Claiming depreciation for your investment property in Melbourne – the benefits

Currently the business of investment in real-estate is at its boom all over the world. People own different properties in different areas either locally or around the country, and tend to keep it as an asset. However, certain of these people incline to use it as a means of business. Real estate owners invest in properties for residential as well as commercial rental of property. This not only brings them a lot of rental income but also enables them to collect the tax deductions and benefits which are exclusive to the real estate as they are available only of residential or commercial rental property.

There is a long list of these benefits some of which are included here such as; interest, depreciation, repair, casualties and theft losses, insurance, and legal & professional services. All of these are also claimed as deductions on property in the tax return. However, our main focus in this article is the depreciation claim. It’s very important to identify the nature of depreciation, the schedule of depreciation, and how depreciation can be claimed and turned into a benefit? All these questions are answered in the article and enlighten the latest rules that apply to depreciation claim in the Australian market according to the rules set by Australian Tax Office.

Depreciation-Nature and Significance

It is depicted from research results that 80% of real estate investors most of the time fail to take benefit of property depreciation and hence miss out on thousands of dollars’ worth of savings which is rather a huge benefit to the government as the liability turns into earnings.

This is because it is the only kind of benefit which doesn’t require any sort of payment. Exactly! Depreciation is free claim on the property wear and tear, renovation and repair expenses involved over the period of time. However, not most of the property owners have the knowledge of claiming this share of benefit hence tend to lose the opportunity to claim what is already their own.

Thus, one can make a lot of money through their property either in commercial or residential use by claiming their fair share of depreciation claim.

Against property there are two basic kinds of depreciations that can me allowanced; depreciation against plant and equipment which in such cases refer to as the items found with in the building, and the Building allowance(also called in certain cases “Capital Allowance”) which is referred to as the construction cost involved in building of the structure. It is stated that these allowances can be counterbalanced against the assessable income.

Depreciation scheduling and its role

According to the Tax Return Melbourne experts:

The major function or role of the depreciation schedule is that it will reduce the tax payable amount for the real estate owner.

Now the question is how?

In simple words, depreciation of a real estate is grounded on its ‘valuable life’, or the time period in terms of years an estate is estimated to stay in use. Considering the type of property as in, if it is residential or commercial and its date of construction, a property is expected to be useful for 25 years to almost 40 years. However, in certain cases this period might be rather short or can also be longer.

A tax depreciation schedule for Melbourne properties comprises of a report which prepared by the Quantity surveyor who conducts a survey of all depreciable item with in the building by taking their photos and enlisting them through thorough documentation. This tends to act as the adequate proof to make the report. Furthermore, the report includes

  • value of every single qualifying plant & equipment article inside the property,
  • the total cost of construction involved at the time the building was constructed;
  • A proper forecast of the deductions claimable per financial year over the period of 40 years.

Making sure that the depreciation claim is maximized on any building needs a blend of skill regarding construction costing and detailed information of current tax depreciation legislature. So it is suggested that property owner must consult a specialist which in this case are considered to be Quantity Surveyor to formulate an error free Depreciation Schedule before filing the return to ATO.

Depreciation Claim on old Melbourne property- Still Valid?

Majority of the property owners don’t tend to have knowledge of their depreciation claim and so they lose a lot of money. However certain of the property owners who received a professional advice from Tax Return Melbourne CBD specialists discover about their bounty of claim and acquire the required knowledge have certain very simple question regarding their claims regarding their old properties. Is the claim applicable on their old properties? Can depreciation claim be acquired on renovated property?

The Australian law regarding depreciation claim was amended in 1985. If the property was built after 1985, both capital allowance and, plant and equipment can be claimed. But in case of property’s construction prior to 1985 would result in loss of capital allowance but still the owner would be able to claim depreciation on plant and equipment which yet not an empty hand and rather a worthy deal.

In case of property renovation the depreciation can be claimed. The ATO must be given money figure that was involved in the renovation as it is an ATO requirement. It is still possible to apply for depreciation claim even if the renovations were done by the previous owner of the state. Even in certain cases where renovation cost id unknown it is possible to claim depreciation claim. A quantity surveyor must be hired to make the appropriate estimations to ensure the claim.

