{"id":20346,"date":"2018-02-22T01:00:54","date_gmt":"2018-02-21T14:00:54","guid":{"rendered":"https:\/\/www.realestatetalk.com.au\/?p=20346"},"modified":"2018-02-22T01:00:54","modified_gmt":"2018-02-21T14:00:54","slug":"getting-tax-benefits-sooner-brad-beer","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/getting-tax-benefits-sooner-brad-beer\/","title":{"rendered":"Getting tax benefits sooner \u2013 Brad Beer"},"content":{"rendered":"

Investors often wait until the end of the financial year to take advantage of depreciation and the other deductions they are entitled to, but there is a method which allows investors to receive their deductions more regularly.\u00a0 Brad Beer<\/strong> tells us about a Pay As You Go withholding variation.
\nTranscript:<\/strong>
\nKevin:\u00a0\u00a0<\/strong>Investors often wait until the end of the financial year to take advantage of depreciation and the other deductions that they\u2019re entitled to, but there is a method that allows investors to receive their deductions more regularly. This involves submitting a PAYG \u2013 pay as you go \u2013 withholding variation with the help of an accountant.
\nBrad Beer from BMT Tax Depreciation can explain how a PAYG withholding variation works and why including depreciation claims in this process will help you as an investor. He joins me to talk about that.
\nGood day, Brad. How are you doing?
\nBrad:\u00a0\u00a0<\/strong>Fantastic, Kevin. Yourself?
\nKevin:\u00a0\u00a0<\/strong>Very well indeed, thanks, Brad. What difference can a depreciation claim, when it\u2019s combined with submitting a PAYG withholding variation, make to an investor\u2019s cashflow?
\nBrad:\u00a0\u00a0<\/strong>Kevin, it can make a fair difference because of the deductions. But let\u2019s just step back to the PAYG withholding variation to start with. It\u2019s actually been around since\u2026 It was introduced back in July 2000, and what it is is simply a mechanism where at the moment, what often happens is you go through the year, your employer takes some tax out of your income and holds on to it and gives it to the tax office, and at the end of the financial year or just after, we get our gross certificates, we do a tax return, and if it\u2019s nice, we get a nice tax refund.
\nPAYG means that you actually work this out probably at the start of the financial year and say \u201cHang on, employer. I don\u2019t want you to pay all this money to the tax office and hold on to it until I do a tax return next year.\u201d
\nAnd with a property investor, some of the deductions, especially the depreciation deduction that\u2019s a non-cash deduction, you\u2019re making all these deductions and you get this big refund at the end of the year. You might as well get it earlier and put it into your offset accounts or into your things instead of letting the tax office hold on to it for the year.
\nKevin:\u00a0\u00a0<\/strong>Absolutely.
\nBrad:\u00a0\u00a0<\/strong>And look, how much difference can it make? Your employer doesn\u2019t know about your other tax affairs, so they take out the standard required amount of tax and they pay it to the tax office for you. But in a simple scenario where the average deduction out of the properties that we do for depreciation is about $10,000, if we just took that average number and put someone who\u2019s on the average tax rate of 37.5%, that\u2019s about $3700 a year in cash back in deductions. That\u2019s about $60 or $70 a week, something like that.
\nSo, based on only depreciation \u2013 and the other deductions as well, though, but just with the depreciation if you do a POYG on top of the other ones \u2013 it\u2019s \u201cExcuse me, employer. Don\u2019t take $60 a week out of my pay packet and give it to the tax office. Just give it to me.\u201d
\nKevin:\u00a0\u00a0<\/strong>Exactly. It makes a lot more sense to me, too.
\nBrad, does a PAYG withholding variation negate the need to submit a tax return?
\nBrad:\u00a0\u00a0<\/strong>Absolutely not. All it is is you get your accountant at the start of the financial year to say \u201cExcuse me, Mr. Employer. Stop taking all that money and giving it to the tax office. Pay me more of it.\u201d And at the end of the financial year, you do a tax return just the way you do otherwise, and rather than getting a big tax refund, you don\u2019t.
\nSometimes, the tax refund is a good forced saving, but as a property investor, we should be a bit more prudent with our money and put it into areas and use it to work for us instead of the taxman\u2019s pocket.
\nKevin:\u00a0\u00a0<\/strong>Absolutely, and that\u2019s what it comes down to. What advice do you recommend investors seek before they consider taking up an option like this?
\nBrad:\u00a0\u00a0<\/strong>A PAYG only works for a normal taxpayer, a salaried employee. The thing is what you need to do is make sure it suits you and your actual personal financial situation. Speak to your accountant. \u201cDoes it work? Should I do one of these? What will it mean? How much will it cost me to do one?\u201d If you\u2019re only going to get $3 a week extra, you might as well get your tax return at the end of the year.
\nSo, look at that, crunch the numbers on what you think it should look like, get your accountant to help you. And your accountant is the person who will be able to help in that situation.
\nKevin:\u00a0\u00a0<\/strong>Brilliant, mate. I can hear all those investors now rejoicing all around Australia saying \u201cYes, good on you, Brad. More money in my pocket. That\u2019s what I like.\u201d
\nBrad:\u00a0\u00a0<\/strong>Absolutely. And one thing you\u2019ll need in there is obviously a depreciation estimate, but the big thing about it is it\u2019s money in your pocket now instead of later, which is worth more and can be used to work for you instead for someone else.
\nKevin:\u00a0\u00a0<\/strong>Yes, there\u2019s some good news. Good on you, mate. Brad Beer there from BMT Tax Depreciation.
\nWell done, mate. Talk to you soon.
\nBrad:\u00a0\u00a0<\/strong>Great. Thanks, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

Investors often wait until the end of the financial year to take advantage of depreciation and the other deductions they are entitled to, but there is a method which allows investors to receive their deductions more regularly.\u00a0 Brad Beer tells us about a Pay As…<\/p>\n","protected":false},"author":176692471,"featured_media":20348,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[34,10,11,13,36,22,25],"tags":[101],"class_list":["post-20346","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-research-topic","category-sponsored-channels","tag-podcast"],"yoast_head":"\nGetting tax benefits sooner \u2013 Brad Beer - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/getting-tax-benefits-sooner-brad-beer\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Getting tax benefits sooner \u2013 Brad Beer - 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