Taxation & Accounting

Investing has implications for the tax you pay now and into the future. Also you can take advantage of tax breaks and use taxation as a means of funding investment.

Our accounting and taxation specialists will give you detailed advice and discuss the implications for you.

Below is a general overview of some taxation issues. For specific advice, contact us.

Negative Gearing

When you buy an investment property using borrowed money, and the loan and expenses (interest, advertising, body corporation fees, borrowing costs, cleaning, gardening, insurance, rates, repairs and maintenance) are more than the income you generate from the property, the investment is said to be ‘negatively geared’.

Tax law allows you to use the loss on the investment property (the difference between the expenses and income) to offset other income such as your salary. The loss lowers your overall taxable income and so reduces the amount of tax you pay.

Tax (PAYG) Variations

The amount of tax you pay depends on your assessable income and what you can deduct from it. When you have a negatively geared investment property, your allowable deductions increase – so your tax bill will be less. The Tax Office will calculate a new lower withholding rate and, as a result, your tax will be reduced and you will receive a higher after tax income.

To benefit from negative gearing in this way, you need to lodge a PAYG variation every year.