So, if you are an owner of residential or commercial property, don’t forget to claim what is rightfully yours. Use this depreciation claim to solve your financial issues or so, but always remember to collect.

Tax Return Melbourne CBD

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Bookkeeping and tax implications for car expenses

bookkeeping for car deductions

Per Kilometre Claims for Car Deduction

Australian Taxation Office has revealed that the most commonly occurring tax deduction claims over the years have been related to work expenses of employees which accumulated to $18 billion last year. If we go further into the work expense, the largest contributor is car expenses. It is an interesting fact for sure. ATO has applied certain legal implications upon it. Vehicle expenses as deduction claims are made by almost every Australian who earns taxable income. One should know the rules about this concept and have clear understanding for successfully gaining tax deductions. There are certain expenses which you can claim whereas other which you cannot. It is important to know the details about this for successfully applying tax deduction claims. It is must know for every bookkeepers Sydney.

Claims Allowed

ATO has made specific rules which make room for deduction claims. However, it is not the situation where you can make claims for travelling you had to do for unnecessary reasons. In case you have to carry lots of items like a ladder from one place to another then you could make a claim. It could be the travelling from home to work or from work to another place. You are entitled to make car deduction claim if you have two jobs in a day and direct travelling is required from one workplace to the second.

The costs which can be gathered under deductions header include the ones which incurred due to work reasons.  It is the cost which was required for generating assessable income. At the same time, it is important to understand that car expenses are only covered under cars. It cannot be used for other vehicles like motorcycle, van or SUV. No vehicle which has 9 or more passenger space can come under this category or the vehicle which has 1 ton capacity. These vehicles related expenses are covered under the head of “travel” expenses for bookkeeping services Sydney purposes.

Methods of Calculation

The first and foremost thing you need to do is prepare the records (bookkeeping Sydney) for business kilometers. An individual should keep the records with date, vehicle name, details and kilometers. The recorded data will help you be accurate. You have four different methods of calculating the deduction claim to file in your tax return. Try to gain as much understanding as possibly you could.

  1. Cents per Kilometer – with this method you have a fixed rate of cents for every kilometer traveled due to work reasons. By using the particular method, one can only make claim for maximum five thousands kilometers. In case you have traveled more than 5000 kilometers, you must limit the calculation to 5000 kilometers or choose a different calculation method. Diary records and receipts can play important role in this method. One should be able to prove his/her case as authentic.
  2. Original Value’s 12% – for this method certain luxury cars are not applicable. 12% of the original value of an individual’s car is the base for car expenses to be calculated. To use this method, you must have travelled at least 5,000 kilometers or more within one financial year.
  3. 1/3 Car Expense – here you are allowed to calculate and claim overall car expenses’ 1/3 portion in tax return. In this case, the car should have covered more than 5,000 kilometers during the financial year. The rules are strict with this method. One should have all the detailed proofs and evidences for supporting his/her case.
  4. Logbook – The base for this method is the percentage of car expense related to work which needs to be calculated and proved with use of a log book having all the records for at least 12 week time period. One is liable to update the log book after 5 years maximum. Odometer readings are necessary to provide from the time vehicle was acquired till it’s owned. Details for every kilometer traveled needs to be placed in the log book for mentioned time duration. Receipts will play a key role in here for claiming.

Individuals who are GST registered due to profession’s needs such as sole trader needs to have evidence in form of invoices for all car related expenses. It is the only way correct claim calculation could be done. We have briefly mentioned and discussed the different car vehicles which could be used and rates per kilometer for the year 2013/2014.

  • For rotary maximum 800cc and non-rotary maximum 1600cc rate per kilometer is 65 cents
  • For rotary maximum 1300cc with minimum 801cc and non-rotary maximum 2600cc with minimum 1601cc rate per kilometer is 76 cents
  • For rotary maximum 1300cc and non-rotary maximum 2600cc rate per kilometer is 77 cents

Just select one of the above mentioned methods for purpose of making maximum tax deduction claims. Consult financial or tax adviser for best advice on this subject. We hope our today’s editorial was worth reading.

