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From: Mike .


A thank-you and another question - 221D's?
From: Owen
Date: 7/28/00
Time: 4:10:15 PM

Hi Everyone,

Just a note to say my partner and I have now joined the "more than one IP" club by signing up today for our second investment apartment. It's a one bedder in a new development in Newtown, Sydney and we are very confident it will be a nice little earner. Thanks to all of you who contribute to this forum for all the ideas and especially those who answered my questions over the last while. They really helped a lot and I think we have this one structured a lot better than our first IP. Invaluable advice and I thank you all.

You can't rest on you laurels though as I have one more question. Is anyone out there using a 221D form? Was it a hassle to set up? What happens if you leave your job? Some experience would be good as I would like to get that extra cashflow ASAP.

Type you later, Owen
 
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Gee Cee

Reply: 1
From: Mike .


Re: A thank-you and another question - 221D's?
From: Gee Cee
Date: 7/28/00
Time: 7:11:02 PM

Dear Owen & Partner

Congratulations on moving forward with your property portfolio.

I have previously used 221D tax section to allow a deduction of weekly taxation withdrawn from your pay by your employer.

My accountant set it up but I guess you could do it yourself.

The accountant sent in an estimate of Gross wage - Negative gearing Losses to give a estimated net taxable income for the financial year.

The tax dept access the application and send a letter direct to your employer to have your weekly taxation deductions reduced.

A few things to watch.

Don't over estimate the losses too much as if your assesment has been out by 10% or more they will not let you apply for a 221D next financial year.

Some employers are a bit funny about the possibility of your tax being reduced. My previous employer would not reduce the weekly tax until someone had actually phoned back from the tax office.

Also if you leave your employer I believe you would have to apply for another 221D.

Regards, Gee Cee
 
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Ian (NSW)

Reply: 1.1
From: Mike .


Re: A thank-you and another question - 221D's?
From: Ian (NSW)
Date: 7/30/00
Time: 9:21:56 PM

Hello Owen & All

Great to see the forum returning to a level of sensibility after a period of "spam and public slanging".

I have utilised 221D previously....ditto Gee Cee's comments.

I would like to add that it can be something like Line of Credit accounts in that you absolutely MUST be strictly in control of budget / spending habits as it is very easy to tap into and erode what would otherwise be an annual platform to further IP acquisitions (via Tax cheque).

Great vehicle if you are in control.

Cheers Ian
 
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Gee Cee

Reply: 1.1.1
From: Mike .


Re: A thank-you and another question - 221D's?
From: Gee Cee
Date: 7/31/00
Time: 8:49:19 PM

I most certainly agree with your comments.

We are very disciplined with our cashflows but even so if the money isn't in ya pocket ya don't spend it.

What we have found over the last couple of years that a nice healthy tax cheque always manages to find itself living in a fixed deposit/cash management account or parked somewhere until required.

However when you receive it each pay day it can just sort of erode away.

Regards, Gee cee
 
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Lorne

Reply: 1.1.1.1
From: Mike .


Re: A thank-you and another question - 221D's?
From: Lorne
Date: 7/31/00
Time: 11:30:39 PM

I hear what you are saying, but for an investor it doesn't make sense.

Why wait for the end of year tax return to get your money back. It is far better in your hands, than it is earning the tax man interest.

As you get it each pay you could:

1) Put it into a savings account - earning YOU interest.

2) Put it into managed funds - earning YOU interest and growth.

3) Reduce non tax deductable debt - saving YOU interest.

4) Servicing another investment property - speaks for itself.

The question is, where do you want to be in 15 years time, and how serious are you about getting there???

Investors beware!! Time passes quickly. So use it wisely.

Oh!!

Sorry, I'm Lorne, nice to meet you all.
 
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Robert

Reply: 1.1.1.1.1
From: Mike .


Th great 221D's debate
From: Robert
Date: 8/1/00
Time: 7:17:29 AM

Lorne

I see where you are coming from with your comments. But consider this, what if you are already 15 years down that track and the tax return is a minimal amount anyway, why bother to get it out of the government until end of financial.

If you put it into a a bank account for savings your only going to start paying tax again on the interest, plus FIDS and bank fees etc.

If it is NOT needed money, because your running positively geared properties why take it out. Am I right Gee Cee??

I on the other hand will be putting in for my 221D but I'll have that amount separated from my pay account and have it deposited straight into my IP mortgage account because the company I work for allows me to separate my pays to a maximum of 10 bank accounts. For me taking it now, as a beginner is advantageous, but maybe not for an IP investor that been around for 20 years.

Just my comments.... Robert
 
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Owen

Reply: 1.1.1.1.1.1
From: Mike .


Re: Th great 221D's debate
From: Owen
Date: 8/1/00
Time: 11:38:44 AM

Hey Robert,

Looks like I may have triggered something here.

So far I agree with you on this issue as I'm still earning most of my money from the J.O.B so I think that having the added cashflow pay packet to pay packet is going to be helpfull. I also agree with the others though as unless I am careful the money will just erode away. A lump sum can also be handy.

My personal concern is that it looks like my job may expire in about 6-8 months so I don't think the hassle and cost of setting up a 221D is worth while at this stage. Any comments.

Owen

PS Welcome along Lorne. I'll look forward to hearing your questions, comments and ideas.
 
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Robert

Reply: 1.1.1.1.1.1.1
From: Mike .


Re: Th great 221D's debate
From: Robert
Date: 8/1/00
Time: 12:08:38 PM

Owen

Certainly did stir up a reaction. Which is good cause I'm about to start right into the 221D as well since I've got 2 weeks until settlement.

