Hopefully your property manager has already informed you about this, but if they haven’t you’ll want to read this (especially if you’re in Western Australia)… The government has decided to change the rental property laws and it will affect all property investors in Western Australia.

There’s a new government regulation, it appears to be on the state level at the moment… and it requires all property to be fitted with RCD (Residual Current Device) - in layman’s term, safety switches, or trip circuit.

This regulation started on the 9th August 2009, but doesn’t take full effect until 2011. Note that this will affect you when you change tenants or buying/selling a property. The new law says that you have to install TWO RCDs to protect your power points and your lighting otherwise its technically against the regulation to change tenant or buy/sell a property.

anyways to find out more about this new this particular rental property law affects you, please go to Department of Commerce - Energy Safety

Lodge your PAYG withholding variation application 2010 using e-variation from 1 May 2009.

After 29 April 2009, the current 2009 PAYG withholding e-variation will no longer be available.

You can use e-variation to lodge any PAYG withholding variation application: simply enter the relevant reason code.

• To access e-variation at www.ato.gov.au
• select ‘Find a form or publication’ from the left menu
• select ‘All forms’
• then ‘Search’
• then enter ‘2036′ into the NAT number field
• then click on the link to the PAYG withholding variation application 2010 (NAT 2036)
• then follow the prompts.

How long do you have to wait for your PAYG Variation?
When you lodge your e-variation application, you should receive an on-screen message with your reference number. If you do not get this message, the transmission may still have been successful. Do not transmit the e-variation again as this will delay the processing of the application.

We will send you an email confirming receipt or your application. If you do not get this email, please phone 1300 360 221 between 8.00am and 6.00pm, Monday to Friday.

In most cases e-variation applications are processed within 14 days. Please wait 21 days before phoning to check on the progress.

More information
If you have more questions:

• visit the ATO website www.ato.gov.au
• phone 1300 360 221 between 8.00am and 6.00pm, Monday to Friday, or
• email ATO at ITWvariation@ato.gov.au

If you want to find out more information regarding the benefits of doing a PAYG Withholding Variation then you may want to visit:

• Income Tax Withholding Variation - Get Your Taxes Back Before the Financial Year!
• Rental Property Depreciation - Is It Really Worth It?
• Depreciation Schedule - The Benefits
• Depreciation Schedule - Where Can I Get One?

Somebody asked me if it is worthwhile to get a depreciation schedule for his rental property. Strangely I hesitated and did a mental calculation before replying, “Its a numbers game, as long as you can get more back from the rental property depreciation then its worth it. The chances of this is very high”

The cheapest depreciation schedule that I know about is from Tax Shield so lets go through the numbers and do a quick sanity check.

Assumptions

• Marginal tax rate is 30%
• Cost of Depreciation Schedule is $275

Obviously, the cost of the depreciation schedule is also deductible as it is a cost of managing your rental property and tax affairs and directly link to the income generation of the rental property. This means the after tax cost of the Depreciation Schedule is $192.50 ($275 x (1-30%))

For the depreciation schedule to be worthwhile there must be $641.67 (192.5 / 30%) worth of depreciation over the life of the schedule. Ideally you would want the $641.67 to be within the first few years so that you can breakeven within the first year or two.

i.e. Tax Shield has to find $641.67 worth of fittings and fixtures to depreciate over the next 30 years in order for you to break-even. The bonus is items that are classified as “low-value pool” can be depreciated over their effective life (which is usually a lot quicker). Examples could be, kitchen stove, oven or range hood.

Most rental property would have fixtures and fittings like carpets, laminates, floorboards, tiles, blinds, curtains and/or light fittings. These few items alone would make it easy for companies such as Tax Shield to find thousands of dollars worth of depreciation.

In my opinion, it’s almost certain you’ll get your money back for the schedule PLUS more for your back pocket!

Some things you will want to consider are:

• Age of property
• Recent renovations or improvements

I must admit, I have an investment property that is really old, it was built back in the 1960s and I didn’t think it would be worthwhile paying for a rental property depreciation. After going through this exercise, I decided to invest my $275 and to my delight the depreciation schedule is being paid for within a year. i.e. there was more than $641.67 worth of depreciation within the first year that I could claim.

This also made me think about how much my accountant really understood about property taxes and rental property depreciation. They obviously don’t invest in rental properties of their own; otherwise they would have encouraged me to get one especially when I asked them whether I should or not.