Tuesday, 15 May 2012

Tax Deductibility of Property Courses and Coaching

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Deductibility of Property Courses and Coaching from http://www.bantacs.com.au

It is rare that any tax deduction will be available for these courses, even at best only a small portion. 

So before you go spending up big in the expectation of getting a tax deduction before the 30th June, first find out just how much is tax deductible. 

In fact, questioning the tax deductibility of a course may be a way to test the credibility of the provider.

A product ruling is really the only way you can be absolutely sure the ATO will allow the deduction. Nevertheless here are some references to help you understand the issue. 

Petrovic v FC of T 2005 ATC 2169 – Had at various times a commercial property, a residential property, vacant land, provided working capital to developers and had a managed fund investment. 

Mr Petrovic attended a Henry Kaye seminar to learn how to extend his property investments and increase his rental income and paid various other fees for property information. 

The court found that the expenditure was not tax deductible because it was not “incidental and relevant or sufficiently linked to the derivation of rental income”. Further, expenditure relating to purchasing a property is capital, so not deductible against income. 

This case is so relevant to many of the property courses currently available a copy of it and ID 2003/324 has been posted on our forum in the beyond newsflash section. www.bantacs.com.au/forum/viewtopic.php?f=25&t=81&sid=221f72848e519c7435cde0f5a6b19dd1 

ID 2003/324 – The taxpayers were allowed to claim 20% of the seminar costs because it was only that portion of the seminar that related to rent and expenses associated with their existing rental properties (implying no deduction at all if you do not have a rental property before you attend the course).

 The remaining 80% covered how to “establish a strategy or structure for investing in rental properties” which was incurred at a point too soon to be deductible (implying that it cannot even increase the cost base). 

TD 95/60 – A fee for initially drawing up an investment plan is not deductible even if it includes existing investments, though it can be included in the cost base. 
Advice on changing the mix of investments is deductible.
So you need them to give you a detailed apportionment on a time basis of the percentage of time the course will spend on issues relating to tenants and rent as opposed to finding a property, renovating etc. Do not hand over any money until you have this information because it will be harder to get it later. 
And here is a tip, when you know their prices and what the course covers check out how that compares with a destiny course, www.bantacs.com.au/property.php see middle of right hand column. 

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