Property Investors Save Tax With Depreciation

Property Investors Save Tax With Depreciation

As an owner of an investment property you’re entitled to claim depreciation on your building, it’s fixtures and fittings.  This can be a significant taxation benefit and one that is often overlooked by owners.  

Better still depreciation is a non-cash deduction – this means you do not spend any money to claim it on your tax return.  

So what is depreciation and how do you claim it?

Click here to find out. 

Get Paid Faster With Xero Invoice Reminders

Get Paid Faster With Xero Invoice Reminders

Cash-flow is king in business.  What this means is that managing and controlling your cash in business can be the difference to success or closure.  Without cash you can’t pay your employees, your bills or buy your materials.

Busy businesses don’t want to spend time chasing invoices.  You’ve done a great job, surely your customers know to pay on time.  Well, sometimes this is not the case.  We know that there is a direct link between the frequency of following up late paying clients and how quickly you actually get paid.

That’s why Xero’s new Invoice Reminders is an excellent way to automate your initial reminders for customers.

Our top tips for implementing this system are:

  • Don’t set and forget – make sure you keep you eye on your Accounts Receivable and the customers outside their payment terms.  Customer Service is critical to business and you don’t want to be sending reminders to customers who you may have spoken with already, or have particular circumstances you know about (maybe you’ve had a delay in delivery yourself).
  • Take time to tailor your standard templates to reflect your business language and make it consistent with other forms of customer communication.  Even though it is chasing payment, it is still a form of customer engagement and service that will reflect on your brand and reputation.
  • Make sure your customers understand your payment terms.  Make the process of receiving payment from your clients as easy as you can.  Have multiple payment options (cash, credit, EFTPOS).  By using Xero add-ons you can also link payment options straight from your invoice – making it very easy! 
  • Send your invoices to customers as soon as you can.  The sooner your customer has their invoice, the quicker you are likely to get payment.  It’s a good idea to send an invoice when your customer still remembers the service or product you delivered.  This saves on questions and will help the process for both parties.  It’s not a good idea to delay sending an invoice and then chase your payment terms straight away.  You set the expectations by being prompt with your own systems first.

Is your business not on Xero?  Contact our team on info@negotiis.com.au or phone 03 9394 7024 and we can set you up with a trial today and organise free conversions from other bookkeeping data.  

Don’t forget our popular Xero Support Package for small business – it’s a great way to take the hassle out of your bookkeeping. 

Can you claim your car expenses on your tax?

Can you claim your car expenses on your tax?

For the 2016 financial year (July 2015-June 2016) there is a new change to the way you can claim for motor vehicle related expenses in your tax returns.  The options have been reduced down to 2 methods: Cents Per Kilometre or Logbook.

The even rate of 66 Cents Per Kilometre is claimable regardless of the type of car you drive.  You can only use the Cents Per Kilometre claim for less than 5,000km annually.  Whilst you don’t need a Logbook, you do need to have diary records to justify your travel claims.  A diary is less rigid than a logbook and could be your work calendar or appointment notes.

If you do more than 5,000km of work related travel per year you have a logbook.  This method allows to claim for specific expenses such as petrol, maintenance, insurance, registration, etc.

Claiming for motor vehicle expenses is available for employees and businesses alike.  The key criteria is whether your car is used for work purposes. 

Our tips for claiming your motor vehicle:

  • Don’t claim for travel between your home & place of work (this is private use)
  • You can claim for travel home from a meeting held offsite your normal workplace (for example you travel to a customer site and then go home afterwards – you can claim the journey home)
  • Your logbook must have 12 concurrent weeks of records for every trip taken during this time – put the logbook on the passenger seat with a pen so you remember each time to fill it in
  • A logbook can remain valid for 5 years if the nature of your travel doesn’t change – so a little bit of pain in getting it done can last a long time
  • If you use a logbook, you must yearly record the opening/closing odometer of your vehicle on 30 June/1st July 
  • If you have an employer paid vehicle or salary sacrifice you cannot claim for work related motor vehicle expenses
  • There are great Apps available for smart phones that can be used to record your Logbook
  • By using one debit card or credit card you can keep all your motor vehicle related expenses on one set of bank statements making it easy to find all the claims at the end of the year
Preparing for your tax appointment

Preparing for your tax appointment

You can try filling out your tax return by yourself, and you may feel confident enough to do tax returns for yourself or your loved ones. But a qualified tax accountant will be up to date with the latest changes in tax law and will ensure that you get the very best return possible.

If you not sure what to bring with you for your appointment, stress less, the below checklist contains a list of information for you to prepare and ensure you have all the info we need to complete your tax return on the spot.

This will also ensure we have all your information as we cannot always be sure the ATO portal will have these details ready for when you make your tax appointment:

Income

  • Your PAYG summaries including any termination payments (if applicable)
  • Bank interest
  • Dividend statements
  • Superannuation income stream summaries
  • Information on any Allowances paid such as car, travel, entertainment, meals etc.
  • Annual tax statements from investments
  • Foreign income
  • Sale of property, shares, managed funds information that may attract Capital gains
  • Dividend statements
  • Business income and expenses                  
  • Rental income from the agent

Expenses for tax deductions

  • Motor vehicle expenses
  • Travel and accommodation information
  • Work uniforms
  • Self-education and training expenses
  • Tools and equipment
  • Personal Superannuation contributions
  • Interest on investments
  • Telephone and internet
  • Donations
  • Income protection insurance

You might not be able to claim all of these expenses, but your tax accountant will be able to advise you of what you can claim during your appointment. 

It is best to prepare all the information at least a week in advance of your appointment so that you have time to obtain any of the information that you don’t can’t easily locate. 

Please note – The ATO is no longer issuing refunds by cheque therefore please also ensure you bring along your current bank account details including the BSB, account number and name to ensure any refunds can find their way into your bank account.