The end result is that its finally over, I'm so happy - both for the fact that its dealt with and because I dont have the pay the ATO $90,000 like they were originally demanding of me.
Here's the long version:
In 2004, I purchased a property in Clarkson, WA for $197,000 using FHOG and moved into it. For a little bit of that time I had a housemate living in the spare room paying rent (someone i met through Somersoft actually).
Later in the year, I lost my job so moved back to my parents house and rented the house out. I found a new job who after a couple of months promoted me and transferred me to Adelaide.
My accountant in Adelaide suggested I declare the housemates board as rent so that I can claim a portion of the depreciation, rates, interest, etc as tax deductions. In hindsight this was a bad idea but it seemed nice getting a big refund at the time.
From 2005 through 2008 it was rented out via a property manager. During that time the agency closed down and another agency took it over.
I lost my job again and as I had already refinanced it and used up the equity account while a) spending a few months trying to find another job and couldnt and b) returning to study for a year or so, and was basically out of money. Because of this, I sold the property in June 2008 for $370,000. Due to being disappointed about this and a few other things going on in my life at that time, I never lodged a tax return in 2008.
Due to not having done a tax return in 2008, I never did one in subsequent years either because information from the previous ones were required, so it became a domino effect.
After still having no luck on the job front in Adelaide, I returned to Perth a couple of years ago where finding work is much easier.
After a while of ignoring ATO's letters to submit a return for 2008, the ATO lodged a default return, which is basically where they guess my return. Keeping in mind this was the same year I sold my property so they included Capital Gains Tax in their estimate as well as an estimate of incomes and expenses based on their info they had at hand. Initially it was a $40K CGT, a fine for not lodging and a bunch of interest charges monthly since then - current balance of my ATO account is in the red about $90K.
In late 2012 I decided to man up and contact an accountant to sort this mess out. Most information was not available, but he did the best he could to submit returns for 2009, 2010, 2011 and 2012 which all resulted in refunds. The ATO kept all 4 of these refunds and applied them toward my ATO account balance. The accountant also helped me submit an appeal to amend the 2008 return to not include CGT since I lived in the property (6 month, 6 year rule).
First, the ATO asked me to prove that I didn't have another PPOR during the time of ownership. This was accomplished by having my mum write a letter to say what date I moved back home after Clarkson and by having the real estate agency in Adelaide provide statements of the rent I was paying over there.
They then asked me to prove that I lived in the property during 2004. This was extremely difficult. Telstra and utility companies had no proof of me organising a connection since it was beyond the date history their systems could handle. I had never changed my address with electoral roll at the time. I no longer had any hope of this case being successful, so went back into 'head in the sand mode'.
Due to not responding within the timeframe, ATO denied my appeal. I was ready to give up and talk to them about arranging a payment plan to pay off the $90K. Accountant encouraged me to push on, so I took ATO to court (but not to proper court, first step is to mediate at the Administrative Appeals Tribunal). They also grabbed (garnished) some money from my savings account without notifying me.
At the AAT, we discussed the difficulty in obtaining information and the ATO accepted that. The topic came up about me having a house mate there (I hadnt raised it initially as i thought it was irrelevant) and this was a big plus as a letter from him proved that I was living there as well and stayed there after he had moved out.
There's been a lot of back and forth betwen the ATO's lawyer and I questioning certain dates and dollar amounts and intentions. He even attempted to contact the agency the property was rented through and they woudn't provide him info either. There's an actual court case booked for August, but thats not going to happen since we've reached resolution. This whole time I've been self-represented.
Finally, today I got a letter to say that they've amended my taxable income in 2008 from $117K to $15k, are wiping the interest that has accrued since 2008 and are releasing the past 4 years tax refunds back out to me.
Here's the long version:
In 2004, I purchased a property in Clarkson, WA for $197,000 using FHOG and moved into it. For a little bit of that time I had a housemate living in the spare room paying rent (someone i met through Somersoft actually).
Later in the year, I lost my job so moved back to my parents house and rented the house out. I found a new job who after a couple of months promoted me and transferred me to Adelaide.
My accountant in Adelaide suggested I declare the housemates board as rent so that I can claim a portion of the depreciation, rates, interest, etc as tax deductions. In hindsight this was a bad idea but it seemed nice getting a big refund at the time.
From 2005 through 2008 it was rented out via a property manager. During that time the agency closed down and another agency took it over.
I lost my job again and as I had already refinanced it and used up the equity account while a) spending a few months trying to find another job and couldnt and b) returning to study for a year or so, and was basically out of money. Because of this, I sold the property in June 2008 for $370,000. Due to being disappointed about this and a few other things going on in my life at that time, I never lodged a tax return in 2008.
Due to not having done a tax return in 2008, I never did one in subsequent years either because information from the previous ones were required, so it became a domino effect.
After still having no luck on the job front in Adelaide, I returned to Perth a couple of years ago where finding work is much easier.
After a while of ignoring ATO's letters to submit a return for 2008, the ATO lodged a default return, which is basically where they guess my return. Keeping in mind this was the same year I sold my property so they included Capital Gains Tax in their estimate as well as an estimate of incomes and expenses based on their info they had at hand. Initially it was a $40K CGT, a fine for not lodging and a bunch of interest charges monthly since then - current balance of my ATO account is in the red about $90K.
In late 2012 I decided to man up and contact an accountant to sort this mess out. Most information was not available, but he did the best he could to submit returns for 2009, 2010, 2011 and 2012 which all resulted in refunds. The ATO kept all 4 of these refunds and applied them toward my ATO account balance. The accountant also helped me submit an appeal to amend the 2008 return to not include CGT since I lived in the property (6 month, 6 year rule).
First, the ATO asked me to prove that I didn't have another PPOR during the time of ownership. This was accomplished by having my mum write a letter to say what date I moved back home after Clarkson and by having the real estate agency in Adelaide provide statements of the rent I was paying over there.
They then asked me to prove that I lived in the property during 2004. This was extremely difficult. Telstra and utility companies had no proof of me organising a connection since it was beyond the date history their systems could handle. I had never changed my address with electoral roll at the time. I no longer had any hope of this case being successful, so went back into 'head in the sand mode'.
Due to not responding within the timeframe, ATO denied my appeal. I was ready to give up and talk to them about arranging a payment plan to pay off the $90K. Accountant encouraged me to push on, so I took ATO to court (but not to proper court, first step is to mediate at the Administrative Appeals Tribunal). They also grabbed (garnished) some money from my savings account without notifying me.
At the AAT, we discussed the difficulty in obtaining information and the ATO accepted that. The topic came up about me having a house mate there (I hadnt raised it initially as i thought it was irrelevant) and this was a big plus as a letter from him proved that I was living there as well and stayed there after he had moved out.
There's been a lot of back and forth betwen the ATO's lawyer and I questioning certain dates and dollar amounts and intentions. He even attempted to contact the agency the property was rented through and they woudn't provide him info either. There's an actual court case booked for August, but thats not going to happen since we've reached resolution. This whole time I've been self-represented.
Finally, today I got a letter to say that they've amended my taxable income in 2008 from $117K to $15k, are wiping the interest that has accrued since 2008 and are releasing the past 4 years tax refunds back out to me.
