Provisional tax on sold rental

Question from Clinton updated on 16th August 2019:

I owned a rental property which has now been sold. It is not subject to tax since it was outside of the bright line test and not purchased for resale. The tax on it was around $3,600 a year so I've been paying provisional tax. It sold at the end of April so one month into the next tax year. Do I have to pay another year of provisional tax and then claim it all back again the following year or is there another procedure?

Our expert Mark Withers responded:

No, you should file an estimate of your provisional income in the following year and pay in accordance with the estimate so as to avoid overpaying your provisional tax. Just make sure you include in your income estimate the recovery of any depreciation that may have been claimed prior to the ban on further building depreciation. The ban on further claims did not remove the obligation to recover past depreciation if the building is disposed of for more than book value.

Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.

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