad perspective in individual, partnership, corporate and fiduciary tax. You should also make sure that your Accountant will stand by the tax return he or she prepares for you and represent you in case of an audit. With this, the Accountant should review your past tax returns at no extra charge. This only takes a few minutes and it will demonstrate his or her willingness to serve you. An Accountant typically charges by the hour and the rate varies by location and seniority. To help lower your fees, make sure you come to any meetings organised so you spend less time with your Accountant. Use a spreadsheet or a QuickBooks file to easily show him or her your income, expenses and other relevant information. You should also pay attention to their personality and the gut feeling you get from them upon your preliminary meeting. It’s important that you feel comfortable with your Accountant as you will have to ask plenty of questions and share what is often personal information with him or her over time. Finally, have a think about location. While some investors may prefer their Accountant to be based locally, this is not a necessity anymore as you can send your documents easily via email or Dropbox. Nevertheless, if face-to-face meetings are important to you, be sure to research the location of your prospective Accountant and get an idea of what hours they are generally available to meet. If you need a reliable Tax Accountant, visit the Chan & Naylor website to learn more about our services. You can leave your details and we can schedule you in for a free consultation. Chan & Naylor Group has nationwide offices in Brisbane and Capalaba in Queensland, Melbourne and Moonee Ponds in Victoria, East Perth in Western Australia, and South West Sydney, Parramatta, Pymble, North Sydney, and Sydney in New South Wales.

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Claiming work related deductions, car and travel expenses

BMT team — Mon, 20 Nov 2017 22:07:23 +0000

A very easy way to boost your tax return refund is by taking advantage of the deductions that you can claim. When you complete your tax return, you will be entitled to claim deductions on expenses you’ve incurred, which are related directly to earning your income. If you want to claim work related deductions, the money spent from your pocket must not have been reimbursed by your employer. The expenses should be directly related to earning your income and you have a record to prove these expenses. Car and travel expenses are costs that many people claim in their tax returns but not all travel and car expenses are deductible such as travel to and from work. Properly claiming these expenses cannot only save you a lot of money but can keep you out of trouble with the Tax Office. If you use your car for work, the claimable travel and vehicle expenses are leasing, depreciation, registration costs, insurance costs and costs of running such as fuel, oil and servicing. You cannot claim expenses for your private use or those related to voluntary work. You can also claim by using the kilometre travelled for business method. The Tax Office gives you a rate that is used based on the type of vehicle you have. There are many complex deductions which you can claim to reduce your taxable income. Make sure you are claiming all deductions available to you by working with a professional that can help you maximise your tax return. What can you do? If you would like to know more about how you can protect your assets, you can click here to know more about Chan & Naylor’s services. You can leave your details here and Chan & Naylor will schedule you for a free consultation. Whether you are a beginner, seasoned investor or business owner, Chan & Naylor can give you guidance to maximise the financial areas of your life. They can give you an integrated solution of your superannuation, taxation, property investment, asset protection, estate planning and more. If you like what you are reading, you can subscribe to Chan & Naylor’s newletters at www.chan-naylor.com.au. Disclaimer

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Five reasons property is still the stand out investment

