Property tax audit: Are you prepared?
Why do we always get bumps and nerve wrecking feeling when we heard the word audit? Do this word really frighten us? Or are we not prepared enough to face this scenario? Relax and take a back as we unfold some knowledge as this article may help you understand what are the possible requirements needed in an audit. Here are the following steps to make you feel more confident in dealing with a property tax audit. Just imagine that you are briefing for a pre-audit assessment.
- Ensure that the name of the property contract is the same as on the loan documents. If the loan is of different name be sure to prepare additional paperwork in the form of an “On Loan Agreement” to substantiate the interest deductibility to the ATO.
- Right Bank Account Name that is the same as property title of deed. This is needed to avoid future confusions.
- Depreciation Schedule. This must be prepared by a quantity surveyor.
- Scrapping schedule. If you happen to undergo renovation of property, list down the value of items that you have disposed.
- Record the repair and maintenance cost occurred prior and before rental. Also bear in mind to ensure that the maintenance or repair job will justify the cost occurred so that it will not be looked like hocus pocus or over rated. You can also take pictures of the before and after as documents. Labor cost and bill of materials of each activity will also be of a great help.
- Keep track of your record of cash flow and makes it accessible. Keep in mind where did you stock your records so that when the auditor needs that paper you can always have it handed to him immediately. In this case, you will not be anxious and nervous.
- Voluntary disclosure will be needed if you happen to have incorrectly made a claim in your tax return. You have to seek voluntary disclosure to the ATO prior to the tax office who carry out the audit. This could give you a substantial amount reduce in penalties.
If you’re looking for a tax consultant please get in touch with a member of our team today!