Maintaining Gardens

[Cosmo]

Hi Guys,

I have an investment property that has quite an extensive garden at the front. When I bought it the garden looked beautiful but after it’s been tenanted for some years the garden looks bad.

The pensioner next door suggested he look after the garden for me (his is immaculate). He would like payment for his work (and I want to claim it as a tax deduction) but he wants cash. Can I still claim this expense even though he doesn’t have an ABN and won’t provide a receipt?

For example, can the PM pay him via a cash cheque (So it appears on my statement as a gardening expense therefore providing me with a valid receipt)? :)

[Cosmo]

Any takers?

[geoffw]

OK, if you would like a not well informed opinion :D

Option 1. Do it yourself. You want it in a good state for valuation and/or a good rent for a new rental. Otherwise you don'ty really need to keep the yard in tip top condition all of the time

Option 2. Get a quote from Jim's Mowing. Then pay the pensioner half of Jim's quote. You break even. (Just don't expect Jim's to do serious work for you again :D )

Option 3. Offer tenant an inducement (say 1 week's rent after 6 months if the grounds have improved substantially- quantifiable).

I'd be going for option 1 - pensioner neighbour can be a good ally as well. There may be a way to give some inducements in lieu of cash- do you have a good fruit/veggie garden?

[Kristine..]

Well Cosmo

Do you really want to get caught up with the 'cash economy' and tax evasion?

That invariably leads to tears before bedtime.

1. All non-PAYG income must change hands at the top marginal rate 48.5% if no ABN is declared

2. Payments less than $50 per transaction are exempt from this rule (last time I checked with ATO website)

3. Pensioners can earn $ per week before their pension is affected

4. 'Cash in hand' means no receipts for you

5. 'Cash in hand' means no 'warranty' for you.

So

Your pensioner can register an ABN

or

Your pensioner can issue you with invoices for amounts below $50 each

You can pay the pensioner with cash money on receipt of the invoice

Whether they declare the income or not is not your concern

You can declare the expense on your tax return as you have invoices / receipts to prove it

You can pace the work so that at no time do they earn more than they are permitted to earn before their pension is affected

You can reimburse to them all direct expense eg trips to the tip and ask for the receipts

You can claim the gardening expenses in your tax return

By the way, on all my properties the councils issue three wheelie bins - general garbage (putrescible garbage), recyclable waste and green waste. No. 1 Son is paying for green waste at about $104 per annum even though there is no garden to speak of. Note to self: Ring Council and cancel green waste collection thereby saving $104 per year.

Cosmo, there is always a legitimate way to do anything. Your pensioner and yourself can benefit from this arrangement if you think it through and go about it the right way.

One of my properties has a medium 620 msq block but a large house. No tenant has ever attended to the garden. It is the worst garden in the street yet between tenants I put considerable time, effort and money into pruning, replanting, mulching etc. Within months it is as neglected as before. Why is that? Other properties are manicured by the tenants with no problems at all. I have now gone back to regular (paid) garden maintenance at this particular property to at least keep the weeds under control. Each time it is let the tenants proclaim themselves avid gardeners but they are telling big fibs!

I hope you can work it out with the pensioner, it sounds like a great solution!

Cheers

Kristine

[Thommo]

1. All non-PAYG income must change hands at the top marginal rate 48.5% if no ABN is declared

I seem to remember a "Statement by supplier" which is available at the PO which would allow you to pay in full any invoices the gardner gave you. The simplest solution is for him to get an ABN as Kristine suggests. He then gives you a "tax invoice" but if the total of such invoices does not cross the GST threshold (and it wont) he need make no return or statement re the GST.

None of this matters if he is unwilling to give an invoice, no invoice - no tax claim, so GeoffW's tip to pay half the commercial rate is then valid.

Thommo

[Cosmo]

Thanks for the information and ideas.

Good stuff as usual.

[Ecogirl]

I've spent a lot of $$ (relative I guess - more to the point a lot of sweat and blisters) on my gardens at my house in Crns - during the dry season they need watering. I've set it up in my lease agreement that I'll pay for the water bill if they water the garden. I then get it maintained when my PM tells me it looks too shabby....it doesn't cost much and I see it as preventative maintenance and keeps my tennant happy...it's working so far but then again I haven't seen the house in 9mths....

My 2c worth :)
Ecogirl