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Small business owner have good chances of tax deductions

Small business owner have good chances of tax deductions

As the end of financial year approaches, we all get worried about the ATO files for sure. You must plan your taxes well so that you do not get into trouble. The more equipped you are with the knowledge of what is your income and expense regarding the small business that you earn the better it gets for you when you file your ITR

As a self-employer or founder of a home based business, it is a wholesome journey to reach your final ATO income and deductions with proper disclosures and deductions. There are many tax professional and software’s that are available to help you in your financial year Tax Return Sydney. Nevertheless, it is always recommended that you have a fundamental knowledge yourself about your income and expenses so that it makes the process simple and easy, and you know what you are paying for. You file an individual return that is taking its toll on you, we can imagine the plight of the additional business return that you have to file, and it must be overwhelming!!

Being a home-based business owner, it yields many rewards for you. Home-based business owners not only experience great shifts in their work-life balance, but also experience highly improved motivation with the fact that they are their own boss and the whole experience of working on something that they are passionate about. They get many financial rewards too. Main amongst them is the eligibility to claim certain tax deductions.

A good knowledge of what you can claim as a deduction significantly reduces the amount of tax that you are liable to pay.

When you possess a small home based business, must you keep your business and personal expenses separate to ensure easy accounting.  There are many expenses that overlap this area and falls under a situation when it becomes difficult to determine how much amount should be kept aside for what. Here are a some practical tips for you.

The other deductible expenses that are peculiar to home-based businesses are occupancy expenses, running cost and vehicles expenses.

Occupancy expenses

Occupancy expenses are expenses related to owning, renting or using the house, these are not necessarily related to a home-based business but mostly to all such small business. These expenses include rental payments, council rates, mortgage interest, bills and house insurance premiums.

Your home-based business area need to pass the “interest deductibility test” if it does then you are can claim occupancy expenses as tax deductions. In order to pass this test, make sure that your business area is definable from the rest of the house, when you have a home based business. Even if it is a small part of the whole house make sure that it is used only for specific business purpose, keep things separate and organized. These goes a long way in determining and separating business expenses from personal, the business space should exclusively be used by you or your clients for business related work. Let’s say when you claim such expenses; you can divide the whole bills by the area of the house and your hoause and easily get to the amount that accounts for your business expense. It makes things easy for you to explain in front of the auditor. A word of discretion here;  be very careful while claiming some of these expenses like the mortgage interest claims as they might subject to capital gains. A distinction and a thorough understanding are needed here.

Running expenses

You claim all your expenses as the deduction similarly; running expenses are included in deductions. Running expenses are any cost that comes from you using the facilities of your house as part of your business it includes expenses like that of electricity and gas cost, phone bills and cleaning costs of the area of the business.

These expenses are addition to the regular home expenses. The regular home expenses are acquired, as a result, of running your business from your house.In such a case, you are allowed to claim these expenses as deductions, yet please be mind full of the fact that even though they can be deducted they should involve only amount of actual usage for business, not the personal house expenses.

Various methods can be used to calculate the proportions and deduction amounts. One easy way is to find the percentage of floor area which is used for the business purpose as oppose to that used for the entire area. This percentage gives you a fraction that can be applied to calculate the amount of cost for utilities involved in business. Another way is to calculate the cost of utilities of the whole area and the compare the before and after cost of setting up the home based business  the resulting difference is the amount  that is used for the home based- business.

Be prepared to provide information to support the claims you are making, you should be able to confirm that the claims are reasonable and used only for business and private or domestic proportion of the expense has not been included.

Vehicle expenses

You often use your own car for business purpose several times a month not realizing that you can claim deduction for the same. Home-based businesses are entitled to claim deduction related to any travel costs they incurred which is business-related travel. If you are carrying on a home-based business then you can claim deduction for all your travel expenses like that of going to a client’s premises, making a purchase of an equipment or any form of supplies or doing your bank work, or sending mails or when you visit your tax advisor.

