Last AMA of The Financial Year - Tax and Tax Return Questions - Ask Away!

Associatednicolemcmilllon @ Titanium Accountants & Advisors on 18/06/2017 - 16:25
Last edited 05/07/2017 - 10:16 by 1 other user

Hi All,

With the end of financial year coming up - most of you will be looking at lodging your returns in July and getting those refunds as soon as possible.

If you have any tax or tax related questions then ask below and I will answer them for you.

Disclaimer: Any advice or answers given will be general in nature and you may need to speak to a tax adviser for more personalised advice.

P.S Please see my two previous forum post as we try to avoid duplicate questions.

I will reply to this thread with a link to the previous posts. Please go through them to make sure you're not asking the same questions.

Look forward to answering all your tax queries.

Ask Away!

Mod: Removed solicitation.

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Comments

  • bluebagger1 on 19/06/2017 - 10:49

    Havent had to do a tax return for 10+ as retired/pensioner. Just found out paid withholding tax via banking insitutiin incorrecly..i hadnt filed tax file number. Is there a simple way to retrieve or do i need to do full tax return. Thanks Paul

  • jon on 19/06/2017 - 11:15

    When running a small business which involve house visits, I was initially using my parents car and calculating kms to claim the cents per km method.
    However I just purchased a car last month and will be claiming it as a depreciating asset.
    Am I able to claim both the cents per km for the first 10 months of the year and the depreciation costs associated with the car for the last 2 months of the financial year?

    If I am claiming 60% of the car for business (after keeping a log book) and claim the accelerated depreciation for assets <20k (eg 18k from a 30k car) but then increase the business usage in the following financial year to say 80%, will I still be able to claim the remaining depreciation that wasn't claimed in the first financial year?

    In regards to claiming GST credits. If the business is not required to collect GST on the service provided, am I still able to claim on the GST of purchased capital items including the car if I have registered for GST?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 11:40

      If the car is more than $20,000 your best option is to claim a flat 15% depreciation in the first year and 30% in subsequent years using the small business pool. The private portion should generally be estimated when you purchase it and you generally won't change it. However if you know what you are doing then you can increase it as long as you are allocating everything correctly in the small business pool.

      Pick the method that provides the best result (most likely the log book method. You can't use two methods in the same year.

      • congo on 28/06/2017 - 15:29

        Hi Nicole,
        15% on $20K is $3000. This is less than the 5000kms no receipt method?
        Seems that the depreciation method is only worth it for new cars over $30k?

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 28/06/2017 - 15:53

          I don't think you have considered many factors.

          1. You have to think long term and 2.The log book method allows for other deductions such as duel, repairs and maintenance, rego, insurance etc.

          15% on $20,000 is only $300 less of a deduction that you would get the first year. Every year after that the depreciation is $6,000 so its much more.

          With the cents per km method you can't claim any other motor vehicle deductions. With log book method you claim a business % of all motor vehicle expenses :)

        • congo on 28/06/2017 - 16:00

          @nicolemcmilllon: ah sorry I was thinking of the 12% original value method (not the log book method).

          I notice this method was removed for the 2016 return!

          Thanks.

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 28/06/2017 - 16:10

          @congngo:

          That's what I'm here for :)

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 11:41

      Also, what did you mean in your GST question? If you did not pay GST you can't claim GST. If the invoice includes GST paid then you can claim it.

  • Flameo on 19/06/2017 - 11:15

    Thanks for doing this.

    I have some quick questions for claiming deductions

    1) Cost of travel - if you are travelling on the weekend from home to work while your normal working hours is monday - friday, can you claim the travel cost as deduction for this?
    2) Cost of uniform - if your work requires you to wear a suit occasionally to attend meetings, can you claim a certain % of the suit cost towards uniform deduction?
    3) Spcific cost of an electronic equipment - if you work in a shared office environment, can you argue that purchasing a pair of earphones to block background noises and to listen to work-related videos at work as a legitimate reason to claim deduction on the earphones?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 11:35
      +1
      1. No
      2. No
      3. Sure, just claim the work related portion such as 50% for example.
      • Flameo on 19/06/2017 - 13:33

        Thank you Nicole for your reply.

