Etax now asks for number of weeks rented

Just completed tax return and noticed that Etax asked how many weeks of the year was the property rented. Wasn't an issue for us for last financial year as it was rented, or available, as an Airbnb rental all year.

However midway through this financial year we're planning on changing this property from IP to PPOR. Does this mean that our bills for cleaners and other costs associated with running the Airbnb will be proportioned next tax return when I answer 26 weeks?

 

was rented or available for rent?

 

It was available on Airbnb the entire financial year, but was not booked every day of that year.

 

Should have used the paper return. The supplementary section only has about 3 or 4 questions on rental income.

 

what does your tax advisor say?

 

You only need to apportion for costs that cover the year. Cleaning for a rental while rented is deductible in full.

 

Exactly, the very reason why I use paper returns. Use an Excel spreadsheet and put final values into the paper return.

So, why does the ATO deem it appropriate to ask one set of quite detailed questions in the E-Tax return and does not ask the same questions nor require anything like that level of detail in the paper return.

 

But then I wonder how is the ATO going to know which expenses were made at the time of rental and directly relating to that income (ie cleaners) versus costs to be divided, such as council rates? Maybe it will be easier to fill in by paper next year as advised above...

 

Ato plans on getting rid of paper returns. Probably soon after single touch payroll when you will need a mygov account if you want most of your payroll data.

 

You know and the return is self assessed.

 

I can only guess. I'd say a paper return would probably need an extra 20 pages if you had to supply all the information required on an electronic return. That means extra paperwork , data entry etc. I'd also say the number of IP taxpayers using paper returns would be small and a low risk to ATO revenue.

Furthermore, not everyone is computer literate. So the Government must make allowances for these people by allowing paper returns. Probably for another 20 years.

 

Same problem banks have - can't get rid of passbook accounts until all the old people die.

Meanwhile their great grandchildren are using a sim card to identify their accounts.

Do Property Managers have to report rent collected on behalf of owners to the ATO in the same way share registries report dividends?

That could get problematic if you have to apportion things there too - e.g body corp fees or council rates paid during a period of unavailability.

 

You'd hear about it if they did that. There's no legal obligation for PMs to pass that info on unless big brother specifically asks for it under the income tax act. Share registries and banks have your tax number, otherwise they deduct the highest rate of tax from your dividend or interest payment.

They way I see it, the problem is not that investors fail to declare income but rather they over claim deductions to maximise their negative gearing. That's just my view, I don't work for the ATO and have inside knowledge.

 

Sorry to keep flogging this horse, but then why does the ATO ask how many weeks rented, if in each claim we apportion the amount according to time rented. ie only claim half of the council rates, but all of the cleaning...?

 

I reckon it's so the taxman can weed out dodgy returns.

Say you declare the property was rented for 26 weeks but you claim full council rates, interest paid etc. The taxman computer will spit the dummy and say: "why the heck is this taxpayer claiming high amounts of rental expenses and yet the property is only rented out for 6 months of the year? Better have a look at this one Charlie". Out goes an amended assessment.

Simple mistakes apparently are always done. Ever been busted for not declaring that interest from a "long lost bank account" ? lol. Guilty.

 

Are those the account's in the seven levels underground bunker of the numbered Swiss accounts?.

 

No. In Leichenstein. Ahh these tax havens. they create so much head ache.

 

They are mostly concerned with interest and building depreciation. This is affected by the number of weeks available for rent.

And it is a largely irrelevant “why” they ask. The outcome is the same.

 

This question has always been asked.

No the question does not result in in the nominated costs being apportioned by the software. The ATO expect you only show the cost that is the deductible %. Each expense will be apportioned by you. This takes some diligence for the first year. For example from Dec - June the land tax may be 100%. Agent fees are obviously only 100% deductible since they cant relate to the private use period and so on. The insurance will be based on the policy period of cover