The most important tip for any business owner and specially home based business owner is to document everything. Keep record of all the Receipts and invoices. They might be small and insignificant information but when combined they form a lot of amount and a substantial amount of deduction can be made using them this greatly reduce your tax liability and who wants to pay more taxes.

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ATO Audit

How to audit – proove your business

How to audit – proove your business

Audits can be very stressful for any company regardless of how big or small their span of operation is. One would of course think that if they were honest in filing their company’s taxes, then they would be spared the stress and tension of a tax return audit, but that is not the case. Theories abound as to what prompts the ATO to conduct these audits, but no specific reason has come to the front so far. People often question that does such a thing as an audit proof return exist? Well, obviously there is no way you can maintain a very low profile or be invisible when you are running a business. The ATO was formed to monitor all business activities and so you cannot expect to escape from all kinds of surveillance. The ATO maintains a very close watch to ensure that small businesses report all of their income and that no illegal activity is taking place.

Points to remember:

  • As noble as this cause maybe, it does develop as a stressful activity for small businesses because audits can take months to complete during which time all business activities get disrupted.
  • While you cannot escape an audit completely, what you can do is minimize the risk of getting picked for a tax return audit.
  • To be able to do that you first have to become familiar with some of the benchmarks that ATO monitors. These benchmarks are financial ratios that the ATO has developed to measure the performance of small business companies. By making of these financial ratios, the ATO can compare the performance of companies that perform within the same industry.
  • If the financials of your company do not match to that of the other companies then, you are marked for an audit by the ATO.

An understanding of these financial ratios or benchmarks as they are commonly called would help you keep your performance under check and minimize the risk of being called in for an audit. This would also give you an insight into what prompts the ATO to highlight companies for an audit.

The first are performance benchmarks. These ratios or benchmarks are used by the ATO to identify companies that have not been reporting all their income. You should be aware of this ratio to ensure that you have complied with this aspect of the tax requirements. The second type of benchmarks is the input benchmarks. These ratios are for trades people who work in direct contact with the customers and purchase their own materials. Based on the materials they use and the amount that they spend on hiring labor, the ATO can calculate their expected income or at least the range in which the income would lie and then this expected income is compared to what other trades people in the same profession are earning. Trade associations are of immense help when these ratios are being developed.

Being familiar with these benchmarks alone, however, would not help you completely. If you want to minimize the risk of getting called in for an audit then, you can keep the following suggestions in mind as well.

A good knowledge of what you can claim as a deduction significantly reduces the amount of tax that you are liable to pay. The first suggestion, which is given by every professional associated with the field of taxes, is to make use of a computer for all calculations, or at least make sure that you have consulted a professional for this purpose. When you get a professional or a computer to do this work for you, you can be sure of the accuracy of their preparations. You would also know that the probability of errors would be far less as compared to when you would prepare your taxes yourself.

Be sure that you compare your business performance with that of other companies in the same industry at the end of the year when you receive your taxes from your lawyer or when you finish doing them yourself. This would give you an idea of where you stand and what are the chances that you might set off some flags with the tax office. You can even do this throughout the year. For this, you will have to make sure that your bookkeeping is up to date and that all accounts are being maintained well. If at all, after all this analysis you find that you are falling behind the range then you should seek guidance from a professional or from your accountant about what you can do. It would be necessary to find out what you are doing wrong.

If you have these things in place then some of the other steps that you can take are making sure that all your calculations are accurate. Maintain proper documentation for all your deductions. You need to be able to prove that your claims are accurate and correct. Proper receipts and bills for the expenditures that you are claiming and also keeping copies of the same would not only help you in preparing your taxes but will also be useful in making sure that you are well organized. These would come in handy when your records would be checked through. Even the smallest bill should be kept safe and should be paid. Again, you should also keep records of your incomes.

Another thing that you should keep in mind is when you become eligible for a refund do not claim it immediately. You should seek a refund the next year. This would give you a lower profile, and you would not be on the radar of the ATO, which would help you minimize the risk of being called up for an audit. There is, of course, still no guarantee that you would be able to avoid an audit because if your performance benchmarks or input benchmarks provide the ATO with an indication that your performance is different from that of your competitors than you would raise some flags with them. But by following these points you should be able to better monitor your performance.