  • Unorthodox on 19/06/2017 - 11:28

    Out of curiosity, how does the ATO know your capital gains from Shares?

    I'm thinking of putting into a spreadsheet per buy and sell but I'm worried about high frequency and also the GST brokerage charge making things difficult.
    The ato tool for cgt requires each transaction being inputted for them to calculate for you.

    Thanks again for this!

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 11:34

      What do you mean by how does the ATO know your capital gains.

      The ATO relies on the information that you enter into your tax return.

      They are also able to data match sales from brokers which is what we, as tax agents can see on your profile.

      If you put everything down in a spreadsheet your accountant can figure out your gain/loss for each year.

  • Bullion78 on 19/06/2017 - 11:40

    I have a cousin on a DSP. Throughout year he bought and sold goods on eBay profiting about 3500 over the 12 months. Ordinarily he would not need to submit a tax return but I the case where a small profit was made, is it still necessary or does that fall into the hobby income territory?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 11:43

      It is up to your cousin to assess whether or not it is a hobby.

      Go through all these questions on the ATO website to assist in determining if a business is being conducted or if it is just a hobby :)

      https://www.ato.gov.au/Business/Starting-your-own-business/I…

      • techboy on 20/06/2017 - 08:24

        I believe that Ebay will notify the ATO for all amounts over $10,000.
        But again work out if it is a hobby or a business.
        Given the amount earned you may also see how it would effect DSP if reported as income.

  • geoffs87 on 19/06/2017 - 11:47

    Capital Gains question… (in 2 parts)

    Is the cost to stage a property classed as an expense when calculating Capital Gains, therefore offsets the cost?

    If Yes, I am looking at buying the furniture, as its actually cheaper than the basic staging package, and some of the furnishing i buy i will use for my PPOR also. Could i also claim the furniture i buy for the purpose of selling as an expense when considering Capital Gains? NB – i will not include any furniture i purchase and keep / use for selling my PPOR in the calculation.

    NB furniture will either be disposed of, sold (at a loss) or kept (and therefore not claimed) upon sale of property.

    Thanks Nicole - great public service on your part :)

  • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 11:55

    1. The cost to stage the property can be added to the cost base of the property. This will reduce the capital gain.

    2. If you purchase furniture they would ideally be sold with the house. If they are being sold separately then perhaps only include the net expense (cost less sale price) as part of the cost base of the property. i.e purchase lamp for $20 sell for $5, then your cost of $15 can be added to the property. It is essentially an advertising cost.

    Things to consider: Is the difference in price really worth you going and finding a bunch of furniture, then having to find buyers for it to sell.

    • geoffs87 on 19/06/2017 - 12:15

      If i sell it to myself ;)

      Well maybe - not sure at this point… still working it out!

      Thanks :)

  • fedwood on 19/06/2017 - 12:53

    If all shares I have sold this financial year have been the at a loss. How do I document this to put against profits made in the future?

  • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 12:57
    +1

    Include the loss in the capital gains section of your tax return. Item 18. It will let the ATO know you made a loss this year and you can carry it forward indefinitely.

  • klatscho on 19/06/2017 - 13:00

    1) I have bought a phone in mid December 2016 (less than $300) and started my business shortly thereafter (late December). Is the purchase tax deductible?
    2) Said phone just died and I have bought a new one (again less then $300). Can I write this one off as well?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 13:04

      Yes and Yes.

      If they were both used 100% for business purposes then yes you can claim the full amount (both times).

      • klatscho on 19/06/2017 - 13:05

        thank you for the prompt response!

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 27/06/2017 - 15:50

          You're welcome :)

  • Smiley82 on 19/06/2017 - 13:11

    Hi Nicole,

    Thanks for giving your time to this AMA, it has definitely been some very interesting reading.

    My partner has recently secured some secondary work which he performs before his full time job.

    For this, we registered him with an ABN as a sole trader, but he is not registered for GST, and we expect the work to be less than $10k per year. He is required to invoice the company for the work (only 1 invoice has been raised so far with more to follow) and then they pay into his bank account.

    Question 1: Where on his tax return would we declare this additional income?

