tax deduction question

A

Anonymous

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From: Anonymous


Hello all,

When you buy educational material about investments, supposedly this material is tax deductible. Does anyone know how this tax deduction is actually calculated? I've tried to find it on the ATO web site but with no success.

Cheers

Anon
 
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W

WebBoard

Guest
Reply: 1
From: Bob Ward


Hi Anon,

A couple of questions for you;-

1. How much money have you spent on educational material and in what form/

2. Are you an investor already or is the expenditure in preparation for you to invest?

Cheers,
Bob
 
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A

Anonymous

Guest
Reply: 1.1
From: Anonymous


Hi Bob,

In answer to your questions:
1. I've bought books about share and property investments to educate myself. This year they cost about $150. I'll probably also buy software such as the Somersoft PIA (around $240 I think)

2. I own some shares, but the property books and software is in preparation for investing (probably next year or the year after)

Is this all the info you need?

Cheers

Anon
 
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W

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Reply: 1.1.1
From: Bob Ward


Hi Anon,

Thanks for the additional details.

1. you would be able to claim books etc re shares as a reference book expense against your share dividends or share trading income. Even if you made a share trading loss I would still claim these costs under the category of reference books.

2. the property investment books and software are another matter as you have no readily identifiable income to offset them against.

You may be able to claim the reference books as other work related expenses however you're going to battle to be able to claim the property investment software without some property investment income.

Hope this is some help.

Cheers,
Bob
http://lot109.com.au
 
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Reply: 1.1.1.1
From: Dale Gatherum-Goss


Hi

Actually, you are incorrect Bob. Sorry.

You do not need to have property investments to claim education and reference materials as a tax deduction. Your intention to buy IP's will suffice.

The specific laws that you require is S. 8-1 for general deductions and S. 25-5 for tax related expenses.

Obviously, keep receipts and your other documentation that shows your intention to produce income from your investments.

Dale
 
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Reply: 1.1.1.1.1
From: Alan Hill


Don't you love an accountant that says "YES, you CAN claim that..." rather than the more negative type!


:)
 
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W

WebBoard

Guest
Reply: 1.1.1.1.1.1
From: Bob Ward


Hi Dale,

Thanks for picking me up. There's never a problem in being corrected when there's good news in the correction.

I was looking at the nexus between expense and income as the test to apply.

Thanks again.

Cheers,
Bob
 
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Reply: 1.1.1.1.2
From: Geoff Whitfield


Hi Dale,

That raises another interesting hypothetical.

I've heard it said that, if you buy, renovate and sell, that it's not actually necessary to live in the place in order to not to have to pay capital gains tax- it's only necessary to prove an intention to live in the place.

That sounds incorrect to me. Is that in fact correct?

Geoff
 
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Reply: 1.1.1.1.2.1
From: Dale Gatherum-Goss


Hi Geoff

The law says that you should have lived in the house to claim the exemption from CGT. However, if you have no other home or PPOR then you can elect to treat the renovated house as your PPOR and thus avoid CGT.

Just don't continue to do it over and over again.

Have fun

Dale
 
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Reply: 1.1.1.1.2.1.1
From: Nigel W


On 5/27/02 7:31:00 AM, Dale Gatherum-Goss wrote:
>However, if you have no other
>home or PPOR then you can
>elect to treat the renovated
>house as your PPOR and thus
>avoid CGT.
>
>Just don't continue to do it
>over and over again.
>
Whoa Dale! Now you've REALLY got my attention.

So for example, say you did not own your own home and merely rented, but had say 10 investment properties. Are you saying that you could over a period of say 10-20 years liquidate a property or two every year with the INTENTION that it be treated as your PPOR and thus not be required to pay CGT??

[Please let the answer be yes ;^)]

I assume that the 6 year rule doesn't come into play as in this example you never lived in the property yourself in the first place.

N.
 
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Reply: 1.1.1.1.2.1.1.1
From: Dale Gatherum-Goss


Hi Nigel!

Now, you of all people are not going to put words into my mouth, are you? Tsk! Tsk!

Selling off investment properties that produce rental income every couple of years will attract CGT, in full or in part, depending upon your circumstances.

However, buying a house, electing to use that house as your PPOR, whilst renovating it and then selling it should be exempt from CGT. The tax office might take a different view if you continue to do it as they will then argue that it has become a form of business income and not a capital sale.

I hope that this helps

Dale
 
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A

Anonymous

Guest
Reply: 1.1.1.1.2.1.1.1.1
From: Anonymous


Hi everyone,

Thanks for the help. Good to hear that I can use my books as a tax deduction.

Just one more question, someone above mentioned the "6 year rule". Is this the rule that states that if I live in a property as PPOR, and then move out and rent it as an IP, that as long as I move back in to it as a PPOR within 6 years, it is CGT free?

Cheers

Anon
 
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Reply: 1.1.1.1.2.1.1.1.2
From: Nigel W


On 5/27/02 3:51:00 PM, Dale Gatherum-Goss wrote:
>Hi Nigel!
>
>Now, you of all people are not
>going to put words into my
>mouth, are you? Tsk! Tsk!
>
I would never dream of such a thing - there's far too many words of wisdom in there already!

Thanks for the clarification - I knew it was too good to be true.
 
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Reply: 1.1.1.1.2.1.1.1.2.1
From: .watto .


Hi Dale,

A little more on CGT....

Is the 12 month period calculated on the contract date or settlement date?


Cheers
Watto
Melb Freestyler
 
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Reply: 1.1.1.1.2.1.1.1.2.1.1
From: Dale Gatherum-Goss


Hi

Under normal contracts, it is the date of signing the contract and not the date of settlement. However, if you have conditions that must be met before the contract is valid then it would be on the date that the contract becomes unconditional.

Have fun

Dale
 
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