The 1515 application and why property investors need to consider end-of-year tax planning

Around this time of the year client managers at Chan & Naylor may undertake a process of review of the current financial year activities with a number of our clients.  The purpose of this is to prepare for a scenario of likely levels of income tax payable or estimated levels of tax to be refunded. This may determine how quickly you would like to have your tax affairs attended to following June 30. 

Who would benefit from such a process? Any property investor with solid PAYG earnings or business income and sound cashflow.

Through a process of review your financial advisor may be able to assist in identifying particular issues: 

• whether the investment property is maximising its deductible entitlements;
• whether it is worthwhile prepaying loan interest for the following financial year; and
• whether the property is entitled to capital allowance deductions. 

In some instances there may be little that can be achieved for the current financial year but your property accountant may be able to identify whether there is scope for additional property acquisition or means of reducing income for the following tax year and beyond. 

We recommend that you contact a financial advisor should you wish to consider this option.

The benefits of an income tax variation application

Another activity that Chan & Naylor undertakes at this time of the year is the submission of applications for 1515 PAYG variation certificates for the next financial year. The 1515 application is to provide your employer with an authority from the Australian Taxation Office to reduce the amount of PAYG withholding from your regular salary. This is usually in expectation of a significant difference between your normal salary and your likely assessable income for a given year often brought about by a negatively geared property investment. 

The benefit of this is that is increases your amount of “take-home pay” to assist you with the ongoing costs associated with a negatively geared property, primarily the interest expense. 

So if you have purchased your first investment property during the current financial year or have ongoing negatively geared property investments now is a good time to be arranging to have your 1515 applications prepared.

Clive Nelson is a partner at Chan & Naylor Parramatta.