So is this right? (taxation question)

[want2bewealthy]

I just did my tax for one full year on a negatively geared unit,
I got 4.5k return from that and just purchased my second unit,

Now that Im twice that amount in 'debt' and there will be twice the outgoings, does this mean my tax back will approximately double also?

Im currently in the 30 cents to the dollar bracket but the rents on this one may push me above that to 40 cents FWIW.

[Rob Williams]

You should be able accurately project this years income (PAYE & Rent) and expenses (Interest costs and other IP and job realted expenses) quite accurately. The net of these will be your taxable income.
Use the ATO online tax withheld calcuator to work out what your tax would be on this amount.
Then, you can work out from your payslip tax amount how much tax you will actually pay this year. Deduct one from the other and you can work out your projected return for next year.
Better still, do an ITWV and get the tax benefit each pay. That will help your cashflow, unless you are doing OK in the cashflow department and prefer to wait for a nice big return next year.

[want2bewealthy]

Thanks Rob, Ive just visited the site but cant seem to find much useful there, I could be in the wrong section Im not sure.

Does anyone else have any experience with this sort of thing?

[tubs]

If all other things are equal (ie interest, rents, deductions etc) then its probably a fair assumption. Of course, if your taxable income now falls into a lower tax rate it will be reduced, but then interest rates have gone up so there's more to deduct etc.

But if all else is similar, probably a good rule of thumb.

[Rob Williams]

Here's the link to the online tax withholding calculator. There's also a downloadable version somwehere, too:
http://www.ato.gov.au/scripts/taxcalc/calc_standard_hire.asp
Here's the link to the paper version of the ITWV:
http://www.ato.gov.au/content/downloads/bus00135782n2036.pdf
Here's the eVariation of the ITWV:
http://www.ato.gov.au/businesses/content.asp?doc=/Content/6650.htm

That ought to keep you busy for a while :)

[skuzy]

Now that Im twice that amount in 'debt' and there will be twice the outgoings, does this mean my tax back will approximately double also?

Im currently in the 30 cents to the dollar bracket but the rents on this one may push me above that to 40 cents FWIW.

No.

reason is simply that u only 'get back' either 30c or 40c in tax for every $1 deduction.

[tubs]

Here's the basics of how it works.

Lets say you earn $60,000. The ATO assumes you earn the same amount every month, so when you get paid, it takes out the bit that you owe in tax because it can work it out. And the tax on that might be for example $18,000 a year, so they take $1500 each month.

But when you have a rental property, they dont know how much rent you'll make, how much depreciation you have, what your expenses, rates, interest etc are. So you work it all out at tax time.

To do this, you get your $60,000 and add in all the rent. Say that takes it to $80,000. Then you subtract all your expenses that you paid to earn the rent, which might have been $30,000 worth. So, your taxable income for the year will really be $60,000 + $20,000 - $30,000. That comes to $50,000.

So, really you only need to pay tax on $50,000, which might be $14,000. But you paid $18,000 in tax over the year, and since you should only have paid $14,000 you get $4,000 back.

[skuzy]

Here's the basics of how it works.

Lets say you earn $60,000. The ATO assumes you earn the same amount every month, so when you get paid, it takes out the bit that you owe in tax because it can work it out. And the tax on that might be for example $18,000 a year, so they take $1500 each month.

But when you have a rental property, they dont know how much rent you'll make, how much depreciation you have, what your expenses, rates, interest etc are. So you work it all out at tax time.

To do this, you get your $60,000 and add in all the rent. Say that takes it to $80,000. Then you subtract all your expenses that you paid to earn the rent, which might have been $30,000 worth. So, your taxable income for the year will really be $60,000 + $20,000 - $30,000. That comes to $50,000.

So, really you only need to pay tax on $50,000, which might be $14,000. But you paid $18,000 in tax over the year, and since you should only have paid $14,000 you get $4,000 back.

Good example.

But based on the 1st post.. double expense doesnt mean immediately double refund.