- yackMember@yackJoin Date: 2003Post Count: 1,206
Has anyone been subject to ATO Tax Audit as a property investor?
How good do you keep your accounts?
Any feedback appreciated. Always good to hear some rela life experiences.MonopolyMember@monopolyJoin Date: 2004Post Count: 1,612
No I haven’t personally….yet……shocked2] Maybe if I keep things on the up-and-up[angel]they will continue to pass me by????? [disguise]
[worried]Well for now, anyway!!!!![worried]
JoIbuycashflowMember@ibuycashflowJoin Date: 2004Post Count: 274
Four times in four consecutive years in NZ. Tax audits are bigger timewasters than the kids.
I needed to provide all my tax invoices, depreciation schedules, and cashbooks. They even came out and inspected my vehicle (which of course I use for locating property etc.)
The best part about them was that in the last two audits they discovered they owed me money.
We’re on first name basis now and I haven’t been audited since – if that’s any consolation.
My records were not the best in the beginning but they’re pretty good now.
Make sure you check everything before you give it to the ATO. Try and make their job easy.
All the best
JeffDerekMember@derekJoin Date: 2004Post Count: 3,544
Ibuy’s comments are spot on – was talking to an accountant on the weekend who indicated an audit is relatively straightforward for those investors who maintain a good paper trail and comply with the various legislation.
There is nothing to fear if you follow the rules.
Bend the rules and enjoy your ill gotten gains at your own peril.
Property Investment Support Available. Ongoing and never stopping. PM welcome.fjficmMember@fjficmJoin Date: 2003Post Count: 88
im poor at keeping stuff
sometimes i know i paid for stuff but i cant find the receipts
eg after one year i try to get receipts for warranty and i find out its NOT there, so boohoo
so wat happens if i lost my stuff and i get audited, shit especially now with all the props and expenses i have
you’ll probably say clean up get organised etc but too busy and my spare time is my alone time not accounting crap time
If your accounting tax deduction don’t add up what happens then? Will I be in deep doodleDerekMember@derekJoin Date: 2004Post Count: 3,544
You can either change your ways or throw everything in a shoebox and give the box to your accountant.
I keep an excel sheet for each of my properties and record the income/expenditure details on the day they arrive in the post. This way the task doesn’t seem to be too onerous.
I also keep Quciken books for my other stuff and all in all the accountant is very happy with the paper trail.
However all said and done a software package will not cut the mustard if it is not used regularly.
I can easily justify the changed habits (I used to be a little messy) with it either saves me accountants bills or it maximises my deductions or I have nothing to fear from an audit. As far as I am concerned all good reasons for being a little regular with my paperwork.
Property Investment Support Available. Ongoing and never stopping. PM welcome.TerrywParticipant@terrywJoin Date: 2001Post Count: 16,213
It is extremely rare to get audited. I only know a few people that have ever been audited. And one worked for the tax office! The other was partially audited. ie they were asked to substantial certain expenses, but not questioned about others.
But like Jeff above, he was audited a second year in a row. They must think peole let their guard down after one audit, not expecting ever to be hit again.
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[email protected]cobra8272Participant@cobra8272Join Date: 2003Post Count: 54
just as an aside to this i’ve just renewed my house and contents insurance and my policy includes $5000 towards accountants fees if i’m ever audited!
not bad or is it a warning?
Cobra[suave2]PurpleKissParticipant@purplekissJoin Date: 2003Post Count: 580
Our accountant was asked to clarify my husbands claim for meal allowances ie: how was it spent, how was it claimed ie: receipts etc. She rang to advise that they had asked the question and advised us of her answer and we hadn’t heard anything again (that was a couple of years ago).melbearMember@melbearJoin Date: 2003Post Count: 2,429
I was audited in December for seminar expenses only – thank god they didn’t want to know about my property stuff. I would have had all receipts etc., but they asked for a bit of an essay on the seminars…..
In the end I just said, bill me, I couldn’t be bothered with the essay, as my ex had done pretty much the same a couple of months before and lost, and i knew my bill would be about $1000 if that.
I hope I’m not audited again this year……. (although the audit was for FY 01/02, and I’ve only just done tax return of 02/03)
MeldepreciatorMember@depreciatorJoin Date: 2003Post Count: 541
We had a client audited in April – our first one ever. They called in his Tax Depreciation Schedule and asked him a couple of questions. He sent me an e-mail with the ATO questions. The questions concerned those grey areas that we hate (many of which will be cleared up with the changes coming into play on July 1). I wrote a response that included reference to ATO Interpretative Decisions we base our schedules on and the ATO said this week it was fine.
[email protected] 1300 660033TeacherK6Member@teacherk6Join Date: 2003Post Count: 164
A good idea i found, when trying to work out expenses and travel for IP’s is to buy everything possible by card. That way the info is usually kept by the bank as well as yourself, and its good for working out where u were on specific days.
but im sure if u do get audited, i need a proper recipt as proof of what you bought, not just a line on a statement saying “Bunnings Warehouse $73.38”
Also, some fone companies allow you to view your bills online, then you can search for numbers of agents etc and itemise them, instead of scanning them manually…
but keeping on top of your paper work is the only solution…
JasonaussiemikeParticipant@aussiemikeJoin Date: 2004Post Count: 66
Yes you will need a receipt for any aggregated claims totally over $200. If the aggregated claim is under $200 and the individual item to be claimed is under $10 the requirement to obtain a tax invoice from the supplier does not apply.
You will also need to make sure that the receipt has the words TAX INVOICE otherwise it is considered by the tax office to be an invalid receipt and your claim will be disallowed. Note that all suppliers must provide TAX INVOICES for any amounts over $50.
If you don’t have receipts the claim will be rejected . And this year the tax office DOES have the staff and budget to focus on individual returns. I expect within the next 6 months to see a number of postings regarding audits. Property audits are being targeted and they have the resources and technology to do these audit so don’t be surprised if you get one.
As long as you have kept all your receipts, listened and acted on your accountants advice then there really is nothing to worry about.
Oh people may be interested to know that the ATO now has the software to match transfer of titles to company and individual tax returns. If there has been a transfer of title in your company or individual name and no gain has been included in your tax return then expect a visit. The software matching technology is highly sophisticated and is part of the ATO’s new arsenal. This software also takes into account your PPOR. The wonders of computers.HT-007Member@ht-007Join Date: 2004Post Count: 8
If you get audited, will the ATO ‘automatically’ also audit your partner (husband/wife)?
Our situation is that one is good at keeping records,receipts etc. but the other half is not.jancrowsMember@jancrowsJoin Date: 2003Post Count: 122
I was audited some years back. I am very much record keeping meticulous…. freaked at the audit… but as it turned out a repair quite A large invoice for an IP property at the time was overlooked. On checking it was the accountants office that failed to include… but me to not notice the initial ommission…(SO DOUBLE CHECK YOUR SUBMISSIONS) so when resubmitted they (ATO) had to pay EVEN MORE [biggrin]………
Havent heard from them since.
My advice is to always substantiate…run it to the border but dont go beyond. Remember the sleep at night factor…[baaa]
“Do not follow where the path may lead. Go instead where there is no path and leave a trail” Ralph Waldo Emerson