Tax Tips Every Agent Should Know

With the end of the financial year fast approaching now is the time to plan for, and possibly reduce, your year-end tax liability. Through some simple planning, you may be able save a reasonable amount of income tax. Here are some strategies that may be useful in reducing your tax. Story by Jeremy Fox.

Tax Tips for Employees

1. Know your tax ruling

The Australian Taxation Office has a long issued tax ruling, TR 98/6, relating specifically to tax deductions for real estate employees. The ruling outlines tax deductible expenses, as well as those items that cannot be claimed. This is a handy reference tool when preparing information to give to your accountant, or in preparing your own income tax return. Some common expenses which may be tax deductible include home office, computer depreciation and professional publications.

2. Car log book

One of the most common deductions a real estate employee claims is in relation to motor vehicle expenses. While there are a number of ways car expenses can be claimed, those with a high percentage of business travel generally benefit from using the log book method. Ensure that you have kept a log book for twelve weeks during the last five years, or ensure that you start one before the end of this income tax year. Note that if you have a second car, you may also have some additional work related travel to claim.

3. Maximise your superannuation contributions

If cash flow is not too tight, consider salary sacrificing into your superannuation fund. Superannuation is taxed at 15%. If your taxable income is likely to be more than $30,000 for the year, you will be paying more than 15% as personal income tax. It may be worth considering contributing more into superannuation. It is important to note however, that this will be locked away until your retirement (or you meet another condition of release).

4. Make sure your 2008 return is lodged by 30 June 2009

The stimulus payments from the government, of up to $900, have begun to be rolled out. In order to be eligible for the payment your 2008 income tax return must be lodged by 30 June 2009. 

5. Rental property owners

According to the Australian Taxation Office statistics for 2007, only 37% of rental property owners have claimed certain deductions relating to the cost of building the property (known as Division 43). These costs, as well as other depreciable items, are usually outlined on a quantity surveyor report. While some older properties are not eligible for the deduction, it may be worth checking with a quantity surveyor and looking at having a report prepared.

6. Consider salary packaging your tax deductible expenses

A tax planning opportunity exists that saves Goods and Services Tax (GST) (where an employer is GST registered). An employee may ‘salary package’ items that are deductible into his/her salary package. The advantage is that the employer can claim an input tax credit on the benefit and no Fringe Benefits Tax is payable. Had the employee paid for the cost it would have cost the employee 10% more with GST. Examples of these types of costs include subscriptions, training costs, travel.

7. Pay the premium on an income protection policy

Premiums on income protection policies are generally tax deductible. Paying the premium ensures that you receive the tax deduction this financial year.

8. List your yearly expenses

Often deductible expenses are missed from your tax return either because it wasn’t known that the expenses were tax deductible or because they were forgotten about. Before completing your tax return it is worth listing the expenses that you have during the year and seeking advice on which items may be deductible.

Tax ‘to-do’ list for employees

1. Be aware of the tax ruling for real estate agents

2. Car log book – ensure you have one before the end of the

    financial year

3. Salary sacrifice into superannuation where possible

4. Make sure your 2008 tax return is lodged

5. Rental property owners – make sure you have your quantity

    surveyor reports

6. Consider salary packaging your tax deductible expenses

7. Pay for your income protection policy to ensure you receive

    the deduction this financial year