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Property tax accountant in eastern Melbourne

Discussion in 'Accounting & Tax' started by Macman, 23rd Jun, 2015.

  1. Macman

    Macman Member

    Joined:
    21st Jun, 2015
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    Location:
    VIC
    Hi Guys,

    Can you recommend a good and experienced tax accountant who specialises in property investment/development issues? Preferred location would be eastern Melbourne, specifically Whitehorse.

    I'm planning to subdivide my PPOR's block and build a townhouse on the new subdivision but before I start spending any money on this project I want to talk to a tax accountant about the most optimal structure from the tax law point of view.

    Thanks for your advice and cheers!

    Macman
     
  2. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Location:
    Sydney
    That's a good start point and should cover the following issues:
    - Loss of the main residence exemption to a portion of your own homesite;
    - Determining the cost base split
    - If you plan to sell the new property then the GST issue and how it can be reduced
    - If you plan on keeping the new t/house then the GST issues that apply to that
    - Records you need to keep for the GST you will incur on costs of the dev
    - If property is sold, the pure income tax consequences (ie not CGT)

    I would doubt that there is a structural change you can make at this point as the home may well be personally owned. One area to explore may be a spouse transfer and even a refinance under the Vic duty concessions so that future tax may also be more effective.
     
  3. JamesGG

    JamesGG New Member

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    Paul is much too humble to put his hand up and ask for your business directly but he would be the guy to talk to, @Macman . Paul was one of the people I turned to for advice on complex matters when I used to run my own accounting firm once upon a time. Location isn't really an issue these days and I'm sure he could help you via phone email and skype.
     
  4. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Hi James my old mate, Your name came up in discussions with industry colleagues as someone who was very key in guiding many clients along their journey. Hope you are well. Talking about your old firm and changes in industry etc...Trust Magic rewritten too. Old fashion becomes new fashion again.

    Yes always happy to take on clients anywhere in the world but for a local firm House of Wealth is likely local. Coastymike was involved and also posting on SS and may have a login here - haven't seen one yet. I'm not even sure if he remains in Australia spending a fair time overseas. Or maybe try the HOW website - Mike can steer you straight.
     
  5. Macman

    Macman Member

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    Hi Paul@PFI and JamesGG,

    Thanks. Lot's of hard questions to answer, yes. Spouse transfer briefly crossed my mind, by I haven't thought about any tax implication arising from THAT.

    At this very moment the most burning question on my mind is how to ensure that the sale of the new townhouse will be taxed under CGT provisions and not regular income tax. I've been doing research on the internet including reading the booklet "How not to be a property developer" from Ban Tacs but all the example are always slightly different to our case (none of us are builders or developers, no prior investments or development history, original block with house continous PPOR for 5+ years right from the settlement, intention to trade up to anothe suburb closer to CBD which is why we are planning to sell the new subdivision and after that also the old hous, all proceeds - and likely also new loan - will be put into new PPOR) so still not sure.
     
  6. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    A publication title "How not to be a property developer" suggests a taxpayer can undo or avoid that classification. I dont think that firm is suggesting you can mask or disguise the facts but there can be ways to proceed which can be a nail in the coffin. Once you go over the line it can be impossible to undo. If realisation of a part of your PPOR land occurs then its fairly easy to argue that your intent wasn't to profit if you don't "develop" and you don't do it straight away. eg straight subdiv and sell surplus land you have owned for a few month s v's land owned 5 years. The essential element is intention.

    But when a taxpayer subdivs and splits off their PPOR land and constructs its generally argued quite aggressively by ATO that the reason you did this was to profit. Lets assume you built a new property intended for your parents who then die well that could be argued but build then sell is generally a profit making intention and it would take a bit to convince me otherwise. And even harder to convince the ATO. Remember the CGT rules came after the profit intention rules...Its really old law. Not a new CGT issue. The issue of intention may need discussion - was it a new idea or always considered ?

    And there is still a CGT issue you know. The LAND is a CGT asset and a strategy may be used to take some of the profit on CGT account.

    Another reason a person may not be a dev could include an intention to build for long term rent. Then life deals some cards you don't want like a bad illness and no work. So you choose to sell. That may need a private ruling to see if the ATO agree. Example 32 in the ATO ruling is a similiar example. Note in that the daughter constructs her own house on the land sold.

    Prior pattern of dev is irrelevant. A single one off is sufficient. Trade-up may even support the ATO view. Profit doesn't have to mean production of income. It can mean debt reduction too. TR 92/3 remains the ATO views on isolated transactions intending to produce profit. Worth reading more than a booklet that isn't personal tax advice. Also worth reading MT 2006/1 dealing with what an "enterprise" is. It crosses similar areas and results in a clearer understanding although its very generic. I find many taxpayers try to read it down to suit their outcomes.

    Great example of when to get personal tax advice.
     
    Last edited: 25th Jun, 2015
    Macman likes this.
  7. MikeLivingTheDream

    MikeLivingTheDream BCOM MCOM MTAX CPA CTA Registered Tax Agent

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    Location:
    Philippines
    Hey Paul yes i'm here under a new name. If in Melbourne HOW can help and I do consult there still. As you say Paul i spend my time overseas these days and thus the name. Living the Dream. The reason I went into property in the first place was to be able to do what I want when I want. Going to an office every day doesnt appeal to me. Like you said these days you could be talking to a client while sitting on a beach in the Bahamas or talking tax advice after having visited the Louvre. Times have changed. Property has allowed me to live the dream most of us are aspiring to. Financial freedom.
     
  8. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    :)
     
  9. Macman

    Macman Member

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    Thanks Paul, your post is very helpful.

    I guess that means we have to basically accept that ATO will tax us as developers and we'll have to redo our number and see whether we can still reasonably expect enough profit after tax to bother with the construction.

    BTW, when I was downloading the "How not too be a property developer" I was imagining it would be a check list of blunders to avoid, rather than tips to avoid classification as a developer. It was interesting read nonetheless, even if a bit confusing at times (from a POV of a noob like me, at least).
     
  10. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Not really. Seek personal advice is rule 1.
     
  11. arorah

    arorah Member

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    Hi Michael, whats the best way to get in touch with you? Just starting the IP journey, need some guidance to make right choices.
     
  12. MikeLivingTheDream

    MikeLivingTheDream BCOM MCOM MTAX CPA CTA Registered Tax Agent

    Joined:
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    Location:
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    Arorah

    Give me a call on 02 8006 8531 its a skype number but it goes through direct to me. If im chatting with a client or concentrating on some returns ill let it go to voicemail but please leave a message and generally get back to you within 24 hours.