When you sell an asset (let’s say a property), you will do so at a profit, a loss, or you’ll come out even. If you’re lucky enough to come out with a profit, that profit you receive is called your Capital Gain. When you complete your tax return, you’re required to report your Capital Gains as well as your Capital Losses, but you only pay tax on your Capital Gains (i.e. when you’ve made a profit). This is called Capital Gains Tax (CGT).
While negative gearing is a method commonly applied to rental properties, it can in fact be applied to any type of investment. Essentially, negative gearing is when you borrow money to invest (let’s use the example of property), and you operate at a loss, i.e. your rental income is less than what it costs you to hold the property. When it comes to rental properties, there are a number of things you can claim as a deduction in an effort to boost your costs and come out “negatively geared”.
This is a topic we are asked about more and more as there is a move towards people working from home either for an employer or for themselves in a main or side business. Our guidance differs depending on if you own your own home or if you rent.
Most businesses stem from a passion, and many passions show themselves in our recreational and hobby activities. The lines begin to blur when we start making money from what we love, whether it be a full time or ‘spare time’ pursuit.
The methods for claiming your car expenses have changed in the last 12 months in an effort to ‘simplify’ the way deductions are made.
Tax Planning Tips for 2016! Find out how to minimise your tax with a few easy steps.
You’re looking to buy an investment property and wondering how it will affect your tax situation?
Firstly, it’s important to note the difference between a residential or commercial property. If you purchase a residential investment property, there is no GST applicable. This also means you cannot claim any GST, however a commercial property will require you to charge GST and lodge BAS on a Quarterly basis. There will also likely be GST on the purchase and sale which you need to consider.
