New financial year resolutions for 2018

BMT team — Tue, 24 Jul 2018 06:31:17 +0000

The new financial year is a great time to look critically at last year’s investing habits and identify any weak areas that can be improved for a more successful year ahead. The ability to question your investing habits and open yourself up to new ideas is key to strengthening your property portfolio and boosting your investing performance. Alternatively, if you are considering purchasing your first investment property this financial year, it’s important to be prepared with a clear set of goals to work towards. Pay attention to interest rates It is always important to keep your finger on the property pulse and monitor markets across Australia. They are known to move at different times based on key growth drivers such as employment, infrastructure, population growth, housing stock shortages and changing demographics. Aim to continue educating yourself with the use of data, market predictions and the help of expert advice. Remember, however, that the market can change and sometimes be difficult to navigate. Interest rates can unexpectedly rise at any given time and it is important not to over-leverage and put yourself in financial distress. It could be worth checking in with your bank or Broker to see what your borrowing power is and also to make sure you have the best rates on your current loans. You may also wish to get pre-approval organised so that if a must-have property comes available, you are ready to jump on it. Make improvements to your existing investments If you’re not planning on purchasing a new investment property this financial year, perhaps it is a good time to focus on making some improvements to your existing properties. Renovating an investment property can reward investors with increased value, improved rental returns and, of course, additional depreciation deductions. Before you dive into any renovations, it’s important to consider which assets attract the most depreciation deductions when replaced. Individual assets have a unique effective life, on which depreciation rates are based. If you’re considering which assets to add to your investment property, you can use BMT’s depreciation rate finder to weigh up which will give you the most returns. Remember to speak to a specialist Quantity Surveyor before commencing any renovation work as you may be able to claim for any removed and scrapped assets. Consider rentvesting If you’re looking to purchase your first investment property, rentvesting may be a viable option to get your foot in the door. Rentvesting is an increasingly popular way to enter the property market. It involves purchasing an investment property in a strong growth area while living in a rented property. Rentvesting allows investors to benefit from lucrative tax depreciation deductions without having to already own your own home. Get your finances in order Often when things get busy, paying attention to your budget can easily get put aside. If everything seems to be running smoothly, time poor investors often avoid making any changes to the way things are done. However, it is important to do regular checks and look for ways you can improve your situation now to benefit your future. Having regular meetings with your Accountant is one way that you can be sure you are not missing out on any possible return. Don’t be afraid to question your investing habits and involve professionals to assist you to get the most from your property. When it comes to depreciation, ensure you have a comprehensive tax depreciation schedule in place to capture all possible deductions and maximise your return. Contact the expert team at BMT Tax Depreciation to organise a tax depreciation schedule or to update your schedule if you have undertaken renovations.

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June 2015 end of financial year tax planning and business tips

Chan Naylor Team — Tue, 30 Jun 2015 00:00:24 +0000

We all need to have a closer look at our tax affairs for the end of financial year and start to prepare ourselves for effective planning in the next year. This article is an outline of main points everyone needs to think about to help them with their personal planning now and for the future. Advice for individuals Reasonable work related expenses of up to $300 can be claimed without receipts but notwithstanding, need to be real Bring forward any investment property expenses before the end of the financial year so you can claim them this year Pay any interest on fixed interest loans upfront to give yourself a deduction in this current financial year If your salary next year will decrease then bring forward your deductible expense If your salary is expected to increase next year then try to defer payments until then Be mindful that Capital Gains Tax (CGT) occurs on the contract signature date and not on the settlement date Working from home Producing assessable income at home and using your home as your office may be assessable to claim expenses thereby allowing for a deduction. Look for the following: Any depreciation of office equipment Home office running costs Home office occupancy costs (will impact on main residence tax exemption) Office equipment Office equipment that has shared use between office and non-office must be depreciated in proportion of the business/non-business use. However, if the asset is used exclusively for business, the full deduction available for the item can be claimed If a home business has an aggregated turnover of less than $2 million, an immediate write-off can be applied for assets added after 7:30pm on the 12th of May 2015 as introduced during the May 2015 federal budget Assets installed between the 1st of January 2015 and 7:30pm on the 12th of May 2015 which cost $1,000 or less should be pooled to maximise depreciation deductions. 15% can be claimed in the first year and 30% in the subsequent years. If an asset was purchased between the 31st of December 2013 and the 1st of January 2014, if the asset cost $6,500 or less an instant asset write-off will also apply Home office running costs Running costs (expenses) include, power, gas, phone, cleaning Use a diary (minimum record of four consecutive weeks) to record the amount of time your home office was used and apply the Australian Taxation Office ‘Acceptable Tax Office rates’ at thirty four cents per hour Using your phone for business allows you to claim a deduction for phone rental plus calls, but not installation costs. Again, if the phone is used for a mix of business and personal use then a deduction can be claimed in proportion Home office occupancy costs Home must be a place of business, not a salaried employee working from home. You must have an area that is dedicated to and set aside exclusively for your business and advertise property as such. Make sure that you have adequate insurance in place and review council regulations Expenses may include rent, mortgage interest, land taxes, home insurance premiums and council rates. Again, the same business occupancy percentage can be claimed in relation to the area of your home If claiming occupancy expenses (e.g. mortgage interest depreciation) then you will be expected to account for any capital gain attributable to the business portion of your house when it is time to sell Likewise, the business portion of the home will be subject to CGT although some concessions may apply Small business Claim your deductions. Any expense that your business incurs that is related to making an income can be claimed Don’t forget, small business owners with an aggregated turnover of less than $2 million are eligible for an instant write-off for the purchase of any asset after the 12th of May 2015 up to $20,000 in value Assets installed between the 1st of January 2015 and 7:30pm on the 12th of May 2015 which cost $1,000 or less should be pooled to maximise depreciation deductions. 15% can be claimed in the first year and 30% in the subsequent years. If an asset was purchased between the 31st of December 2013 and the 1st of January 2014, if the asset cost $6,500 or less an instant asset write-off will apply Interest on loans – you can deduct the interest charged on the money that your business borrows including overdrafts and business loans Interest accrued on your business loan but not paid by June 30th can be claimed A business activity funded through any personal loan or credit card of the business owner can also be claimed with the relevant paperwork Look for deduction value in your trading stock by doing a stock take. If your stock value changes by $5,000 you must take this into account when assessing your taxable income for the year. A lower stock value equates to an allowable deduction The different methods available for valuing stock are: – Price you bought it – Current selling value – Replacement value – Stock write down for damaged/obsolete items A deduction can be claimed if your stock values changes less than $5,000 by using one of the above methods Keep records of stock write down reasons Make sure that you do not include GST with the value of your trading stock where you are entitled to a GST credit There are various CGT strategies that can be used: – Crystallise asset losses before 30th June as they may be able to offset any capital gains you make on selling profitable assets. – Delay crystallising any capital gain until the next financial year. Capital gains can be offset against trading losses within the same structure. Note, to assist with your forward planning, the disposal of a CGT asset occurs at the date of your contract Accrued expenses can also be claimed: – Employee end of year bonuses – Director bonuses Identify any bad debts for the year and write […]

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New financial year resolutions for 2018

June 2015 end of financial year tax planning and business tips