Accounting ques’n – IP return within tax refund

Hi Amy,

I believe there should be a paperwork in regard to the calculation, you should ask your accountant. FYI, to calculate a refund, it needs few things to determine:
1. Assessable Income which includes the share of property losses, capital gain and employment salary. AI
2. Total Allowable Deduction ( most of them work related, and as well the cost to prepare your tax return). AD
3. Your family situation such as rebates and tax offsets e.g. spouses tax rebate (the fact that you are not working, means he might be eligible for spouses tax rebates unless your family received Family Tax Benefit part , education tax refund, medical expenses tax offset, private health insurance tax offset etc. TO
4. Your liability for medicare levy surcharge if your combined income with your spouse is more than $140 smth thousand and you don’t have private health insurance. Because it will incur extra 1% on top of your medicare levy, which brings the levy to 2.5%. MED

The formulas are:
Taxable Income = AI – AD
Tax Liability = (Tax Rate+MED) x Taxable Income
Final Tax Assessment = Tax Liability- Tax Withheld – TO
If FTA is less than 0 = REFUND

that’s simplified anyway.

Hence, as what Terry said, it is insufficient to estimate the portion of tax refund from the rental property losses itself. By merely grossing up the losses by the effective tax rate, won’t give you the exact figure, estimate perhaps.

My experience, you can ask for the copy of the complete assessment plus the paperwork from your accountant. From there, you might get an idea. But apportioning the refund due to the rental losses won’t be easy.

Regards

Ferdinand

yes there is.

1
Profit = Income – expenses
If this is negative then you are negative cashflow before tax and you would be negatively geared.

2
Profit = Income – expenses – non cash expenses.
(non cash = things you don't pay for directly, but can claim such as depreciation and loan costs)
If this figure is negative then you are negatively geared.

You could still be cashflow positive with negatively geared because of the non cash deductions

3
Profit = Income – expenses – noncash expenses + tax saved (related to this property only)
This will tell you how much it actually makes or loses after everything.

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You cannot just add your tax return to the figures because some of that return is because you were having too much tax taken out of wages each week and you would also have other non property related expenses that you can claim related to your job.

Just get a spreadsheet for the proeprty.
Work out the income for the property. ie the loss

This loss is then added to other income. So you can work out, from the ATO calculator, what the tax payable on the income is before the loss. Then add the loss and work out again.

This will enable to you work out how much the tax you saved because of the propeerty.

ps I am not an accountant either.