Good financial records essential: HLB Mann Judd Sydney

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A good “new financial year resolution” for Australian investors is to ensure they maintain good financial records so they don’t miss out on tax deductions this financial year, advises Peter Bembrick, tax partner at HLB Mann Judd Sydney.

“Many people get to tax time each year and regret the fact that they haven’t kept better records, so now is a good time to get organised for the 2014 financial year.

“A disciplined approach to record keeping is extremely important, especially for investors.

“While most people know that they need to keep income tax records for five years, there is more to it than this.

“For example, for capital gains tax purposes, records need to be kept for every asset held since acquisition, no matter how long ago it was purchased.

“Records of what bank accounts and the like are held are also important.  Each year millions of dollars are handed over to state revenues from bank accounts which are not claimed.

“These are often accounts kept by individuals who didn’t keep any records and their family knew nothing about them when they died.

“Indeed, one of the most difficult tasks for executors in administering an estate is trying to track down all of the assets and records of the deceased.

“It is amazing how hard it can be to find details of all bank accounts, insurance policies and investments that have been made over the years.”

Mr Bembrick said that another simple example is medical records and receipts.

“Many people don’t claim their full entitlement to the medical expense tax offset when completing their tax returns because they don’t have records of all medical costs incurred, other than those claimed through Medicare or a medical fund,” Mr Bembrick said.

He added that CGT is an area where it is easy to miss out on useful tax deductions if there isn’t careful planning and record-keeping.

“With assets sold during the year, such as a parcel of shares in a particular company, good records allow the seller to decide which shares were sold – those that cost most or those that cost the least – for CGT purposes according to their circumstances.

“Another area where the rules of CGT are not fully understood is the difference that applies between holiday houses and investment properties.

“With investment properties there are a number of expenses, such as property insurance, rates, repairs and maintenance, which can be deducted against rental income each year.

“However, with a holiday house that does not produce income, these can be added to the cost base of the property to reduce the capital gain.

“There are other deductions, such as mileage for property maintenance and inspection visits, that often go unclaimed, so it is essential to get advice before completing tax returns, especially as this advice is also deductable,” Mr Bembrick said.

HLB Mann Judd Sydney is a firm of accountants and business and financial advisers, and part of the HLB Mann Judd Australasian Association.


For more information please contact:

Peter Bembrick – Phone: 02 9020 4223

3 July 2013