Are you an Australian living or working overseas with a family home in Australia? Or you know someone who is? If so, be sure to consider the impacts of the capital gains tax (CGT) on you from 30 June 2020. Since 1985, the exemption of Australian expatriates from the CGT tax has been available for…

Running your business from home can have great benefits, such as being able to spend more time with your family, not having to travel, and deciding your work hours. To make the most out of your home business experience, it is important to be aware of what tax deductions you can claim. If your home…

When someone dies, their superannuation usually gets transferred to their beneficiary as superannuation death benefits. Depending on who the beneficiary is, the benefits may be taxed in some circumstances. If you are a beneficiary, the amount of tax you pay depends on factors such as: If the benefit is paid as a lump sum or…

Employees of a small business may need to develop their expertise or skills in a particular area to better perform their duties. While training courses like seminars and one-day intensives can be a worthwhile investment, there are still a few things employers should consider from a tax point of view. Employers can generally claim deductions…

Leasing commercial premises, such as an office building, hotels or stores have their own struggles compared to being a residential landlord. Making the correct tax payment and knowing what you can and can’t claim is key in being a successful commercial landlord. When leasing out a commercial property, you must include the full amount of…

In the event that your records have been damaged or destroyed in a natural disaster, such as bushfires, there are a number of ways you can reconstruct them. The ATO is able to help with reconstruction in the event tax records have been lost or damaged. Where the tax records are lost or destroyed as…

Franking credits are a kind of tax credit that allows Australian companies to pass on the tax paid at a company level to shareholders. Franking credits can reduce the income tax paid on dividends or potentially be received as a tax refund. Where a company distributes fully franked dividends (and those dividends are included in…

Buying a holiday house can seem appealing, whether it’s to rent out for income, for your own holidays or both. However, it is important to be aware of the different tax implications for how you choose to use your holiday house. If you own a holiday house and do not rent it out, you cannot…

The government has changed capital gains tax (CGT) rules for foreign residents under the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Bill 2019, which was granted assent on 12 December 2019. The law change no longer allows foreign residents to claim the CGT main residence exemption, which will impact people who are overseas…

Individuals can claim tax deductions when giving gifts or donations to organisations that have the status of deductible gift recipients (DGR). To be eligible to claim a tax deduction for a gift, the ATO stipulates that it must meet the following four conditions: The gift must “truly be a gift”; that is, a voluntary transfer…

The interest you earn from term deposits is subject to tax, just like your regular income. You have to declare investment income on your tax return, including interest in the year it was credited or received. The amount of tax you need to pay depends on the amount of interest you earn on your term…

The national rental affordability scheme (NRAS) started on 1 July 2008, encouraging large-scale investment in affordable housing. It offers tax and cash incentives to providers of new dwellings for 10 years, granted they are rented to low and moderate income households at 20% below market rates. Though the NRAS is no longer taking new investments,…

Plans are underway to carry out a system change during the December closure of the ATO, to introduce Activity statement financial processing (ASFP). This change will move the majority of taxpayer financial information into one accounting system that will have multiple accounts. ASFP will shift activity statement and franking deficit tax accounts from the current…

Small businesses entitled to refunds of GST may not be aware of the four-year time limit on claiming those refunds. Your entitlement to a GST credit ends four years from the due date of the earliest activity statement in which you could have claimed it. GST refunds are claimed under the indirect tax concession scheme…

On the 28 October 2019, The Treasury Laws Amendment (2019 Tax Integrity and Other Measures No.1) Bill 2019 received royal assent. The new tax law creates limitations for deductions related to the expenses of holding vacant land from 1 July 2019. This is likely to affect those who acquire land for investment purposes and begin…

The Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Bill 2019 was re-introduced to parliament on 23 October 2019. This comes after it was first announced in the 2017-18 Federal Budget. The amendment introduces a new system where the government will provide up to an additional 10% capital gains tax (CGT) discount for resident…

The structure of your business determines how you would pay tax and other business obligations you would need to consider. Whilst you are able to change your structure as your business develops, business owners must keep up with the changing tax responsibilities that may occur as a result. There are four major business structures in…

The margin scheme is a way of working out the GST you must pay when you sell property as part of your business. The amount of GST normally paid on a property sale is equal to one-eleventh of the total sale price. If the margin scheme is used, the GST is calculated on the difference…

A business industry code (BIC) is a five-digit code you include on relevant tax returns and schedules that describes your main business activity. BICs come from the Australian and New Zealand Standard Industrial Classification (ANZSIC) codes and are added to by the Australian Tax Office (ATO) for tax return reporting purposes. Employers must use the…

When making a claim in regards to your residential rental property, there are specific circumstances for when you can and cannot claim travel expenses. The law about claiming travel expenses for rental properties changed in July 2017. In the last year alone, the ATO received more than 70,000 incorrect claims for travel to and from…

To qualify for small business CGT concessions, an asset must meet the conditions of the Active Asset Test to apply. An asset is considered active when you own it and it is used or held ready for use in relation to a business. You can also have an intangible active asset if it is inherently…

The taxable payment reporting system (TPRS) has extended to further businesses that provide particular services and those that pay contractors to provide the service. The extension was approved on 1 July 2019. Road freight services, information technology services and security, surveillance and investigation services will now have to lodge taxable payments annual report (TPAR), even…

Capital Gains Tax (CGT) events occur when an individual or company makes a capital gain or capital loss by selling or disposing of an asset they own. The timing of a CGT event is quite important, as it determines which income year an individual will report the capital gain or capital loss, and may affect…

Taxpayers are responsible for safely storing a written backup copy of their tax record in case the original electronic form becomes inaccessible or unreadable. In the event that your records have been damaged or destroyed, there are a number of ways you can reconstruct them. Where the tax records are accidentally lost or destroyed from…

Businesses can no longer claim deductions for payments to workers if they have not met their pay as you go (PAYG) withholding obligations. This applies to income tax returns lodged for the 2020 income year onwards. Any payments made to a worker where PAYG amounts haven’t been withheld or reported are called non-compliant payments. If…

The ATO has released the Taxation Determination 2019/9, which outlines changes to the fringe benefits tax (FBT) car parking threshold. The car parking threshold for the year commencing on 1 April 2019 is $8.95. This replaces the amount of $8.83 which applied to the FBT year ended 31 March 2019. The increase has been set…

The ATO has developed a new toolkit that helps small business owners to understand their entitlements and avoid mistakes in their tax returns. The 2019 Tax Time Toolkit Small Business covers information about: Three of the most common expenses: home-based business, motor vehicle, and business travel. Single Touch Payroll (STP) for small employers. These toolkits…

The Australian Taxation Office (ATO) is warning taxpayers to keep an eye out for people posing as tax agents who are not registered with the Tax Practitioners Board (TPB). Only a registered tax agent can charge a fee to prepare and lodge your tax return. There are concerns from the ATO about the number of…

The ATO has developed a new rental property owners toolkit for property investors to ensure that mistakes are avoided in their tax returns. Each year, the tax office identifies fairly common mistakes being made with tax claims made in regard to investment properties. In a recent review of individual tax returns, nine out of 10…

The ATO is developing new online services systems as AUSKey will be retired in March 2020 Replacing AUSKey will be myGovID and Relationship Authorisation Manager (RAM). MyGovID is an authentication service that will allow individuals to prove who they are online. This system will work by establishing your identity once online and then using your…

Small business owners may be able to claim deductions for the costs of using your home as a principal place of business when filing your 2019 income tax return. Tax deductions may be claimed for the business portion of expenses that include electricity, cleaning, rent payments or mortgage repayments. However, it can be difficult to…

