Do you wait untill tax time ?
- Thread starter Bez
- Start date
Nope have the Income Tax Varation because I need the extra cash flow.
How does this work in terms of accuracy?
I mean that, just say you got 2 airconditioners installed at a total cost of $1500.00, at the end of the year, would you see your accountant and spread that throughout the year? [aircon's will go on depreciation] but the labour cost is 100% tax deductible.
We've just done it based on the interest from memory. Any additional expenses are added when we do the tax return.
You just make a calculated best guess and adjust at tax time. As long as it's reasonably close it's fine (10%-15% I'm guessing, don't quote me on that).
I've got my first one in place. Am enjoying the bigger pay packets in my offset account although tax time won't be as fun anymore.
Incorrect. The cost in installing an air conditioner is added to the cost of the unit and depreciated / pooled.
PAYG variations are about one thing - cash flow. If you need more cash flow during the year to pay for IPs or to sustain your lifestyle - get one. Otherwise don't bother because they are difficult. You have to be careful though. If you end up paying tax because you underestimated your income, they may deny you lodging another one next year. Also one of my clients lodged one and underestimated his income by $20,000 and got hit with a $1800 underestimation penalty.
It is best to revisit your calculations in April to see if your estimates will stand. If you are likely to end up paying tax, you can request your pay office increase the amount of tax being withheld.
Hi Bez,
I've been considering this too and am a little confused about it all. Currently I am living in the IP for FHOG reasons however I did have this page bookmarked to look at closer to the date it will be rented out:
http://www.ato.gov.au/taxprofessionals/content.asp?doc=/content/00096490.htm
The one thing I am confused about is who exactly organises for the tax to be adjusted? Assuming you are not self employed, does the ATO contact your payroll office or is this something you need to organise? Hoping to get this fully understood by the time we move out so great question!
Hope it helps!
The one thing I am confused about is who exactly organises for the tax to be adjusted? Assuming you are not self employed, does the ATO contact your payroll office or is this something you need to organise? Hoping to get this fully understood by the time we move out so great question!
You apply directly (or via your tax agent) to the ATO to have your tax varied.
The ATO then access your application and forward a written notice direct to your pay master to deduct x% from your paye each pay period.
The ATO also sends you a written confirmation of the above for your records.
Hope this helps.
The one thing I am confused about is who exactly organises for the tax to be adjusted? Assuming you are not self employed, does the ATO contact your payroll office or is this something you need to organise? Hoping to get this fully understood by the time we move out so great question!
You fill out the form and send it to the ATO. The ATO then contacts your pay office (you put those details down on the form) and then the pay office adjusts your deductions accordingly.
Alex
i wait until tax time - the refund usually comes at the right time to pay all the rates bills!
Up until now I've just waited until tax time and got the big fat refund cheque. But given its getting to stupid levels I've flagged with my accountant that I want to do a Section 221D ITWV adjustment from now on. In fact, my tax return this year will be testing 6 figures I think, so its probably time to have that cash in my pocket as the year progresses and not months after the financial year lapses and I finally get my return lodged. Which reminds me, its probably time to chase up my accountant on that again...
Cheers,
Michael.
Cheers,
Michael.
The ATO dont pay you interest for holding your money thats rightfully yours through out the year.
Plus what about all the growth/income you also miss out on from lost investment opportunity.
Its better to get every single dollar working for you as fast and as efficient as you possibly can.
Your real wealth is created from compounding capital growth. The faster you build your asset base, the longer you are in the market. The longer you are in the market the greater your growth rate at the end.
Thats the magic of time and the power it creates on compounding capital growth. 80% of growth is achieved in the final 20% of time.
IMHO you would be far better off gaining your tax back through out the year and using it to cover the holding costs on an additional asset you would not have been able to hold otherwise, thus maximising your asset base even further and increasing your time exposure to the power of compounding capital growth.
Hope this provides further food for thought.
Plus what about all the growth/income you also miss out on from lost investment opportunity.
Its better to get every single dollar working for you as fast and as efficient as you possibly can.
Your real wealth is created from compounding capital growth. The faster you build your asset base, the longer you are in the market. The longer you are in the market the greater your growth rate at the end.
Thats the magic of time and the power it creates on compounding capital growth. 80% of growth is achieved in the final 20% of time.
IMHO you would be far better off gaining your tax back through out the year and using it to cover the holding costs on an additional asset you would not have been able to hold otherwise, thus maximising your asset base even further and increasing your time exposure to the power of compounding capital growth.
Hope this provides further food for thought.
