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Tax Free $

Discussion in 'Accounting & Tax' started by Paul@PFI, 24th Jul, 2015.

  1. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,400
    Location:
    Sydney
    Client had a strange thing happen. They had an IP a few years back and sold it in 2012. This week the electricity company noted that the tenant had been overcharged for years. Apparently picked up in an audit and since it was a contract price the ACCC got involved. They wanted to refund the overpayment. So they did a title search since the tenant didn't reply to mail. Found his name and somehow his address...

    So he asked is its taxable ?? ATO confirmed that its tax free for two reasons:

    1. The cost was a private expense of the tenant so no tax adjustment arises; and
    2. Out of time to amend if it was required.

    Bank error in your favour collect $3k....:)
     
    Terry_w likes this.
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    Wouldn't the treatment change if this were a business expense?
     
  3. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,400
    Location:
    Sydney
    Its a former IP now PPOR so I don't see how any business issues can apply

    If it was business income on a business use property then it would be an assessable receipt when received.