    His current scenarios involve him driving to a job site (Job A), performing work on-site before driving to his full time job (Job B) and working 9-5, then coming home.

    Question 2: We have been keeping records and understand that we can claim the cost of travelling between job A and job B as deductible, but not the trip to Job A, or home from Job B. Is this correct?

    Question 3: He completes the work on-site, then comes home and completes around 2-3 hours of paperwork at home. He uses stationery and printing supplies we which have also been keeping receipts for. I assume we can claim these as they are solely related to his income? Is there anything else that we should be capturing?

    Thanks in advance and happy Tax Time! :-)

    Kylie

  • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 13:18

    1. You show the additional income on the business schedule in the tax return. If you are doing the return yourself it would be on the supplementary income section Item 15.

    2. That is correct. Calculate the kms and multiply by 66cents to get the deduction (assuming using that method).

    3. That is correct. Anything for the business can be claimed in the business schedule against the business income. You could also claim a portion of electricity/internet/telephone related to the home office as well as deprecation of computer/desk in the home office.

    • Smiley82 on 20/06/2017 - 13:44

      Thanks so much :)

      • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 20/06/2017 - 13:48

        You're welcome :)

  • recharger on 19/06/2017 - 13:29

    Hi Nicole,

    Thank you very much for your detailed answers on your past and present AMAs, it is much appreciated by myself and I know the whole OzBargain community.

    I have a few questions about my blog business which I operate as a sole trader. I have online ads on my blogs where I receive a few cents if someone clicks on the ad. The ad providers are all based in the US so I never bothered to get an ABN as from what I read online an ABN was only necessary if income exceeded a certain threshold or GST was involved. I have earned about $20k this year. So in relation to this business, my questions are:

    1) Do I actually need an ABN, and if so, would it be OK to apply for one now?
    2) Sometimes I pay people to share links to my blog posts and share a % of the profit generated from that post with them. Can I claim this as an advertising expense if I get them to invoice me for the payment?
    3) I operate this business from a room in my home that I am renting, and spend an estimated 2 hours per day working on it. Can I claim business expenses including share of electricity, internet, rent, etc? I've measured that the room is approx 15% of the floor plan of the home I rent.
    4) I have purchased a number of items throughout the year for exclusive business use (i.e. storage HDD for backups) - can I claim the cost of these?

    Thanks so much once again for all your great contribution throughout the AMAs :)

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 13:35
      +1

      1. You should probably apply for the ABN from 1 July 2017 and kick off the new financial year with an ABN.

      2. Yes you can. You should be asking for an invoice from anyone that you pay advertising expense to. These expenses will offset your income.

      3. Yes you can claim a percentage of the expenses based on the floor plan. If you believe it is 15% then you can claim that amount on the expenses used for your business. However for example you wouldn't be able to claim 15% of home costs not related to your business (such as pool maintenance costs for example).

      4. Yes these would be deductible and will go against the income in your return.

      • recharger on 19/06/2017 - 13:36

        Many, many thanks for the quick and detailed reply!

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 13:36
      +1

      Do you have any other income (such as employment income)? in the 2017 financial year?

      • recharger on 19/06/2017 - 13:37

        Yes, I do have employment income in the 2017 financial year (approx 70k)

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 13:39
          +1

          Obviously you will be paying tax on that $20,000 income in your tax return. The tax will be approximately $8,000. Wasn't sure if you were aware of this.

        • recharger on 19/06/2017 - 13:42

          @nicolemcmilllon: Yep, I have been setting aside about 35% of business income to service the tax bill so that's roughly in the ballpark. Thanks once again :)

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 13:43
          +1

          @recharger:

          No problem :)

  • cheapm8 on 19/06/2017 - 13:34

    Hi Nicole.

    I know refinance costs for home loans are tax deductible, but what can they be considered as? A capital expense or as a deduction during the FY that it occurred? If its a deduction, what category does it fall under?
    Looking at last years online MyGov form, the only categories i see that this could possibly fall under are "Total Legal Fees" or "Total Other Fees"

    Thanks!

