In a recent article I advised of the importance of obtaining a depreciation report from a quantity surveyor. The cost of these reports can vary greatly so you should shop around. You should also ensure the person preparing the report is suitably qualified and a member of a relevant professional body. Q. Instead of engaging a quantity surveyor, can we use the property purchase price as the “Original Cost” then calculate 2.5 per cent depreciation based on that figure? What happens if the property was purchased 5 years ago and I have done my tax returns every year without claiming any depreciation on the property? A. You cannot use your purchase cost to calculate the construction cost to claim the 2.5 …

Whether someone is classed as an Australian resident for tax purposes has a major effect on what they pay tax on and at what rate. By the flood of questions sent in from readers both here and overseas the matter of residency causes many problems. Because of the complexities in this area, and because every case is judged on its own facts, professional advice should be sort to ensure you get the right answers. Q. I have a three year contract in Doha. I rent an apartment there but still have a house in Kiama which my children live in. I receive no income from this. I pay no income tax on my wages in Doha and transfer money into …

The residency of a person dictates how their income is taxed. But the residency tests used by the ATO are different from Australian citizenship tests. Under income tax law whether a person is a resident is decided by a series of tests. The first of those tests requires a person to have resided in Australia continuously for a period of 183 days. The next and more important test is the domicile test that requires a person to establish their normal place of abode. The application of this test can result in someone who has been in Australia for more than 183 days being classed as a non-resident for tax purposes, and someone who has been overseas for longer than 183 …

In most cases the only taxes property investors have to deal with are income tax and capital gains tax. There are however some situations where a knowledge and understanding of the GST rules is required. Q. What are the GST consequences of someone building a new residential property to sell? Would your answer vary if the property in question was actually a main residence rather than an investment? Would the subsequent sale of the new dwellings attract GST in that instance? A. A person or entity must register for GST if they are carrying on an enterprise and the expected GST taxable turnover will exceed $75,000. Carrying on an enterprise means where something is done for the purpose of making …

Investing in property can bring many rewards. Where gearing is involved the losses can help reduce income tax. This benefit can come at the cost of a significant drain on cash flow depending on the tax rate of the individual and what type of property has been purchased. The choices for investing in direct property are between buying a new property or one that is established, and either commercial premises or a domestic property. Each of the choices offers different opportunities and tax benefits. The impact on an investor’s cash flow of deductible costs depends on their type. There are those costs that are deductible in the year they are paid such as rates and agents fees. The other costs …