Could software be tax deductible?
- Thread starter Jenko
- Start date
If you are a mortgage broker it would be. If you wish to buy future properties then probably not as it does not relate to the production of income right now. If you have a few proeprties already then maybe you could claim a portion of the cost. If you are in the business to building properties then probably claimable.
Hi there,
You can use it to manage your existing investments, under the Portfolio Manager memberships. Hence this should be tax deductible, but get professional advice. It also integrates with Xero.
If you have multiple properties, i think the magic number is 3, it is a tool for your business (the ATO see you as being in the business of property) and this makes it a lot clearer.
**Disclaimer: Have been a subscriber for a number of years. May or may not have a vested interest.
You can use it to manage your existing investments, under the Portfolio Manager memberships. Hence this should be tax deductible, but get professional advice. It also integrates with Xero.
If you have multiple properties, i think the magic number is 3, it is a tool for your business (the ATO see you as being in the business of property) and this makes it a lot clearer.
**Disclaimer: Have been a subscriber for a number of years. May or may not have a vested interest.
What does three have to do with IP's ?? The ATO see an investor as someone with one, two or twenty two. The ATO do not generally consider IP investors as a business unless a broad range of other characteristics are evident. Anyone thinking they operate a business when they own passive income producing assets needs guidance since the sale of the property may be subject to GST and loss of CGT discount issues in extreme's. (ie selling a block of units may actually be sale of a business) Fortunately its not that easy to classify an IP activity as a business.
IP owners should steer clear of commercial software and systems and undertaking highly systematic processes (ie spruiker style approaches) as it could result in an adverse view of the activity. Ditto apply for an ABN and other mistakes I see.
"but get professional advice". 4 key words.
My advice recieved, some time ago, was this was the threshold where you are 'in the business of investment property'. But I did also type first 'i think'.
What on earth are you trying to say here:
"IP owners should steer clear of commercial software and systems and undertaking highly systematic processes (ie spruiker style approaches) as it could result in an adverse view of the activity".
Don't use software and systems? It could result in an adverse view of the activity?? As in, you suddenly know the investment your financial planner pushed sucked?
My advice recieved, some time ago, was this was the threshold where you are 'in the business of investment property'. But I did also type first 'i think'.
What on earth are you trying to say here:
"IP owners should steer clear of commercial software and systems and undertaking highly systematic processes (ie spruiker style approaches) as it could result in an adverse view of the activity".
Don't use software and systems? It could result in an adverse view of the activity?? As in, you suddenly know the investment your financial planner pushed sucked?
There is no precise threshold to numbers of properties to classify as a business. What ever led to that opinion was incorrect.
Read https://www.ato.gov.au/Individuals/...ublications/Rental-properties-2013-14/?page=5
There are some rulings also such as TR 94/8 which is equally as non-prescriptive. The key issues that the ATO will consider relate to systematic organised process and approaches that are business like in VOLUME. In the example cited the ATO refer to 26 as a business. But their reasoning doesnt address a number. They look at other factors. There is a SMSF ruling on Real Business Property which adopts a similiar approach. However just owning 26 properties does not make a business....
What I explained was that I would avoid using business like software if you are a passive investor with loads of properties and seeking to retain CGT discounts etc. You want to avoid inadvertently acting in the ways that the ATO consider demonstrate business like approaches. If a taxpayer even thinks they have a concern personal tax advice is a must have. A request for a tax private ruling may be considered to eliminate doubt.
If someone acted on third party advice to acquire - ie a dodgy adviser or a spruiker it may fail to satisfy the ATO of a business like approach in any event. Arguably most business like approaches would need sophisticated research and tools and time devoted. Reliance on a suggested buy from a third party seems passive to me. The extent of reliance upon regular income as a means for support and the time involved are key issues.
Read https://www.ato.gov.au/Individuals/...ublications/Rental-properties-2013-14/?page=5
There are some rulings also such as TR 94/8 which is equally as non-prescriptive. The key issues that the ATO will consider relate to systematic organised process and approaches that are business like in VOLUME. In the example cited the ATO refer to 26 as a business. But their reasoning doesnt address a number. They look at other factors. There is a SMSF ruling on Real Business Property which adopts a similiar approach. However just owning 26 properties does not make a business....
What I explained was that I would avoid using business like software if you are a passive investor with loads of properties and seeking to retain CGT discounts etc. You want to avoid inadvertently acting in the ways that the ATO consider demonstrate business like approaches. If a taxpayer even thinks they have a concern personal tax advice is a must have. A request for a tax private ruling may be considered to eliminate doubt.
If someone acted on third party advice to acquire - ie a dodgy adviser or a spruiker it may fail to satisfy the ATO of a business like approach in any event. Arguably most business like approaches would need sophisticated research and tools and time devoted. Reliance on a suggested buy from a third party seems passive to me. The extent of reliance upon regular income as a means for support and the time involved are key issues.
Gotcha, thanks for taking the time to elaborate.
