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Tax Newsletter – April 2015

March 25, 2015 |

Author admin

Separate ATO appeals unit needed to resolve tax disputes

The Inspector-General of Taxation has called for a separate appeals unit within the ATO following a review of the ATO’s management of tax disputes.

The Tax Inspector noted that while the ATO’s recent initiatives represent a positive step in tax dispute management, more could be done to help small businesses and individual taxpayers. Mr Ali Noroozi said a separate, dedicated appeals unit within the ATO, should be led by a new Second Commissioner.

The unit within the ATO proposed by the Tax Inspector would manage and resolve tax disputes for all taxpayers including the conduct of pre-assessment reviews, objections and litigation (including providing oversight on settlements), as well as championing the use of alternative dispute resolution. The Government said it would consider the recommendation along with any other recommendations to be made by a parliamentary committee that was examining tax disputes.

Single Touch Payroll consultation noted big changes afoot

Businesses need to be aware of big changes afoot with the implementation of the Government’s proposed Single Touch Payroll. Under Single Touch Payroll, employers will be required to electronically report payroll and superannuation information to the ATO when employees are paid, using Standard Business Reporting-enabled software.

According to the Government, Single Touch Payroll would cut red tape for employers and simplify tax and superannuation reporting.

TIP: Single Touch Payroll is expected to be launched in July 2016. In a brief public consultation period, the ATO highlighted potential impacts that the implementation of Single Touch Payroll could have on employers. Businesses or their payroll providers may be required to either purchase or upgrade existing software, potentially at an additional cost. Another concern is the immediate impact on cash flow, particularly during transition.

Time limits on trustee tax assessments clarified

The ATO has issued Practice Statement PS LA 2015/2 which outlines its practice of limiting the period within which it will raise an original trustee assessment. The practice means that returns lodged by trustees are broadly exposed to similar time limits for review as other taxpayers.

Generally, the ATO notes it will not issue an original trustee assessment more than four years after the relevant trust tax return was lodged, or more than two years after lodgment for the 30 June 2014 and later income years if the trust was a small business entity (and certain specific qualifications under the tax law do not apply). However, the ATO notes that the time limits can be extended in certain cases.

The following example illustrates the time limit within which the ATO can raise an original trustee assessment:

The 2010 income tax return for the Oak Family Trust was lodged on 9 May 2011. The trust was not a small business entity for the 2010 income year. An audit of the trust reveals that some of the trust net income should be assessed to the trustee. The Practice Statement provides that the Tax Office must issue an assessment to the trustee by 9 May 2015 (unless the time limit is extended).

GST credits for employee accommodation refused

The Federal Court has held in the recent decision of Rio Tinto Services Ltd v FCT [2015] FCA 94 (handed down on 19 February 2015) that the taxpayers are not entitled to input tax credits for providing remote region residential accommodation to employees who are required to live remotely in order to carry out their employment duties.

Broadly, the Federal Court held that the taxpayer, Rio Tinto, was not entitled to input tax credits for the acquisition made by Hamersley Iron Pty Ltd (Hamersley), a related company in Rio Tinto’s GST group, in providing and maintaining heavily subsidised residential accommodation for their employees in the remote Pilbara region of Western Australia, where they conducted mining operations.

The Federal Court was prepared to accept that Hamersley’s leasing activities may have been wholly incidental to its mining operation and merely a means to carrying on its business. However, the Court denied Hamersley input tax credits in relation to that activity on the basis of a narrower interpretation that the acquisition “relates to” the supply of residential accommodation by way of lease, being an input taxed supply (which means there is no GST credit).

TIP: At the time of writing, Rio Tinto has appealed to the Full Federal Court against the decision handed down by the Federal Court. The principles followed by the Federal Court could have wide-reaching implications for GST registered businesses, and the appeal process should be followed closely.

Penalty for promoting pharmaceuticals donations scheme

The Federal Court has imposed a $1.5 million penalty after finding a promoter of a scheme involving the purchase and donation of pharmaceuticals to charities with foreign operations engaged in conduct that resulted in himself and two other corporate entities being promoters of a tax exploitation scheme.

