Renovating without invoices

Hi

I'm looking at renovating my IP and for some parts getting my uncle to do some painint and paying him for it but no invoices. Funds will be taken from a IP mortgage account and interest claimed as a tax deduction.

Is this a No, No?

Other option is to get a reputable company (not saying my uncle isn't reputable) and getting a tax invoice.

What are people's thoughts.

Regards
Daniel
 
If you get audited you would need to show receipts for everything you are claiming a deduction on. If it sounds dodgy then it probably is.
 
That's what I thought but if I'm claiming as a depreciation deduction couldn't I just some firm to do a depreciation schedule and use that.

I guess its the interest too I need to look at.
 
That's what I thought but if I'm claiming as a depreciation deduction couldn't I just some firm to do a depreciation schedule and use that.

Sure. But it's your tax return - you sign off on it. So you take responsibility for the accuracy of information in the return.
 
That's what I thought but if I'm claiming as a depreciation deduction couldn't I just some firm to do a depreciation schedule and use that.

I guess its the interest too I need to look at.

QS are expected to base work done by the owner on actual cost hence is usually far less than a tradie job. They would likely ask for the invoice. If not they may be negligent and the ATO could have a concern. They could lose their tax agent services registration. The number of peeps who try to tell the QS that something cost $15K but they did the work themselves is fairly common.

The ATO rules are very clear. If its a non-arms length supply then actual COST must be used. Actual cost is substantiated two ways. First a receipt / invoice and second evidence of the amount paid. Your relative would be up ***** creek no matter what...Or rather you both will. Then they will ping you with penalties for making false statements etc....That's how it usually works out.

This would also mean the borrowing for the same costs is not eligible for interest deductions as well. Your blended loan then poses a problem going forward.
 
How much work is there to do?
definitely use your uncle over an outside source. But just don't get caught up on the tax return etc etc. you obviously would rather use your uncle and he will give you a good deal by the sounds plus quality work so, either you pay your uncle and pay $x or you pay old mate invoice $y, then claim a deduction, interest etc and still end up with out of pocket expense $x.

Leave the IP account out of it if possible
 
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