Foreign Investment Property Owners – Beware of the new tax!

The Bill has passed and received Royal Assent on 30 November 2017 for the Commissioner of Taxation to charge a vacancy fee to foreign residents owning an investment property in Australia that is not occupied.   This has been popularly called a “ghost tax”.

The fee only applies to non-Australian tax residents who own a residential property that was “vacant” for more than 183 days in a financial year.

A residential property is “occupied” (ie not “vacant”) when:

(a)  the owner or his/her relatives genuinely lives in the property,

(b)  the property is under a lease or licence for a minimum of 30 days, or

(c)  the property is genuinely available for lease or licence for a minimum of 30 days.

If the property is classed as “vacant” (ie not “occupied”), then the owner of the property will need to file a “Vacancy fee return” to the Commissioner of Taxation and pay the vacancy tax.

Investment Property Owners – Updates you need to know!

While other political issues were holding centre stage in late November 2017, the Parliament very quietly passed a Bill to limit plant and equipment depreciation deductions for rental property owners and deny travel deductions on rental properties. It has received the Royal Assent on 30 November 2017. As detailed in the May 2017 Budget, these changes apply from 1 July 2017 onwards.

What it means to you:

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Subdividing your property and Tax

If you live on a large sized block you may have at some stage thought about subdividing.

You might want to subdivide to make some profit, to generate regular rental income or to reduce your backyard maintenance.  You will need to think about what happens when you sell….

Generally, your main residence is not subject to capital gains tax when you sell it, but subdividing your land will create two (or more) separate titles which are now separate assets.  These subdivided properties will have tax implications when you sell them.

A few things to consider are:

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Remitting employee super payments when there is insufficient information

As an employer you are obliged to pay your employee their wages, remit their PAYG Withholding to the ATO as well as remit superannuation payments to their superannuation fund accounts.

In an ideal world, on the first day your employee starts work with you, they would complete their forms including a Super Choice Form informing you their superannuation fund account details for you to remit superannuation payments.

What if your employee did not provide enough information for you to remit superannuation payments, and the amount is due to be paid?

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Are you a US Citizen in Australia?

The USA is one of very few countries who tax their citizens on their world-wide income no matter where they are living overseas. This means that US citizens who live in Australia are required to also lodge US tax returns with the Inland Revenue Service. If you are a US citizen, living in Australia, it is important to let your Australian accountant know as soon as possible as there can be unforeseen consequences from your Australian business activities if caught up under the USA IRS’s expansive rules and regulations.

Photo Courtesy of Wikimedia Commons: By James Montgomery Flagg (http://www.usscreen.com/american_spirit/) [Public domain]