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ISSUE ARISING ON RENTAL INCOME TAX

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ESSAY ON ISSUE ARISING ON RENTAL INCOME TAX Students' Name Course Title Instructor’s Name Institutional Affiliation City and State Date of Submission Rental properties 2017 Act and Australian Tax Office regulations are set to guide on when and how rental income is assessed and recognized as well as its provisions on when rental income allowable deductions are applicable. Australian Tax Office requires that any amount earned as rental income or relating to the rental property should all be included as taxable income and further filed as rental income tax return

ISSUE ARISING ON RENTAL INCOME TAX

   Added on 2020-05-08

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RENTAL INCOME TAX.ESSAY ON ISSUE ARISING ON RENTAL INCOME TAXStudents' NameCourse Title Instructor’s NameInstitutional AffiliationCity and State Date of Submission
ISSUE ARISING ON RENTAL INCOME TAX_1
RENTAL INCOME TAX.Rental properties 2017 Act and Australian Tax Office regulations are set to guide on when and how rental income is assessed and recognized as well as its provisions on when rental income allowable deductions are applicable. The 2017 Australian Rental Property Act is seen to define rental income as any amount paid as rent when you allow a person to live or use your rental property. It is a payment of the service of allowing the tenant to use your premises Poterba(2008). It is mostly paid over an agreement between the landlord and the tenant or an agent who sets terms of payment as well as the rent rate payable as well as payment timelines i.e whether monthly, quarterly or annually.Australian Tax Office requires that any amount earned as rental income or relating to the rental property should all be included as taxable income and further filed as rental incometax return after subjection to the allowable deduction. Australian Tax Office has set guidelines on all the cluster of expenses relating to rental property whether before, during or after the construction of the rental property. Australian Tax Office allows property owners to claim immediate tax deduction expense on any expense relating to the rental feature the likes of management agency fee, payment of interest on the loan issued to finance the property construction Reinhardt (2006). It further outlines, more on their significant consideration to the property owners, whose finance cost or the loan payment value in their loan amortization schedule, is seen to be more than the return on investment or slightly less than what they get. Hence are allowed to claim a deduction on it an aspect referred to as negative gearing in Australian Tax Office advice. This negative gearing aspect mostly makes the property owner operate on a loss that is claimable in line with tax law on their income whether salary or any investment income at the point of filing tax return Saarimaa(2011). However, in case the property owner’s wages are not enough to set off the rental loss mostly forwarded for future settlement during the nextfinancial year Hulse (2014). Immediate expense deductions are only applicable if the
ISSUE ARISING ON RENTAL INCOME TAX_2
RENTAL INCOME TAX.property is seen to be marketed for rent purposes as well as if it is a rented residential property McGregor-Lowndes (2009). Likewise, if it is a residential property under construction, the land in which it is building its existence gives the owner to claim the deduction. The following outlined expenses are what classified as immediate deduction, i.e., water and sewerage rates, land rates, cleaning expenses, tenants advertising cost, i.e., printingmagazines or even television and through internet means among other expenses directly relating to the property before its full occupancy Antoniades (2014).With all the above guidelines set in place by ATO, I believe we are now able to classify the specific cluster and scenario the management account issue falls as well as being able to offer appropriate treatment on the deduction. The first thing to admit about the management accountant is that he owns a rented property hence we expect him to either be enjoying income from it or hoping revenue from it shortly and likewise we anticipate him to be currently incurring expenses or waiting for expenditures as occupancy proceeds Hulse(2012).The issue at hand is that the management accountant refuses to sign his rental tax return with the allegation that the interest and expenses claimed are contrary to the free accounting principles present mainly because within those four months of claim there was no income he was making. I wish first to appreciate the management accountant concern and cautious sense on tax matters and further inform him that Australian Tax Office has set guidelines on how expenses and interests are supposed to treated whether after or before rental income is earned.If we analyse the expenses and interest in the context, we learn that they were incurred within the four months period when there was no income generated from the rents. Ifthen allowed I wish to term this as an immediate deductible allowance expense that is acceptable in the tax office. These immediate expenses qualify for deduction mainly because
ISSUE ARISING ON RENTAL INCOME TAX_3

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