Jimmy 00:00
It's E O F Y. I always confuse me every year, when that comes out, it's E, O, E, O F Y, they say it's our E O F Y, sale and I'm going, what is Eoffy?
Sue Williams 00:11
I've never actually heard anyone say E O F Y. I mean, I've written it in stories. I've never actually heard someone say it.
Jimmy 00:17
Yeah, so it's end of financial year, which is time to get your tax done, and the tax office is on the warpath for property investors, landlords. Oh, really, some of whom listen to this podcast, we're going to talk about that. We're going to talk about the $35 million that's just been tipped into the Building Commission, or is about to be when the budget goes through, and we're going to talk about recording your strata meetings. Can you do it? Is it a good idea? I'm Jimmy Thomson. I write the flat chat column for the Australian Financial Review,
Sue Williams 00:53
And I'm Sue Williams, and I write about property for domain, the Sydney Morning Herald, the Melbourne age and the AFR.
Jimmy 00:58
And this is the flat chat wrap.
Jimmy 01:00
The tax office sent out a media release. It's the second one and on a similar topic, which is double-dipping by rental property investors.
Sue Williams 01:26
Ah, is that when they maybe lend their lend their apartment to family, or friends, but they still claim all the deductions as if it was up for rent for the whole year?
Jimmy 01:39
No,
Sue Williams 01:42
Because that does happen as well.
Jimmy 01:43
It does happen, yeah, but that's not what they're after this year. What they're after is people who claim a deduction for stuff that they bought for the rental apartment, but then claim it as depreciation as well. So anything that's under $300 that you pay for for your rental apartment, you can claim as an immediate deduction, but anything over that is a capital expense and that should be depreciated over several years, like 20 or 40 years. And so they're saying, Look, this is double dipping. You cannot claim it as an expense and then claim it as a tax deduction, an immediate tax deduction as well, which is complicated enough. Apparently, according to the ATO, 86% of property investors have errors in their tax returns that are done by tax agents.
Sue Williams 02:39
Really.
Jimmy 02:39
Yeah,
Sue Williams 02:40
And what would the proportion be for those who didn't, don't get this stuff done by taxation?
Jimmy 02:44
Well, I don't know, but you think the the tax agent thing, they're saying that it's not that the tax agents are wrong, it's that the investors, the landlords,
Sue Williams 02:54
Are providing them with wrong information.
Jimmy 02:56
They're not giving them the full information. And they cited a case of somebody in Melbourne who had bought curtains and air conditioning and something else for their investment property and then claimed it as an immediate deduction and it should have been depreciating, but they also bought two stovetops, cooktops, one for the rental property and one for their own home,
Sue Williams 03:23
And they claimed both.
Jimmy 03:24
Yeah, the tax office went, how come this rental property has got two kitchens?
Sue Williams 03:30
That was a bit dumb.
Jimmy 03:31
So they had to pay the correct tax, pay interest on the unpaid tax, and pay a fine Think they're trying to scare us, us being, oh, yeah, we are property investors,
Sue Williams 03:45
but we haven't even had a depreciation schedule done, and we really should have done that.
Jimmy 03:49
Yeah, we should have that, would make sense.
Sue Williams 03:51
And it's too late now, isn't it really nearly there?
Jimmy 03:54
Oh, for this year, for this year,
Sue Williams 03:56
Because we could have started claiming immediately.
Jimmy 03:59
Yeah, I don't think I totally. I think it's retrospective, though. I think you can go back and look at it. Maybe we should check, you know somebody, you've been talking to somebody in the past. I'm just not sure about the depreciation thing. Because, yes, you will get money off your tax, but then when you sell, the capital gain is calculated on the basis of you how much you paid for the property minus all the depreciation. So then you've got a bigger capital gain. Oh, I see what you mean.
