A Tax Depreciation blog by Paul Bennion.
Figures show that the recent Federal Budget was predicated on collecting even higher levels of personal tax over the coming years from Australians workers.
With Government debt expected to rise even further, the Federal Government will be reliant on collecting even higher levels of personal taxes to underpin its finances.
The Federal Government is expected to owe $518 billion in 2018-19, with the interest bill on that to top more than $20 billion.
This bigger debt load is coming despite a surge in the amount of tax the Government is collecting.
This financial year total tax receipts are expected to reach 22.3 per cent of GDP – the highest level since 2007-08.
And tax receipts are expected to continue climbing, reaching 23.4 per cent of GDP in 2018-19.
Most of that tax will come from ordinary workers who will pay a record $194 billion in personal income taxes this coming year.
During the full term of the Rudd and Gillard governments, personal income tax collections grew 21 per cent while the Abbott Government is banking on its personal tax collections to grow by a third over five years.
Personal tax collections are expected to rise as more Australians are subjected to ‘bracket creep’ where they are pushed into higher tax brackets as wages rise. It is expected about 1 million Australians will be affected by bracket creep moving forward.
One way to offset rising levels of personal tax is to invest in property. Buying investment properties is a very effective way of reducing these tax liabilities as well as creating long term personal wealth.
Despite this, the proportion of households who own a second home such as an investment property is still relatively small in Australia.
The reality is that many wage earners in Australia fail to maximize their tax benefits and built long term wealth through investing in property.
Even those wage earners who do purchase properties in Australia often overlook the important tax benefits such as depreciation associated with owning an investment property.
DEPPRO is the largest specialist tax depreciation consultancy in Australia and estimates that only one in five residential investors make use of the tax depreciation entitlements which are available to all investors on all investment properties.
For an average property investment residential property in Australia this can equate to well over $100,000 in possible tax benefits through depreciation.
A large proportion of these tax benefits are never claimed which means that each year hundreds of millions of dollars in tax benefits are lost every year by investors not claiming their legitimate entitlements.
As part of our service to property investors, DEPPRO searches for a large number of items that could be claimed in a depreciation schedule which we undertake for clients. If the tax benefits flowing from the depreciation schedule are less than the cost of the schedule (average cost is around $600.00),
You can contact us to find out more of order a report online now.
