The ATO estimates that incorrect reporting of rental property income and expenses is costing around $1 billion each year in forgone tax
revenue. A big part of the problem is how taxpayers are claiming interest on their investment property loans.
We’ve seen an uptick in ATO activity focussing on refinanced or redrawn loans. This activity is a result of a major
data matching program of residential property loan data from financial institutions from 2021-22 to 2025-26. This data is being matched
to what taxpayers have claimed on their tax returns. Those with anomalies can expect contact from the ATO to explain the discrepancy.
If you have an investment property loan and redraw on the loan for a different purpose to the original borrowing, the loan account becomes a
mixed purpose account. Interest accruing on mixed purpose accounts need to be apportioned between each of the different purposes the money
was used for.
On the other hand, if the redrawn funds are used to produce investment income, then the interest on this portion of the loan should be
deductible.
For example, if you have redrawn on the loan to pay for a private holiday, or pay down personal debt, then the interest relating to this
portion of the loan balance is not deductible. Not only will the interest expenses need to be apportioned into deductible and non-deductible
parts, but repayments will normally need to be apportioned too.
Withdrawals from an offset account are treated as savings rather than a new borrowing. If you have a loan account and an interest offset
account is attached to this account that reduces the interest payable on the loan, withdrawing funds from the offset account will typically
increase the amount of interest accruing on the loan, but won’t change the deductible percentage of the interest expenses.
That is, when you withdraw funds from the offset account this is really a withdrawal of savings and won’t impact on the extent to which
interest accruing on the loan account is deductible.
If you have a home loan that was used to acquire your private home and you have funds sitting in an offset account, withdrawing those funds
to pay the deposit on a rental property won’t enable you to claim any of the interest accruing on the home loan.
However, if you redraw funds from the home loan to acquire a rental property then interest accruing on this portion of the loan should
be deductible. The tax treatment always depends on how the arrangement is structured.
Think you might have a problem? Contact us and we can investigate the issue before the ATO contact you.
When new couples start living together one of the first things they need to consider is how they will manage their finances.
A great way to deal with the post-Christmas financial hangover is to look at different ways to consolidate your debts.
Giving peace of mind and a sense of direction and calm is one of the greatest gifts that we feel privileged to offer our clients.
Getting a good grasp of your business’s cash flow situation will help put you in a strong financial position.
Commercial office assets represented 34.2 percent of all commercial property sales during 2022, up from 27.2 percent last year.
The commercial property sector continues to grow. 2023 is shaping up well with a range of opportunities for investors.
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You will be amazed in this race against time to reach the finish line. Welcome to The Amazing Race memoir - Smart Business Solutions 2022 End of Year Team Building and Christmas party.
The Government’s ‘Secure Jobs, Better Pay’ legislation passed Parliament on 2 December 2022.
If you are required to but have not yet applied for your ID, you should seek an extension immediately.
The most effective way of sharing Christmas joy with customers is not necessarily the most tax effective.
In many instances, businesses might need to wait 60 days or more to get paid, which can put a strain on the business's cashflows.
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While conditions for retail tenants have been tough during lockdowns, the luxury end of the market and certain sectors continue to perform strongly.
After a record-setting few years, industrial property has continued to perform strongly throughout 2022.
A car loan is a great way to purchase a vehicle when you don’t have all the money to pay for the car upfront.
Getting your finances organised well in advance is one of the most important stages of the auction procesS.
Many lenders will offer competitive interest rates to new customers as well as other incentives that could save you money.
Purchasing a property is a big decision and it’s important to determine the best location to buy that will give you the best return over time.
When the time comes to sell, if you’ve got the budget to style your property, you might find that it can really help entice buyers.
If your goal is to buy a property in the new year, then it’s important to not let a Christmas splurge get in the way of your real estate dreams.
While we all love giving presents, if you’re looking at potentially applying for a home loan in the new year, it’s important that you don’t do any damage to your chances of getting finance by overspending
Here are the 5 signs you personally should look out for when deciding whether or not you should hire a professional bookkeeper.
Demand for second-hand vehicles and equipment has reached record levels, as supply chain problems have made new products difficult to obtain.
Record low vacancy rates have seen industrial rents jump 30 percent across Sydney and more than 20 percent in Melbourne.
The surge in commercial lending is the largest annual growth since 2009.
17 NOV 2022 @ 3:30-5:00pm
Come and warm our newly extended and renovated office space at Smart Business Solutions in Mornington alongside Bruce Billson, Small
Business and Family Enterprise Ombudsman.
Many are looking at ways to get their repayments down. The best thing to do is speak to a finance broker who can compare your options and find a loan product.
If you’ve owned a home for a number of years, you might be able to access some of the equity to use as a deposit for another home.
With the RBA’s ongoing cash rate hikes, mortgage rates are also continuing to climb.
With Spring selling season in full flight, thousands of homeowners across Australia are looking at how they can make their homes more appealing to buyers.
While many people are excited about the idea of buying their first home, it can also be overwhelming knowing that you have to eventually pay off a large mortgage.
Legislation before Parliament will lift penalties for serious or repeated privacy breaches, and provide new powers to the Australian Information Commissioner.
The increase in interest rates is starting to take effect helping to restore price stability. However, in its statement, the RBA said that it will be a challenge to return inflation to 2-3%
If you’re famous and make an income from your fame and image, the way the ATO believes you should be taxed on the income you make may change.
In July, the Australian Taxation Office (ATO) reported a new wave of ‘Tax refund SMSF scams’.
Consumer price inflation rose by 1.8% in the June quarter, and by 6.1% on a rolling 12-month view. Whilst high, these measures were below consensus expectations. In turn, this prompted hopes that local interest rates might not need to increase as much as previously feared.
With seven months before the 2023-24 Budget released in May 2023, this Budget is a shuffling of the deck not a new set of cards.
The traditional diversification strategies of super funds are failing, and a worsening inflation.
The Optus data breach is top of mind for a lot of Australians, particularly those who have had their data breached.
The Queensland Government has backed away from an amendment that would have seen the land tax rate for investment property in Queensland.
The value of cryptocurrency assets inside Australian self managed superannuation funds (SMSFs) increased by 589.9%.
UK Chancellor Kwasi Kwarteng announced a series of tax cuts, including the reduction of the top personal income tax rate.
New guidelines for professional services firms - lawyers, architects, medical practitioners etc., came into effect on 1 July 2022.
National Cabinet agreed to end the mandatory isolation requirements for COVID-19 effective from 14 October 2022. Each state and territory has, or will, implement the end of the isolation rules.
Come and see what happens when the precision of accounting and foresight of financial planning collide.
Your partners in wealth accumulation, protection and management for today and beyond.
A secured loan is a form of finance backed by collateral. For most businesses, the collateral takes the form of real estate, either commercial or residential.
Interest rates are rising as the Reserve Bank of Australia (RBA) looks to aggressively hike the official cash rate to help slow growing inflation.
Property has a long-term track record of capital growth, which is why it is a favourite asset class for hundreds of thousands of Australians.
If you’re in the market to buy a property, or looking at refinancing your current home loan, one of the most important things to consider is trying to obtain a pre-approval from a lender.
Rabobank’s Australian Agricultural Price Outlook shows that agricultural land prices across Australia rose by 27% in 2021.
With the now abolished land tax in Queensland it is interesting to note that it was never going to have the same impact on commercial property compared to residential.
Tax planning is more than just a financial necessity—it's a strategic advantage for businesses of all sizes. By proactively managing your tax strategy, you can significantly reduce your liabilities, enhance cash flow, and ensure full compliance with ever-evolving tax regulations.