Chan Naylor Team — Mon, 20 Feb 2017 04:10:34 +0000

Here are five reasons why I think property is still the stand out investment for 2017. Interest rates still at an all-time low The word is that US interest rates will increase over the coming twelve months and Australian banks have already started to raise their rates under the guise that costs are increasing and returns diminishing to shareholders. Australian rates sit at historic lows of 1.5 per cent. Even if rates do increase along with the predicted US rates over the coming twelve months; by the end of the year they will still be low. If rates do increase, you will see an initial emotional reaction from the market, but when the dust settles investors and mortgage holders will realise that rates remain at very sustainable levels. Demand is still high, no oversupply of property in key areas Sentiment in the market is still strong with the outlook from the Developers at Stockland and Mirvac. They have been advising that while the rate of price growth will slow, pent-up demand remains strong. Mirvac’s outlook is that in the residential sector, conditions remain mixed nationally. In Sydney and Melbourne, indicators such as auction clearance rates point to solid demand supported by a competitive lending environment and increasing urban population growth. They say price growth remains positive in Sydney and Melbourne, relatively steady in Brisbane and weak to steady in Perth. According to Australia’s richest property investor and Developer Harry Triguboff, there is still a shortage of supply particularly in Sydney so demand is still outstripping supply. Banks have cracked down on property development finance which makes it more difficult for smaller Developers to access funds for a project. This means that there will be less development and inevitably less housing coming onto the market over the coming years. Bank funds readily available Banks still view residential property as a solid long term investment. Why else would they be prepared to lend you 80 per cent of the purchase price? The mortgage investment sector is very competitive with the banks flushed with funds this can only be good news for investors and rates below the advertised interest rate should be negotiated. There has never been more choice of products, interest rates and numerous banks to select from that are willing to lend against property. Long term investment We all know that you invest in property for the long term. Property is not a short-term investment due to the cost of entering the market, stamp duty, etcetera. We have seen statistics which show that over a ten-year period, property generally will double in value which equates to a capital return of 7 per cent per annum in addition to a net of 3 per cent rental return per annum that equates to a solid 10 per cent return over that period. You just need to be mindful that property works in cycles and although you may see extraordinary capital gain over a few years there will also be periods of little, zero or even negative growth. Rents are more consistent and over the longer term a combined 10 per cent return per annum is what you could expect for the right property in the right area. Negative gearing for the short term at least The federal Government has ruled out any changes to negative gearing legislation in the short term which means at least for the next couple of years property investors will benefit from the tax savings. The most important aspect of holding investments with borrowings is being able to fund any shortfall between the rent received and the cost of holding the property including the mortgage payments. The tax benefits received, assist the investor with the funding of the shortfall to hold the property longer term. You can get in touch with one of our experienced Property Tax Specialist Accountants for further information and assistance for a complimentary ten-fifteen minute phone call. Go to www.chan-naylor.com.au to contact your nearest Chan & Naylor Property Tax Specialist Accountant. Disclaimer: This article contains general information; before you make any financial or investment decision you should seek professional advice to take into account your individual objectives, financial situation and individual needs. Click for more detail regarding this disclaimer. Article originally published online at www.chan-naylor.com.au/5-reasons-property-still-stand-investment-2017/.

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Preparing for the end of financial year

Chan Naylor Team — Wed, 08 Jun 2016 04:31:59 +0000

Don’t leave it to the last minute Earnings from investments contribute to the overall income for many Australian households. Since such income is subject to government taxes, it is sensible to structure investments in tax effective manners. Here are some basic ways in which you could reduce your tax liability. Reallocate profits or salary package proceeds into superannuation which reduces your tax liability while planning for a dignified retirement Start a wealth creation portfolio now, using a tax effective investment with a Tax Office Product ruling Revisit your current financial arrangements to bring forward interest Salary package to minimise your overall tax position Case study: John and Karen Both John and Karen decide they each want to put a total of $5,000 away each year towards their retirement. They calculate how much they could save by sacrificing some of their salary into their super account. They also analyse and compare how much they could save by investing outside super. For the purposes of this example, the assumptions are the same for both super and non-super, using an investment return of 7 per cent pa. Summary John earns $75,000 p.a. and pays tax at the marginal rate of 31.5 per cent. After twenty years John’s savings could be: Inside super: $108,123 Outside super: $78,369 That’s a difference of $29,754 if John salary sacrifices into super. Karen earns $95,000p.a. and pays tax at the marginal rate of 41.5 per cent. After twenty years, Karen’s savings could be: Inside super: $108,123 Outside super: $62,484 That’s a difference of $45,639 if Karen salary sacrifices into super. Case study: Matthew Matthew wants to save for a home deposit. Finding a way to make his money work harder now, without restricting his financial freedom and accumulating capital over the medium to long term is his priority. Matthew’s Strategy Adviser recommends that he takes out a margin loan to borrow an additional $40,000, giving him a total of $80,000 in investment capital. That’s considered more than enough to establish a sizeable and well-diversified growth – oriented Australian and global managed fund portfolio. By investing in managed funds, Matthew can combine potential returns with flexibility. Outcomes and benefits: If he needs to access some of his capital in case of an emergency, Matthew can simply sell a portion of his account. Investing via a reputable margin lending provider means that he will have a wide choice of investments to choose from and simple, consolidated reporting. This means he doesn’t have to waste his time doing paperwork, leaving him more time to enjoy the things he loves in life. It is important to remember there are high risks associated with all margin lending facilities such as the potential to lose your entire investment. So, as with Matthew, it is important to speak to a Financial Adviser to determine whether a margin lending facility is appropriate for you. The interest is only deductible to the extent the borrowed funds are used for investment purposes. The potential result: Based on an annual return of 9 per cent, Matthew’s Adviser predicts that at the end of seven years his initial $40,000 investment could be valued at $74,195 (after the loan, tax and interest payments have been paid for). On the other hand, without gearing his account, the amount accumulated at the end of seven years could have been worth $64,166. Matthew’s strategy is also easy and tax effective. Because he is borrowing for investment purposes, he can most likely claim the interest paid on his loan as a tax deduction to offset against his income. If you would like to know more about how Chan & Naylor may be able to help you plan for your future, call on 1300 99 77 34 or email your inquiry to financialoptions@chan-naylor.com.au for a complementary initial consultation. General advice disclaimer The advice provided on this article is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. If any products are detailed on this website, you should obtain a product disclosure statement relating to the products and consider its contents before making any decisions. Chan & Naylor Wealth Planning disclaim all and any guarantees, undertakings and warranties, expressed or implied, and shall not be liable for any loss or damage whatsoever (including human or computer error, negligent or otherwise, or incidental or consequential loss or damage) arising out of or in connection with any use or reliance on the information or advice in this article. The user must accept sole responsibility associated with the use of the material on this site, irrespective of the purpose for which such use or results are applied.

