What FY does your rent fall in?

So according to the ATO rental properties book in your tax return you must put in the "full amount of rent and associated payments that you receive, or become entitled to, when you rent out your property" however when do you put it in?
- If a tenant is behind then pays a lump sum in July? Which FY does the rent go in?
- The reverse if the tenant pays a large payment in advance in June? In this case you are not entitled to it yet, theoretically the tenant could move out and you refund this money.
- If tenant a tenant is way behind in their rent and hasn't paid when you put in your tax return? You are entitled to the rent but....

I have always though it was simply what rent was due in this period as long as its been paid but i have seen a few things lately that would make clarifying this worthwhile.

Cheers,
Smallbuyer

 

Late rent is on receipt.
Advance is when received. Even if its all received on 30 June and they pay a year in advance.
Zero rent due to arrears only goes into tax return when its received.

The key words in the ATO guidance are quite clear...THAT YOU RECEIVE...The issue of becoming entitled to refers to issues when a PM receives your rent say on 28th June and doesnt pay the owner until 10th July. They are your agent and received it before 30 June and so it IS income at 30 June. the agent will report it on their annual statement.

Always use agent statements and dont adjust them without personal tax advice.

 

Thanks Paul, makes sense all based on when the cash comes

 

Not really.

When your agent receives the rent you are deemed to receive it. not when the agent pays you.

 

Yes Terry. Those who read one post and then forget it and read the next are the ones I worry about. A few words cut from my post didnt help !

If the agent receives it, its received.

 

Not really. Re-read

 

should have said *comes from the tenant to you or your agent.
I was just looking at a statement from an agent and it doesn't actually say when the rent was paid to them just it was paid since the last statement and the date period it was paid for.
Probably a trivial issue for most unless your income is hugely different between the two FY's

 

The agent annual statement will clearly advise the financial year position.

Some (dodgy) agents who charge a annual fee and their clients elect to avoid the $25-$55 pa extra cost can choose to add up their own 12 statements. I dont recommend this. - Its what causes variances and gets you into difficulty if its wrong. You could even pay tax on the same income twice or miss paying tax on income. If a PM wants my business I expect a annual statement and dont expect to pay a surcharge for the benefit.

I have seen a few investors who send me 12x statements. They want me to add them up and summarise all the costs instead of paying $25-$55. I charge a hell of a lot more than that to add things up.

A false economy for those who dont get an annual agent statement.

 

I always just go off the annual agent statement like you say certainly far easier than adding everything up yourself. I just had a tenant in a property i manage myself pay a large lump sum of late rent in early july, seems its good for me and bad for the tax man he was late
I am curious does the ATO routinely harvest property agents for the annual rental statements, fishing for people who have put different figures in their tax returns (pretty stupid but im sure someone does it).

 

When I did our agency's annual statements for all our landlords, it gave the option of it being based on transaction date or statement date. Not sure who the latter would appeal to. Certainly didn't charge for them either.

 

Not as such tends to go the other way....Up to now there is no process for that data collection in a uniform manner. There is a proposal before Treasury that the ATO wants TFN disclosure by all landlords and withholding tax would apply. REAs would then report annually to ATO. I beleive the ATO property database would try to match up - Its not uniform so some work is needed. eg Apartment, Unit, 10/4-7 Smith St, Villa 10 etc etc. Adding a unique title identifier is onerous too. The idea is that it may help etax include rents and some rental expenses.

I believe many real estate bodies dont like the idea as the software doesnt cater for it and it adds a cost burden to small business. But I suspect nobody will win the enlargement. But like their proposed one touch payroll god knows what will happen.