Spouse Property Manager

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From: Steve Kiddle


Firstly, I'm a newcomer to this site and it is excellent. Thanks all for your input.

I understand you can pay your wife to manage your IP and claim it as Tax Deduct. (I know she must also declare income). What is the limit of this, % wise, and is my statement correct? Does this arrangement test the boundaries of "at arms length" with the tax man.

Steve K
 
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Reply: 1
From: Alan Hill


Steve,

I was certainly doing this for a number of years but last year my accountant informed me it was probably no longer worthwhile doing under new guidelines. My wife would need ABN's, possibly Super etc.

I am far from being an accountant so please verify this with a good accountant or we may both be lucky enough to be further educated by one of our resident experts.

:)
 
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Reply: 1.1
From: Duncan M


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If you're wife doesnt work.. it might be beneficial forming a Partnership
with her. In effect you would be able to pay her to do administrative tasks
and not have to cough up Super etc..

If you have a serious IP business, ie. you have multiple IP's (dont ask me
how many), you run it in a professional manner, derive a large proportion of
your income from the properties etc then the Partnership could actually be
used to skew the Net Profit or Loss in a proportion other than the legal
ownership of the properties.. (ie. normally 50/50 for Wife/Husband).


Regards,

Duncan.

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If you're wife doesnt work.. it might be beneficial =forming a Partnership with her. In effect you would be able to pay her =to do administrative tasks and not have to cough up Super =etc..

If you have a serious IP business, ie. you have =multiple IP's (dont ask me how many), you run it in a professional =manner, derive a large proportion of your income from the properties =etc then the Partnership could actually be used to skew the Net Profit =or Loss in a proportion other than the legal ownership of the =properties.. (ie. normally 50/50 for Wife/Husband).


Regards,


Duncan.




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Reply: 1.1.1
From: Steve Kiddle


Just to clarify :
1. The IP is solely in my name and my wife does not own part of it
2. Wife not working (baby) so will have nil other income
 
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Reply: 1.1.1.1
From: Dale Gatherum-Goss


Hi Steve!

There are no rules. However, I would normally not charge more than the market rates as this would be very hard to justify to the tax office.

Also, there is no real need for an ABN or superannuation. However, an ABN is simple and easy to register should you wish and will not cause problems either.


Have fun

Dale
 
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Reply: 1.1.1.1.1
From: Alan Hill


Dale,

See my post below and your previous reply....

ie.
"It still might not be enough though when you consider some of the other "new" rules that have arrived within the last year or so to do with people working for one client."

Have I misread your post or have you changed your mind?


:)



Topic: Payment of Spouse (1 of 3), Read 245 times
Conf: Property Investor Forum
From: Alan Hill
Date: Sunday, July 08, 2001 07:05 PM

Hi all,

I currently pay my wife to do the books and manage our couple of IP's for which she declares as income and pays tax.

I saw someone mention in the forum recently that the ATO was reviewing this and it may be cut out. Would think many spouses would be furious about this as it amounts to unpaid labour.....I'm sure many women especially have a pretty strong point of view on that already!

I checked with my accountant and he said it wouldn't be worth me doing this anymore as she'd need an ABN or I would have to pay her Super etc etc. Has anyone heard anymore about this?

I could understand an objection from the ATO if my wife wasn't declaring this as income and paying tax but I can't see the problem under these circumstances.

I'd appreciate any feedback. Thank you.






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Topic: Payment of Spouse (2 of 3), Read 203 times
Conf: Property Investor Forum
From: Dale Gatherum-Goss dalegg@bigpond.net.au
Date: Monday, July 09, 2001 07:12 AM

Hi

It is issues like this that always make me angry and frustrated with our tax system.

The tax law is not a fair law and never will be. It is designed by beaurocrats who do not fully understand the real world and the implications of their laws. In fact, this is proven over and over again when we head off to the highest court in the land for direction and 3 judges vote one way and 2 the other. It's a farce!

Sorry, Alan, I got carried away there!

The answer is that the tax office are likely to attack your situation if the look closely enough to see it. This is because although your wife declares the income it is quite likely that she does so at a ;lower rate of tax than you pay and there is the reason why the tax office won't be happy.

Having said this, if your wife was to have an ABN and was to keep diary notes and records of the time that she spends on the business of bookkeeping, you will have some chance of getting it through.

It still might not be enough though when you consider some of the other "new" rules that have arrived within the last year or so to do with people working for one client.

Sorry.

I hope that this helps though

Dale
 
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Reply: 1.1.1.1.1.1
From: Dale Gatherum-Goss


Hi Alan!

7 months is a long time in the tax world and rules change all the time, let alone interpretations.

The issue is a grey area and can go either way depending upon the facts, and the people interpreting them.

I'd still claim the costs if they are at market rates and your record keeping reflects the facts that your wife is indeed acting as property manager. This might include diary entries in her handwriting, letters in her name and things like the ABN.

Does this help?

Dale
 
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RE: Spouse Property Manager - handwriting

Reply: 1.1.1.1.1.1.1
From: Duncan M


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Dale,

With regards to "handwriting", do you have any idea where the ATO stands on
Vehicle Log books, I keep mine using a software package..

Regards,

Duncan

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Dale,


With regards to "handwriting", do you have =any idea where the ATO stands on Vehicle Log books, I keep mine using a =software package..

Regards,


Duncan




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RE: Spouse Property Manager - handwriting

Reply: 1.1.1.1.1.1.1.1
From: Dale Gatherum-Goss


Hi Duncan!

I have nothing official to hand, but, I am well aware that the tax office will accept log books prepared electronically providing that the copy they get is signed and that you have other records that support your claim such as diaries.

All this because the tax office won a case on a technicality about 10 years ago that they should have lost. Aaargh!

Have fun

Dale
 
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Reply: 1.1.1.1.1.1.2
From: Alan Hill


Thanks Dale.

I guess it's not a lot of money we're talking about here.......it's just the principal of paying the ATO more than you have too!!


:)
 
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Reply: 1.1.1.1.1.1.2.1
From: Felicity W.


I may be wrong, but I also believe that if you're employing your spouse to do skilled work (such as bookkeeping) then you have to show that the spouse has skills in this area, ie a course or job experience.
Keep smiling
Felicity :cool:
 
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Reply: 1.1.1.1.1.1.2.1.1
From: Dale Gatherum-Goss


Hi Felicity!

Mmmmm, that would certainly help, but, it is not essential given the self help books and materials readily available on the subject.

Most importantly, you are now thinking about building the defence to what you're doing before you even do it. That will make you incredibly bullet proof should the tax office attack. Well done!!!

Have fun!

Dale
 
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