Building new through a company - Fee deductible?

I've engaged a company to build a new investment property. The fee is called a "management fee" and according to them, it's tax deductible. It's $10k and was paid in June.

Is it tax deductible in one hit? I.e. can I claim it in the 16-17 tax return?

Thank you.

 

management fee for doing what ?

if its a buyers agent fee disguised as a management fee so you get a deduction watch out the ATO is well aware of that scheme. Refer Drummond v FCT for capping deductibility of excessive deductions.

you may want to ask the person if they are doing this whether they are aware of Part IVA and also the promoter penalty regime.

also ask why a development company is providing tax advice. ask for them to provide the advice in writing. dont think that will happen.

 

If you are building a dev the cost forms part of the trading stock. If you are having an IP built its a CGT cost as a part of the construction. I cannot see how a fee for managing any build can be "tax deductible" other than a project management fee which reduces taxable profit when the project is sold. Its not deductible when paid.

Good to see a building firm that gives its own tax advice. Only problem is 1. They arent qualified and 2. Its incorrect. What other stories did they tell you ?

Did they discuss claiming the GST too

 

Sorry if my information was misleading.

It's a company like Open Corp (so not a building firm). I just asked what the name of the fee was so that I could explain it to my accountant if needed. They didn't say whether it was deductible when paid or when sold. I guess I should ask (and then ask accountant too).

Thanks.

 

Sounds like a buyers agent fee.
I think there is a discussion on somersoft where this company's directors were posting.

 

See Open Wealth Creation

They claim the fee is a management fee and is deductible.

I have no idea if this is the case or not.

 

id apply for a private ruling before claiming such a large deduction.

i think you will find if the fee includes sourcing a property the fee will need to be apportioned.

 

What are they a 'building broker' or BA?