KeyPlay Business Solutions

I am currently living in Melbourne and am renting at present. I was looking at buying an apartment with my parents as the costs associated with buying by myself far exceeds my income level! I would then live in the property BUT was wondering if my parents could still treat the income and expenses of their share in the property as an investment property? The rent would be market value of course and expenses (rates... etc) would be divided up according to our respective share in the property.

Hi Emily,
Great question.Funny you ask. The ATO have recently release ID 2010/193 which broadly confirms that "Co-Owners" can negative gear property.So yes you could live in the property as a 50% owner of the investment and because you have exculsive access to the property your parents can negative gear their 50% half.Further to this your half of the property would remain Capital Gains Tax Free. Your parents and yourself need to know a few other details before you proceed with this property strategy, not to mention there are other options as well.

Hi, I have recently traded some shares and resulted in a small profit (after brokerage). Before, during and after this share trade I purchased some books and training materials related to trading shares to help me better understand the market and trading conditions. When it comes to working out my tax for FY2010 are these expenses deductible against the profit from this trade? Neil

Hi Neil,
Thanks for the question. Unless you are a taxpayer who is classified as a "share trader", the buying and selling of shares is normally classified as a capital gain (i.e. profit) or capital loss(i.e. loss). Follow the link below to see what the ATO classify as a share trader and a share holder. The point is, capital gains are worked out differently to normal profit. For example if you are a share holder and own the shares just sold for longer than 1 year, you are allowed to halve the capital gain - a good result! It would be important to get some advice is this area. As normal the devil is in the detail.

But to answer your question, assuming you are a share holder, yes those type of costs you outline above are 100% deductible in the year of purchase. They need to be entered into a special section of your tax return. The logic is that these type of expenses are deductible against income normally derived by holding shares - Dividends. Be sure to keep evidence of these expenses. Thank you for your blog Neil.
That link is: http://www.ato.gov.au/businesses/cont....
Copy and paste this into your browser's address bar.

Hi,

I have been receiving cents per km from my employer for the last financial year however I also kept a log book as the driving I was doing was further than what I could claim through work. How do I go about claiming these amounts?
Thanks

Hi Veronika,
Often a motor vehicle claim at item D1 on a tax return is a large claim, so it is important to get it right. Briefy, the ATO actually allow 4 different methods to claim a motor vehicle, used for work purposes. The best advice for you, is to make sure your tax agent calculates each one to determine the best result for you. That is what our office would do. Usng our tax software this process is almost automatic. The Methods are:
1. Set Kilometer method
2. Log Book Method
3. 12% of cost method
4. 1/3 actual expenses method
Each method has it own set of rules and substantiation requirements.
The simplest medthod for you would be to work out the number of work related kilometers you have travelled for work and then claim them against the ATO standard cents per KM. The rates depend on the engine size of your car. Nevertheless provided you have fullfilled the log book reqirements, the log book method may give you a better result.
I have included a link for you to access. The ATO provide a work related car expenses calculator and it covers all 4 methods. It is probably a great place to start. Here is the link. Just click on it. http://calculators.ato.gov.au/scripts...
Keep in mind our office can assist,even remotely in the preparation of your tax return via our Remote Tax Return system. All the best for now.

Dear Jamie,
As therapists performing a States-based modality in our clinic, Roger and I return frequently to attend training seminars. Thus, travel to the States becomes a business expense. How should expenses such as lodging, air fare, food, mileage, etc be accurately allocated and entered into the MYOB live accounts?
Joni Edmunds
Buninyong, VIC
www.thedreamingbody.com.au

Hello Joni, great question. There are a few important things that need to be considered when answering your question.

Firstly it must be noted that a deduction is only available for the business portion of your travel expenses. A travel diary is recommended to substantiate your claims, whether it be 50%, 80% or even 100% business related. A diary should record the nature of activity, days and time business activity began, how long the business activity last, name, place and also the relevant cost incurred, including airfares, accommodation and incidentals.

Any expenses that are incurred overseas will not attract GST per the tax invoice and therefore will have to be recorded accordingly in MYOB.

Another consideration is that the expenses incurred overseas will be charged in the countries currency. All foreign expenses must be translated (converted) to Australian dollars before being entered in MYOB. Generally, these require amounts to be converted at the exchange rate prevailing at the time of transaction, or at an average rate. The ATO has provided on its website a list of applicable average rates for a range of countries. This can be found at the following link: http://www.ato.gov.au/taxprofessional...

In summary, a deduction is limited to the business portion per diary, the transaction does not attract GST per the tax invoice and the transaction is to be converted to Australian dollars before being entered into MYOB. We would recommend recording the travel expenses separately to domestic travel expenses i.e. create a new account called Travel Expenses – Overseas.

Should you require further clarification or assistance, please do not hesitate to contact me at paul@keyplaybs.com.au