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 13:37
      +1

      I assume this is for a rental property? If so, they go in the rental schedule under "borrowing costs" and are deductible over a 5 year period. So if the costs are $1,000 you deduct $200 per year for 5 years, apportioned for days the first and last years.

  • kev98 on 19/06/2017 - 13:45

    When I buy item off eBay during 15% off promotion, and I am eligible to claim item for work purposes, can I claim full value or only the amount I paid via card. Does ato have way of knowing I only paid 85% of that value?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 13:51
      +2

      The Australian taxation system is one of self assessment. Which means, unless you get an audit, they are trusting you to self assess.

      The law states that you can only claim what you incur. If you receive a 15% discount, it would be illegal to claim that portion of it as a deduction :)

  • TheBilly on 19/06/2017 - 13:49

    Hi Nicole,

    I purchased an investment property as "tenants in common" with my wife with a 50/50 split:

    Am I able to claim 100% of the (negative gearing) if my wife's income is under the tax free threshold?

    If not, can the arrangement be changed after purchase and settlement of the property?

    If not, what happens with the (negative gearing), can she accumulate the deductions for the next financial year or when a time comes and her income increases?

    Thank you

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 13:54

      Someone above asked the same question and someone else commented on changing ownership to 99% and 1%. I personally would not recommend this but it is up to you to get legal advice on that.

      As it currently stands you have to each claim 50% of income/expenses. Should negative gearing end up giving her tax losses they would roll forward to future years.

      However if her income from other sources is for example $25,000 and the negative gearing is $10,000. Her taxable income is now $15,000 and she is under the threshold. The negative gearing must be applied against her income and therefore she would have used up the entire negative gearing (you can't choose to roll over to other years if there is other income).

  • Ozbargainlyf on 19/06/2017 - 13:57

    Has something replaced the temporary budget repair levy?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 14:00

      As far as I know, for the year ended 30 June 2017, there is still a temporary levy of 2% on that part of a person's taxable income which exceeds $180,000.

  • dragon7 on 19/06/2017 - 14:29

    Hi, i have questions on car expenses. My car rego and insurance is due for renewal on 5 Jul. I already paid for the rego and insurance renewal last week. Can i claim this as expenses in this FY16/17 or have to wait until EOFY 17/18?
    Another question is asset life for car depreciation, do i need to use 8 years effective life regardless of the car age i.e. bought used car 10 years old for 3K, still need to depreciate over 8 years, cant claim as expense straight away. Thanks

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 14:32
      +1

      Are you a small business or employee?

      • dragon7 on 19/06/2017 - 18:46

        Employee using 80% of my car for business travel, thanks

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 18:57

          If you are using the log book method, you can claim prepayments as long as they don't exceed $1,000.

          Regarding the depreciation, you depreciate it over 8 years from the date you bought it for the price you paid, regardless of how old the actual car is :)

  • RedLights on 19/06/2017 - 15:38

    Are there any tax implications for gifts from overseas?

    i.e. gift of cash from my elderly grandparents for me to buy a new car here.

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 15:41

      Nope. They are just giving you a gift from overseas. Nothing sinister about it :)

  • Chael Sonnen on 19/06/2017 - 15:58

    Recently purchased an investment property with my girlfriend. We're going to be renting it out but are planning to pay more than the minimum payments each month. For example, the bank requires us to pay 2000 per month but we will pay 3000 a month to pay off the loan faster. As this is an investment property, will I be able to claim tax benefits on the extra 1000 per month paid as well?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 15:58
      +2

      No, if anything your interest will be lower. But that is a good thing, it means you will pay it off quicker, and that is the true benefit believe me!

      • Chael Sonnen on 19/06/2017 - 22:10

        In that case, is there even any tax benefit to actually putting the money into the loan as opposed to keeping it in an offset account to reduce the interest?

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 22:18
          +2

          Nope. Hence why most people have offset accounts.

  • z10cvbnm on 19/06/2017 - 15:59

    Hi Nicole,

    I got a property this financial year under my name that's currently occupied by my siblings (and mortgage servicing is all covered by them). So there's no agent involved. Can I classify this as a investment property? What about getting a Depreciation Report, can I claim on those?

    Thanks very much for your help!