The ATO noted the penalty of $1.5 million was the “highest civil penalty to date”. In commenting on the decision of the Federal Court, ATO Deputy Commissioner Tim Dyce said the scheme involved the purchase and donation of AIDS pharmaceuticals to charities in Africa. “As we discovered, the purchasers only paid 7.5% of the grossly inflated price of the drugs, yet claimed tax deductions of 100%,” said Mr Dyce.

Tax concessions following business sale cancelled

The Administrative Appeals Tribunal (AAT) has confirmed that the general anti-avoidance rules under the tax law applied to a “scheme” carried out by taxpayers in order to enable them to qualify for the capital gains tax (CGT) concessions for small businesses on the sale of a business. In particular, the AAT examined the effect of a “restructure” of the business which occurred several weeks before the sale. An effect of the “restructure” was to enable the taxpayers to meet a requirement to access the CGT small business concessions.

Before the AAT, the taxpayers sought to argue that, contrary to the position they took on claiming the tax concessions on the lodgment of their tax returns, they did not qualify for the concessions. However, the AAT held the taxpayers did qualify for the concessions. It also held that, after finding that the steps to “restructure” the business constituted a “scheme”, the general anti-avoidance rules under the tax law applied to cancel the “tax benefit”. The AAT found the taxpayer entered into the scheme for the dominant purpose of obtaining a tax benefit (reduced tax) and not for any asset “protection purpose”.

TIP: The ATO uses data-matching to identify taxpayers that may be inappropriately seeking the CGT small business concessions. Business “restructures” which occur just prior to a particular transaction which result in significant tax benefits could potentially raise red flags. Where a restructure is effected for purposes such as asset protection (which the courts have said is a legitimate non-tax purpose), such benefits must be real and not simply illusory.

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Property Newsletter – March 2015

March 4, 2015 |

Author admin

What does the RBA rate cut mean for property investors?

The Reserve Bank of Australia (RBA) surprised many last month when it cut rates following its first meeting of 2015, but what does this mean for property investors?

The reduction in the official cash rate to 2.25% came in February after the RBA had left rates on hold at 2.5% since August 2013.

The move on rates caught many experts off guard with the majority of analysts predicting that the central bank would again leave rates on hold.

However, delivering its decision the RBA said it made the cut because growth was continuing below-trend pace and that it expected the move to add some support to demand and help to foster growth.

So what does this mean for property investors?

Most importantly investors with a variable-rate loan should review their loans with their mortgage broker to ensure they are receiving a competitive rate and a product that suits their needs.

A property investor with a loan of $500,000 will save just over $100 per month if their rate is reduced by .25%, so it’s important to speak with your broker about your current situation.

The savings may be enough for a property investors to make their next acquisition to further build their property portfolio.

Alternatively, any savings could be used to complete minor renovations on existing properties to demand higher rents.

Furthermore, with historically-low interest rates it might be worthwhile for property investors with variable home loans to fix their rates.

Again, the decision to fix rates should be discussed with your mortgage broker who will be able to recommend the best course of action to take.

However, fixing rates can provide surety over the repayment amounts and can help you save further.

While the February rate cut is beneficial for property investors, there could be further good news on the way.

Many analysts have tipped that the RBA will again cut rates later this year by a further .25%, taking the official cash rate to just 2%.

Whether this occurs remains to be seen, however to ensure you’re receiving a competitive rate, it’s important to regularly review your situation with your mortgage broker.

Does an apartment make a good investment?

With lower price points and stronger rental yields apartments can be an enticing proposition for many investors, however are they a smart investment option?

The short answer is yes, they can be.

However, when it comes to property investing, the general rule is that land appreciates in value, while dwellings depreciate.

This is why houses or villas generally make a better investment option – because they often have a large land component, unlike some apartments.

Another major downside of buying an apartment as an investment property is that you have significantly less control.

In an apartment complex you are just one of many property owners and therefore represent just one of many votes in the strata complex.