Sue Williams 04:24
So they might cancel each other out,
Jimmy 04:25
Or even more than that, but we should talk to somebody. Are we having a podcast here? Are we having a chat about our finances? Are we exposing ourselves a little bit too much? But the the other complication for tax for strata owners is so this is really weird, and this is our friend Tony Cordato, who pointed this out you can claim your levies for your apartment as a tax expense. Yeah,
Sue Williams 04:55
yep,
Jimmy 04:55
But your levies include a component that is for maintenance and improvements, which is supposed to be depreciated, right? But because that would make life just way too complicated, the tax office says, Look, you can claim the levies as an expense and your tax deduction, unless it's a special levy, if a special levy is raised for repairs or maintenance, or whatever that kind of thing, then you cannot claim that as an expense which complicates things a bit
Sue Williams 05:30
Does. And another thing is, if the building earns money anyway, like perhaps they rent their roof space for telephone towers, anything like that, yeah, individual owners actually have to pay tax on the income
Jimmy 05:46
In New South Wales.
Sue Williams 05:47
Oh, just in New South Wales.
Jimmy 05:49
Here we are non-mutualised, which means that we are considered by the tax office to be separate entities, whereas, I think in Queensland and possibly Victoria, the tax office considers the the strata scheme to be the tax, the taxable entity. So you got, you know, yeah, you can get people here, but we some of some of our property in in this building is rented. I'm trying to think, who to why? Maybe it's something on the roof, I don't know, but we get a very small amount, and it's calculated on the basis of your unit entitlements.
Sue Williams 06:28
You said the storerooms.
Jimmy 06:30
Yes, it's the storerooms. Yes, because we Yeah, exactly. So the storerooms are for a source of income, and all that income is put together in the pot, and then it's divided up. You never see the money. You we never see the money. It just goes into the general accounts. But it's taken to be a benefit for tax purposes, and people say, "Why can't I get the money?" And the law says that you can get the money if everybody in the building agrees, agrees
Sue Williams 06:55
That they all want the money.
Jimmy 06:56
And there's always somebody who goes,
Sue Williams 06:58
Yeah, sure.
Jimmy 06:58
No, yeah, yeah. So, yeah, so that's another complication for your tax bills, your tax returns. I think this double-dipping thing, this is the second email media release that the tax office has put out in the past two or three weeks. I think they're really targeting this. The ATO Commissioner, or assistant Commissioner's name is Robert Thomson, and he spells he spells his surname the same way that I spell mine, without the P. And I didn't know when I was writing the story. I've just written a story for the fin review about all this, and I didn't know, should I put no relation in there? But I thought, No, probably not. People would assume reasonably that I wasn't a relation. So that's it. That's me. I just, I hate talking about tax really. I don't understand it. I don't understand all the complexities of all this stuff. And yeah, and I don't, I don't like writing about it either, because that's even worse, because it's an it's in print then. But yeah, anyway, watch out, don't double dip.
Sue Williams 08:03
And I've written a story about that in the prestige domain magazine,
Jimmy 08:08
Same press release from Mr Thomson
Sue Williams 08:11
EO four,
Jimmy 08:12
E offy end of financial year, when we come back, we're going to talk about the money allocated in the upcoming budget, $35 million for the Building Commission. That's after this.
Jimmy 08:34
I think if anybody thought that the Building Commission, the New South Wales Building Commission, and its pursuit of dodgy developers would be dialled down when David Chandler retires in August may be surprised to hear that the state government has tipped $35 million into the Building Commission.
Sue Williams 08:54
Yeah, it's very good, isn't it, really?
Jimmy 08:56
And it's interesting because they're they're now focusing very much on data analysis. So what they've been doing is they look at developments that have failed, where there's been big problems, and they look at the architect, the builder, the developer,
Sue Williams 09:15
The certifier
Jimmy 09:16
And the certifier, and then they extrapolate that out to where is this certifier working now, and who are they working for? And if they get two or three of the same names pop up,
Sue Williams 09:29
Yeah, they keep an eye on them.
Jimmy 09:31
Oh, they send inspectors out because they've got because of the the Residential Apartment Building Act, the RAB act, they now have the right to go and inspect anything and everything in apartments in New South Wales, so they just turn up with their hard hats and their clipboards and say, we've come to check what's going on here, which I think is great, but I do think I was just writing this this week thinking, you know, you're a civil servant in Fair Trading and you've got, you know, people complaining about their rental agents or their broken toys or their tattoos that aren't coloured inside the lines, and because that's all fair trading as well. And
Sue Williams 10:13
Dp people complain about things like that? Suppose they must?