    Joe

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 16:10
      +1

      You can only classify it as an investment property if you are charging them rent. Here are some questions to better understand your circumstances.

      Are you living in a different property? If so is it your primary place of residence?
      When you say mortgage servicing is covered by them, do you mean they are paying all the expenses etc?
      How new is the propery, i.e when was it build?

      • z10cvbnm on 19/06/2017 - 16:23

        Thanks Nicole.

        I live in a different property.

        The mortgage payment is transferred fortnightly to my bank account to cover the repayment. Including expenses.

        The property was finished in late 2016.

        Just want to get an understanding what can I claim and what not. Thanks again. :)

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 16:34
          +1

          It it up to you if you want to charge them rent. If you do, then you can classify the repayments to you as rental income. Then you could claim all the expenses and potentially depreciation that may lead to the property being negatively geared.

          If the property is relatively new then consider a depreciation report. BMT Tax Depreciation is a company that specialises in these reports. You can contact them.

          I would recommend you discuss the numbers in detail with your accountant to see if its worth charging them "rent".

        • z10cvbnm on 22/06/2017 - 20:23

          Hi Nicole, if I don't charge them rent, can I still do the depreciation report and claim on it?

  • h3h3 on 19/06/2017 - 16:06

    Hi Nicole,

    I am a full time student but DJ as a sole trader (ABN with at least 50% of work invoiced)

    1. i do a lot of regular driving for gigs (sometimes hours away).. what is the max km's i can claim using the cent per kilometre method (without having a strict log book, i can work out in my head roughly how much it is)

    2. this year it looks like i will only make about 14k net profit, i understand i don't have to depciate all my items instantly and so they can roll over into future years for when i may make over 18k net profit… so what percentage can i or do i take across to future years, is this only possible for expenses over 1k?

    3. i also buy and sell a lot of DJ related items, for tax purposes is it as simple as i just record the amount i paid for it as the expense and once i sell it i put this as income, so buy for $400 sell for 4500 i made $100 and this goes towards my net income with anything over the total 18k taxed.

    Great job with the AMA

    TIA

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 16:14

      1. You can only claim km traveled from one gig to another, not from your home to the gig. You can use the cents per km method up to 5,000km x 66 cents = $3,300

      2. If you don't need the depreciation, then depreciate all expenses over $1,000 over their effective life.

      3. That is correct.

      • h3h3 on 19/06/2017 - 22:39

        great thanks!

        also..
        4. i have a gig once a month where i must stay away from home, they pay me for my service and provide me with accommodation, but can i claim meals as an expense since this is purely a business trip

  • mini2 on 19/06/2017 - 16:10

    Say I buy 10 bottles of Krug from Qantas Epiqure. Nets me 162k Qantas points. $395 per bottle = $3950.

    Then I need to fly overseas for a work related event. So I've used up all 162k points to pay for the business flight. The retail value of that flight is approximately $6k. Qantas valued those points at approximately 4 cents per points or $6480.

    Then the 10 bottles of Krug….I gave 5 bottles away to business associates then drank the 5 bottles myself. So….

    1) So is FBT payable on the 5 bottles I’ve consumed myself? That’s a lot of vintaged champagne   
    2) So how much is the flight valued at? The price of the Krug’s purchased for ($3950), the retail or Qantas value of those points ($6480) or the retail value of the flight ($6k)?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 16:16

      Are you an employee or business owner?

      The flight is not deductible as you did not incur any costs in flying regardless of its value.

      • mini2 on 19/06/2017 - 16:31

        Employer if that make any difference.

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 16:32

          Employer? As in you own your own business. It makes a difference because the business deductions are diff from employee deductions.

          Also, if you are an employee, then I assume your employer would be the one paying for all this rather than you.

  • d-hunterz on 19/06/2017 - 16:27

    Hi OP

    One of my family members have worked 2 Jobs all year in FY16-17, along with that she was doing this online project work on ABN for 2 months ( this all up resulted in incoming cash of $2500 in total) To do this she bought refurbished laptop for $1000. Now she has just purchased a house.

    What are the things apart from cent per Km for the second job, uniforms, stationary can she claim.
    Is the Laptop claimable as she has the invoice.

  • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 16:36

    Yes as a small business she can write off the laptop immediately.

    She can claim costs incurred in her employment (which usually isn't very much as employers usually provide everything).

    Any business deductions will only count against her $2,500 business income. Other business deductions can't be offset against her employment income.

  • Cameronol on 19/06/2017 - 16:51

    Hi Nicole,

    I work for an IT contracting company that provides IT Support to a client with multiple sites, plus I also work at one of my company's locations half a day a week.
    I own a motorcycle that I use to get to, between, and from work sites on a daily basis. Work gives me a travel allowance only for travel between scheduled contracted sites (emergency support travel from one location to another isn't covered), I also use my motorcycle to ride to TAFE after work 3 days a week.

    I use the ATO Deductions app for logging all distance travelled (where I don't get the allowance) for work purposes and going from work to TAFE, however it only states somewhere that it is for Car deductions, and that a motorcycle is covered under something completely different.
    I log well under 5,000ks per FY on the app.

    How can I claim using my motorcycle for work purposes?
    I can't really make sense of any of the information on the ATO's website, as most of it points from one page to another to another.

    Thanks for your time!

    ,Cam

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 17:14
      +1

      I think the cents per km is 15 cents for a motorcycle. So even if you claim the entire 5000km it's not that big of a deduction.

      • techboy on 20/06/2017 - 09:41

        Never heard that one Nicole. Motorcycle claims should be a D2.
        You would need to establish business use % etc.

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 20/06/2017 - 09:55

          I think the 15% is a judgement call that we've been doing for years. Its based on the FBT rate for a motorcycle.

  • oishiigiri on 19/06/2017 - 16:53

    Hi, appreciate you spending the time doing this.

    I work full-time but I plan to set up my own side business at home and plan to spend under $10k for a home office (PC, desk etc.) I already have my ABN as a sole trader. Is it best to make these purchases now? Or wait til after July 1 for the new financial year?

    As I understand it, I would then need to claim the home office as depreciative assets against my ABN. Worst case scenario, what would happen if I don't generate any income on my side business? In the likelihood I do make money, then I will be inclined to hire a tax accountant to look after the books.

    Thanks

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 17:15

      1. There's no benefit in purchasing before 1 July so it's probably best to wait to see if you're going to generate any income because…

      2. If you don't make any money the losses can't be offset against employment income. They can only sit there indefinitely waiting for your business to generate income.

  • Ncb88 on 19/06/2017 - 17:25

    Thanks for taking the time to help :)

    I left my role as an analyst at a fund management company earlier this year. I am still without work but since then I have enrolled (and sat for) the level 1 CFA examination. Is the cost of enrolment and any additional reference books I purchase a deductible?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 18:35

      No sorry it isn't.

  • fantacular on 19/06/2017 - 18:28

    Hi Nicole, thanks for the AMA :) I have a negative gearing question

    1. I own an apartment apartment that I am currently occupying and wish to lease out next year. It will be cashflow negative. At the time we purchased the apartment we paid a 20% deposit to avoid LMI and hence 80% LVR. The property has gone up in value and the bank has offered refinance us at 95% LVR - if we do this before we move out, can we claim the finance costs at 95%, or only the original 80%? Can I claim the cost of the LMI arising from the refinancing?

    Thanks

    Dan

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 18:37

      As far as I know, refinancing will taint the loan and will cause difficulties in calculating the interest that is deductible as you are withdrawing money for a diff purpose.

      The LMI is not deductible and forms part of the cost base of the property.

  • AndyRates on 19/06/2017 - 18:51

    How much can I depreciate a laptop by? Which depreciation method is best? Can I claim it all in one go?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 18:59
      +1

      You can depreciate it 100% (which is 2 years effective life at diminishing value) but remember to apportion it for the days you owned it. For example if you purchased it today you can only claim 11/365 x cost (as there are 11 days left in financial year)

      • magikz on 20/06/2017 - 21:30

        If the laptop was bought for business purposes, say for $1000, and you earn't $2000 income as a sole trader, shouldn't you be able to offset the full $1000 from the $2000 income, regardless of when you bought the laptop? I thought this was simple depreciation rules.