If you own a house, you don’t have the inconvenience of having to consult other owners if you want to make changes.

However, if you are set on buying an apartment there are a number of points to consider to ensure you make the best acquisition.

Firstly, high-rise apartment buildings, especially in the CBD of major cities, should generally be avoided by property investors.

This is because additional supply of high-rise buildings, often with hundreds of extra apartments, can be constantly built in the immediate area and weigh down capital growth of existing dwellings.

Alternatively, investors should seek low-rise, or boutique, apartment complexes in areas where planning rules cap the number of apartment buildings. This will limit the capacity for new supply to be added in the area and will help to support capital growth.

Furthermore, low-rise apartment buildings have a higher land-to-value ratio than high-rise complexes, and therefore are better placed to increase in value.

It’s also important to buy an apartment in a complex with a high ratio of owner-occupiers, as they tend to maintain the property to a higher standard, are less likely to sell and are easily contactable for maintenance issues.

Another key consideration is the additional amenities an apartment complex offers. Pools, gyms, saunas and other luxury facilities might be appealing initially, however these frills often result in higher strata fees for the owner and can reduce net rental returns.

While apartments generally aren’t viewed as a great investment option for all, they can suit some investors depending on their individual circumstances.

As usual though, it’s best to speak with a professional buyer’s agent to ensure an apartment suits your investment plans.

Suburb set to benefit from surrounding development

Cockburn_stn2This overlooked suburb is ideally located to leverage off a number of ongoing development and revitalisation initiatives in its surrounding areas.

Bibra Lake is conveniently located being just several kilometres from a number of major shopping, entertainment and employment precincts, including Fremantle and the North Coogee Marina to the west, Cockburn Gateway Shopping City to the south and the Murdoch Activity Centre to the north.

Furthermore, the Kwinana Freeway lies across the suburb’s eastern border, which makes Perth CBD, and many other parts of the metropolitan area, easily accessible.

Bibra Lake is mostly low-density residential structures with more than 90% of dwellings listed as houses.

Located within the City of Cockburn and 15 kilometres south of the Perth CBD, the suburb has a population of about 6,000 residents with a median age of 39 years.

Bibra Lake’s value lies in the development occurring in its surrounding suburbs including major residential and commercial land development in Coogee, continued redevelopment of the Cockburn Gateway Shopping City and the recent completion and ongoing commissioning of the Fiona Stanley Hospital and the Murdoch Activity Centre (MAC).

Neighbouring suburbs include North Lake, Coolbellup, Spearwood, Yangebup and South Lake.

As well as low-density residential housing, Bibra Lake also contains an extensive light industrial area, a portion of the Beeliar Regional Park and a large part of the Bibra Lake Reserve.

The light industrial area is located on the south-western side of the suburb and takes up a large portion of the suburb, while the Western Power substation is in the south-east pocket.

Containing the light industrial area and in close proximity to the MAC there are a variety of job opportunities in the immediate area.

School facilities include Bibra Lake Primary School, Perth Waldorf School and good access to Murdoch University.

As well as Cockburn Gateway Shopping City, there is also Phoenix Shopping Centre in Spearwood and the Lakes Shopping Centre on the border with South Lake.

Bibra Lake boasts good accessibility bordering the Kwinana Freeway and Stock Road and is split by North Lake Road, which connects to South Street and Beeliar Drive.

4 features to look for in an exceptional property manager

Finding a property manager that will help you to maximise value from your investment property portfolio can be an extremely tough exercise.

With so many different property management companies in the market the degree of service you will receive can vary dramatically.

Too often do property managers promise the world before disappointing and becoming just another ‘transaction filler’.

Here are four features to look for in a property manager to help you find a professional advice-driven service, which will help you make the most of your investment property.

1. Communication

Open and clear communication should be maintained by the property manager at all times. Check to see if the property manager has a customer service charter that outlines their commitments to you. A good property manager will ensure they return phone calls or emails within one working day or contact land lords within one working day after becoming aware of required repairs or maintenance. They should also provide regular (monthly) updates on the performance of your property and if rent is being paid on time.