In the 2019-20 Federal Budget, the Government announced their plans to change and build on the Personal Income Tax Plan. These changes affect the low and middle-income tax brackets and were passed on 5 July 2019. The Budget proposed that from the 2018-19 income year: There will be an increase to the low and middle-income…

Single Touch Payroll (STP) will change how employers report their employee’s end-of-year information to both employees and the ATO. The first year of STP for employers with 20 or more employees will soon come to an end at the completion of this financial year. Employers that are reporting through STP will no longer need to:…

The ATO has recently replaced the Taxation Ruling (TR) 93/7W on whether penalty interest is deductible to the new TR 2019/2. This new ruling highlights the circumstances in which penalty interest is deductible and the situations where it is not. “Penalty interest” refers to an amount charged by a lender to a borrower under a…

Although the 2018-19 financial year is coming to an end, there are still a number of tactics you may be able to employ to ensure that you get the most out of your tax return. Bring forward expenses:It is a common recommendation at tax time for small business owners to claim all of the appropriate…

The ATO will start processing 2018-19 tax returns on 5 July 2019 and are expected to start paying refunds from 16 July 2019, with the majority of electronically-lodged current year tax returns completed within 12 business days of receipt. There a few changes to tax returns that individuals should take note of going into this…

Lodging a business activity statement (BAS) is something all business owners will be familiar with, however, mistakes can still be made. You must ensure that you have reported carefully and correctly to avoid incurring a penalty. In the event an error has been made in the reporting of your activity statements, here is what you…

The Personal Income Tax Plan has gone through recent changes regarding rates, thresholds and offset entitlements. These changes were announced in the 2018-2019 Federal Budget and were implemented at the start of the 2019 financial year. For the upcoming tax season, individuals should review these changes in case they are affected. The 32.5% tax bracket…

New penalties for business’s pay-as-you-go (PAYG) withholding and reporting obligations are to be introduced as a result of legislation commencing 1 July 2019. The law will now prevent businesses from claiming deductions for payments to employees and certain contractors if they fail to comply. Payments that are impacted include salary, wages, commissions, bonuses or allowances…

The goods and services tax (GST) is applied to most goods and services sold in Australia, taxed at a rate of 10%. If you run a business, you are likely to have GST obligations such as claiming credit for any GST included in the price of goods and services that have been purchased for your…

The ATO small business benchmark guides are designed to help small businesses compare performance with similar companies in the same industry. These guides have been updated to include data from the 2016-2017 financial year. Within this system, there are two benchmarks businesses can use. Performance benchmarks apply to all industries and businesses. This area consists…

The ATO has released a statement in relation to transitioning to Single Touch Payroll (STP) for small employers. Parliament has passed legislation to extend STP to include employers with fewer than 20 employees from 1 July 2019. STP is payday reporting by employers to the ATO as it happens. The initiative is designed to help…

The Australian government has launched the Better Tax campaign in order to help inform the public of tax reforms coming into effect. Designed to “better Australia”, here is a look at what this plan means for you. Individual Tax: New low to middle-income tax offset: Offering immediate relief of up to $530 after an individual…

On the occasion that you are required to travel overnight for work, you may be eligible to receive a travel allowance from your employer for accommodation, food, drink or incidental expenses. The reasonable amount of travel expenses is updated yearly and is based on job type and salary. From this allowance, tax deductions are to…

As of 29 January 2019, the Instant Asset Write-Off Scheme will be extended to 30 June 2020 for assets purchased under $25,000. The Instant Asset Write-Off affects small businesses with a turnover of up to $10 million a year. It allows business owners to immediately deduct assets costing up to $25,000 which can then be…

On 1 July 2018, the Australian Tax Office (ATO) rolled out Single Touch Payroll (STP). This changed the way employers with 20 or more employees report their employees’ tax and super information. Generally through payroll or accounting software that offer STP reporting (or through a third-party service provider), employers are expected to report information on…

You can claim tax deductions for expenses related to business travel provided you follow the ATO’s rules. Eligibility requirementsYou must fulfil certain eligibility requirements for your tax deduction claims to be valid. You can only claim a tax deduction if you: Travel once your business has already started Keep records and documentation to provide evidence…

Unwanted attention and penalties from the ATO can jeopardise your small business. Protect your business by avoiding these common small business tax errors. Not using an accountantTax laws frequently change, and compliance requirements can be time-consuming and demanding. A registered tax agent will streamline your financial processes, provide advice on maximising your finances and keep…

The ATO has introduced the Business Portal to allow small business owners to manage their tax affairs online at their convenience. Connect your ABN to your myGov account or a compatible AUSkey so you can access the business portal. The portal is accessible 24 hours a day, seven days a week. The portal can be…

The ATO has enforced strict guidelines on tax deductions for rental property owner’s travel expenses. As a rental property owner you are not able to claim deductions for travel expenses relating to inspecting, maintaining or collecting rent. If you have already claimed a tax deduction for the cost of travel to and from your property…

The ATO has updated the Taxpayer’s Charter which prioritises a relationship with the public built on mutual trust, courtesy and respect in all interactions. Your rights regarding review of ATO decisions are clearly outlined by the Charter if you feel you have been mistreated. The Charter has also committed the ATO to use easy to…

Small business owners suffering from mental health issues can seek the ATO’s help in meeting their taxation and super commitments. If you are going through tough times take advantage of ATO services that will help keep your finances in check. Get in contact with the ATOGet in touch with the ATO as soon as you…

Businesses that fail to keep accurate records may struggle to remain compliant at tax time and incur financial penalties from the ATO. Follow the ATO’s record keeping guidelines to stay organised. Basic organisation tips: Keep records electronically (if possible) Keep evidence of all transactions Take photos of paper receipts to avoid faded records Keep all…

Tax exemptions may apply to small businesses going through a restructure provided they meet certain criteria. Typically when a business is sold, you would have to pay income tax due to transferring assets. However, when a business is restructuring, the ownership of assets remains unchanged, and there is instead a rollover. This allows you to…

A default assessment is an assessment of taxable income for overdue tax returns or the net amount or assessable amount-for late activity statements. Although the ATO’s preferred approach is to work with taxpayers to help them meet their lodgement obligations, a default assessment will be issued if this collaborative approach fails. PenaltyThe administrative penalty of…

Fuel tax credit rates have increased on 1 August. The ATO reminds you to use the new rates to calculate claims on your next business activity statement (BAS). How to simplify fuel tax credit claimsIf you claim less than $10,000 in fuel tax credits each year, you can use the ATO’s simplified methods to keep…

The ATO has extended the $20,000 threshold to 30 June 2019. If you buy an asset and it costs less than $20,000, you may write off the business portion in your tax return. To be eligible to use the simplified depreciation rules and claim an immediate deduction for the business portion of each asset costing…

The ATO is seeking to increase their attention on home office expenses due to the high level of questionable claims made by taxpayers. There has been an increase in the number of Australians claiming deductions for costs incurred from working from home. The ATO reports that in the last tax year 6.7 million taxpayers claimed…

The ATO is in the midst of developing advanced data programs to find individuals who are leaving a source of income out of their tax return. Analytical tools have been developed to utilise the amount of data the ATO receives to identify instances where income has gone unreported. This is to address the annual $1.4…

On the 1 July 2018, the Australian Government introduced Single Touch Payroll (STP) for employers with 20 or more employees. The new scheme requires employers to report payment activities each time employees were paid. Authorisations for an agent to act on behalf of an employer to streamline the process of STP are provided below. STP…

