Emily McPhee 
The ATO has announced an increased focus on rental property deductions for the 2015 year. Due to this increased focus from the ATO we would encourage clients to double-check the information that they are providing to us to prepare their income tax returns and ensure that the claim can be substantiated in the event that the ATO may audit their income tax returns.
The following are areas that the ATO will be focusing on:
- Holiday Homes – ATO will be reviewing excessive deductions claimed on holiday homes. In particular making claims for periods that the home is used for private use.
- Splitting of income – Documentation will be required to support the splitting of income for jointly owned properties. Rental income that is being split unequally to gain a tax advantage will be disallowed.
- Refinancing – loan documentation will be reviewed to support that the purpose of the loan is 100% in relation to the rental property. Drawdown’s for private use on rental property loans need to be proportioned and the interest amount on these refinanced amounts are not to be included as a deductible rental interest expense.
- Repairs & maintenance – initial repairs to a newly purchased rental property will be disallowed. Repairs to bring a rental property up to an improved standard prior to renting out, also described as initial repairs are not deductible.
In relation to the ATO’s increased focus on rental property deductions there are a few simple rules that rental property owners should follow to ensure that they are getting their rental property deductions right.
Firstly ensure that you keep accurate records to ensure that you can substantiate the rental income & expenses that you are including in your income tax return.
Secondly deductions should only be claimed for the period that the property is genuinely available for rent.
Thirdly costs to repairs to correct damage defects of deterioration or renovation costs will not be claimable as an immediate deduction and will be claimed over a number of years.
If you would like to discuss this further please contact your LBW representative.
Simon Flowers 
Accountants who have been dealing in superannuation matters in the past for their clients which will cease on 1 July 2016 if they do not hold a licence to do so. From 1 July 2016 an accountant must be licenced to provide superannuation advice or must be referred to a financial planner or another accountant who is licenced. This will have ramifications for clients of SMSF’s due to some work accountants have done in the past for next to nothing, but from 1 July 2016, where advice is provided, a Statement of Advice must be prepared and explained to clients. This additional red tape will result in higher compliance costs where advice is provided.
Some areas include:
- Recommending a smsf
- Recommending to consolidate super assets
- Recommending additional super contributions
- Recommending the commencement of pensions
- Recommending a binding death benefit nomination
We will be providing more advice in this area over the next 6 months. However if you would like to discuss this further please contact Simon Flowers, Cathy Walley or Matthew Grapsas.
Richard Bull 
The death of a taxpayer brings with it many consequences, not the least of which is administration of the deceased’s tax affairs – both before and after death.
When a taxpayer dies, the following chain of events is set in motion, all of which have income tax consequences for those involved:
- The deceased’s estate must be administered. The deceased estate consists of all assets owned by the deceased as at the date of death. Administration effectively involves the creation of a new taxpayer which must lodge tax returns as appropriate.