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Maximising depreciation deductions for multiple owners

BMT team — Wed, 02 Jan 2013 03:00:31 +0000

Determining depreciation deductions on an investment property with multiple owners can create a complex tax situation. A BMT Tax Depreciation schedule makes life easier for Accountants by splitting up depreciation deductions, regardless of how many owners have a share in a property. A survey compiled by Mortgage Choice found 71% of respondents indicated they would be purchasing their investment property with a partner, sibling, parent or friend. When multiple people buy a property they become either ‘joint tenants’ or ‘tenants in common.’ Ownership structures can influence how depreciation deductions are calculated. BMT Tax Depreciation will ensure deductions are maximised for each ownership situation. In this article we will look at: Pooling for multiple owners BMT Tax Depreciation case study Pooling for multiple owners Legislation states that some assets within an investment property can be grouped together and written off at a higher rate. To qualify for these groups the asset’s value must fall below $300 or $1,000. Assets which fall under $300 are able to be written off immediately (this option is called the ‘immediate write-off’). Assets which fall under $1,000 are entitled to an accelerated depreciation rate of 18.75% in the year of acquisition and 37.5% per year there after (this option is called ‘low-value pooling’). Both options will be affected depending on the ownership structure of the property. For example, in a 50:50 ownership situation, items under $600 can be written off immediately and items that are under $2,000 can qualify for the ‘low-value’ pool. Example one Three sisters decide to purchase an investment property together with a one third share each. The property has a split system air conditioner at a value of $2,600. Considering the one third share, the individual value of the split system for each sister is 33.3% x $2,600 = $867. This means that instead of depreciating at 20% under a normal diminishing method each year, it will qualify for the higher rate pool of 37.5% each year following the year of acquisition. Example two John and Mary purchase an investment property shortly after getting married. They purchase as joint tenants and their accountant apportions 50% of the total deductions to each of them. In this scenario, the ‘immediate write-off’ legislation affects their return. For the ‘immediate write-off’, individual assets with a value of less than $300 can be written off as a 100% deduction in the year of acquisition. Their investment property has a mechanical door closer at $95 and ceiling fan at $290. Both of these assets will be written off as 100% deductions in the first year. However, they also have a room air conditioner with a value of $580. As they own a 50% share each, according to the Australian Taxation Office (ATO), they each own half the value of the room air conditioner, or $290 each. The 50:50 split means that they can both individually claim their share of the air conditioner as a 100% write-off with because their share is under $300 in value. BMT Tax Depreciation case study Two friends purchase a property with a 50:50 share. This example highlights the difference between simply halving the deductions and ensuring legislation is applied to each individual’s interest considering the 50:50 split. After listing ten fixtures normally found in a residential property with a total value of $27,462, BMT Tax Depreciation conducted an assessment on the deductions. The situation is identical except for the fact that the 50:50 split has been applied to each individual’s share, which has allowed for some accelerated depreciation. BMT’s 50:50 split report would save this investor an additional $2,099 in tax deductions over the first five years of owning the property. BMT Tax Depreciation are leading the way with this new approach to preparing our depreciation schedules and can take into account any split purchase percentages, including 50:50, 70:30 or even 1:99. Read more: Split schedules maximise depreciation deductions For more information contact our office to speak with one of our qualified tax depreciation specialists.

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