The Australian Tax Office (ATO) released draft guidelines outlining that Utes will no longer be exempt from Fringe Benefits Tax (FBT). Amendments originated from reports that dodgy tax returns were responsible for a loss of $8.7 billion in income tax due to wrongful claims. The requirement of a logbook New rules require employers ensure their…

The time to report and lodge your annual tax return for your business is fast approaching. Remember, what you must report will depend upon the type of business entity you have. Sole traders As a sole trader, you are required to lodge a tax return even if your income is below the tax-free threshold. This…

From 1 July 2018, businesses that supply cleaning or courier services must report payments made to contractors (if payments are for cleaning or courier services) via the Taxable payments annual report (TPAR) each year. However, the ATO does not require taxpayers to lodge their TPAR during the period up until the proposed law change is…

You may be able to claim a tax deduction for capital expenditure on a landcare operation in Australia in the year it is incurred. Providing you are a primary producer, a rural land irrigation water provider who incurred the expenditure on or after 1 July 2004, or a business using rural land for taxable uses…

The Tax Office is reminding individuals who either own or are looking to purchase a rental property that there are essential record-keeping and taxation obligations that they must meet. Examples of records to keep (for the period the individual owns the property for and up to five years after it is sold), include: – Rental…

As tax time continues, the ATO has announced the top misconceptions many individuals make when completing their claims for tax deductions. Four popular tax misunderstandings include: 1. Individuals can give credit card statements as proof of claim Debunked: When making a claim, individuals must be able to show they spent the money, what the money…

The Tax Office has confirmed the rate for work-related car expenses will rise to 68 cents per kilometre for the income year beginning 1 July 2018. The new rate will affect those eligible individuals who elect the cents per kilometre method when calculating the income tax deductions for their work-related car expenses for the 2018-19…

The ATO has released its latest findings on the tax gap for Australian individuals. The estimated gap in 2014-15 is approximately $8.7 billion or 6.4 per cent. The income gap is an estimate of the difference between the tax the ATO collects and the amount that would have been collected if each taxpayer was fully…

The Australian Tax Office (ATO) is reminding individuals to remain vigilant against any scams that may pop up this year around tax time. With over 37,000 scam attempts reported to the ATO this time, last year, individuals need to be wary of scam artists looking to trick taxpayers into either paying for fake debts or…

From 1 July 2018, the Tax Office is advising Australians that if they find an error in their tax return or activity statement they will not incur a penalty but will advise of the error and how to get it right next time. Penalty relief will only apply to eligible taxpayers or entities (i.e., turnover…

Tax Time is now upon us, with the ATO Assistant Commissioner announcing the top five mistakes commonly made when Australians complete their annual tax returns. Common mistakes some taxpayers are making include: – Leaving out a portion of their earnings, i.e., forgetting to include a job – income from a temp job, or income earned…

The Personal Income Tax Plan announced as part of this year’s Federal Budget has been passed by Parliament. The plan introduces: – a new low and middle-income tax offset to reduce the tax payable by low and middle-income earners in the 2018-19, 2019-20, 2020-2021 and 2021-2022 income years – a new low-income tax offset from…

The Australian Tax Office (ATO) is cracking down on claims for work-related clothing and laundry expenses this tax time. Last year total claims for work-related clothing and laundry expenses totalled nearly $1.8 billion. The ATO has acknowledged that many of these claims are legitimate. However, it is unlikely that half of all taxpayers would have…

Overseas businesses that meet the GST registration threshold (A$75,000) will be required to charge GST on goods purchased from the 1 July 2018. Specifically, GST will be charged on goods that are: less than A$1,000 (low-value); not GST-free (i.e., alcohol or tobacco products); and imported into Australia. Individuals who purchase low-value goods (which they import)…

With the end of the financial year fast approaching, preparing ahead will help to take off the pressure of running your business and organising your tax affairs this tax season. Business owners can benefit from gathering and sorting their records now, including cash, EFTPOS, bank statements, credit or debit card transactions that relate to sales…

The Government is widening the scope of Division 7A to include unpaid present entitlements from 1 July 2019. This will apply where a related private company is entitled to a share of trust income as a beneficiary but has not been paid that amount (unpaid present entitlement). Division 7A is an integrity rule that requires…

As of 1 July 2018, purchasers of new residential premises or potential land are required to withhold an amount from the contract price and pay the amount to the ATO before settlement. A supplier (vendor, seller) of residential premises or potential residential land must notify the purchaser in writing whether they will need to withhold…

The Tax Office has flagged work-related car expenses as a concern this tax time. The ATO is targeting those who make mistakes or deliberately lodge false claims. Examples include: – Claiming things they are not entitled to, i.e., private trips such as work to home travel. – Making claims for trips that did not occur.…

The Government will continue its commitment to strengthen the economy by focusing on improving its integrity measures to create a fairer level-playing field for all. Funding new ATO enforcement Additional funds will be allocated from the Budget over four years to fund a new ATO enforcement strategy to tackle the black economy. Through this measure,…

The 2018 Federal Budget is built on the back of a historically strong post-mining boom Australian economy, triggering fairly conservative changes to tax policy. The Budget’s strategy is to provide sustainable tax relief to those in the workforce, stimulating spending and encouraging businesses to invest in creating jobs. Individuals The Government is introducing a seven-year…

The Australian Tax Office is standing by its actions undertaken that were presented on a recent current affairs program. The ATO says where taxpayers fail to lodge tax returns and BAS returns over a number of years despite repeated requests, the ATO will raise a default assessment based on evidence that can be obtained, i.e.,…

Employers can employ holiday makers on either a Working Visa (subclass 417) or a Working and Holiday Visa (subclass 462). Employees on either visa are taxed at 15 per cent from the first dollar earned, regardless of their residency. Working holiday makers cannot claim the tax free threshold and must provide their employer with their…

Buyers of new residential premises or subdivisions of potential residential land will need to pay the GST component of the purchase price to the Australian Tax Office (ATO) as of 1 July 2018. The amount of GST will not change. This change does not affect the sales of existing residential properties or the sales of…

Fuel tax credits are provided to businesses who acquire, manufacture, import or use fuel in part of running a business. These credits can greatly benefit business owners but it is important to get the claim right. The ATO sees common mistakes made when calculating and claiming fuel tax credits, including: Wrong calculationsA common error is…

The Tax Office has rental property owners in its sights this tax season with a large number of mistakes, errors and false claims made by some using their own property for personal holidays. The ATO is reminding owners they cannot claim deductions for holiday homes that are not actually available for rent or only available…

The Australian Tax Office (ATO) is warning taxpayers to be aware of scammers impersonating the Tax Office and demanding cryptocurrency such as Bitcoin as payment for fake tax debts. The ATO became aware of these fraudsters late last year with over $50,000 paid in Bitcoin to scammers claiming fake ATO debts. Once scammers receive payment,…

The Australian Tax Office (ATO) is urging employers with 20 or more employees to prepare for the introduction of Single Touch Payroll. Single Touch Payroll will be introduced from 1 July 2018, requiring employers to report their employee’s tax and super information to the ATO through Single Touch Payroll approved software. Employers will report each…

Property investors can access a wide range of tax deductions and items subject to depreciation for their rental property yet many miss out on unknown tax breaks, foregoing an average of $20,000 a year on a $1 million house. Here are four ways to maximise your tax deductions while complying with the tax office: Use…