2. Negotiation

Property managers are constantly in negotiations, whether this be about the rental price, lease contracts or gathering quotes for maintenance services. An outstanding property manager should hold good negotiation skills to ensure you, as the landlord, receive the best outcome.

3. Knowledge and passion

While the number of years a property manager has worked in the industry can be an important factor, it’s not the be-all and end-all. What’s more important is their enthusiasm for the industry – do they read industry publications to expand their knowledge, for example? Do they have a comprehensive understanding of the Residential Tenancies Act? Do they attend regular industry training courses and seminars? An outstanding property manager will have a passion for the industry to ensure they stay abreast of the latest trends and information.

4. Professionalism

Professional property managers will be active participants in the broader industry. Is the property manager a member of any credible industry organisations? Has the property manager, or their company, won any industry awards for their excellence in property management and customer service? Furthermore, ask if the property manager has a cap on the number of properties they can manage as some individuals will handle hundreds of properties, which will mean a poorer service for you.

The importance of completing a pre-acquisition feasibility study

Property development can be a fine line between huge windfalls and financial disaster; however a pre-acquisition feasibility study can go a long way to mitigate the risks.

If you’re searching for a property to develop it’s important to complete a feasibility study prior to purchase to ensure the site meets your expectations.

This can be done before final settlement by including adequate clauses in the sales contract that will provide a sufficient due diligence period on the site and allow you to cancel the acquisition if you’re not satisfied for any reason.

To complete a thorough feasibility study during the due diligence period it pays to hire a professional company that is qualified and has experience with the construction and approvals processes.

A feasibility study should outline how much the site is worth, the number and type of dwellings you can build on it and a forecast of the size of the profit, or loss, you would make.

It will also provide finer details including a brief of the building and subdivision costs, a working timeframe of the project, soil analysis and engineering and drainage requirements, location of service and utilities (such as sewer lines), any covenants or easements on the land title and political or community opposition to the development.

By completing adequate due diligence at the feasibility stage you will be able to maximise your profit margin, or potentially avoid a disastrous financial loss if the project isn’t viable.

It’s also important to remain emotionally detached from the project, particularly if you may have spent substantial time and money searching for a development site and it fails to pass a feasibility study.

In this case you need to forget the site and continue your search – it will pay to be patient until the right development property arises.

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Tax Newsletter – March 2015

February 24, 2015 |

Author admin

Small business tax review finds first steps for improvement

The results of a review into tax impediments affecting the success and growth of small businesses has been released by the Government. The review focused on small business tax reform and, in particular, simplifying processes and cutting excessive red tape. In releasing the review findings, the Minister of Small Business, Bruce Billson, said the ATO has already begun implementing most of the administrative recommendations identified in the review.

Mr Billson said the removal of tax impediments for small businesses will make it easier for businesses to start, enable established businesses to grow, and provide greater security for small business owners in retirement. He said the review findings will feed into the Government’s broader considerations on small business taxation and was particularly timely ahead of the Government’s release of the Tax White Paper.

The Small Business Minister also highlighted the review’s recommendations concerning superannuation, and accepted that superannuation penalties on small businesses can be harsh, with disproportionate outcomes. Mr Billson said the Government will ensure that penalties for paying super late or for short-paying super by a small amount would reflect the nature of the breach. He proposed that these changes would take effect from 1 July 2016 and that the Government will consult with stakeholders on implementation details.

Valuation reports for tax purposes could be easier

A review examining the ATO’s administration of valuation matters has found room for improvement. The review was undertaken by the Inspector-General of Taxation, Ali Noroozi. In his 129-page report, the Inspector-General identified inherent difficulties associated with the nature and associated costs of valuations. Given these issues, the Inspector-General made a range of recommendations to the ATO aimed at taking a more practical and transparent approach to assessing taxpayer valuations and developing administrative safe harbours.

