Investment Property Tax Deduction Receipts

Hey all,

Another quick, & granted simple, query: when one gets their end of financial year (EOFY) statements from their property managers, if one is ever queried about deductions from the ATO, is the EOFY statement enough proof, or does one actually need to keep copies of all the invoices it references?

And if I can add to this: interest on loans. Am I right that one only claims the deductions as and when they come out of your account (i.e. no pro-rataing for the financial year)? Are there any statements that need to be kept for this?

Thank you very much.

 

you will need to prove that you have incurred the expense and what it related to.
Probably the ATO might accept agent statements are proof, but these often would not contain enough details so you should keep all invoices.

Strictly speaking interest would need to be apportioned, but I am not sure if many do that. You would need to keep statements.

 

In audit enquiries I see the ATO will ask for

1. Agent annual statements
2. Agency agreement or other evidence of engagement as well as asking how rent rates are determined and if the renter is related or on other terms
3. On agent statements they will often seek supporting docs for items seemingly described as repairs. The agent often provides copies or retains these. The ATO does not generally accept the agent allocation to repairs as sufficient and will even make enquiries directly to the agent or the service provider if required.
4. Copies of YOUR bank statements where the rent was credited
5. All loan docs and statements going back to initial drawn down of funds as supporting legal docs. Where refinancing has occurred they will want each refinance also supported. This may be difficult but is a requirement.
6. Your evidence of payments made directly (ie non agent) with invoices / receipts AND copies of statements etc evidencing how and where the funds were obtained. In many instances a copy of the BPay history may suffice.
7. Where apportioning is involved evidence of reasonable calculations etc

Note - Absence of receipts for even minor matters may result in deductions being denied. Remember where MORE than $300 in total deductions on a return are claimed then ALL expenses must be substantiated excepting some which may be based on other methods eg reasonable other evidence.

 

So it seems like the answer is-yes keep all invoices, not just the statement.
For the interest the answer is deduct payments of interest via cash accounting method rather than accrual (i.e. when money gets taken out of your account that is a deduction).

 

Expenses may usually be cash based bug some are not and are deductible when incurred. Land tax and depreciation are examples