The Australian Taxation Office is continuing to pay close attention to claims made as ‘work-related expenses’ throughout 2018. Making incorrect claims of work-related deductions can land you in hot water with the ATO, and thus it is important you can justify these claims. In order to claim correctly, you must be able to show that:…

While we like to think of business ventures as a platform to make money, there are also many expenses that will be incurred through running one. Luckily, there are many tax deductions a business owner can claim when it comes to the expenses their business incurs, in particular their legal expenses. Understanding what these tax…

The Australian Tax Office is honing in on small businesses failing to comply with guidelines regarding appropriate record keeping. Findings from the ATO’s Protecting Honest Business campaign indicated that one of the leading factors for small business failure is their poor record keeping practices. Small business owners are required to disclose particular information, and keep…

The Australian Taxation Office is urging all businesses and individuals to take care in relation to avoiding the risk of fraud. With a focus on criminals lodging fraudulent returns in order to obtain unwarranted refunds through accessing banking information that is not their own, the ATO recommends businesses and individuals practice the following: Discussions with…

This year, the Australian Taxation Office has placed a greater focus on property developers and are particularly watching company directors with a history of GST obligations avoidance. As of May 2017, the Government announced new requirements on those purchasing newly constructed residential properties or new subdivisions to remit the GST directly to the ATO as…

The Government has announced a reform of the Deductible Gift Recipient (DGR) status to strengthen governance arrangements, reduce administrative complexity and ensure trust and confidence in the sector. The reforms are as follows: From 1 July 2019, non-government DGR’s must be registered as a charity with the Australian Charities and Non-for-profits Commission. Non-government DGR’s that…

With the FBT year-end just around the corner, it is a good time to review your FBT compliance to avoid raising attention from the Australian Tax Office (ATO). The ATO is currently targeting the following rules for FBT: Motor vehicles Situations where an employer-provided motor vehicle is used or available for private travel for staff.…

It is quite common for small businesses to provide their staff with car parking benefits, however, many business owners may not take into account the effect parking has for fringe benefits tax (FBT) purposes. Fortunately, if you are a small business, car parking benefits are exempt if you meet all of the following conditions: –…

The Australian Tax Office (ATO) is targeting privately owned and wealthy groups that display specific behaviours and characteristics in relation to their tax affairs and lifestyle. A large focus is currently on lifestyle assets and private pursuits that generate deductions or are mischaracterised as business activities. The ATO is also looking at those assets and…

The holiday season is a peak time for activities in the sharing economy to increase. During this time those participating in the sharing economy must not forget their tax obligations. The most common sharing economy activities around the festive season include: – Providing ride-sourcing services for a fare. – Completing jobs or errands for payment.…

The Australian Tax Office (ATO) will be closed from midday Friday 22 December 2017 to 8.00am Tuesday 2 January 2018 over the festive season. The Tax Agent Portal Dashboard and BAS Agent Portal Dashboard will be available to check portal availability. The ATO’s technical help desk will be available from 7.00am to 6.00pm weekdays, excluding…

Taxpayers are being reminded they can prepay amounts towards their expected tax bill to help stay on top of their tax and avoid falling into debt. To make a prepayment to the Tax Office, you must get the correct payment reference number, decide how much to pay and choose a payment method. Using the correct…

The Australian Tax Office (ATO) has sophisticated data matching programs in place to ensure individuals and businesses are complying with their obligations and to uphold the integrity of the tax system for the community at large. The Tax Office uses data matching to pre-fill tax returns, ensure people and businesses are lodging tax returns and…

Those selling property as part of a business sale may be eligible for the margin scheme. The margin scheme is a way of working out the GST you must pay on the property that you are selling as part of your business. The scheme is only applicable if the sale of a property is taxable.…

Australian goods and services tax (GST) will be implemented on sales of low-value goods imported into Australia by consumers as of 1 July 2018. According to the ATO, business will have to register for GST, change GST on sales of low-value imported goods and lodge returns if they meet the $75,000 AUD registration threshold. These…

To protect honest, compliant Australian businesses, the Australian Taxation Office has placed a strong emphasis on targeting the cash and hidden economy. The ATO is visiting businesses that deal predominantly in cash, with a focus on those that: Fail to meet super or employer obligations, and that fail to register for GST or lodge activity…

The ATO has established the ‘Business Assistance Program’ to help new business owners understand their tax obligations associated with running a business. Small businesses that have recently registered for an ABN, registered for GST or likely to register for GST in the near future and have a turnover of less than $2 million a year…

When it comes time to sell your home, you may be wondering if you will need to pay capital gains tax (CGT). Generally, if you live in the home you are selling you will not have to pay CGT under the main residence exemption. The ATO considers a dwelling as your main residence if: –…

In its effort to facilitate a fair business environment, the ATO has offered continued support for honest businesses. With an estimated $40 billion lost to the hidden economy, the need for strong diligence and continued governance over Australian businesses is essential. The Black Economy Taskforce that was established in May 2017 and various trends have…

Self-managed super fund trustees must notify the Australian Tax Office (ATO) if there are changes to their SMSF. Trustees must provide written notice within 28 days if there are changes to: the name of the fund the address of the fund details of the contact person the membership of the fund the trustees of the…

Under the new law introduced on 1 July 2017, Australian GST registered businesses that import services or digital products for business purposes do not have to pay GST. These businesses will need to supply their Australian business number (ABN) and a statement that they are registered for GST to the supplier at the time of…

Those who participate in ride-sourcing (i.e., Uber, GoCatch) as a driver can access a number of tax deductions come tax time. You may be able to claim expenses such as: – Parking fees – Road tolls – Mobile phone costs – Fees or commissions charged the facilitator – Other expenses – to the extent that…

The ATO is reminding those who work in the sharing economy to be aware of their tax obligations. The sharing economy connects buyers (users) and sellers (providers) through a facilitator who usually operates an app or a website. Some popular examples include Airbnb, Stayz, Uber, Deliveroo, Airtasker and so on. Different rules apply, depending on…

From 1 July 2018, employers with 20 or more employees will report payments to the Australian Taxation Office at the same time as they pay their employees, using the Single Touch Payroll reporting system. This reporting system will keep track of payments such as: Salary and wages Super contributions Deductions, e.g. workplace giving Pay as…

The small business income tax offset can help reduce the tax small businesses pay on business income by up to $1,000. This offset is available from the 2015-16 income year onwards. Small businesses with an aggregated turnover less than $5 million can access the concession from the 2016-17 income year. Business income derived by another…

Personal services income (PSI) is income mainly produced from your personal skills or efforts. There are special tax rules that apply if your income is classified as PSI. Almost any trade, industry or profession can receive PSI. The most common are financial professionals, IT consultants, engineers, construction workers and medical practitioners. PSI does not affect…

The Australian Taxation Office distributes penalties to ensure individuals are not making misleading or false statements regarding income, business and wealth matters. Studies indicate there is over $5.5 billion lost every year through tax avoidance in Australia, a massive amount of money. One of the reasons these penalties exist is to ensure taxpayers take more…

On 1 August 2017, fuel tax credit rates increased. Some of these rates also changed on 1 July 2017, due to a change in the road user charge and an annual increase to excise duty rates on biofuels. Fuel tax credit rates change regularly – they are indexed twice a year, in February and August,…

Activity statements generally issue from the ATO by the end of the month but in some circumstances they can be generated early. Business owners can access activity statements early in the following cases: your business has ceased you will be travelling and will not be able to obtain your activity statement if generated under normal…

