Source: New places to play in Gungahlin
Item
Activity
Responsibility
Purpose
4
Repairs and maintenance (R&M)
Receipts to be retained and maintained (by property) for all R&M expenditure. Where repairs are managed through the property manager, receipts to be furnished, downloaded and stored.
R&M expenditure will be recorded in the Excel spreadsheet entitled ‘Rental property financial accounts” and be referenced to the relevant property, within 3 days of payment of the invoice. Accumulated totals should be maintained within the spreadsheet.
Bill Bookkeeper
Ensure records of Mr Simple’s investments in real property are not lost in the event primary information sources are compromised.
5
Interest expense
Documentation regarding any external financing obtained to acquire or improve real property assets is to be retained. Documentation should include points explaining:
- the date the finance was obtained
- the purpose of obtaining finance
- how the finance was applied, and
- the applicable interest rate or other terms upon which the finance was obtained.
Interest expenses are recorded in the Excel spreadsheet entitled ‘Rental property financial accounts’. Accumulated totals should be maintained within the spreadsheet.
Bill Bookkeeper as informed by Simple groups lawyers or tax agents
Support the John Simple property trust’s claim for interest deductions that are associated with the debt funding of its property portfolio (where and when required).
6a
Depreciation (Division 40)
On initial acquisition of real property, a tax depreciation schedule will be obtained from a qualified valuer or quantity surveyor.
Bill Bookkeeper and Simple group’s tax agents/advisors
To help ensure that the John Simple property trust is using the correct tax cost bases when determining the amount it can claim as capital allowance
6b
The costs of existing and new depreciable assets held by the John Simple Property Trust are to be recorded on an Excel spreadsheet entitled ‘tax fixed asset register’ that includes:
- a description of the asset
- the date asset was ready for use
- a calculation of the assets tax cost
- the method and rate of depreciation applied to the asset
- the capital allowance claim for the year
- the assets closing cost.
For purpose of calculating depreciation, use the Commissioner’s effective lives for depreciating assets guidance as published each year in the ATO’s Taxation Ruling.
For all new depreciable capital assets that are acquired, receipts are to be maintained and referenced against the tax fixed asset register (including low value pools).
Bill Bookkeeper and Simple group’s tax agents/advisors
To support the John Simple property trust’s claim for capital allowance deductions in the year of income in which the claim is made.
6c
Where depreciable assets are disposed of, the tax fixed asset register will record:
- the date of the disposal
- sale price
- the balancing income/loss recognised on disposal.
Bill Bookkeeper and Simple group’s tax agents/advisors
To help ensure that gains or losses on disposal of depreciable capital assets by the John Simple property trust are calculated correctly for tax purposes.
7a
Capital works (Division 43)
Upon acquisition of an existing real property asset that’s not vacant land, a determination will be made about the percentage rate at which capital works deductions can be claimed.
On initial acquisition of an existing real property, a tax depreciation or capital works schedule will be obtained from the property’s previous owners or obtained from a qualified quantity surveyor.
Upon incurring new expenditure on capital works, a determination will be made about the percentage rate at which capital works deductions can be claimed.
Note: Generally, the Simple group acquires assets for which the 2.5% rate is applied.
Bill Bookkeeper and Simple group’s tax agents/advisors
Ensure that the John Simple property trust’s is eligible to claim capital works deductions in respect to a particular property, the cost base by reference to which capital works deductions can be claimed and the percentage to be used when claiming capital works deductions each year.
7b
For new capital works, receipts should be retained and referenced against the tax fixed asset register.
Details of new capital works are recorded on an Excel spreadsheet entitled ‘tax fixed asset register’ that includes a
- description of the capital works
- date the capital works were completed
- cost of the capital works
- percentage deduction rate applied (for example 2.5%)
- deduction claimed for the year
- closing balance of unclaimed construction expenditure at year end.
Any complex issues concerning the application of, or calculations required by Division 43, should be escalated to the Simple group’s tax advisors.
Bill Bookkeeper and Simple group’s tax agents/advisors
Substantiate capital works deductions for the year. Help ensure compliance with the Simple group’s record keeping obligations.
Support the John Simple property trust’s claim for capital works deductions.
Accessing sophisticated levels of advice helps ensure complex issues with capital works claims are treated correctly.
8
Other expenses
A list has been (or should be) prepared and retained that outline and explains typical expenses incurred by the John Simple property trust in the course of its property leasing activities.
Accounting expenses should be recorded (by property) in the Excel spreadsheet entitled ‘Rental property financial accounts for the year ended 30 June 20XX’, within 3 days of the supplier invoice being received. Accumulated totals should be maintained within the spreadsheet.
Bill Bookkeeper
Ensuring typical expenses associated with each property portfolio are understood and explained – for succession planning.
Support John Simple property trust’s claims for allowable deductions.
9
Prepaid expenses
Where eligible expenditure has been prepaid, maintain records of prepayments. Prepare an accompanying note that explains the nature of the prepaid expenditure and relevant time period to which the expenditure relates (more or less than 12 months).
Bill Bookkeeper
Help with preparation of the John Simple property trust’s draft tax reconciliation.
Support John Simple property trust’s claims for allowable deductions.
10
Before forwarding information to the Simple group’s tax agent, review the following spreadsheets and resources against a sample of documentation to sense check that income and expenses have been captured and correctly recorded.
- Real Property Investment Register
- List of typical expenses
- Tax and accounting fixed asset register
Bill Bookkeeper
Helping ensure that Mr Simple’s income and expense disclosures are complete.
11
At least 4 weeks before the due date for lodgment of the John Simple property trust’s tax return, provide the Simple group’s tax agent with:
- a summary narrative about the John Simple property trusts typical and atypical activities during the year
- real property investment register
- the property manager’s end of financial year summary statement for each property investment
- excel rental property financial accounts
- tax and accounting fixed asset registers
- related source documents as required by the tax agent
- notes concerning any prepaid expenses.
Bill Bookkeeper
Ensuring the John Simple property trust’s tax return is lodged on time.
Helping the tax agent with the process of preparing the John Simple property trust’s tax return.