Investax Frequently Asked Questions
Contributions generally cannot be returned to a member because:
Contributions may only be refunded in circumstances tightly prescribed by legislation.
If you are not treating any other property as your Principal Place of Residence (PPOR), you can continue to treat this property as your primary residence indefinitely after you have stopped residing in it.
You are considered a CGT Concession Stakeholder in a company or trust if you are:
You can own this stake either directly or through other entities. To calculate your stake, use the same method as the significant individual test.
You’re a significant individual in a company or trust if you own at least 20% of it. This 20% can include both your direct ownership and indirect ownership through other entities.
Special Note – A spouse of a significant individual must have a participation percentage greater than zero in the business entity.
CGT Event J5 occurs if, after choosing a roll-over for a capital gain, you haven’t acquired a new asset or improved an existing one by the end of the allotted time. Additionally, this event happens if:
Example: CGT event J5
In September 2020, Luke made a capital gain of $80,000 on an active asset. He met the maximum net asset value test.
Luke disregarded the whole capital gain under the small business roll-over.
In September 2022 (the end of the 2-year period), Luke did not have any replacement or capital improved assets. CGT event J5 happens, and Luke makes a capital gain of $80,000 in September 2022.
Source – ATO/ Small Business Rollover
In the context of your Self-Managed Superfund (SMSF), your transfer balance cap represents the upper limit on the total amount of accumulated superannuation funds you
can move into retirement phase accounts, which enjoy tax-free earnings. This cap is not a one-time figure; it’s a lifetime limit that applies to all transfers you make over the course of
your life into retirement phase pensions.
With the commencement of your retirement phase income stream within your SMSF, your personal transfer balance cap will be equivalent to the prevailing general transfer balance
cap at that juncture.
Please note that since the 1st of July 2021, the general transfer balance cap is indexed with inflation, tracked by the consumer price index, and is adjusted in $100,000 increments. This
indexation can potentially increase your transfer balance cap over time, enhancing the amount you can shift into your SMSF retirement phase account, thereby maximizing your
superannuation’s tax-effective potential.
Source: ATO – Transfer Balance Cap Explanation
For your investment property, the ability to claim a deduction for repairs and maintenance while the property is not rented hinges on specific circumstances:
It’s essential to understand that if the property is intended for your personal use following the repairs and maintenance, to be eligible for a deduction, the property should have
produced rental income in the same financial year in which the repair costs were incurred. Thus, the timing of the rental period relative to the repairs is a critical factor for tax
deduction eligibility.
When it comes to your investment property, if you find yourself needing to undertake repairs and maintenance tasks straight away after the purchase, it’s
important to understand the tax implications. These immediate repairs, often required due to wear or damage that occurred before you acquired the property, are
classified as ‘initial repairs.’; According to tax regulations, specifically Section 25-10, the costs associated with these initial repairs are deemed capital expenditures. As
such, they do not qualify for immediate tax deductions. Instead, they are capitalised and used to form part of the cost base of the property for capital gains tax purposes
when you sell the property.
Refinancing is the process of replacing an existing loan with a new one, typically to secure better terms or lower interest rates. You should consider refinancing when interest rates drop significantly, as it can potentially reduce your monthly payments, save money on interest over the life of the loan, or shorten the loan term to pay off debt faster. Additionally, refinancing may make sense if your credit score has improved since you originally obtained the loan, as this can lead to more favourable terms. However, it’s essential to weigh the costs associated with refinancing, including application fees, and closing costs, against the potential benefits to determine if it’s a financially sound decision.
