Super co-contribution when you have IPs

I'm debating whether to make a voluntary contribution of $1k into my super for the co-contribution.

I earned $30k gross this financial year but had $40k rental income (and $40k deductions). If I owned the IPs on my own, my assessable income would be $70k so I wouldn't be eligible for the co-contribution (ATO ignores the deductions), according to:
http://www.ato.gov.au/super/content.aspx?menuid=0&doc=/content/42616.htm&page=8

Luckily though, I own the IPs with my husband as tenants in common (me: 99%; him: 1%) so would we be considered as owning the investments "jointly" and therefore the deductions can be taken into account? Or would we have to have joint ownership not tenants in common?

Also, any recs for a good accountant, as we are thinking of getting one now that we have IPs.
 
Luckily though, I own the IPs with my husband as tenants in common (me: 99%; him: 1%) so would we be considered as owning the investments "jointly" and therefore the deductions can be taken into account? Or would we have to have joint ownership not tenants in common?

Tenants in common is definitely not "joint ownership" within your meaning.

Joint owners have equal and indivisible interests in the entire property

In your case you will declare 99% of the income and claim 99% of the allowable deductions.

However, your gross income will be used to determine super co-contribution eligibility ... unless you were treated by the ATO as a business of managing residential properties which requires much more than owning a few IPs.

Cheers,

Rob
 
Clarification please

Hi,

Maybe the accountants out there can correct me on this. Tenants in common issue aside, is it true that if a property was singularly owned, then gross income and then later deductions relating to the property need to be disclosed in the tax return?

However, if the property is owned jointly, my impressions were that a tax partnership exists and one discloses through their tax return net income from the property hence the impact on the Government Co-contribution.

Your opinion would be much appreciated.

Regards

Rahul
 
Hi,

Maybe the accountants out there can correct me on this. Tenants in common issue aside, is it true that if a property was singularly owned, then gross income and then later deductions relating to the property need to be disclosed in the tax return?

However, if the property is owned jointly, my impressions were that a tax partnership exists and one discloses through their tax return net income from the property hence the impact on the Government Co-contribution.

Your opinion would be much appreciated.

Regards

Rahul

Hi Rahul,

Well the new labels in the tax returns from 2010 onwards seem to have cleared up any doubt on the ATO's position.

It now clearly states in the ATO guide that joint owners of investments do get the benefit of deductions for eligibility for the co-contribution.

Ironically, the explanatory memorandum stated that deductions were only allowed for business owners to avoid disadvantaging high turnover but low margins.

Yet the legislation is clearly worded as "assessable income plus reportable fringe benefits".

So you are correct, since co-owners are within the extended definition of a partnership then they may use their net income for this purpose.

They don't even need to file a partnership return with these new labels on the individual return.

Well spotted. A legal loophole you could drive a truck through !

Cheers,

Rob
 
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