The Government has announced a new measure in the 2016-17 Mid-Year Economic and Fiscal Outlook to prevent the distribution of franking credits where a distribution to shareholders is funded by particular capital raising activities. This new measure is intended to address issues raised by the Tax Office’s Taxpayer Alert 2015/2 regarding arrangements used by companies…

The ATO has provided further guidance for healthcare practitioners dealing with lump sum payments from healthcare centre operators. The Tax Office is concerned with some practitioners who have received lump sum payments and have incorrectly treated the payments as a capital gain. These practitioners have then applied the small business CGT concessions to reduce the…

The Mid-Year Economic and Fiscal Outlook 2016-17 (MYEFO) announced that from 1 July 2017, the ATO will disclose tax debt information of businesses who have not effectively engaged with the ATO to credit reporting bureaus. The new measure is aimed at enhancing the integrity of the tax system and ensuring businesses who are not compliant…

With the fringe benefits tax (FBT) year ending 31 March 2017, now is the time for business owners to get their FBT affairs sorted. When calculating FBT liability, employers must gross-up the taxable value of benefits provided to reflect the gross salary employees would need to earn at the highest marginal tax rate (including Medicare…

Many small food retailers buy and sell products that are both taxable and GST-free. Depending on the point-of-sale equipment used, identifying and recording these sales can be difficult for business owners. The ATO has introduced a series of simplified accounting methods (SAMs) to make it easier to account for GST and work out the amount…

From 1 July 2017, many of the 2016 Federal Budget super reforms will take place, including the reduction of both the annual concessional and non-concessional contribution caps. Concessional contributions Concessional contributions include employer contributions and salary sacrifice amounts. Personal contributions claimed as a personal super contribution deduction also count as concessional contributions. The concessional (pre-tax)…

The ATO has provided business owners with further guidance on the deductibility of website costs in a recent Taxation Ruling. The Tax Office considers a commercial website as a website which is used in the course of a business, irrespective of whether it is used directly to produce income. This does not include software provided…

The Federal Court has recently agreed that ride-sourcing is taxi travel. For GST purposes, the word taxi means a car (vehicle) made available for public hire that is used to transport passengers for fares. State and territory laws regulating transportation of passengers contain specific definitions of the term taxi. A vehicle can be considered a…

Fuel tax credit rates increased on 1 February 2017. These rates are indexed twice a year, in February and August, in line with the consumer price index (CPI). The rates vary depending on when you acquire the fuel, what fuel you use and the activity you use it for. Rates may also change for fuel…

The Australian Taxation Office (ATO) has issued a ruling that clarifies the circumstances in which a deduction for bad debts is allowable. To obtain a bad debt deduction under section 63 of the Act, a debt must exist before it can be written off as bad. A debt exists for the purposes of section 63…

Business owners who make a car (leased or owned) available for employees to use for private travel may be subject to fringe benefits tax (FBT). If a car is garaged at or near your employee’s home, even if only for security reasons, it is considered by the ATO to be available for their private use…

The Australian Tax Office is collecting data from financial institutions and online selling sites as part of their data matching programs for credit and debit cards, online selling and ride-sourcing. The data will include: the total amount of credit and debit card payments businesses received online sellers who have sold at least $12,000 worth of…

Tax rates for working holiday makers who are in Australia on a 417 or 462 visa have changed. From 1 January 2017, employers who employ a working holiday maker in Australia on a 417 or 462 visa: – Must withhold 15 per cent from every dollar earned up to $37,000 with foreign resident tax rates…

The ATO have introduced a simpler BAS to take effect from 1 July 2017 to help reduce GST compliance costs for small businesses. From 1 July 2017, small businesses will only need to report GST on sales (1A); GST on purchases (1B) and Total sales (G1) on their BAS. Businesses will no longer need to…

Giving to charity this Christmas is a great way to give to those less fortunate while receiving some extra tax perks. Charitable donations are tax deductible which only adds to the incentive to be generous this holiday season. Here are some tips for maximising your tax breaks on charitable donations: The charity must be registered…

Despite the Australian Tax Office’s education campaign on GST reporting, many small business owners continue to make errors when claiming GST credits in their GST returns or Business Activity Statements. The vast majority of errors are easily unavoidable and relate to the over-claiming of GST credits. Here are the top ten common GST mistakes: Residential…

If your small business is registered for GST (Goods & Services Tax), most of your sales in Australia will include GST. Sales which include GST (taxable sales) are: – made for payment (monetary or other) – made in the course of operating your business (including any capital assets sold) – connected with Australia For these…

The ATO has provided further guidance regarding limited recourse borrowing arrangements (LRBAs) and when non-arm’s length income (NALI) rules apply to a related party LRBA. The Tax Office recently released a Taxation Determination (TD 2016/16) and updated their Practical Compliance Guideline (PCG 2016/5/) to provide further clarification concerning the circumstances where a self-managed super fund…

The ATO is currently targeting contrived trust arrangements that minimise tax by creating artificial differences between the taxable net income and distributable income of closely held trusts. Arrangements where trustees are engineering a reduction in trust income to improperly gain favourable tax breaks or pay no tax at all are being targeted by the Tax…

Income tests are used to work out a person’s eligibility for tax offsets and benefits which can reduce the amount of tax they have to pay. The Australian Taxation Office considers various items from a person’s tax return when applying income tests. For example, a number of offsets, benefits and obligations are assessed using a…

Tax offsets (also known as ‘rebates’) can directly reduce the amount of tax payable on a person’s taxable income. While claiming certain tax offsets can reduce a person’s tax payable to zero, on their own, they cannot create a tax refund. Here are three common types of tax offsets some individuals are eligible to claim:…

The Australian Tax Office has recently collaborated with industry representatives to develop a safe harbour for car fringe benefits. A safe harbour is a guideline that allows Australian businesses to make use of an efficient way to calculate tax where certain conditions are met. This particular safe harbour will simplify the approach for working out…

The Australian Tax Office has warned small businesses that time is running out to start paying superannuation contributions in the new and mandatory electronic standard called SuperStream. SuperStream is the new mandatory way employers must make super contributions on behalf of their employees. It involves employers sending all super payments and employee information electronically in…

Following an announcement in July, the Australian Government recently increased the 32.5 per cent tax threshold from $37,001 – $80,000 to $37,001 – $87,000. The new PAYG withholding rates will apply to individual taxpayers who earn more than $80,000 from 1 October 2016. The Australian Tax Office provides a range of tables to assist employers…

The Australian Tax Office allows Australians who work at or from their home to claim a deduction for the additional expenses they incur from running their business. Generally speaking, the deductible expenses that can be claimed are divided into two categories; occupancy expenses and running expenses. Occupancy expenses: relate to ‘the place of business’, i.e.…

The Australian Tax Office (ATO) is reminding small businesses to transition to SuperStream by 28 October 2016. SuperStream is the new mandatory way employers must make super contributions on behalf of their employees. It involves employers sending all super payments and employee information electronically in a standard format. Those employers that are still paying their…

The Australian Tax Office has launched a new initiative called Super Scheme Smart to help educate individuals about the pitfalls of certain retirement planning schemes and how to protect their retirement nest egg. Each year the ATO discovers complex tax schemes and arrangements designed by promoters solely for the purpose of helping people avoid tax.…

Fringe benefits tax (FBT) is a tax an employer pays on certain benefits they provide to their employees, including their employees’ family or other associates. The benefit may be in addition to, or part of, their salary or wages package. Fringe benefits tax is separate to income tax and is calculated on the taxable value…