According to the Inspector-General, disputes between taxpayers and the ATO may be purely attributable to the differing professional judgment of each party’s valuer. In these circumstance, and given the nature of the self-assessment regime, the Inspector-General was of view that the taxpayer’s valuation should be accepted notwithstanding that it is not exactly the same as the ATO’s valuation. In this regard, the Inspector-General recommended that the ATO provide guidance to its compliance officers to assist them in determining when to accept a taxpayer’s valuation. The Tax Office agreed with this recommendation, and many others aimed at reducing disputes.

Employee share scheme tax law changes on the way

The Government says it will improve the taxation arrangements for employee share schemes. According to the Minister of Small Business, Bruce Billson, the proposed changes to the tax law are designed to increase the international competitiveness of the country’s tax system and allow innovative Australian firms to attract and retain high-quality employees.

A key change proposed is to reverse some of the changes made in 2009 to the point at which rights issued as part of an employee share scheme are taxed for employees of all corporate tax entities. Another key change is to provide employees of certain small start-up companies with further concessions when acquiring certain shares or rights in their employer. These further concessions would be an income tax exemption for the discount received on certain shares and the deferral of the income tax on the discount received on certain rights, which are instead tax under the capital gains tax (CGT) rules.

The ATO has also commenced consultations with stakeholders on how to streamline the process of establishing and maintaining an employee share scheme.

TIP: The tax law amendments are proposed to commence on 1 July 2015. This could mean swift passing of legislative amendments through Parliament. Companies should keep a watch on the progress of the legislation.

ATO code of settlement

A code of settlement has been developed by the ATO. The code sets out the ATO policy on the settlement of tax and superannuation disputes, including disputes involving debt. It states that settlement negotiations or offers can be initiated by any party to the dispute and can occur at any stage including prior to assessments being raised.

The ATO notes that when deciding whether or not to settle, it will consider all the following factors:

the relative strength of the parties’ position;
the cost versus the benefits of continuing the dispute; and
the impact on future compliance for the taxpayer and broader community.

According to the ATO, settlement would not generally be considered in situations where there is a contentious point of law which requires clarification, or when it is in the public interest to litigate, or when the taxpayer’s behaviour is such that the ATO needs to send a strong message to the community.

TIP: According to the code, a settlement agreement provides a reasonable basis for treating similar issues in future years unless it is specifically stated that it is not to apply to future years or transactions, or the taxpayer’s circumstances change materially, or the law remains either unclear or amended. However, the Code states the ATO can provide greater certainty to a taxpayer for future years if required.

Court confirms tax on transfer of land to joint-venture trust

A corporate trustee (the taxpayer) has been unsuccessful before the Full Federal Court in a tax matter concerning the transfer of land owned by the taxpayer to a joint-venture trust. The taxpayer had purchased the land in 1995 and began discussions with other adjoining lot owners in 1997 with the idea of commercially developing the combined lots and selling them off. In 1998, a joint venture agreement and the joint-venture trust were created among the landholders, and the land was transferred to the trust.

The ATO assessed the land transferred to capital gains tax (CGT). The taxpayer argued there was no taxing event under the CGT rules, or that there were exemptions to the rules that applied. Essentially, the taxpayer argued there had been no change in the beneficial ownership of the land. However, in disagreeing with the taxpayer, the Full Federal Court confirmed that the transaction effecting the transfer of the land from the taxpayer to the joint-venture trust for the purpose of redevelopment was taxable under the CGT rules and that the specific exemptions under those rules did not apply.

Personal services income when no service is provided

The ATO has determined that a payment received by a personal services entity (PSE) from a service acquirer during a period the service provider is not providing services to the acquirer until further called upon is personal services income (PSI) under the tax rules. The ATO says there may be circumstances where a payment made by a service acquirer to a PSE during a period in which the service provider is not called upon to do anything is not PSI because the payment appears to be in consideration for doing nothing. However, the ATO says such a view is “clearly not in accord with the intention of the legislature given the alienation measure is targeted at salary like payments”.

