This article contains a number of relevant Australian tax updates for people who own real estate investments. Your tax accountant should be aware of these, but as an property investor it’s good to know what tax dedications and available and how they may affect your tax situation.

Claim 100% for this year or depreciate?

Taxpayers are entitled to claim the cost of repairs and maintenance immediately, but there are other adjustments to a property which are classified as ‘capital works’ and can only be claimed over a number of years.

“For example, if the guttering on your property is damaged in a storm, and you replace the part that is damaged, you can deduct that immediately,” says Karen Foat, Assistant commissioner at the ATO.

“However, if you replace the whole guttering, that’s a capital works, it’s a structural improvement. And you can claim that at a rate of 2.5 per cent for 40 years,” she said.

Source: Accountants Daily sister publication, Smart Property Investment, December 2018.

Australian Business Taxes

Australian Business Taxes

The key taxes affecting businesses are Company (income) Tax, Capital Gains Tax (CGT) and the Goods and Services Tax (GST).

These taxes are all set by the Australian Taxation Office (ATO).

Company Tax

A resident Australian company is subject to company tax which is currently 30%.

Capital Gains Tax

Capital Gains Tax (CGT) applies on any capital gain made through the disposal of assets. It is paid as part of income tax. Businesses are required to keep records upon acquiring assets that may be subject to CGT in the future. Small businesses may also be eligible for CGT concessions under certain circumstances.

Goods and Services Tax

The Goods and Services Tax (GST) is a national, broad-based consumer tax on most goods and services sold or consumed in Australia and is currently at the rate of 10%.

Most businesses are required to register for GST with the Australian Taxation Office (ATO).

These include any business with an annual sales turnover of $75,000 or more.

If a business is earning less than $75,000 annual sales they can choose whether to be GST registered or not.

If they are not registered then they do not need to complete and submit a Business Activity Statement (BAS) every quarter.

Sample GST due calculation

If a business makes sales of $88,000 which include GST and has expenses of $66,000 including GST, then GST to be paid is applied on the balance of $22,000.

10% (GST) of $22,000 is $2,000 which is the amount to be paid to the ATO.

Assistance with bookkeeping, GST calculations and BAS submission can be provide by us at Axia Accounts.

Contact one of our experienced Australian bookkeepers.

Payroll Tax

Payroll tax is a state tax on the wages paid to employees.

It is calculated on the amount of wages paid per month and must be paid if total Australian wages exceed the exemption threshold in the relevant state or territory.

The payroll tax exemption threshold and the payroll tax rate varies between states and territories.

Other Business Taxes

Other Australian Government and state and territory government taxes may be relevant to certain business activities.

This may include items such as land tax and fringe benefits tax (FBT).

Contact Axia Accounting to find out if this applies to you.