There is no doubt that investing in property can bring significant rewards. But with rewards come responsibilities – to your property, to your tenants and to the taxman.
As a property owner the law requires you to file a tax return if you earn rental income from your investment. “Income” is not necessarily the same as “profit”, however. Many items of expenditure can be offset against your rental earnings to minimise your tax liability, especially with the help of a knowledgeable specialist accountant.
There is a popular “urban myth” that you do not need to file a return if you believe you are owed a rebate – but this is not the case. Whatever the figures, if your property earns an income, you need to file in order to comply with Australian tax legislation. The recent conviction of Tammy Franks, the South Australian Greens MP, threw this into stark relief when she was fined over $14,000 for failing to file her tax returns for a decade.
Franks fought a high-profile legal battle in the Adelaide Magistrates Court, claiming that she had believed she did not need to file the returns from 2001 to 2010 because she thought she owed nothing and was actually due a rebate. She also argued that she had been incapable of filing the returns as a result of her marriage breakdown. The Court rejected her defence, finding her guilty and ordering her to pay a penalty of $6,600 plus costs of $7,500.
The case has cost Franks more than just a fine. The media attention has left her reputation in tatters and her future in the balance. As her offences were not indictable, Franks has so far managed to hold onto her place in parliament – but it will be a long road to rebuilding her public image, with no guarantee of success.
As a property investor you need to be organised and well informed when it comes to your tax obligations. Our systems will help you stay up to date with the latest tax legislation and make sure you are compliant. With smart filing systems and detailed instructions on what to do, and when to do it, you can be sure to keep your finances and your reputation in order.
You should also download the McCarthy Group “Tax Planning tips for 2013” to stay on top of your accounting needs.
Why not get in touch and get some free advice for your tax? Get in contact here!