The following example illustrates the ATO’s point:

A sole director/shareholder (“Jim”) provides his expertise and skills to a client company for a flat monthly contractual fee that is non-contingent. During a specified period, a dispute arises between Jim and the client company which results in no work being performed for the period. However, Jim is still paid the monthly contractual fee. According to the ATO, the monthly fee during the dispute period is considered to be personal services income under the tax rules notwithstanding that the client company did not call upon Jim to undertake further services.

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Property Newsletter – February 2015

February 4, 2015 |

Author admin

3 easy tips to increase your borrowing capacity

Having problems financing the purchase of your next investment property? Here are three easy tips to increase your borrowing capacity.

Recently Australian banks and other lenders have been forced to comply with regulations that encourage responsible lending.

While these regulations might inhibit the amount of money that an individual can borrow, the rules are vital to ensure the financial system remains robust and protects borrowers from verstretching their financial capacity.

The amount an individual can borrow is determined by an ‘ability to repay test’, otherwise known as a ‘serviceability test’.

The serviceability test allows lenders to prove that borrowers can repay their loans. However, different lenders interpret this in their own way and the size of a loan for an individual can vary greatly from lender to lender.

So the serviceability test isn’t necessarily a broad, ‘cookie-cutter’ system but rather a tool that is interpreted differently from lender to lender.

This is why someone might be approved a $300,000-loan at ‘Lender A’, while the same individual could be approved a $400,000-loan at ‘Lender B’. The lenders simply interpret the client’s ability to repay the loan in a different manner.

Therefore, it pays to shop around or visit a mortgage broker that has a wide variety of lenders and lending products available.

To maximise your borrowing capacity from any lender, there are three easy steps you can take.

Close unnecessary credit cards and review credit card limits
As part of the serviceability test, lenders will assume that your credit cards will be drawn to their limits. For example, a credit card with a $10,000 limit will be deemed by lenders as a $10,000 debt in your name, even if you haven’t used the card. If you have a credit card with a $10,000 limit but you only ever use a portion of this, then you should reduce the limit to a more appropriate level.

Furthermore, you should consider closing unnecessary credit card accounts and, if possible, only keep one card open.
Reduce personal debt
Personal loans will affect your serviceability rating because these generally require expensive monthly repayments, which means you will have less disposable income to repay the proposed home loan. You can combine your personal debts into your home loan, which can increase your serviceability rating, but this will mean you repay the personal debt over the life of the home loan and subsequently more interest repayments in the long term. If possible, it’s best to repay personal debt as soon as possible or avoid it all together if you know you will be purchasing an investment property in the near future.
Maximise incomes from existing investment properties
If you own existing investment properties, even just one, you should seek to maximise rental prices to increase your disposable income, which will be taken into consideration by lenders and in the serviceability test. Your property may be undervalued or you could complete some low-cost improvements to the dwelling to demand more rent. Even allowing tenants to own pets is a quick and easy way to demand higher rental prices.

5 basic features your next investment suburb must have

When searching for your next investment property the sheer amount of information can be overwhelming. Here are five basic features your next investment suburb must have.

Once your finance has been approved and you’re in a position to make your next acquisition, the real work begins – searching for the perfect investment property.

This can be one of the most exciting times in your property investment journey. However, it can also be immensely frustrating as countless people have an opinion on where’s best to invest.

With so many different and often conflicting views, it’s no wonder that, without the help of a professional buyer’s agent, many investors fail to make the best decision and unintentionally waste their opportunity to grow wealth through property.

The following are five basic features that every good investment suburb must have.

Good public transport links
Rental properties near public transport links will attract more interest from prospective tenants and subsequently yield higher rents. Ideally the suburb will have its own train station but a good bus exchange can be just as attractive. This is increasingly important as urban sprawl continues to impact many capital cities.
A vibrant retail and café strip
Tenants want to live near vibrant public spaces, including retail and café strips where they can shop and dine out with friends and family. Shopping precincts and supermarkets in close proximity are also highly desirable.
Reputable schools and child care centres
This is particularly important for families. Now that NAPLAN and TER results are freely available to the public, it is easy for families to determine which are the best-performing public schools. Many families will want to buy or rent in catchment zones with a high-performing public school, particularly as private school tuition fees continue to rise.
Parks and recreational facilities
Just as vibrant retail and café strips are appealing to potential tenants, so are parks and recreational facilities. Well-maintained parks, sporting facilities and other social amenities that can be readily utilised by tenants are appealing to tenants.
Within close proximity to the employment centres
With urban sprawl continuing to affect most Australian capital cities, rental properties close to employment centres will prove to be highly desirable for young professionals and families. In most cities the CBD is the major employment centre, however you should consider other areas if they have solid employment opportunities. Accordingly, higher rental growth may be achieved, as well as higher capital growth prospects.

