who does there own tax?

I don't know how you would go trying to sue your accountant when it is clearly stated on the return that you take full responsibility for what you are signing, and for the figures provided and signed off etc etc.

However, I would never attempt our tax and, apart from everything that I love about having an accountant to do the hard work, I especially love that (generally speaking) having an accountant with a good "record" means that it is less likely that you would be audited.

I have been told the ATO know to a certain extent which accountants do a good job, and possibly which ones stretch the envelope a little. I wonder if that is true?

I think that doing your own tax with IPs would be somewhat of an invitation for the ATO to see whether you are claiming correctly, in my opinion anyway.

I also love being able to let our accountant place our expenditure into "repair" or "depreciate" depending on which is correct. I feel quite sure I would get it wrong.
 
So how do people organise their documentation for their accountant? I spent hours one year putting everything into a spread sheet to make it easier for the accountant. Hoping that they would be able to do the job quicker and thus save me money, but I'm pretty sure they didnt use it at all and just ended up adding everythign up themselves again anyway. I have heard people say you cant just lump up to the accountant with a box of receipts, but after my spread sheet saga I'm confused about what else I'm supposed to do to make it easier for them.

On a side note - I learnt the difference between 'their' and 'there' from a sex in the city episode where Carey was making fun of Mr Bigs new girlfriend on an invitation where she got it wrong. I was 28 years old... now... was it 'to' or 'too'???
 
We don't have many IPs, so I keep mine very, very simple. I get all my receipts together, bundle all my receipts for a particular house, write a story, eg. "Smith Street - In August 2009 we had a plumber replace the sewer due to the old pipes being cracked. Plumber cost $3,000 (receipt attached). We had the kitchen repainted - cost $600." That type of thing.

I write my story about what we have done or spent on each house and list the costs clearly, so the accountant can find them easily if they have to refer back and for checking. I let the accountant decide how each expense will be treated, eg. repair or capital expense. I give over two copies of this story, and ask that each item be ticked off and any queries be noted. They then call me with any issues.

Any expenditure of a general nature, ie. new power saw that will be apportioned over all houses, stationery, internet fees, paint, general hardware etc I list separately and let them put it in the appropriate section of our return.

Hubby's group certificate, our health fund info, charity donations and all those things that don't actually refer to a particular house, I keep separate again.

It is very easy to follow, and as the story unfolds, the receipts are in order. I don't send my bank statements but give that info in the story in a section where I list all the interest paid and earned.

I have asked him if he would prefer a spreadsheet, but he is quite happy with the format I use.

My mum has more IPs and she does enter things into a spreadsheet and hands over the disk as well as hard copy.

Last time we went to see the accountant, a man was also waiting with the proverbial "shoe box" full of a jumble of receipts :eek:.
 
Thanks Wylie,
you have inspired me to try again with my accountant. Ill try making a storey like you have suggested and attach my receipts as the story goes along.
 
beautiful, love it.

splade said:
So how do people organise their documentation for their accountant? I spent hours one year putting everything into a spread sheet to make it easier for the accountant. Hoping that they would be able to do the job quicker and thus save me money, but I'm pretty sure they didnt use it at all and just ended up adding everythign up themselves again anyway. I have heard people say you cant just lump up to the accountant with a box of receipts, but after my spread sheet saga I'm confused about what else I'm supposed to do to make it easier for them.

On a side note - I learnt the difference between 'their' and 'there' from a sex in the city episode where Carey was making fun of Mr Bigs new girlfriend on an invitation where she got it wrong. I was 28 years old... now... was it 'to' or 'too'???
Click to expand...
I have done our tax, think I did ok. I have our ex-accountants depreciation schedule for the properties, I could be wrong but it seemed pretty basic. In fact there was a couple of items that we could have claimed for in the past, and he hadnt, small things like a new vanity we had put in, couple of dollars, but it adds up. and I wouldnt have known this unless I had gone through, and understood what we could claim, at what % and for how long. I didnt know that we could get a surveyor to go through the properties to see what we could claim, my accountant never suggested that ,so we will do that now. My thing is, not trying to save money, by not going to see an accountant, I like the fact that I am in control, by using etax, I can just go back in next year, and its all there for me, deprecation schedules, everything, love that. If my accountant had just dissapeared without sending his schedule for the properties to us, I would have had no idea how he was claiming. For example one property we have was built in 1987, and not even the council can give me a month, but our accountant has been claiming 4% on that for 25 years, but it could have been at 2.5% for 40years, now I know I only have a couple of years to claim, and maybe in three years, if I can, seek an amendment if I can prove it was built after September, and get it adjusted. As in getting audited, surelly if you are doing the right thing, checking and cross checking, and keeping records, you're ok? who has been audited out there? and what was involved, fees etc.
 
