Business, Property, SMSF & Tax Advisors

HOW TO LEGALLY MINIMISE YOUR TAXAND MAXIMISE YOUR PROFITS

2014

Tony Lee

Business, Property, SMSF & Tax Advisors

liable

principal and

WHERE YOU HAVE NEGATIVELY GEARED RENTAL

INVESTMENTS, THE NEGATIVE PART OFFSETS

AGAINST YOUR OTHER INCOME E.G. SALARY,

REDUCING YOUR TAX PAYABLE AND RESULTING

IN A LARGE REFUND WHEN YOUR TAX RETURN

IS LODGED.

This refund can be used to reduce your loan, pay

your interest expense or help finance another

investment property.

To help with cash flow, would it not be great if you

were able to access this refund throughout the

year instead of waiting till the end of the year? This

can help finance that extra property which has

potential to pick up some capital growth between

the beginning and end of year.

This can be done by lodging an application to

vary the 'PAYG Withholding’ using a form

from ATO. This can be done electronically on

line or you can download the form, prepare and

lodge it manually.

Depending on your personal

circumstances the additional refund from

negative gearing may not be substantial. If the

savings are small, you should consider saving the

cost of preparation

To get the maximum benefits out of the cash flow

savings, late May/early June is the best time to

prepare and lodge the Application for PAYG

Withholding Variation because then you can get

the full effect of lower tax

When lodging electronically ensure you

keep a copy of the electronic receipt or make a

record of receipt reference number. It helps when

chasing up ATO.

and Maintenance

A tax deduction is available, where you

pay for this before 30 June 201 ... useful

where you purchased a new property & interest

expense was lower than expected.

Depreciation is the wear and tear on building and

equipment. Claiming a tax de-duction for this

expense does not require any cash payment. You get

a tax saving without paying any additional cash

money.

To maximise your deductions it is prudent to get a

Quantity Surveyor to produce a report for you as

they are skilled cost estimators. You get a nice report

which minimises your accountants time and cost in

preparing your tax return.

Prepaying expenses up to 12 months ahead are

allowed as a deduction in the earlier year. In this

case 201 . Prepaying expenses increases your

deductions, reducing your tax.

Most people prepay the following types of expenses

Rates – Council & water

interest

-

-

- Strata Levies

Before prepaying deductible property expenses, it

is prudent to check on how your tax return may

look for that financial year. Do a bit of forecasting.

If you have investment properties – which are

negatively geared (the interest and expenses

are larger than the rental income) the negative

component will be offset against other income

such as salary, reducing your taxable income –

reducing your marginal rate of tax and your tax

liability.

One of my clients ha about $13k taxable income. If

he were to prepay expenses – bringing the deduction

forward to 201 year instead of leaving them for 201

– he would lose money. Because at $13k

taxable income – no tax is payable.

rom 1/7/201 the tax

increase from to

Deductions for

contributions to super

are capped at

$25,000

This amount includes the

SGC payments made

by the employer

Additional contribution

to a Self Managed Super

Fund (SMSF) maybe

necessary to make

up for any losses in a

property owned by the

fund and is negatively

geared.

With the aging

population, more older

Due to the non-recourse

loans which are forced

on super funds by

the legislation banks

are only willing lend

between 65-70% of

the value of a property.

Where a fund wants to

buy larger property

or propert in

the

then a non-concessio

nal contribution (non-

deductible) may be

required. The caps on

these is $150k per

year

.

Tax Tip – If you

are able to make

non-concessional

contributions to your

SMSF and you want

a larger deposit for a

purchase the time to

make these contributions

is:

- $150k before 30 June

- $150k immediately

after 1 July

Within days you can

have $300k in cash in

the fund to use for an

additional purchase.

Tax Tip – using

spare cash available

outside Super to lend

to an SMSF to acquire

property inside an

SMSF. The profits will

be retained in the fund

being taxed at the

concessional rates.

propriately authorised, financial

adviser.

Review your current property

& tax situation ... maybe the

next deal or

hether or not to sell

a property which one in

the portfo

Tax planning should ideally form

part of your overall financial

planning, as it may well have an

impact on your overall financial

situation.

You should be proactive with your

tax planning – and discuss it as

part of your broader financial

situation with a licensed, or ap-

our asset protection

strategy. What is your risk

profile? High ..medium ..low

Structuring your next

investment property. In

whose name should it be?

lanning to legally

minimise your tax position or

just to explore the possibilities

your Self Managed

Super Fund ready to

acquire a property

Prepare your next tax return

or application to reduce your

PAYG

Why We Choose Lee & Lee Accountants

Tony with Sam Saggers, CEO of Positive Real Estate. Together, we will help you to find the right path and provide you with the right tools to navigate it.

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For over 10 years, Positive Real Estate have

helped thousands of every day people, just like

you, navigate the minefield of property invest-

ing. We aim to equip you with the knowledge

and skills necessary for buying an investment

property, so that we can help you achieve

financial freedom.

Like us, Lee & Lee Accountants believe your true

wealth is tied up in your values, vision and dreams.

Through planning, they get to understand the

financial, emotional, and charitable aspects of

your business, family and personality.

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Becoming wealthy is for everyone. Start now, strap in and enjoy the journey. I can attest that living wealthy, seeing the world, working less and loving more are far better than doing things tough. Real estate is merely your tool to get you there, so get started today.

Reading and education definitely is invaluable. However it could never do justice to a topic as serious as property investment, property taxes and your future wealth. It is highly recommend-ed that you visit us at our next free Property Investor Night.