Tax deducting rates - cash or accrual?

[BLTN]

Hi all,

So I've just received my settlement documentation with the pro rated water and council rates. This got me thinking - what is the best way to tax deduct this at tax time?

1) Simply the actual amount paid in the year; or
2) An accruals amount (so the calculated amount attributable to the financial year)

Aside from the fact that the accruals is harder to keep track of, it gets tricky when rates increase or change.

More importantly though, is there actually a choice in how you deduct it or a fixed treatment?

Cheers,
BLTN

 

[Paul@PFI]

An individual taxpayer is required to use the "cash" method for claiming deductions. This means an accrual is NOT deductible. A deduction must have been incurred and paid. Example - An instalment of rates is due on 28 June but paid on 5th July 2014. This is deductible in the 2015 tax year.

Tip : Prepayment of expenses can increase deductions in Y1. However this process must be maintained continually or future year deductions will be reduced.

 

[BLTN]

An individual taxpayer is required to use the "cash" method for claiming deductions. This means an accrual is NOT deductible. A deduction must have been incurred and paid. Example - An instalment of rates is due on 28 June but paid on 5th July 2014. This is deductible in the 2015 tax year.

Tip : Prepayment of expenses can increase deductions in Y1. However this process must be maintained continually or future year deductions will be reduced.

Exactly what I needed to know, thanks mate

 

[Rob G.]

An individual taxpayer is required to use the "cash" method for claiming deductions.

TR 97/7

 

[Rob G.]

Hi all,

So I've just received my settlement documentation with the pro rated water and council rates. This got me thinking - what is the best way to tax deduct this at tax time?

1) Simply the actual amount paid in the year; or
2) An accruals amount (so the calculated amount attributable to the financial year)

Aside from the fact that the accruals is harder to keep track of, it gets tricky when rates increase or change.

More importantly though, is there actually a choice in how you deduct it or a fixed treatment?

Cheers,
BLTN

Individual non-business:

If the s.8-1 prepaid expense is less than $1000, or related to a service period that does not exceed 12 months and ends before 30 June 2015, then immediately deductible.

Otherwise apportion by days in the relevant financial year.

s.82KZM ITAA36