        Please correct me if I am wrong as I may choose to hold off on buying assets for myself.

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 20/06/2017 - 21:37

          Yes you can if you are running a business as a sole trader.

          I assumed you were an employee working for someone else.

  • jasonlah on 19/06/2017 - 18:58

    Hi I am a dentist, my accountant is setting me up as a company. I have a job at a practice during the monday to friday and work at another practice on saturday which is a 300km drive away, both places I am working as the company. Can I claim the car expenses for the drive between

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 19:00

      Don't you think you should be asking your accountant since they would know your circumstances better.

      The car expenses shouldn't be deductible as they are from home to work.

      • jasonlah on 19/06/2017 - 19:03

        yeah i thought so. Thanks i'll ask them

  • ArnoldIsComing on 19/06/2017 - 19:18

    Hi Nicole, first of all thank you for taking your time to answer our questions.

    I have looked through your previous 2 Forums and i couldn't find anything that answers what i want to know.
    I want to be able to buy a couple more under $300 items in my Home Office area for this years tax.

    1) Is there ever a problem with claiming a Desk+Chair+Bookcase all in the same tax year? They are used 100% only for Work Related Study for my Home Office that is used for study and research (IT).

    For example, $199 Chair, $200 Desk, $99 Bookcase and to claim them 100% this financial year?
    Or are there other items that are better to purchase that you may suggest.
    NB. I've already bought a printer and and a shredder (each under $300 and only for work use) and am claiming my usual Work Related purchases.

    Thank you :)

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 19:24
      +1

      That is all fine to deduct. Just remember, don't ever purchase anything purely for the tax deduction. The cash benefit to you will only be 30% of the outlay.

      • techboy on 20/06/2017 - 09:48

        Just remember that if you are claiming Home Office Costs, 45 cents per hour then you wouldn't be able to claim for the furniture as these costs include heating, cooling, lighting and decline in value (depreciation) of office furniture. I normally see which generates the biggest deduction.

  • Vinny79 on 19/06/2017 - 19:34

    Can I pay interest in advance for investment property for 2 years in advance and claim tax deduction.

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 20:14

      Generally you can claim prepaid interest of 12 months.

      For example if you prepay it on the 4th April you can claim the portion related from 4th April to 30 June and 1 July to 30 June the following year.

  • Ayanami on 19/06/2017 - 20:06

    Thanks for doing this!

    I have a small business that I run through a company. Am I able to buy a motorbike under $20k through the company, claim the entire purchase price immediately as a deduction and then use it for both work and private use? Or does FBT come into it even though it;s a motorbike?

    Cheers!

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 20:11

      Yes it will be subject to FBT.

      Best to purchase it outside the company and just pay for fuel via the company :)

      • Ayanami on 19/06/2017 - 20:24

        No worries, thanks :D

  • brawndo on 19/06/2017 - 20:36

    Hey Nicole

    Thanks for doing these AMA's, there's been heaps to learn from the threads.

    Question is, for an investment property purchased years ago and paid off, If one was to take a loan out to build a secondary dwelling (granny flat):

    1. Are all interest and loan establishment expenses deductible?
    2. How does the new dwelling affect the cost base when it comes time to sell the lot. Should the dwelling be depreciated?
    3. Does investing in the new dwelling affect the > 12 months capital gains discount?

    Thanks!

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 22:24

      1. Interest yes. Establishment fees deductible over 5 years.

      2. The cost base will be your total renovation costs plus what you paid for it.

      3. It's not really a new dwelling. I assume the granny flat is not a separate title. It will affext the capital gains as you will need to hold for more than 12 months or else only some of the gain will be able to.be discounted.

  • xabiso on 19/06/2017 - 21:02

    If I have a 3-4 year old computer (lost receipt ~$1.5k in value) that I currently use primary for work purposes (Oct16 to June17). Am I allowed to depreciate it and claim the no receipt $300 computer for work deduction?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 19/06/2017 - 22:21

      If you don't have any other deductions at all then you can claim 300. Once u have 301 total deductions in your return then the entire amount must have reciepts

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