Hello Investwest,

Keep in mind that the depreciation of an investment property depends on many factors including the type of property (for example, residential, retail, industrial, etc), the time it was used as an investment property, the building start time, etc.

The depreciation of the building comprises depreciation on the plant and equipment (for example, lights, cooktop, vinyl, hot water heater, etc.) as well as capital deductions, which may include the structure and external works (depending on ATO tax rulings).

I would recommend the use of a quantity surveyor for a tax depreciation schedule. This is because a quantity surveyor is considered to be the "accountant of the construction industry" and property depreciation is based on the construction cost and not the purchase price. Also, the fee for the tax depreciation schedule is tax deductible.

By the way, after reading all the threads, well done on your achievements.

Kind regards,
Constructivity
www.constructivity.com.au
 
Stuff working out depreciation myself ! Before finding this forum, I fofund Depreciator, now I jut have to find where I'v e put the schedule .. and find my water rates & council rates bills from last year... Then ready for the battle of finding where in etax everything goes.

spoke to a an accountant friend.. he really cant do much, except check if Ive stuffed up, there arent too many things I can claim which I dont already.. ]
then again, he probably knows how to enter cap gains form share trading.. oh well, cant be that hard....
 
Wylie,

You are correct for the sign off - the sign relates to your liability as regards the ATO. That said, there is always the separate civil proceedings you may bring against your accountant. In that regard, my comment was made. For instance, there may be a claim against your client for breaching his/her duty of care, engaging in misleading and/or deceptive conduct and so on. Of course, that is a very different issue to the matter between the ATO and the taxpayer, and is quite different from you escaping liability in that sense.
 
I found etax pretty easy to use.

jaycee said:
Stuff working out depreciation myself ! Before finding this forum, I fofund Depreciator, now I jut have to find where I'v e put the schedule .. and find my water rates & council rates bills from last year... Then ready for the battle of finding where in etax everything goes.

spoke to a an accountant friend.. he really cant do much, except check if Ive stuffed up, there arent too many things I can claim which I dont already.. ]
then again, he probably knows how to enter cap gains form share trading.. oh well, cant be that hard....
Click to expand...

Etax is really user friendly, pretty much if you get it wrong, it tells you. It's easy to follow, and if you're stuck they have pretty clear instructions.
I just find it a little hard to read from the computer, so I got the tax department to send out hard copies of their guides on rental properties, and the depreciation guide, easier to refer back too. There should be workshops for investors on how to do your own basic returns, especially if it's pretty much the same each year.
 
thanks.

Constructivity said:
Hello Investwest,

Keep in mind that the depreciation of an investment property depends on many factors including the type of property (for example, residential, retail, industrial, etc), the time it was used as an investment property, the building start time, etc.

The depreciation of the building comprises depreciation on the plant and equipment (for example, lights, cooktop, vinyl, hot water heater, etc.) as well as capital deductions, which may include the structure and external works (depending on ATO tax rulings).

I would recommend the use of a quantity surveyor for a tax depreciation schedule. This is because a quantity surveyor is considered to be the "accountant of the construction industry" and property depreciation is based on the construction cost and not the purchase price. Also, the fee for the tax depreciation schedule is tax deductible.

By the way, after reading all the threads, well done on your achievements.

