Home office hours claim for a couple who are share traders

Discussion in 'Accounting & Tax' started by money, 5th Jan, 2020.

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  1. money

    money Well-Known Member

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    If a husband/wife couple have a joint brokerage account and do share trading (meaning they are truly classed as in the business of share trading based on the ATO's definition), does the "home office hours" claim need to be split 50/50 on both their tax returns? What about if only one of them is actually doing the trading using the joint brokerage account? Or can the full "home office hours" be allocated to just one individual?
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    If joint then all expenses must be claimed equally.
     
  3. money

    money Well-Known Member

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    That's what I was thinking. Ok thanks for that Terry :)
     
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  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    You should ideally not be jointly owning shares!
     
  5. money

    money Well-Known Member

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    Any particular reasons as to why not? I can only think of potentially paying more tax then needed to when they are sold (due to a 50/50 split) or if one party were to go bankrupt then all the shares could be at risk of being lost.

    I'm thinking that a discretionary trust holding shares would be probably the best option for flexibility of distributing the profits but if there is a loss than the loss can't be distributed but kept in the trust until a profit is made. Also legal benefits from either husband or wife going bankrupt or being sued.
     
  6. Trainee

    Trainee Well-Known Member

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    Bankruptcy risk is bad enough.

    How about death?

    if it really meets the criteria of being share traders, its making enough net income to be structured like a proper business?
     
  7. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Say one has no income in one year and the other on the top tax rate - you cannot tax effectively sell down shares.

    Bankruptcy doesn't make much difference and neither does death, unless you are holding them as joint tenants.
     
  8. Stoffo

    Stoffo Well-Known Member

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    I have my own business
    We have a computer on a desk with paperwork everywhere, a filing cabinet and a mile of tool/equipment storage, the only thing we claim is half our internet charges !

    Getting the pittance claimed back may seem like a good idea up until you sell, then the government are going to want their chunk of capital growth back on the percentage of the property claimed......
    Pass
     
  9. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    There are 2 aspects

    a) occupancy costs - such as heating, electricity etc, which won't effect CGT

    and

    b) true office costs such as a % of the loan - which will make the house subject to CGT

    of course if you are renting it doesn't matter!
     
  10. Mike A

    Mike A Accountant

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    Why would the government get anything if you were eligible to use the small business cgt concessions to potentially reduce the gain to nil
     
  11. ChrisP73

    ChrisP73 Well-Known Member

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    Does that apply when you sell the PPoR? Or just the business?I could have misunderstood, but I susoect Stoffo may have been referring to the former.
     
  12. Stoffo

    Stoffo Well-Known Member

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    Didn't mean to hijack the thread
    TBH, I haven't looked into the legalities/legislation of it
    Maybe I need a better accountant also

    My limited understanding was that by claiming a % of my ppor building for use at tax time that eventually when I sell my ppor that % claimed would then have gst applied to it.
    With the capital gains made in Sydney from 2011 I chose not to claim the few hundred for office/storage use (as I imagine I'd have to pay several thousand back if I sold today)
    I do claim internet and a small amount for electricity.
     
  13. money

    money Well-Known Member

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    Running a business from home you can claim a portion of electricity and internet and home office hours without being liable for CGT on your PPOR. At least that's what our accountant has told us many years ago. I believe if you claim interest payments for your PPOR home loan then that's when you'll be liable for CGT later down the track.
     
  14. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    what do you mean by 'home office hours'?
     
  15. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    It is not if you claim but if you could have claimed - even if you didn't claim.
     
  16. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Its not a share trading business in most cases. Its an activity that is not a small business but bizarrely may still be a business so things like the non-commercial loss tests may impact.. Other typical costs may include a share of internet, and direct costs such as data subscriptions etc. Brokerage is NOT a separate deductible cost. It is a element of the cost of each parcel bought / sold. Assuming its a share trading venture then the trading stock basis to calculate profit & losses will prevail over the CGT basis. If no shares at held on hand at 30 June then the outcome may be identical anyway.

    The cost of a share of rent etc is NOT an eligible deduction. Occupancy expenses for a home you own or are paying off is also not allowed as home is not a place of business in most cases for share trading activities. A share trading business needs far far greater scale to meet that test. eg a full time and sole income producing activity v's limited day trades
     
    Last edited: 6th Jan, 2020
  17. Trainee

    Trainee Well-Known Member

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    52 cents an hour?
     
  18. money

    money Well-Known Member

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    The one the accountant puts on the Business Item Worksheet that they write down as "Home Office Hours".

    Yes, that's the one.
     
  19. Trainee

    Trainee Well-Known Member

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    Thought thats only if you dont itemise?
     
  20. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    The ATO dont get that data. Its largely a waste of time and effort and does no more than make data entry costly which the client is paying for time so time is money right ?. Some narrations help for the following year. eh Home office 40w x 25hr They just get major numbers in a business worksheet.

    The data fields in D1 -D10 are now transmitted to the ATO. Some deductions require a detailed worksheet if the value exceeds a threshold of $5K. eg Dividend and interest deductions. It requires more info about what the product is and who was paid etc. eg BT Margin Lending Interest, Paid in arrears, Interest etc $7035 and it asks what was invested eg shares under margin lending.
    eg D5 Work Related
    Computer $1535 would pose a concern since it indicates its capital expenditure and potentially non-deductible and should be depreciated. The ATO now expect tax agents to enter line by line but its not mandatory. Its well advised for larger value deductions to at least help minimise enquiries. I often get clients who provide a list and I may enter this as :
    Client Summary $2010
    For gifts we tend to ask for receipts for high value ones to check its a deductible gift and now include the ABN in the field. Help avoid delays as the ATO can look, check and see its OK.

    For rentals the ATO gets little of the rental schedule. The software bundles certain categories of expenses and reports those as a bulk number. If I entered eight different types of repair it gets sent as one Repair & Maintenance cost.