Paying Spouse for Record Keeping

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From: Gordon Austin


I read in Jan's latest book (from memory) that one of the items that can be claimed as a tax deduction is payment to your spouse for record keeping (secretarial fee etc). Hence if your spouse is on a low tax bracket this could be worthwhile. This would then need to be declared by the spouse.

Can someone please provide more info on this? Would the spouse then need an ABN? Is it worth the cost etc?

Thanks - Gordon
 
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Sim

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Reply: 1
From: Sim' Hampel


Wasn't there a recent ATO ruling which effectively stated that spouses should do this kind of thing for love ? ie. these expenses are private in nature and not claimable ? Dale ?

 
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Reply: 1.1
From: Dale Gatherum-Goss


Hi

The tax office do not particularly like any form of income splitting. However, it is something that they will not dispute providing the amounts are "commercially realistic" and the spouse is actually doing the work that they are paid for.

I would normally ask the spouse to keep a diary detailing the bookwork, property management work and other related tasks and then pay the wages based on a fair, commercial rate per hour.

I also note that on page 3 of the 2001 rental properties guide that the tax office produces that the tax office suggests that secretarial and bookkeeping fees are possible tax deductions.

I hope that this helps

Dale
 
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Reply: 1.1.1
From: Jas



Whilst we're talking family, what can you get the kids to do, and how
much can they get tax free?

Jas
 
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Reply: 1.1.1.1
From: Dale Gatherum-Goss


Hi Jas!

Kids can earn up to $6,000 pa tax free providing they actually earn the money and don't just get given it.

Again, this is an area that the tax office will attack so it is important to be able to prove that the children do work for which they are paid. Keep an eye on the time that they spend, plus, the type of work involved.

Good luck and be careful

Dale
 
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Reply: 1.1.1.1.1
From: Jas


Hey there dale :)

> Kids can earn up to $6,000 pa tax free providing they actually earn
the
> money and don't just get given it.

Huh? I thought it was something tiny... like $104... I thought you had
to be an adult (over 15? 18?) to get the full limit...


>
> Again, this is an area that the tax office will attack so it is
important
> to be able to prove that the children do work for which they are paid.
> Keep an eye on the time that they spend, plus, the type of work
involved.

So, they clean the houses, and can get paid commercial rates?

Jas
 
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Reply: 1.1.1.1.1.1
From: Dale Gatherum-Goss


Hey Jas!

Yes, it is $6,000 per child. Neat, huh?

Yes, cleaning is a good example, as is lawn mowing of the IP's.

Dale
 
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Reply: 1.1.1.1.1.1.1
From: Paul Zagoridis


It's UN-earned income that is limited to $674 (from memory). So rent, dividends, etc.

My issue is especially with dividends. If my 8 year old daughter is gifted a sack of cash from her grand-parents, which she then invests wisely, why should she be penalised for her age? Or have I misunderstood the restriction Dale?

What about her earning royalties or license fees for a book she wrote (or other creative endeavour)?

Paul Zag
Dreamspinner
The Oz Film Biz site is archived at...
http://wealthesteem.dyndns.org/
 
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Reply: 1.1.1.2
From: Duncan M


Have you see the add with the baby dressed up as mop and crawling around the
floor?

Dale will know, but I believe the Tax Free Threshold for Minors is around
$700


Regards,

Duncan.
 
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Reply: 1.1.1.2.1
From: Dale Gatherum-Goss


Hi

The first $643 of Unearned income is tax free, thereafter, there are penalty rates of tax.

However, if the minor earns that income (such as wearing a costume and mopping the floor for an ad) then the income is earned and as such, the first $6,000 is tax free.

It's an area that allows for you to take advantage of the opportunity, if you can.

Dale
 
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Reply: 1.1.1.1.1.1.1.1
From: Dale Gatherum-Goss


Hi Paul!

Accumulated investment income that can be traced as actually belonging to the child falls under different rules for "excepted assessable income"

This means that if the child receives a gift each year of some shares and those shares do well, accumulate through dividend reinvestment, and the total is more than $643 then your child will not pay tax until the income is greater than $6,000.

I hope that this helps

Dale
 
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