EOFY tips for real estate

With tax time just about here, we’ve asked the Australian Taxation Office’s tax time spokesperson, Rob Thomson, to lend some tips for small business owners in the real estate industry*.

‘You can claim a deduction for most expenses you incur to carry on your business, as long as they’re directly related to earning your assessable income’, Rob said.

Business deductions may include motor vehicle expenses, phone and internet usage, legal, digital, and home-based business costs.

Remember the three golden rules so you only claim what you’re entitled to:

1. The expense must have been for your business – not private use.
2. If the expense was a mix of business and private use, you only claim the business portion.
3. You must have records to prove it.

You can't claim the GST component of your expenses as a deduction in your tax return if you can claim it as a GST credit on your business activity statement.

If you’re a sole trader or in a partnership, you may be able to claim the business-use portion of running expenses (the costs incurred using your home’s facilities) and occupancy expenses (what you pay to own or rent your home).

‘There are a couple of ways to work out your running expenses. The fixed rate method, which for the 23-24 income year allows you to claim a set rate of 67 cents for every hour you work from home, covers additional running expenses you incur for energy (such as electricity), phone and internet usage, and stationery and computer consumables. Or there’s the actual cost method, that allows you to calculate your actual costs incurred as a result of running your business’.

There are different record keeping requirements for each method. See ato.gov.au/home

‘Whether you’re doing your tax yourself, or lodging with a registered agent, it’s important that you understand what records you need to keep – and that they are complete and accurate’, Rob said. Remember that you are responsible for the information in your return even if you use an agent.

‘You need to keep most records for at least five years, so keep them stored them in a safe place’.

If your business is registered for GST, you need to lodge a business activity statement (BAS).

‘Lodging online is quick, easy and secure, and means you may get an extra two weeks to lodge and pay your BAS’, Rob said. ‘You could also get an extra 4 weeks if you lodge through a registered tax or BAS agent’. 

Lodging all your BAS before you lodge your tax return will also help with reconciling your figures.

It's important to lodge and pay in full and on time. ‘If you're worried you won't be able to lodge and pay by the due date, contact your registered tax agent or visit the ATO’s website to find out what support options are available to you’, Rob said.

If you’re experiencing financial difficulties and owe $200,000 or less, you may be eligible to set up a payment plan using the ATO’s online services. Payment plans require an up-front payment and repayments should be completed within the shortest possible timeframe to help reduce interest charges. 

Planning ahead for your obligations can help you smooth out your cash flow. Set up a separate bank account for pay as you go withholding, employee super and GST, and avoid the temptation to use it as cash flow. This will ensure you’re on track to pay your tax on time.

Find a solution that works with your business.

Whether you're a sole trader, small team, or large business, we’ve got plans to suit you.

* Optus does not provide tax advice, this article has been prepared by the Australian Tax Office for guidance only.