Digital banking brings brains to your account

Investors who file too early may find themselves facing questions from the ATO.

H&R Block director of tax communications Mark Chapman said while bank interest was typically pre-filled in tax returns within weeks, managed funds and other investments might not be finalised and pre-filled “until mid-September”.

“There’s a risk if you have investments in those funds and you lodge early, you can potentially miss stuff in your tax return,” he said.

Investors who don’t remember to claim everything they’re entitled to are giving money to the government.

Interest on investment loans is often the biggest deduction, but landlords have a wide range of other claims, including land tax, insurance, property management fees, maintenance, repairs, pest control and council rates.

The ATO has a helpful guide, Rental Properties 2019, available online and in print.

INCOME Investors are increasingly going global, and CPA Australia head of external affairs Paul Drum said all income, gains and losses from foreign assets and investment funds must be included in tax returns.

“Also check your entitlement to any foreign tax credits for tax you paid overseas,” he said.

DEPRECIATION This is one of the most lucrative tax deductions for real estate investors because the claims don’t involve spending cash.

The only money spent is the $600-$800 getting a quantity surveyor’s depreciation report, which itself is tax-deductible.

BMT Tax Depreciation chief executive officer Bradley Beer said its average claims for investors were above $8800 a year, more than $5000 above ATO averages.

“This difference suggests that many self-assessors are leaving thousands of dollars of tax savings unclaimed each year,” he said.

OF ADVICE If in doubt, get professional help to fill in your tax return.

“We often see investors making mistakes by not having a strong team of advisers around them and often trying to DIY their own claims,” Mr Beer said. AUSTRALIA’S new breed of digital banks are introducing artificial intelligence to stop the inertia that costs consumers millions of dollars annually.

Big banks and other bill providers have earned huge profits for many years from customers who don’t examine their payments or search for better deals.

However, digital banks – also known as neobanks and smartbanks – are set to turn that strategy on its head by automatically finding savings and prompting their customers to act.

Financial technology infrastructure provider Frankie Financial’s CEO, Simon Costello, said consumers would benefit through artificial intelligence and “shiny new tech” providing automatic recommendations and switching.

“Neobanks will be able to spot your providers in your direct debits, let you know how much you would save if you switched providers, and then offer a single-click switch,” Mr Costello said.

“This is very powerful functionality that has the potential to change the way consumers compare, select and change providers, not just across the energy sector but financial, insurance, and health sectors as well.”

New digital players include Xinja, Volt, 86 400, Judo Bank, Revolut and the Bendigo Bankbacked Up Bank.

Comparison technology is already being used by the NSW Government’s EnergySwitch service.

Charlotte Tregellis used it and saved $380 after uploading her latest energy bill.

“I was told about the website by a friend when I complained about our latest electricity bill being so high,” she said.

“I haven’t switched providers for years but this was just so simple.

“The savings we make will help go towards a muchneeded family holiday.”

Digital bank 86 400 was granted a full banking licence by regulator APRA last month, and CEO Rob Bell said its retail launch would take place gradually over the coming weeks.

Mr Bell said the term “artificial intelligence” scared a lot of people, but for digital banks it was simply about using customer’s data to save them money.

“No-one is yet using data as a useful way to predict what might happen in the future,” he said. “We look at customers’ history in terms of bills and will give them a prediction of what bills are coming up.

“Big banks think they own the data and it’s predominantly used for marketing purposes. We want to help customers, not catch them out.”

Mr Bell said 86 400 would also help people to make the most of savings accounts paying bonus interest, by using algorithms to remind them when key dates for those accounts were approaching.