January 2017

Are you?
– A property owner?

At a glance:
– The profit or loss on sale of a main residence is exempt from capital gains tax (CGT).

You should:
– Consider if you have established your property as your main residence.
– Contact us if you require any clarification or advice.

A dwelling is defined as anything that is used wholly or mainly for residential accommodation, including:

• A home or cottage;
• An apartment or flat;
• A strata title unit;
• A unit in a retirement village; or

A caravan, houseboat or other mobile home.

Factors to be considered when establishing a dwelling as your main residence:

• The length of stay;
• Whether you and your family lives there;
• Whether you keep personal belongings in the dwelling;
• Address to which your mail is delivered;
• Your address on the electoral roll;
• The connection of services, such as phone, gas and electricity; and
• Intention in occupying the dwelling.

It is not sufficient to treat a dwelling as your main residence with only a mere intention without actual action.

If the dwelling is not your main residence for the whole ownership period, you may only be entitled to partial exemption.

For more information, click here.

Remember:
– A mere intention is not sufficient to treat a dwelling as main residence.

This article was published on 30/12/2016 and is current as at that date

Are you?
– Claiming tax deductions for your rented holiday house?

At a glance:
– You can claim tax deductions for expenses relating to a holiday home to the extent the property is rented out or genuinely available for rent.

You should:
– Ensure the holiday house is genuinely available for rent.
– Contact us if you require any clarification or advice.

The principles that apply to a rental property also apply to a holiday home if it is rented out. You can claim expenses for the property based on the proportion of the income year it was rented out or was genuinely available for rent.

Holiday rental property expenses that may be claimed include:

• Maintenance & repair costs;
• Advertising costs;
• Pest control;
• Insurance;
• Cleaning;
• Council rates; and
• Depreciation of assets.

However, you have to apportion your expenses between periods of:

• genuine rental period; and
• private use purposes, such as when you use it yourself, or allow your relatives or friends to use the property free of charge, or at a reduced rate.

If the property is not rented out, you cannot claim any expenses relating to the property. The following factors might indicate that your holiday house is not genuinely available for rent:

• Unreasonably limited advertising, such as the property is only advertised at your workplace or by word of mouth;
• Unreasonable conditions for renting, such as setting the rent above the rate of comparable properties in the area; or
• Rejecting rental enquiries or offers for inadequate reasons.

For more information, click here.

Remember:
– Ensure the holiday house is genuinely available for rent.

This article was published on 30/12/2016 and is current as at that date

Are you?
– An employer?

At a glance:
– Employers who choose to hold Christmas parties need to consider the fringe benefits tax (FBT) implications that may arise.

You should:
– Be aware of your tax obligations when hosting a Christmas party for employees.
– Contact us if you require any clarification or advice.

In general, an employer’s FBT obligations in relation to providing Christmas parties and gifts depend on the following:

• Whether they are provided to current employees, their associates or clients;
• Whether the party is held on a working day;
• Whether the party is held on or off business premises; and
• The value of the benefit provided.

If the Christmas party is provided to current employees on a working day on the business premises, the associated costs may be exempt from FBT.

If the cost of the party is below $300 per employee or associate of an employee, it may be considered a minor benefit and exempt from FBT.

Christmas gifts provided to an employee, which are less than $300 in value each may also be exempt from FBT.

The costs of hosting a Christmas party can be claimed as income tax deductions only to the extent that they are subject to FBT.

For more information, https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/In-detail/Fact-sheets/FBT-and-Christmas-parties/.

Remember:
– The cost associated with providing a Christmas party to employees may attract FBT if it is not a minor benefit.

This article was published on 30/12/2016 and is current as at that date

This article was published on 30/12/2016 and is current as at that date