As the countdown begins to Australia’s tax return lodgment date, many individuals in the country may be hurrying to find a few extra possible tax deductions to claim. However, in the rush before the deadline, it is important not to waste time claiming deductions for expenses or items that are commonly thought of as tax…

The small business company tax rate has been reduced from 30 per cent to 28.5 per cent. The new lower rate applies to small businesses that are corporate unit trusts and public trading trusts. When completing company tax returns, use the new rate of 28.5 per cent on calculation statements at label T1 – Tax…

The ATO has recently provided recommendations for self-managed super funds (SMSF) trustees with related party LRBAs that are lodging before the 31 January 2017 compliance deadline. The Tax Office stated that the relevant income of an SMSF is considered NALI (non-arm’s length income), and should be reported as such in the SMSF’s 2016 annual return,…

Individuals can minimise capital gains tax (CGT) when selling an investment property where proceeds are contributed to superannuation. Those who sell their property can contribute up to $500,000 as a non-concessional contribution into their superannuation, which means that no tax will be payable. Non-concessional contributions, or after-tax super contributions, are super contributions for which an…

The ATO is currently targeting work-related expenses by taking a closer look at unusual deductions and claims that are higher than expected. The Tax Office will be looking for expense claims that are much higher than others who are in the same occupation and will be contacting employers to validate these claims. When claiming work-related…

The ATO has its sight set on individuals participating in an increasing number of aggressive tax avoidance and retirement planning schemes in self-managed superannuation funds (SMSF). The Tax Office has launched Super Scheme Smart, an initiative designed to help inform individuals and advisers about illegal retirement planning schemes. The program is a result of an…

The Seniors and Pensioners Tax Offset (SAPTO) is a tax offset for retirees who are at the Service Pension age or the Age Pension age or older. Those who have received SAPTO may be eligible to transfer unused portions of their offset to their spouse. When transferring unused SAPTO, both the receiving individual and their…

There are a number of employee benefits that are exempt from fringe benefits tax (FBT). They include the following work-related items: – portable electronic devices (mobile phones, laptops, tablets, portable printers and GPS   navigation receivers) – computer software – protective clothing – briefcases – tools of trade The FBT exemption is limited to items…

Refund fraud occurs where tax returns, activity statements and other documents are deliberately falsified in order to claim a tax refund a taxpayer is not entitled to. Fraudulent claims can be lodged by individuals on their own account or third parties on behalf of others. Often, this can involve identity crime, where taxpayer identities are…

The Australian Tax Office has announced that it will be paying close attention to rental property owners during this tax season, especially in areas where excessive interest expenses are claimed and where there is an incorrect apportionment of rental income and expenses between rental property owners. The ATO will also be focusing on those who…

Redundancies, whether forced or elective, can become complex as there are many taxation issues to consider when receiving a payout. The most common form of payment an employee will receive is an employment termination payment. Employment termination payments (ETPs) include payments for unused rostered days off or for unused sick leave; payments in lieu of…

With tax time fast approaching, now is a good time to review those tax deductions that are often easily forgotten such as mobile phone expenses. Mobile phone expenses can generally be claimed as a tax deduction provided they are used for work purposes, such as receiving or making work calls. When claiming expenses you will…

The Tax Office is focusing on rental property owners this tax time and is encouraging rental owners to understand their obligations and check their claims are right before lodging their tax returns. The ATO will be paying close attention to excessive interest expense claims and incorrect apportionment of rental income and expenses between owners. The…

From 1 July 2016, those who purchase a residential or commercial property in Australia that is worth more than $2 million must withhold 10 per cent of the price. Buyers are then required to remit this amount to the Tax Office unless they obtain a tax clearance certificate from the property vendor. The new rule…

The Taxation Office has recently announced that it is working towards making a simpler BAS to reduce GST compliance for small businesses and also make GST record keeping and reporting easier. This is a result of tax professionals, small businesses and industry associations expressing their concerns to the ATO over current BAS requirements. From 1…

A quick scan of the average taxpayer’s wallet of receipts or documents in the home office can result in quite a few expenses they can claim as tax deductions. However, some of the most obvious get forgotten on a regular basis. While not all available tax deductions will apply for every individual (since claimable items…

The Australian Tax Office has its sight set on an emerging tax avoidance tactic being taken up by a number of self-managed superannuation funds. The ATO has warned trustees not to use a strategy known as personal services income (PSI) through their SMSF to pay little or no tax. Even though only a handful of…

Tougher superannuation rules may create an unintended spike in risky property borrowing by those with a self-managed super fund, with experts suggesting that the changes will force SMSFs to load up on debt in an attempt to increase returns. While there are still incentives for people to wanting to own property within their SMSF, under…

The Government is now giving individuals a greater incentive to work without being taxed more by making a start to personal income tax relief. The changes will take place from 1 July 2016 and will prevent average full-time wage earners from moving into the second top tax bracket until 2019-2020, by increasing the 32.5 per…

The ATO has identified certain businesses it plans to target for potential tax audits. These businesses include the supermarket, bakery, computer system design and car retailing industries that often need more help to meet their tax and super obligations. In response to this, the ATO has begun an education campaign for business owners in these…

The ATO has issued a statement expressing its concern over recent misrepresentations of transition to retirement income streams (TRIS) and how they are meant to operate. In its statement, the ATO said that under special circumstances a member can select under regulation 995-1.03 of the Income Tax Assessment Regulations (ITAR) 1997 to treat a TRIS…

The ATO has begun working with insurance companies to assess artworks and collectibles owned by taxpayers and identify the owners of these kinds of assets. There have been many instances where the tax office has identified ‘lifestyle assets’ that were not being properly accounted for. Since some assets may be subject to capital gains tax…

After a taxpayer has held a life insurance policy for ten years or longer, the reversionary bonuses received on that policy become tax-free. Life insurance policies are issued by life insurance companies and friendly societies. A reversionary bonus is profit earned annually on traditional life contracts on top of the sum insured that is added to…

Businesses with a GST turnover of less than $20 million who have not been asked by the ATO to report their GST on a monthly basis can report and pay their GST quarterly. Businesses who report and pay their GST quarterly have three reporting options: 1. Calculate and report GST quarterly This option allows businesses…

With the end of the fringe benefits tax (FBT) year fast approaching, business owners need to be aware of the FBT and gross up rates when preparing for their FBT return. The FBT rate increased from 47 per cent to 49 per cent from 1 April 2015. The rate increase was due to the introduction…

It may be beneficial for trustees who buy and sell assets through their self-managed super fund to start a transition to retirement pension to escape the burden of capital gains tax. Capital gains are profits that an SMSF makes on the sale of an asset. Capital gains tax (CGT) is a tax on the profits…

Federal Parliament recently passed legislation that will allow small businesses to change the legal structure of their enterprise without incurring a capital gains tax (CGT) liability. Instead, the CGT liability can be deferred until eventual disposal. The legislation, ‘Tax Laws Amendment (Small Business Restructure Roll-over) Bill 2016′, will apply from July 2016. It provides an…

A large number of Australians who rent out a room in their home, whether it be via Airbnb or another avenue, are unaware that the practice can incur capital gains tax (CGT). Many assume CGT is not on the cards because profit made from the family home (or ‘primary residence’) is usually tax-free. However, those…

Wealthier individuals in Australia may have to pay higher taxes on their superannuation in the near future, with the government hinting that superannuation tax concessions will be reorganised to target those who are most at risk of relying on the age pension in retirement. Industry groups are expected to be advised of the proposed changes…

