Non-Cash Deductions

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From: Peter Boyce


Hi all,

I have just purchased my first IP and have determined that it is cashflow negative (excluding the non-cash deductions), but cashflow positive when including the non-cash deductions.

My question regards the how and when the non-cash deductions are implemented into the 'big picture'.

My limited understanding of the situation is that I can get my accountant (as yet to lock this done) to submit paperwork to the ATO so that I will receive these monies in my regular pay packet through the reduction in my assessable income (hence tax).

When can this be carried out as my plan was to have this property providing income from day one so as to minimise any outlays?


Peter
 
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Reply: 1
From: Rixter ®


Peter,

The best way to maximise your non-cash deductions is to commission a Quantity Surveyor to provide you a 40 year report to work from.

In relation to getting your tax rebate back from your PAYG earnings, you need to fill out a Variable Tax With-holding Application which is available from the ATO..you can also download it from their website. Its relatively simple to fill out. If you do have problems you can get your Accountant to to this for you, but as you know thats his job and will charge you accordingly.

To maximise your cashflow make sure you lodge your Variable Tax With-Holding application by May 15th to have your Tax with-holding set up in time for the New Financial Year. However don't be too concerned if you didnt get it in before that date because you can get it in or update an application when ever your particular circumstances change..all you've done is missed a few pays of getting the rebate in.

Hope this has helped.


Happy Investing,
Rixter :)
 
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Reply: 1.1
From: Peter Boyce


Thanks Rixter,

As the IP is new and is currently under construction, will the Depreciation Schedule that has been supplied as part of the contract will be acceptable to the ATO?
I have read a number of books and it looks pretty complete to me.

As the IP contract will be settled in about 3 months time, would it be wise to get my accountant to fill out the Variable Tax Withholding form so as to ensure that I don't end up with a bill at the end of the financial year?

Peter

PS Love your signature gif file!
 
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Reply: 1.1.1
From: Rixter ®


Peter,

The Depreciation schedule should be Ok providing it has been done by a Qualified Quanity Surveyor. Who is doing it?

In relation to getting the TAX Variation withholding Application in , it will not create a tax bill at the end of the year as you put it...if anything they should owe you the difference..speak to your accountant about it.

Happy Investing,
Rixter :)
 
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Reply: 1.1.1.1
From: Peter Boyce


G'day Rixter,


Doh..you've got me there....and I thought that I was being careful and crossing my i's and t's.

The builders' accountant has drafted the depreciation schedule.

Peter
 
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Reply: 1.1.1.1.1
From: Lotana Von Amor


Peter,

From my limited experience, you can only get the best depreciation schedule if you commission your own QS and pay them directly. Your builder's accountant works for the builder, not for you. Also, he obviously knows the actual building cost and can't put a different figure in his DS. On the other hand, your QS- would make certain assumptions and estimates within certain boundaries and would vote on your behalf wherever (s)he can. I leave it to you to make a conclusion.

Regards,

Lotana
 
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Reply: 1.1.1.1.1.1
From: Peter Boyce


Thanks all for your comments.

Peter
 
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