Clients failing on depreciation front - property investment
Several tax specialists and national mid-tiers have found clients are struggling to understand their rights and benefits associated with depreciation, ...
... and accountants are being told to proactively engage with clients on the matter to avoid unwanted consequences at end of financial year.
Bentleys Sunshine Coast managing director Peta Grenfell told Accountants Daily that accountants should actively educate clients with an interest in property investment about depreciation.
“Clients usually understand there are tax benefits associated with owning a rental property, but they tend not to understand what they need to do to access the benefits, or how they work,” Ms Grenfell said.
“I think it comes down to the relationship the client has with their accountant. The more proactive the accountant is in helping the client to maximise their deduction and understand their investment the more likely we are to see an increase in understanding.”
In an interview with Accountants Daily, Pitcher Partners' David Staples said that accountants who don’t encourage communication and understanding early can end up creating more work for themselves and their clients in the long run.
“The most critical thing is for people to actually talk in advance,” Mr Staples said.
“I say to people if you don’t talk to us before you do it we can't help you and then it's a bit late after you've bought the property to tell your accountant 'oh we've bought this property' and then you try to get depreciation or capital works schedules out of people.”
Mr Staples said that record keeping is the most important aspect to save both accountants and clients time when it comes to doing tax returns.
“One of the things accountants can actually do is help people set up ways of tracking and keeping proper records because it's hard a year and a half after you've bought the property to come and do your tax return and say where's all this information,” he said.
BMT CEO Bradley Beer said there are five key mistakes that investors commonly make which accountants should work to educate them on.
The first mistake many investors make is not claiming all the legitimate items they are allowed to depreciate.
The second is investors believing that their properties are too old to hold any deductions, when a property’s age doesn’t necessarily rule out all deductions completely.
Thirdly investors who renovate their properties are often not aware of scrapping deductions available for the assets they remove and replace.
The fourth common mistake is investors believing that because they purchased their investment property some time ago that they cannot benefit from tax depreciation or items that may have been missed in a previous claim.
Lastly, many investors attempt to do their own tax claim and miss things out.
LARA BULLOCK
Wednesday, 18 January 2017
accountantsdaily.com.au
Hot Issues
- FBT Reminder – Odometer Reading
- ATO’s debts on hold campaign prompts new IGTO guidance
- A comprehensive collection of small business benchmarks
- The 2025 Financial Year tax & super changes you need to know!
- Underperforming employees: When can you terminate?
- A comprehensive list of guides to industry specific tax deductions.
- ‘Renewed concerns’ about economy sees consumer sentiment dip: Westpac
- Oldest Buildings in the World.
- Small businesses may ‘collapse under strain of payday super’, IPA warns
- ATO’s hands tied with scrapping on-hold debts, expert says
- What Drives Your Business Growth and Profits?
- Australian Taxation Office (ATO) shifting to firmer debt collection activity
- Why employee v contractor comes down to fine print
- Sharing economy reporting regime for platform operators
- Countries producing the most solar power by gigawatt hours
- Illegal access nets $637 million
- Accessing superannuation benefits.
- Does your business have a company Power of Attorney?
- Labor tweaks stage 3 tax cuts to make room for ‘middle Australia’
- GrantConnect
- 2 in 3 SMEs benefit from instant asset write-off, survey reveals
- Updated guidance on R&D claims
- Do you know how to recover debts?
- Wheat Production by Country
- Types of small business benchmarks
- Vimeo test
Article archive
- January - March 2024
- October - December 2023
- July - September 2023
- April - June 2023
- January - March 2023
- October - December 2022
- July - September 2022
- April - June 2022
- January - March 2022
- October - December 2021
- July - September 2021
- April - June 2021
- January - March 2021
- October - December 2020
- July - September 2020
- April - June 2020
- January - March 2020
- October - December 2019
- July - September 2019
- April - June 2019
- January - March 2019
- October - December 2018
- July - September 2018
- April - June 2018
- January - March 2018
- October - December 2017
- July - September 2017
- April - June 2017
- January - March 2017
- October - December 2016
- July - September 2016
- April - June 2016
- January - March 2016
- October - December 2015
- July - September 2015
- April - June 2015
- January - March 2015
- October - December 2014
January - March 2017 archive
- Impending GST changes good news for SMEs
- SMSF related-party borrowing arrangements
- Primary Producer Income Tax Averaging
- Active vs passive assets and the small business CGT concession
- ATO issues further taxpayer alerts on key focus areas
- Borrowed money to pay a business tax debt? Is the interest deductible?
- Online Selling
- The dangers of income splitting
- Clients failing on depreciation front - property investment
- Home office deductions: What substantiation will the ATO accept?
- ATO advises accountants on client data swoop
- ATO issues stern reminder on new backpacker tax
- Debt Recovery
- Government takes next step in tax cheats crackdown
- Car salary packages and the deductibility of after-tax running costs
- Choosing an Executor
- ATO fires warning shots at cash economy exploiters
- Getting a tax valuation from the ATO
- 5 tips to get home office deductions right
What our clients say about us