But one question what "costs" are there associated with setting up the 221D. I thought that it was all down to the employer to structure it all after authorisation from the ATO???

Robert

PS: To bad you can't make it on Sunday to Canberra, would have been good to catch up again.
 
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Ian (NSW)

Reply: 1.1.1.1.1.1.1.1
From: Mike .


Re: Th great 221D's debate
From: Ian (NSW)
Date: 8/1/00
Time: 8:14:41 PM

Hello Robert & All

I had my accountant complete proceedings for the first time @ $200.00

The ATO requires at least one month to process application and then you need time for your pay office to process. So could take up to two months to see results.

Valid points from all participants in the discussion to date. My own situation saw me not continue after the first year 221D as we had two babies close together, job change and moving house.....dipped into the honey pot!! Hence my initial comment on being mindful of accessibility to funds.

Good luck to all 221d applicants.

Cheers Ian
 
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Terry A

Reply: 1.1.1.1.1.1.1.1.1
From: Mike .


Re: Th great 221D's debate
From: Terry A
Date: 8/2/00
Time: 2:05:05 AM

Just thought I would add my two cents worth. I have owned IPs for nearly ten years and have used 221Ds from day one. Personally I wouldn't give the tax man an interest free loan. For those who dip into the honey pot it is all up to personal discipline.

The suggestion of a separate account is a good idea and that is what I do. The cost of a 221D is 45 cents, the cost of the postage stamp if you do it yourself. Jan's books give clear guidelines on how to do it and the forms are not hard to fill in. You can get the forms by asking the tax office or downloading them from the ATO site. If they haven't already done it you will soon be able to lodge it on the internet.

If you are unsure then it is worth getting an accountant to do the first one and after that do it yourself. If you change employers then you resubmit the form but with the new employer details filled in. When the ATO calculates your tax reduction they take into account how much you have earned so far this year and how much tax you have paid so even if there is a delay then the tax reduction should be slightly higher to compensate.

My opinion is go for the 221D and make sure you put the money aside in a separate account for property expenses and more IPs.
 
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Rick

Reply: 1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: Th great 221D's debate
From: Rick
Date: 8/3/00
Time: 1:34:47 PM

Like Terry, I did it myself, except it cost me 55c because I had to buy a stamped-envelope :) I submitted my "new 221D" beginning of July and had a reply with my new LOW tax rate :) within 3 weeks. Quite good by ATO standards.

Rick.
 
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Gee Cee

Reply: 1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: Th great 221D's debate
From: Gee Cee
Date: 8/2/00
Time: 8:09:03 AM

Hi Terry Great to hear from you

I agree with not giving the tax man a interest free loan. For many years I had 221D deductions set up. If not I would not have been able to eat and put fuel in the car etc.(A simple lack of cashflow).

The best way is to have the extra money in your pay automatically deducted, however a lot of people I know end up just frittering it away throughout the year.

Sort of like if you get a $5000 pay rise. Most people just move their expenses & lifestyle upward & eat up the extra pay.

There will be as many different opinions on this as there are personalities.

You need to do what suits yourself.

Regards, Gee Cee
 
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The Lurker

Reply: 1.1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: The great 221D's debate
From: The Lurker
Date: 8/2/00
Time: 11:23:09 PM

I have been lurking around here for a while - a great site.

I would agree with those who don't want to give the taxman any interest free money. After all if at the end of the year you end up owing the taxman money, you can borrow the money to pay it and claim a tax deduction on the interest paid on that loan! Well that's my understanding anyway, perhaps someone can confirm that?

Just as an aside to that, if you are registered for GST can you charge the GST on your sales or services, put your income against your home loan, and then borrow the money to pay your PAYG obligations and claim the interest as a deduction. If so it would certainly speed up the transfer of 'bad debt' to 'good debt'.
 
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Robert

Reply: 1.1.1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Where to find 221D's on the ATO web page??
From: Robert
Date: 8/2/00
Time: 10:48:40 AM

Terry

Could you please advise where in the ATO's web page. I've searched through most of it, also did a search on 221D. I'm scratching my head on where it is located. (Typical of a government body to hide things that will assist in a return of money to a tax payer!!)

If you have a link could you please post it. Otherwise I'm going to ring them to have it sent out.

Cheers Robert
 
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Terry A

Reply: 1.1.1.1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: Where to find 221D's on the ATO web page??
From: Terry A
Date: 8/3/00
Time: 12:59:29 AM

I'm stretching the memory cells here but you can do a search on 221D or use the link below:

http://www.ato.gov.au/content/forms/form_payg_variation.htm

I found it by clicking on forms on the left menu bar. You can look for it as n2036.pdf which is the actual form that you can print out.

I mentioned being able to lodge on the internet using the jetform program which is included as part of the download procedure. Also the form is known as "Application for variation of amounts required to be withheld under PAYG Income Tax Withholding - 2001" The ATO makes it simple doesn't it? Or you can list it by NAT number which is 2036.

Hope this helps :cool:
 
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Robert

Reply: 1.1.1.1.1.1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: Where to find 221D's on the ATO web page??
From: Robert
Date: 8/29/00
Time: 8:16:34 PM

To all

I've now put in my "Application for variation of amounts required to be withheld under PAYG Income Tax Withholding - 2001" (AKA 221D). Had to ring the ATO, it got answered in 3 rings, wow.

But they've advised that you can't lodge the form over the internet "yet". It is still in the planning stage and may be out soon.

Regards Robert
 
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