Jimmy 10:16
I suppose they must. Yeah, but you've been doing all this dreadful, dreary work. And then suddenly, along comes David Chandler and says, I am setting up a Building Commission, and I need 400 people from Fair Trading to come and work for me.
Sue Williams 10:29
Yep.
Jimmy 10:30
And suddenly you're like a detective, you know? You're like CSI strata sitting there analysing all these things and finding out who the baddies are. And according to the press release that came out last week, they're also targeting insurance companies. And they go into insurance companies and saying, "Oh, do you know that there's a building here going up and this builders putting this building up, and they say that they're insured by you. Can you just check?" And they're going, "Oh, we've never heard of these people." Yeah,
Sue Williams 11:01
That would be fun, wouldn't it? Doing that job?
Jimmy 11:03
And if they're also, it's not just apartments
Sue Williams 11:05
Wack a mole
Jimmy 11:06
Wack a mole. It's not just apartments. They are doing freestanding houses where people, you know, there's a lot of real cowboys out there, just and what happens is, you go along to the show apartment, it's absolutely immaculate, and what they don't tell you is the team that built this house that you're looking at and thinking of spending your life savings on won't be near any of the other buildings that go up around this because they're off building other showhouses. So you know you're there's a lot of cowboys out there. They're not just building apartments, they're building houses too, and they're hunting them down, which is great,
Sue Williams 11:45
Excellent. And when we come back, we'll talk about recording meetings.
Jimmy 11:49
Recording meetings. Yeah, that's after this.
Jimmy 11:57
Do you know what the law is on recording conversations just off the top of your head quickly.
Sue Williams 12:03
When I went to the court case the other day, they said you couldn't record the court the court case, even though it was outside on the street.
Jimmy 12:10
Right, but that's court so I also said people weren't allowed to applaud, didn't they?
Sue Williams 12:14
They did. Um, I would think that maybe it might make people really uncomfortable if you
Jimmy 12:21
Tell me what the law is?
Sue Williams 12:23
I reckon the law is that you can't record a meeting.
Jimmy 12:27
You can't record a meeting.
Sue Williams 12:27
You can record it in shorthand or writing, but you can't actually record it with a recording device.
Jimmy 12:33
How about recording a conversation?
Sue Williams 12:35
You can only do that with a person's permission.
Jimmy 12:38
I think you're wrong. I think the law says you can only do it with their knowledge.
Sue Williams 12:43
Oh, that's a bit different.
Jimmy 12:44
It's very different because what effectively happens, and I may be wrong, but I'm pretty sure this is the case. You say to somebody, "I'm recording this conversation", and if they keep talking, they've effectively given you permission.
Sue Williams 12:57
Okay, well, I guess if that happens in a meeting, the only recourse they have is to leave the meeting.
Sue Williams 13:02
Be a handy thing.
Jimmy 13:02
And that's what happened to somebody in our forum. They've posted now, I think the person who sent this post in, maybe the person who turned up at the meeting with a tape recorder, or not a tape recorder anymore. Would it be a little digital recorder in their pocket? And somebody at the meeting said, are you planning to record this meeting, and this person said, "I'm not telling you. I don't have to tell you." And the two of the committee members walked out, and because, because of the strange like before they left, they appointed two of the people who were staying to be their surrogates there, so it didn't lose its quorum. The meeting went ahead, and apparently, according to the person who wrote to the forum, was all the better for the people having left. Now, here's my thing, two things; If you say to somebody, "are you going to record this meeting? And they say, I'm not telling you", and then they continue to record. I think they're breaking the law, yeah, because they haven't got permission and they haven't informed yet. But what about the general idea of recording meetings? Now here we are talking on a medium which is audio, where people listen to us. Would we think that people might want to listen to a strata committee meeting? I don't think so. Actually, no, but suppose you've got a really disruptive member of the committee, yeah,
Jimmy 13:03
A handy thing. I mean, it's something that you could say at the beginning of the meeting. "We propose" you have to put it on the agenda. "We propose that we record this meeting and make the recordings available to all owners." That seems absolutely fair to me. And would it have the effect that you were looking for? Possibly, if somebody was being disruptive, they might be less disruptive. It might also have the effect of making people who weren't sure of themselves and wanted to ask questions that they thought might be taken as being a bit stupid. It might make them
Sue Williams 15:07
Inhibit them.