Franking credits are a kind of tax credit that allows Australian companies to pass on the tax paid at company level to shareholders. Franking credits can reduce the income tax paid on dividends or potentially be received as a tax refund. Where a company distributes fully franked dividends (and those dividends are included in the…

The ATO is currently working with insurance providers in a bid to identify wealthy Australians with policies that cover an expanded range of asset classes. Last month, the office launched a data-matching program, which involves contacting insurers to distinguish policy owners of various classes of insured assets that are often associated with wealth. Insurance policies…

FBT law includes different categories of fringe benefits and specific valuation rules for each category. FBT is a tax employers pay on benefits they provide to their employees, including their employees’ family or other associates. The benefit may be in addition to, or part of, an employee’s salary or wages. Employers who provide fringe benefits…

The ATO is currently targeting taxpayers who rent out their holiday homes for only a few weeks during the year but claim a full year’s worth of deductions on their tax returns The tax office is will be paying close attention to rental property owners, especially those who own a holiday home who incorrectly claim…

While the transfer of shares from an individual to their super fund will trigger a CGT event and therefore capital gains tax, there are ways individuals can minimise this. Individuals can transfer shares to a self-managed superannuation fund (SMSF) by completing an off-market transfer, also known as an in-specie transfer. An off-market transfer is the…

In the 2015-16 Budget, the Australian Government introduced a separate single grossed up cap of $5,000 for salary sacrificed meal entertainment and entertainment facility leasing expenses (meal entertainment benefits) for employees. That cap will apply from April 1, 2016, to coincide with the start of the FBT year. The new limits are designed to improve…

Individuals can claim tax deductions when giving gifts or donations to organisations that have the status of deductible gift recipients (DGR). To be eligible to claim a tax deduction for a gift, the ATO stipulates that it must meet the following four conditions: the gift must “truly be a gift”; that is, a voluntary transfer…

In the latest crackdown on tax evasion, the ATO is targeting parents suspected of paying their children’s private school fees from secret offshore bank accounts. Following concerns that overseas accounts are being used to hide away secret funds, the tax office will be contacting more than 100 parents with private school fees of up to…

Significant tax breaks and incentives for Australian investors were unveiled on Monday when the Turnbull government released their National Innovation and Science Agenda. The tax changes are designed to help support start-ups to develop their ideas in Australia. Investors will now be able to access a 20 per cent tax offset instead of deductions or…

Many problems can occur when processing activity statements and tax returns which can lead to a delay in the ATO issuing refunds. However, these problems are often caused by small issues and can be easily avoided. Here is a list of tips to help minimise some of the issues that can prevent a speedy tax…

Designing, creating and maintaining a website for your business can be complicated. Many of today’s small businesses employ the services of a web developer and designer to take care of getting a website up and running since they don’t have time or expertise to be able to do it themselves. Often, this can be an…

An employment termination payment (ETP) is a lump sum payment an employer makes to employees when their employment is terminated. Depending on the age of the employee, and the length of their employment, the amount of an ETP may be taxed at a different rate. An ETP may encompass a tax-free portion, a concessionally taxed…

Negative gearing is a popular tax strategy that gives investment property owners the ability to offset the cost of owning a property against their assessable income. Negative gearing involves generating short to medium term tax losses, which arise from tax-deductible costs that are higher than investment income, and leveraging this to increase exposure to potential…

A capital gain or capital loss is the difference between the cost of an asset and the profit or loss made when it is disposed of.  In certain circumstances, a capital gain from a CGT event can be deferred, or ‘rolled over’, until another CGT event happens which involves an asset in the following events:…

A CGT event occurs when an individual or company makes a capital gain or capital loss by selling or disposing of an asset they own. Determining the timing of a CGT event is quite important, as it determines which income year an individual will report the capital gain or capital loss, and may affect how…

Over the last few years, there has been a significant increase in the number of home-based businesses starting up in Australia. While working from home can help improve a person’s work and life balance, when it comes to claiming home expenses for these business owners, there are a multitude of factors that need to be…

If a tax refund or promise sounds too good to be true, then it probably is. Tax scams can take many forms, such as false emails and text messages, but phone scams are the number one threat in Australia. Phone scammers usually impersonate an ATO employee and tell the receiver that they owe a tax…

Australians who work overseas for an extended period of time should be wary of the tax implications that can arise from taking up such offshore opportunities. The tax residency status of an Australian who move overseas for employment plays a key role in determining how much tax that person is required to pay in Australia.…

While many employees can sacrifice salary in exchange for most work-related purchases, it is essential that employers are aware of FBT when working out the expense that will replace the income in a salary sacrifice arrangement. Employees should also be wary that if their employer has to pay FBT, that cost will most likely be…

A capital gain is a profit made from the sale of an asset. Your capital gain is calculated as the difference between what you paid for the asset and what you eventually sold it for. A capital gain is considered by the ATO as part of your assessable income and is taxed at your marginal…

Whether you’re an established property investor or contemplating purchasing your first investment property, you may care to familiarise yourself with the way that negative gearing works. A property is considered to be negatively geared if the owner has taken on debt in order to acquire it and the net rental income is less than the…

While the ATO continues to crack down on its tax minimisation strategies, quite a few legal pathways to paying less tax while preserving wealth for retirement or estate planning purposes still exist. Family trusts have significant tax-saving abilities, and can save high-income earners a fair amount of money over a few years by apportioning wealth…

Those who produce some form of assessable income at home or incur expenses from using that home as a workplace can claim for expenses and tax deductions. Individuals can claim deductions for their home if it is used for income earning activities but isn’t a place of business, or if it is being used as…

With the 2014-15 financial year at an end, business owners should now be planning for a tax regime that includes a $20,000 instant asset depreciation. Since the government’s introduction of an instant tax deduction on up to $20,000 of capital items in the May budget, business owners should integrate the new rules into their cash…

Business owners sometimes need their employees to develop their expertise or skills in a particular area. While training courses like seminars and one-day intensives can be a worthwhile investment, there are still a few things employers should consider from a tax point of view. Although employers can claim deductions for the full costs incurred when…

Leasing out your holiday house to others can make owning the property more affordable. The principles that apply to an investment rental property also apply to leased or rented holiday houses. This means owners are entitled to claim expenses for the property based on the proportion of the income year when it was rented or…

Wrongly claiming tax deductions can result in heavy penalties from the tax office. Despite this, many Australian taxpayers continue to attempt claiming invalid tax deductions that are rejected by the tax office. While some are not quite so obvious, below are some common misconceptions about deductions that many taxpayers believe. Driver’s licence: While claiming deductions…

Business owners registered for GST may be able to claim GST credits for an employee-reimbursed expense. A reimbursement occurs when a business repays an employee for the price (or part of the price) of a purchase they have made. There are three conditions that an owner must meet in order to claim GST credits: the…

Changes to the tax treatment of employee share schemes, which took effect on 1 July 2015, means employees can now share in and gain from the future growth and success of a business. The changes allow employees, who are issued with share options, to defer paying tax until they are able to grasp a benefit…

The ATO recently reported that small business owners were repeatedly making common mistakes when applying for capital gains tax (CGT) concessions eligibility tests. A taxpayer may qualify for the CGT concessions if they: – own a business with an annual aggregated turnover of less than $2 million; – are involved in a partnership that owns…

To drive small business growth, the Government’s 5 per cent tax discount for unincorporated small businesses with an annual turnover of less than $2 million will take effect from 1 July 2015. The discount will be capped at $1000 per individual for each income year and will be delivered as a tax credit in their…

