Asset Register for Investment Properties

peterpeterpumpkin on 08/09/2018 - 21:06

Hi,

Before I give all my money to an accountant, I have a quick question that one of you might be able to answer.

I've lost one of my original receipts from years and years ago that has to be deducted for 40 years as a capital works deduction.

I have a depreciation worksheet that was performed with my tax return by H&R Block a while back and I was wondering if that would suffice as a one-off "asset register", despite not having the formalities of one, namely a specific statement with regards to citing the original documents. The example given in the ruling (https://www.ato.gov.au/law/view/document?DocID=TXR/TR200210/…) has something like this:

"I, [full name], Registered Tax Agent [No.], certify that this and the preceding pages signed by me for identification are a true and faithful transcription of information contained in the original documents which I have sighted."

The depreciation schedule seemed to be thrown among all the other tax documents and the only tax agent "certification" is for the lodgement (which doesn't specify citing original documents…e.g. https://www.ato.gov.au/Tax-professionals/Services-and-suppor…).

To be honest, I had no idea you could even get an "asset register" ("you should have used a real accountant") that could legally substitute original receipts after 5 years. For those not aware, if you don't have one, you need to keep almost ALL the documents related to an investment property for 5 years AFTER you sell the property. So if you have a property for 60 years that's 65 years of document storage for your conveyancing fees and purchases.

It's a bit of a joke that scanned images are considered suitable copies of original documents because they're not "modifiable" like spreadsheets…I get the need for privacy but sometimes I wish ATO document keeping could be as simple as flybuys (which we've had since, like, 1994).

Financial

Comments

  • mskeggs on 08/09/2018 - 21:32
    +1

    You can use other evidence than an original receipt.
    At worst, sign a stat dec that it was lost and to what the original contents were. If it is in line with expectations, the ATO will be fine should you ever get audited.
    You do need to keep records, but it is far from uncommon for some to be lost.

    • peterpeterpumpkin on 08/09/2018 - 21:51

      Thanks for that.

      When I rang the ATO they actually told me to sign a stat dec for pretty much everything where I've got no direct evidence or an estimation was made, but the tax agents I went to couldn't help me (one tax agent told me to go to an accountant and the lady at H&R Block where I went years ago seemed either flustered or didn't want to give away information for free - I was going to pay of course but she never contacted me to setup an appointment and I lost faith).

      Before I discovered the "asset register" I actually thought the tax summary and depreciation schedule was perhaps superior to a bank statement (which is often accepted) since it had more comprehensible information that was previously cited by a tax agent.

      You're the first person I've communicated with that even knows about the ATO's recommendation of stat decs!

      • mskeggs on 08/09/2018 - 22:08
        +1

        I think the best way to handle tax is to look at it from the point of view of what is reasonable (which is ultimately what would be considered if you ever ended up in court against the ATO).
        If your house floods, and all your records are lost, the ATO would be likely to accept future returns which based depreciation and other past things on what has previously been claimed (especially if you had secondary evidence like bank statements).
        If you tried to double the deduction after such an incident, the ATO would be acting reasonably to reject it.

        If you have lost a single record, but continue to claim the depreciation based on your recollection of the lost record, this is fine. Should you ever be audited, you could swear a declaration setting out exactly what you have done, as evidence that you acted reasonably.

        Despite the occasional horror story, the ATO are most interested in getting things right, not making people's lives difficult.

        I personally use an accountant who has many years of experience, including occasional audits of his clients. This experience allows him to advise me on what is reasonable, in his expert opinion, for things like record keeping. When we do the tax returns, we keep notes on how we arrive at calculations (e.g. things like estimating 30% business use of an item that might have personal use too), and having these notes that stretch back now for many years all adds to my confidence that should I be audited, I can demonstrate good intent and a reasonable position.

        It may be the result on an audit might go against me, and I will be asked for some more tax, but I believe having good evidence for how I arrived at things will be a strong defence that I wasn't trying to cheat or evade.

        • peterpeterpumpkin on 08/09/2018 - 22:18

          Yeah, this was my reasoning as well.

          I have further issues with trying to translate UK foreign income from a decade ago because their financial year begins on April 6. And of course as a working holiday maker I worked 10 different jobs and not all of them emailed payslips. And of the ones that did, not one job ended exactly on June 30 (and of course the UK has 5 year record-keeping rule as well…so not even the UK government could prove me wrong!).

          But I still have my flight tickets and random correspondence about shifts that I'm saving as evidence to show I at least tried and the estimated split between financial years is fair.

          What annoys me is that so many people work overseas but no one had ever mentioned this issue. And the tax agent wasn't even sure that as a working holiday maker abroad if I was a resident for tax purposes (which is another reason I'm going to an accountant…).

  • jug123 on 08/09/2018 - 21:37

    Only need to keep records for 5yrs, so if youve already started claiming you should be fine

    • peterpeterpumpkin on 08/09/2018 - 22:08

      Yeah, everyone was telling me the same thing but investment properties are sadly a more complicated animal: https://www.ato.gov.au/General/Capital-gains-tax/Your-home-a…

      While I get the principle of keeping records for the life of the investment property to establish the cost base or to rationalise ongoing depreciation after 10 years (of letting it slide) it's a pointless exercise when the original companies that issued the receipts don't have to keep records after 5 years, most banks won't issue statements older than 7 years, and frankly, government agencies should be keeping records on my behalf (do I really need to prove I paid mortgage duty to the NSW government in 40 years when the ATO knows I made a dollar in bank interest in 2009).

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