There are only a few sleeps left until the end of another financial year. While there aren’t any carols, public holidays or sitting on a red-clad jolly man’s lap (unless you visit a fairly strange accountant), I reckon it’s the best date on the calendar. Christmas comes in a distant second.
I’ve always loved tax time. As soon as the last piece of required paperwork is in my hot little hands, I excitedly rush off to see the accountant. It’s usually no later than July 15.
I sit in his office, watching him tap away at his calculator, dreaming of a stocking full of cash. Most of the time, I’m rewarded with a nice little refund. Once or twice I’ve been left with a lump of coal. Despite those odd disappointments, kind of like getting a pair of socks or daggy shirt on December 25, I still relish the day.
I’ve picked up a few simple tips since my first tax return, which I completed by hand with a tax pack and ultimately botched. They might make the process a bit simpler and maximise your return.
Keep thorough records
Over the course of 12 months, it’s easy to lose track of statements, receipts and the other bits and pieces that make up your return. Rather than stuffing these vital pieces of the puzzle in a drawer, keep a dedicated file that’s split into relevant sections and make a note in your diary to do some quick housekeeping once a week.
There are even phone and tablet applications available that allow you to ‘scan’ receipts with the device’s camera and file them away digitally, making this process a breeze.
Make it simple for the accountant
Before you head off for your meeting with the accountant, prepare a simplified overview of all your particulars. Itemise amounts for maintenance, property management, insurance, mortgage repayments and other allowable deductions. Your helpfulness will be appreciated and can make preparing your return a lot quicker.
Double-check your statement
You’re only allowed to claim the interest component of your investment property’s mortgage repayments, so make sure you’re not inadvertently including any principal. Most banks will itemise the financial year’s interest amount on your bank statement or online banking account summary.
Similarly, your council might be able to provide you an accurate figure for rates and water charges. These billing periods don’t always match up with the financial year. A phone call could save you the time (and a headache) of having to calculate it yourself.
Get a depreciation schedule
For a couple of hundred dollars, you can have a quantity surveyor prepare a depreciation schedule on your investment’s fixtures and fittings. Even if you own an older property, there could still be a fair chunk available to claim.
With a few initial details, most providers will be able to give you an indication of how much depreciation potential is in your property. Plus, the cost of getting one done is tax deductible.
Ask for advice
The obvious allowable deductions are, well, obvious – but there are others that might come as a pleasant surprise. If you’re not sure what you can or should claim, ask your accountant for a list and get cracking on preparing next year’s return now.
What’s your tax time advice for other investors? Have you discovered a hot tip you wish you’d known about sooner? Merry EOFY-mas!
Shannon Molloy is the deputy editor of Australian Property Investor magazine www.apimagazine.com.au