With just over a week until June 30, here are some tips that can help savvy individuals make the most out of their tax refund for the 2014-15 year. The following tips are by no means exhaustive and may not be relevant to every personal situation. Keep your receipts The most important thing every individual…

The ATO is closely scrutinising employees who make abnormally high work-related expense claims. The tax office is using advanced data and technology to identify and investigate claims that stand out from the usual. They are repeatedly targeting people who claim a tax deduction for using their computer, phone or other electronic devices to perform duties,…

If you are appointed as an executor in a will, your responsibilities commence following the death of the will-maker. It is important for executors to consider the capital gains tax implications of a deceased estate when it is time to administer the estate property for its beneficiaries. There is generally no CGT payable for the…

The ATO is targeting holiday-home owners who are over-claiming on tax deductions for periods when their property isn’t being leased. Some owners have been rejecting tenants so that their holiday home is available for them to use. They provide their accountants with authority to rent documents to make it appear that they are trying to…

Taxpayers are responsible for safely storing a written backup copy of their tax record in case the original electronic form becomes inaccessible or unreadable. Where the tax records are accidently lost or destroyed from a burglary or fire, the ATO will allow a taxpayer to claim a deduction for certain expenses. The conditions are: – The…

The ATO is warning taxpayers of aggressive tax planning strategies will attract a significant amount of scrutiny. A number of specific strategies have been flagged as aggressive in a video named ‘Tax Tricks That Will Get You In Trouble’. When it comes to tax avoidance schemes, it is not uncommon for individuals to be duped…

The government’s tax white paper has revealed that in the next twelve months the average Australian will be pushed into the second highest tax bracket. As average wages become higher due to inflation, but do not actually rise in real terms, many taxpayers will be pushed up into a higher tax bracket. This phenomenon is…

The federal government has announced that it is planning to place a tax on bank deposits in its next budget, which will be handed down in May. According to media reports, the tax will take the form of an insurance levy; the government offers consumers a savings guarantee of up to $250 000 to protect…

Yesterday, the Australian Tax Office released a blueprint containing information on a new unit for wealthy taxpayers, as well as a new design to guide future proceedings with taxpayers. Entitled ‘Reinventing the ATO’, the blueprint outlines an exclusive unit to deal with wealthy individuals in Australia and at least one million privately owned businesses. The…

1. Put more into your mortgage offset account: Mortgage offset accounts are usually considered to be a mechanism for protecting yourself from interest rate rises. However, another advantage is that if you direct more money here and less to your savings account, you will save on tax earned on interest. With interest rates at record…

Switzerland and Australia have entered into an unprecedented agreement that will see the two countries automatically exchange tax information. The move is intended to prevent tax evasion through income earned and held in offshore bank accounts. Tax avoidance has been increasingly prominent on the international agenda recently, and Switzerland is striving to shake its reputation…

This financial year, the ATO has announced that it will be focussing on specific types of deductible claims. In previous years, the tax office has announced specific industries or professions that will be subject to particular scrutiny. The biggest announcement this year is that deductions for personal electronic devices such as smartphones, tablets and laptops…

Many Australians overlook the fact that they can claim the premiums paid for income protection insurance as a tax deduction. Income protection insurance policies are designed to protect you in the event that you become unable to work due to illness or injury. Most policies will pay you a pre-determined portion of your previous income,…

The holiday season is a great time to think about giving a little back to those less fortunate than you, and many Australians will make charitable donations. In Australia, charitable donations are tax deductible, which only adds to the incentive to be generous this year. A recent global survey of charitable giving across the world…

There are a couple of things that you can do before June 30 to maximise your personal tax return: 1. Spend up on deductible expenses: By prepaying your tax-deductible expenses for the year, you can bring the deduction forward into the current financial year. 3. Charitable donations: If you are considering donating money to charity,…

If you are looking to reduce your tax bill this financial year, it is a good idea to try to bring forward as many deductions as possible. By thinking about tax deductions that you are eligible to make, and spending the money in the current financial year, you can reduce your taxable income. By reducing…

The government has used its administrative powers to increase the tax that motorists pay on fuel. The controversial budget measure is currently encountering difficulty in the Senate, so the government has adjusted the indexation under the assumption that there will eventually be legislative approval. As of November 10, the tax on fuel was raised by…

As part of their project DO IT, the ATO have successfully uncovered over $550 worth of assets that Australians hold offshore. The tax office is offering a period of amnesty that allows them to come forward and reveal offshore assets without the risk of heavy penalties. The ATO will only assess four years of income…

A tax reform by the federal government will increase the scope of employers to issues employees with shares and stock options. Prior to 2009, employees receiving shares or stock options were able to defer paying tax, with many only paying CGT once they have disposed of the assets down the line. In order to increase…

The ATO is cracking down on businesses that operate off the books in order to avoid paying their fair share of taxes, also known as operating within the black, underground or cash economy. Businesses are known to use a wide range of strategies to skirt their tax responsibilities. This may include underreporting takings and paying…

Treasurer Joe Hockey has announced that he has requested the Tax Commissioner ramp up his efforts to prevent multinational corporations from generating profits in Australia before moving them offshore to avoid tax responsibilities. Tax evasion tactics by multinational corporations have been an ongoing problem in Australia. There has recently been a renewed interest in the…

A capital gain is a profit made from the sale of an asset, for example, real estate investments (the family home is exempt), a business or shares. Your capital gain is calculated as the difference between what you paid for the asset and what you eventually sold it for. A capital gain is considered by…

The ATO has issued its decision on the treatment of bitcoin, and other crypto-currencies, for tax purposes. Bitcoin is a form of virtual digital currency that has been gaining popularity worldwide. Based on the  average number of daily transactions, bitcoin has overtaken western transfer and is fast approaching PayPal as the world’s most popular form…

A new law that prevents taxpayers from benefiting from dividend washing has been enacted. The new integrity rule is intended to help taxpayers understand their tax responsibilities and comply with the legislation. Dividend washing occurs when a shareholder seeks to claim two set of franking credits. This is done by selling shares after a dividend…

Backdating to July 1 2014, the carbon charge will be removed from all fuels. The ATO has indicated that this will result in some changes to fuel tax credits. There will be an increase in fuel tax credits available for a range of off road activities, while credits will no longer be available to specified…

The Abbott government has delivered on its long-standing election promise to repeal the carbon tax, effective from July 1, 2014. A condition of the repeal receiving crucial crossbench support from the Palmer United Party (PUP) was that savings be directly passed on to consumers and small businesses. As a result, the ACCC (Australian Competition and…

The ATO has introduced a new streamlined online tax return process for individuals with very straightforward tax affairs. MyTax is made up of just ten screens and is intended for people whose only income derived from wages, salary, dividends, bank interest, allowances,  and/or other Australian government payments. To use myTax your only tax deductions need…

The ATO has recently advised taxpayers to seek a second opinion on before entering into any tax avoidance schemes. According to the ATO tax avoidance schemes are designed to appear legitimate, even to savvy investors. In particular taxpayers should be wary of complex financing schemes that rely heavily upon round robin financing schemes and non-recourse…

If you use a piece of equipment, such as a computer, for work related activities then you may be able to claim it as a tax deduction. If the item is valued at over $300 then you cannot claim the entire cost in the year of purchase. Instead, you will need to calculate the depreciation…

If you own a rental property or are considering purchasing an investment property, it is important to be aware of the tax deductions you can claim. Claiming all of the legitimate deductions on your investment property can save you a lot of money. On the other hand accidently claiming illegitimate deductions can cost you a…