Can I hire an admin assistant and claim her fee as expenses?

I have a portfolio of 6 investment properties (4 of them have granny flats) having total of 10 tenancies managed by 3 separate rental agencies.

Here is how I am managing my tax affairs. Please advise how I can improve.

- 100% electronic record keeping in gmail. 0% paper.
- Monthly statements from agencies are labelled and archived as soon as I receive them. For example, monthly statement for property at 1 Parker St goes under FY18-19 -> 1 Parker St. label.
- Repairs and maintenance bills also go under respective labels in gmail as soon as I receive them.
- At the end of financial year I download all receipts/statements from bank website, my gmail and put them in a folder with one subfolder for each property.
- I then prepare an excelsheet (I have a template that I reuse every year) that contains 6 worksheet one for each property describing income and expenses for that property and one summary worksheet describing total of all properties. The net income/loss field(derived from all other fields combined) shows me the bottomline of my portfolio.
- I send only the excelsheet to my accountant who copies data from excelsheet to ATO and completes my tax return. (If I have any doubt about whether certain item is tax deductible, I ask accountant at this stage.)
- I then zip excelsheet + backing documents all together and email to myself as a single file and archive it under label FY18-19.
- Every single claim is backed by documented proof and any ATO enquiry in future can be answered by downloading one single zip file and pulling document from respective sub-folder.


As you can see the work done by accountant is very minimal. Hence small accountant bill.
However, this is process (preparing the excelsheet and collecting all receipts/statements in a single folder) consumes approx 2 weekends of my time.

I am wondering if it is possible to outsource this work. I need someone who I can share my gmail password with.

I am thinking of hiring my brother-in-law as my assistance. He does not have any account degree or any admin assistance degree but he expert in excelsheet and is good with numbers in general.

Can I claim his fee as tax deductible expense? He has ABN and will be showing this income in his tax return as well.

 

1) How will employing someone be related to earning the income from the properties?
2) Why can't this be done by your accountant?
3) The time involved is minimal (2 weekends)

 

I would say if he is doing work on the administration of a income producing business then yes.

 

Two weekends equals four days - 30 hours at the most? Don’t pay cash, get a tax invoice (GST?) and record full details of the payment. Ensure you pay at the correct rate for the actual position.

Remember you will be giving your relation access to your personal financial details, not always a good idea.
Marg

 

You could potentially deduct a reasonable amount of a payment to a related entity - what the commissioner considers reasonable s26-35 itaa97
consider Part IVA too.

I take it the relative is on a lower income to you? So there will be a tax advantage.

 

I can’t share my gmail password with accountant. Also sorting out receipt and putting them together in an organised manner is a time consuming admin task. Don’t want accountant to spend her hours($$) on that.

 

Wouldnt it make more sense to download all the pdfs anyway?

 

I wouldn't share my email password with anyone.

Why not just give access to google drive or set up a new email just for this?

 

Is $25 per hour reasonable?

For current tax return my relative may spend around 30-40 hours. However, I am thinking of hiring him for casual part time as needed basis.

Example of tasks he would carry out throughout the year would be:
- Liaising with mortgage broker for any loan refinance. Provide documentation.
- Liaise with property managers to carry out repairs.
- Future loan documentation.
- Tax time document preparation.
- Basically anything related to properties.

Total 120-150 hours work per year may be required.

Currently I am spending lot of my personal time on these tasks and considering my future plans to acquire more properties I need someone who can manage these affairs with minimum inputs from me.

I am not sure how other investors who have multi-property portfolio manage this.

 

I understand what you mean. But I don’t want accounant to flip through receipts/statements for each property.

I want to provide accountant only the excelsheet. So that her time spent on filing tax is minimal.
( What I have seen in past is most “good” accountants have an admin type assistant who does it for them and when all docs are in order and ready for lodgement they conduct a review. But they charge large amount because overall time spent was large).

My accountant was impressed the way my excepsheet was put together last time. She just has to read and verify the excelsheet and lodge the return. She charged me minimal fee for that.

But I had to spend atleast 2 weekends worth of my time putting it all together which I want to avoid in future by hiring an admin assistant.

 

This.

You can allow your accountant to have access to the relevant files/information (and nothing else) without having to share your password.

 

Totally agree.

 

This is probably unreasonable. You would have to apply for a private ruling to find out though.

 

I can setup a restricted google drive access for my admin assistant but not for accountant. I want to provide accountant only the excelsheet.

Also, as I mentioned before, there are other admin tasks that I have to deal with on an ongoing basis.

Would $25 per hour spent on admin assistant (who is also low income relative) for say 150 hours per year look reasonable to tax commissioner?

Question is not whether I should share my password with brother-in-law, question is how tax commissioner would see it.

 

Why not schedule your property expense payments and record your income and expenses on a more regular basis? I do mine weekly. It usually only takes a few minutes and it gives me a chance to review what's going on. Then at tax time it's all sitting there ready to go.

Much better than stressing out about a couple of unpleasant weekends of bookkeeping...

 

Thanks @Terry_w

 

Have you considered Airtasker?

 

Do you have PMs for the properties? If so, they will do the majority of account keeping for you, and organise maintenance and repairs. You are already paying (and claiming a deduction) for this admin work.

If so, 3 hours a week for “assistance” seems excessive and smacks of tax avoidance by diverting income to a relative. For pay rate look up the relevant award.

And surely negotiating loans is something you would have/want to do yourself?
Marg

 

That’s what we did when we had several IPs. Only took a few minutes each month to transfer details from the PM statement to a spreadsheet for each property. Any occasional expenses we paid were added as they occurred. Then at tax time it was quick to total each column and good to go.
Marg

 

Why don't you get an accountant that has a book keeper? I had a lot of catch up leg work to do and it was very cost effective.

Maybe set up a separate email account to direct or forward all property related comms to.