Tax Variation Question

[Marc]

From: Marc Krisjanous


Hi all,

I am about to go for a tax variation. I have two questions that I would like to ask:

1) Can you claim the IP loan interest (ATO) if the IP is vacant but you can prove that you have been trying to get a tenant.

2) Is there a situation where the ATO owes you so much money (YAY!) that it cannot pay back all the monies through the tax variation process for the financial year? That would mean that the ATO does not tax your income. If so will the ATO give a tax credit or do something else?

The reason why I ask this is that this is the first year of my IP purchase so I am looking at a good depreciation schedule - plus it’s negatively geared. I hope this makes sense!

Best Regards

Marc

 

[Rixter]

Reply: 1
From: Rixter ®


On 9/9/02 6:21:00 PM, Marc Krisjanous wrote:
>Hi all,
>
>I am about to go for a tax
>variation. I have two
>questions that I would like to
>ask:
>
>1) Can you claim the IP loan
>interest (ATO) if the IP is
>vacant but you can prove that
>you have been trying to get a
>tenant.

Yes you can claim it!

>2) Is there a situation where
>the ATO owes you so much money
>(YAY!) that it cannot pay back
>all the monies through the tax
>variation process for the
>financial year? That would
>mean that the ATO does not tax
>your income. If so will the
>ATO give a tax credit or do
>something else?

Yes you can get a situation where you can do this..The ATO issues you Tax credits to use in the next year!

>The reason why I ask this is
>that this is the first year of
>my IP purchase so I am looking
>at a good depreciation
>schedule - plus it’s
>negatively geared. I hope
>this makes sense!

This situation usually arises when you have aquired a few IP in your portfolio.

>Best Regards
>
>Marc

Hope this helps!

©

Happy Investing,
Rixter®

 

[DaleGG]

Reply: 1.1
From: Dale Gatherum-Goss


Hi guys!


>>I am about to go for a tax
>>variation. I have two
>>questions that I would like to
>>ask:
>>
>>1) Can you claim the IP loan
>>interest (ATO) if the IP is
>>vacant but you can prove that
>>you have been trying to get a
>>tenant.
>
>Yes you can claim it!


I agree.


>>2) Is there a situation where
>>the ATO owes you so much money
>>(YAY!) that it cannot pay back
>>all the monies through the tax
>>variation process for the
>>financial year? That would
>>mean that the ATO does not tax
>>your income. If so will the
>>ATO give a tax credit or do
>>something else?
>
>Yes you can get a situation where you
>can do this..The ATO issues you Tax
>credits to use in the next year!


Whoa nelly!!! No, I do not agree with this, Rixter. If your net income is a negative (because your tax deductions are more than your income) then the loss can be carried forward to next year to offset against your income.

However, the tax office will and do refund every cent in tax credits that you are entitled to in the one year and will no carry forward credits into another year.


Have fun

Dale

 

[Richard Hunt]

Reply: 1.1.1
From: Richard Hunt


Marc,

I agree with Dale that any net tax losses may be carried forward to future years.

Remember however that as a resident for tax purposes taxpayers are entitled to a tax-free threshold of $6,000. Accordingly, any rental loss deductions that reduce taxable income to less than $6,000 down to nil, will neither result in any additional tax credit nor be able to be carried forward to future years - they are basically wasted.

Where you find yourself in this situation, if possible try to execute some tax planning early on by deferring deductions to a later income year or accelerating income into the current year so that you take full advantage of the tax-free threshold and don't otherwise waste an additional tax credits.

Regards
Richard