Note: these are not all the factors you need to consider when making an investment decision but they are a good place to start.

5 tips to maximise returns from your investment property

Whether you’ve recently acquired an investment property or have a long-held portfolio, it’s always beneficial to review your assets to ensure returns are maximised.

If you’re the type of property investor that relies on your property manager for guidance, particularly for direction to optimise rental returns, you’d want to make sure that you’re using a company that offers an advice-driven service.

It might come as a surprise to hear but as long as your property is leased and you and your tenants are happy, then the average property manager wouldn’t think to look at increasing your rents.

However, it’s important to review your property portfolio, ideally on an annual basis, to ensure you’re receiving the best rental returns.

Here are five tips to maximise your property portfolio’s returns.

Update or renovate where required
This is one of the most obvious, and generally most effective, ways to maximise rents. It could be as simple and low cost as giving the interior a fresh coat of paint or something bigger, such as renovating the kitchen or bathroom. Upgrading the kitchen, though, doesn’t have to be an expensive exercise as you can complete a cheap facelift by updating fittings and fixtures and installing new benchtops.
Install additional appliances
A dishwasher, reverse-cycle air conditioner, alarm system or other ‘value-add’ appliances can help to maximise returns on rental properties. For example, in a hot climate tenants may pay extra for an air conditioner, while a large family might pay more for a dishwasher.
Be pet-friendly
Because most landlords will not allow tenants to own pets, permitting animals on your property can attract premium rents. While there are downsides to allowing pets into your investment property, it remains a reasonable option that should be considered thoroughly.
Price the property right
It might be tempting to ask that little bit extra for your rental property, however, if it’s overpriced you’re highly unlikely to secure a tenant, which will ultimately cost you more if the property sits vacant for an extended period. Do your research and price the property right to ensure you maximise returns.
Property development
While you might initially think property development isn’t feasible, simply because of the financial cost, changes to planning rules and regulations in recent years have made it an attractive options for many. On a block in which you might currently have just one dwelling you might be able to build additional dwellings or even ancillary accommodation, which can command more rent and potentially increase the value of the property overall.

Boost rental yields with a dual-income strategy

Would you like to increase rental yields from your residential property to more than 7%? You might think this is impossible, but many investors are taking advantage of this opportunity already.

Ancillary dwellings, traditionally known as granny flats, have recently become a viable option for investors in Western Australia to increase rental yields.

Planning and development changes implemented in WA in 2013 mean an ancillary dwelling may be rented to anyone, not just to the property occupier’s relatives, as was previously the case.

The changes also saw an increase in the permissible size of ancillary dwellings to 70 square metres, up from 60sqm.

The changes created new housing choices for many, including students, singles, couples or renovators needing temporary accommodation, and have proven to be a great lower-priced housing alternative for many.

For investors, an ancillary dwelling provides a secondary source of rent from one property, or what’s known as a dual-income strategy.

Rent from an ancillary dwelling, combined with the primary dwelling, means investors can reap yields of more than 7% from one property.

Furthermore, the benefit of ancillary dwellings is that landlords don’t need to subdivide their land, saving thousands of dollars, and construction can take as little as 12 weeks.

While this means that an ancillary dwelling can’t be sold separately from the main dwelling because they share the same land title, it can be a good strategy for those who are planning to hold a property for the long run.

An ancillary dwelling won’t suit all property investors and their respective strategies but it’s worth considering given the great rental returns that can be secured.