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how to register small business in australia

How to Register a Small Business in Australia

Business Plan

In Australia, as in many other countries, you must have a good business plan or at least a business advisor to help you, in the process of establishing your business. There is also advice that you can get from many of the government support services. Establish your accounting system as this will be needed to apply for loans and startup costs.Find the location for your business. Are you going to build, lease or work from your home. Depending on what you choose there may be obligations that come with it. Decide the type of business you are operating, such as retail, service or manufacturing. There can be different laws and regulations depending on the business so once you have established that area check to see what ones will be relevant to you and your company. Once you have your business plan, begin the process of getting your registrations, permits and licensing.


One of the first things you may need to register is your company name. You can check with Australian Securities and Investment Commissions National Name Index, to make sure that the name you have chosen is available. Each State or Territory is responsible for registering the company name so check with the appropriate office in your area.

Choose the type of business structure:

Sole Trader Owned by one person who is liable for all profits and debts.

Partnership between two or more people will share in profits and debts.

Company (Pty Ltd) Proprietary Limited Liability which is what most companies are.

If you anticipate annual sales of over $50,000.00 you will need to register with Australian Securities and Investment Commission (ASIC) for goods and service tax. When you register for this you will need to apply for an Australian Business Number (ABN). This is an eleven digit number that will help you when buying from vendors to keep them from withholding amounts from payments. The exception is a sole trader who can then use their personal tax file number (TFN). Again each state or territory is responsible for all business licenses, permits, registrations and certificates so check with your local government offices to see what you will be required to do. The ASIC will also be able to inform you if you will have to file financial reports. ASIC has an on line lodgement service to help you if you need to change any of your companies details. You can also review annual statements and receive email alerts.

It would be a good idea to go ahead and register for your website, even if you aren’t planning on using it immediately. You can receive all the information you need at Australian Domain Name Administration. Having a website ready to go will take the stress out of setting it up later when you need to actually be working on it. Today there is more business being done on the internet than ever before. There are also accounting programs available that are done on line that will make doing business easier than ever. A good website could add more sales to a business that is trying to establish itself. You can find a good web site developer to help you with the design and function of your website.

Advertise in your State or Territory to help increase your recognition, and jump start your sales. Check your competition and see how they are advertising, this will help you know how to set yourself apart and become unique in your field.


Visit the Australian Business License and Information Service and see if you fall in the Legal Obligations Competition and Consumer Act. This covers legal and ethical selling guarantees and protecting privacy and trade measure laws.


If you are going to employ a work force you will need to know the Employer Obligations Common Law for State, Federal and Territorial. For information you can contact Employer and Workplace Relations at an Australian government small business website.


You can visit business.gov.au for more tips and information including many forms and services you may need. There are several places to check to see if vendors you are using are licensed and since you are just beginning your business it will be worthwhile to make sure you are dealing with reputable companies. The more research you do for your company will only benefit it. They have more information about basic business practices and can help you structure your business to maximize its’ success. There are videos and articles that can show you how to implement the best plans for your business. This is one of the best sources for the most information.


Your responsibility as an Australian company is the same as in many other countries, make sure you have finished all the registering and licensing and that you understand your obligations. Report in a timely and correct manner.

Insure your business with the appropriate insurance such as Public Liability and Product Liability. Educating yourself to all your obligations and being informed of any changes to your laws and regulations will make doing business easier and more enjoyable.


Do your homework. Research every avenue of your business. Consult with a business advisor or hire a CPA firm to guide you through the paperwork and tax information you are going to need. Take advantage of the free information at many of the government websites and don’t be afraid to ask for help if you are having trouble understanding any of the laws and regulations you may be required to follow. Check with your state or territory to see what forms you need and what licenses you are required to have to conduct business in that area. Establish your company in your customer target area and maximize your sales with good advertising. Make sure your company is covered from any type of liability claim by having the correct insurance. Many lenders will require liability insurance. Use your financial information to help guide you through the managing of your business.


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