Kind regards,
Constructivity
www.constructivity.com.au
Click to expand...
The depreciation side seems pretty simple, now I know what is classified as capital deductions, and what the building deductions are. The tricky part is getting the most out of it, i think, and like you said a quantity surveyor is a really good idea. Accountants can make it seem so complex, my brother inlaw is an accountant, but he cant give me a straight answer, he goes into all this mumbo jumbo which is'nt even relative, when all I wanted to know was at what % and for how long I could claim for each of the buildings.
 
investwest said:
The depreciation side seems pretty simple, now I know what is classified as capital deductions, and what the building deductions are. The tricky part is getting the most out of it, i think, and like you said a quantity surveyor is a really good idea. Accountants can make it seem so complex, my brother inlaw is an accountant, but he cant give me a straight answer, he goes into all this mumbo jumbo which is'nt even relative, when all I wanted to know was at what % and for how long I could claim for each of the buildings.
Click to expand...

Nice one. Yep I did mine in about 30 minutes this year, all my depreciation schedules are carried over from last year, medical expenses from medicare are now all downloaded are pre-filled automatically. It's too easy.

I had all my expense receipts in a pile and just waded through them for each property.

I had other expenses related to home business like claiming mortgage expenses for my study, electricity and water rates etc. All done and dusted and 5 days later I have my refund. Saaweet!
 
gooram said:
I had other expenses related to home business like claiming mortgage expenses for my study, electricity and water rates etc.
Click to expand...

Gooram

Beware of claiming mortgage expenses on your PPOR as you may compromise CGT exemptions on your PPOR when you eventually sell. :eek:

IMO opinion not worth it.
 
In what way is it compromised? Is it black and white, either you pay it or you don't, or is it ajusted based on how much you've claimed?
 
gooram said:
In what way is it compromised? Is it black and white, either you pay it or you don't, or is it ajusted based on how much you've claimed?
Click to expand...

I think what Joe D was highlighting, is that if you declare part of you home as being for business, you can claim portion of expenses etc, however, you also lose a portion of you CGT free status on the sale of your PPOR. SO if your PPOR happens to have gone up a significant amount by the time you sell it, the CGT you are liable for may be considerable in comparison to what you have cliamed over the years in tax.

Cheers,

The Y-man
 
Last edited:
This is where people run into all sorts of issues trying to do their own tax and bookkeeping. I see it all the time, clients thinking they are saving money by not seeking accountants advice (or businesses who won't get a professional bookkeeper to do their books and their job ends up so messy it costs a fortune for the accountant to sort out) but could end up making costly mistakes by doing so which cost far more than the accountants advice. Gooram, sounds like you're going to have a CGT issue on your PPOR when you sell (obviously seek your own professional advice). Generally when claiming home office expenses it's ok to claim running costs such as some electricity, furniture etc. But as soon as you start claiming mortgage costs, rates etc. you're running into dangerous CGT territory.
 
It's not a property I would sell unless the sh*t hit the fan, but regardless of that, does anyone know how it's calculated? That will decide whether it's worth it or not.
 
Are you claiming the mortage, elecricity expenses, etc on a room size basis? ie. if the room you are using as a home office is 10% of the floor plan is that what you're claiming in expenses? If so I think the CGT is calculated based on that percentage.

Also, keep in mind you shouldn't be claiming home office expenses unless it is actually an office where clients etc come to do business with you or you are working from home full time. If you're doing the occasional few hours a week work at home you should be claiming 26c per hour.
 
Leikela said:
You still might be in trouble. Suggest you read this.

http://www.ato.gov.au/businesses/content.asp?doc=/content/33087.htm

But just say you can claim mortage etc. then the CGT would be based on floor area of your office. Say your office took up 10% of the building, then 10% of your gain would be subject to CGT.
Click to expand...

Good to know... thanks. The inclusions, exclusions seem pretty arbitrary to me.

Regardless, is it worth it? Let's see:

Sale price $ 1,000,000
less Cost of selling $ 15,000
Adjusted sale price $ 985,000
Purchase price $ 500,000
add Cost of purchase and ownership $ 39,000
Adjusted purchase price of asset $ 539,000
Capital gain/loss $ 446,000
Tax payable
(marginal tax rate on 100kpa x half capital gain) $ 108,155
10% = ~10k

Let's say it was owned for 10 years, would I claim more than 10k over 10 years in business expenses... there wouldn't be much in it. And what if you never sold?

I think it's a moot point anyway coz you can't claim mortgage expenses.
 
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