Jimmy 15:08
Yeah, might inhibit them a bit, but I think in the right circumstances, it's a good thing.
Sue Williams 15:13
I think you're right too.
Jimmy 15:14
The other aspect of this is a lot of meetings now happen on zoom so
Sue Williams 15:20
But when you when you record a Zoom meeting, it does come up so the other person can see that they're being recorded,
Jimmy 15:26
Not if somebody is sitting in their bedroom with a recorder, a recording device, up against the speaker.
Sue Williams 15:33
That's true.
Jimmy 15:34
I remember going to sing a Mirvac event, and Matt Kean was there doing a presentation on recycling materials and using them in new buildings. And I had a little handheld recorder, and I just walked over to the speaker, like the big speaker. He was talking at a microphone. There was a speaker at the side. He didn't even realise I was there. And I put the microphone up against the speaker, and got absolutely crystal clear recording, which I think we used in podcast, actually. But yeah, it's very easy to do you, so you don't have to. You might be listening to a meeting on Zoom, and you could record it with a little handheld recorder, because some of them are very, very good. Yeah. In fact, Zoom recorders are one of the best ones, the most popular, but it's a different kind of zoom. So, yeah, recording meetings. I'm in favour, but you got to tell, you got to tell the meeting. I think if you are a guest at a meeting, and like you're not a member of the committee, and they ask you if you're recording, and you say yes, and then everybody gets up and walks out. I think maybe you would have to do something of in the in the standing orders for the meeting, just say this committee has decided that we will not have this recorded. And if you bring recording instruments into the meeting, you will be asked to leave. Yeah, there's enough problems in strata without that Sue, you are actually not here at the moment. Are you?
Sue Williams 17:05
No.
Jimmy 17:08
Where are you?
Sue Williams 17:09
I'm in Arnhem Land.
Jimmy 17:11
Wow!
Sue Williams 17:11
Yes. I'm doing a travel job, another travel job, and I'm travelling around quite remote areas of Arnhem Land. I start in Nhulunbuy in the northeast of Arnhem, land, where I've been before, but then I'm just travelling on the north coast. And
Jimmy 17:27
Get much wildlife out there,
Sue Williams 17:29
I think, lots of crocodiles.
Jimmy 17:30
What about buffalo? Do they have buffalo?
Sue Williams 17:32
They do have buffalo, actually.
Jimmy 17:34
What about camels?
Sue Williams 17:35
I don't know about camels
Jimmy 17:36
There's more than a million camels in wild camels in Australia at the moment.
Sue Williams 17:40
Well, maybe, maybe they're gonna
Jimmy 17:43
See, probably got lions, maybe now,
Sue Williams 17:46
Well, I mean, it's, it can be very, very beautiful. There's the Arafura swamp up there, which is the biggest swamp in Australia, and that obviously carries lots and lots of wildlife. And I think I'm going on a boat on the swamp
Jimmy 18:00
Right
Sue Williams 18:00
To see what the wildlife is like.
Jimmy 18:02
You just remind have reminded myself of a joke, two old blokes sitting talking, and one of them says, Do you realise that Lions have sex four times a day? And the other one says, I knew it was a mistake to join the Legion.
Sue Williams 18:17
And on that note,
Jimmy 18:17
And on that note, well, maybe next week, we'll be able to talk to Sue otherwise there'll be somebody else here to talk to me and talk to you. And thank you all for listening.
Sue Williams 18:28
Bye,
Jimmy 18:29
Bye. Thanks for listening to the Flat Chat Wrap podcast. You'll find links to the stories and other references on our website, flatchat.com.au, and if you haven't already done so, you can subscribe to this podcast completely free on Apple podcasts, Google podcasts, Spotify, or your favourite pod catcher. Just search for flat chat wrap with a w. Click on Subscribe, and you'll get this podcast every week without even trying. Thanks again. Talk to you again next week you.