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Builders: Get your taxable payments report ready before August 28

30 July 2018

Businesses in the building and construction industry, take note – the deadline is August 28, 2018 to report the total payments you made to each contractor you enlisted the services of in 2017-18. You will need to report these payments to the ATO on the Taxable payments annual report.

The taxable payments reporting system was initially introduced to address longstanding compliance issues by contractors in the building and construction industry. Tax compliance issues that were identified included non-lodgement of tax returns, income being omitted from tax returns that were lodged, non-compliance with goods and services tax (GST) obligations, failure to quote an Australian business number (ABN), and use of an invalid ABN.

Note that the most recent Federal Budget announced that from 2019-20 three additional industries on top of building and construction will be required to lodge taxable payments reports with the ATO — security providers and investigation services, road freight transport, and computer system design and related services.

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Tips for your Tax Return

5 July 2018

efore we sit down with you to go over your tax return, certain information will be needed. Of course these days pre-filling takes care of a lot of the “paperwork”, and if you wait until late-July or mid-August the ATO’s systems will most likely be able to provide most of the information from employers, banks, government agencies and other third parties. We will then be able to double-check the information is correct and enter any deductions you want to claim.

However to be thorough, before coming in for your tax appointment here are the sorts of information needed to enable us to complete your tax return:

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Superannuation contributions ‘work test’ for over 65s

25 June 2018

Whether or not the trustee of a complying superannuation fund can accept member contributions for those aged between 65 and 75 depends on the member satisfying the “work test”.

The work test requires a member to have been gainfully employed for at least 40 hours in a period of not more than 30 consecutive days during the financial year a contribution is made.

To be “gainfully employed” a person must either be employed or self-employed for gain or reward in any business, trade, profession, vocation, calling, or occupation or employment.

The definition of “gain and reward” is particularly broad and does not limit itself to salary or wages. It includes business income, bonuses, commissions, fees or gratuities, in return for personal exertion.

If the contribution is made to an industry or retail fund, the person making the contribution is generally required to tick a box that states that the work test has been satisfied.

In the case where the contribution is made to an SMSF, a Work Test Declaration would typically suffice as proof the work test has been passed.

It is however essential to retain evidence of the work performed as there is always the risk of being asked (in the event of an ATO audit) to provide appropriate evidence that the work test has been met. If the ATO is not satisfied with the evidence provided, the contribution is likely to be disallowed.

Many questions have been asked about the work test over the years. The following is a compilation of answers to some of the most relevant questions.

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Dealing with tax and renting via Airbnb

27 May 2018

Airbnb is one of many examples of the “sharing economy” — connecting buyers (users) and sellers (providers) through a facilitator that usually operates an app or a website. Airbnb acts as this facilitator by allowing individuals, referred to as “hosts”, to rent out a room of their house or their whole house for a short-time basis via its online platforms.

While the focus here is on Airbnb, the tax concepts outlined could be applied in a more general sense to anyone seeking to rent out a part of their home, whether through Gumtree, Realestate.com.au, Flatmates.com.au and so on.

The tax issues raised relate to hosts who:

  • own their own home;
  • live in it full time; and
  • want to generate some dollars by putting up an identifiable area of their home for rent.

As a host, the three major tax considerations that you need to be aware of are rental income, rental expenses, and capital gains tax.

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Duties and taxes when you buy online from overseas

10 May 2018

Duties and taxes when you buy online from overseas

Items that you buy over the internet from an overseas source are generally required to abide by the same rules and screening processes that apply to any other “import”. Also the usual duties or taxes should apply.

Customs duties are regulated by the Department of Home Affairs (a recently formed body from December 2017, which now oversees the Australian Customs Service as well as Immigration and Border Protection).

Relevant facts to keep in mind include:

  • For goods that are worth $1,000 or less, there are at the present time no duties, taxes or charges to pay (however see below*).
  • For goods that are worth more than $1,000, you are generally required to fill out a special form called an Import Declaration, and pay duties, taxes and charges.
  • You will need to pay duties and taxes on some goods (like tobacco or alcohol) regardless of their value.
  • Certain types of goods are not allowed to be brought into Australia, such as firearms, or else need special permits.

The Department of Home Affairs may screen, x-ray or examine your goods just like any other imported items to make sure the goods are allowed into Australia. The Department of Agriculture may also need to clear and inspect items before they can be delivered to you.

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Have a HELP Debt? Leaving Australia? Worth a read

 14 May 2018

By Ashleigh Donaldson – Senior Accountant at i2 advisory

HELP Debt Recovery from Non-resident Australians

HELP Debt ChangesIf you have a HELP (Higher Education Loan Program) debt, from 1 July 2017, should you choose to pack your bags and intend to, or have already relocated overseas for more than 183 days in a 12-month period you must notify the Australian Taxation Office.

With what was estimated as $20-$30 million each year lost due to graduates moving overseas, the government is no longer prepared to foot the bill for your education should you choose to ditch Australia and chase the sun or snow overseas. For years it’s been known that should you relocate overseas with the view to never return it’s very likely your HELP debt would never catch up with you, I mean how could it? You’re no longer an Australian resident for tax purposes and based on the previous criteria, you were under no obligation to make any repayments…. Hallelujah! Continue reading “Have a HELP Debt? Leaving Australia? Worth a read” →

Stay Alert for Scams and Fraud

12 March 2018

The Australian Taxation Office (ATO) is committed to educating taxpayers on how to protect themselves against tax scams and identity theft. It says that up to the end of last financial year, $2.7 million was handed over to fraudsters, with about 2,500 individuals providing some sort of personal information to scammers, including tax file numbers.

Over the 2017 calendar year, the ATO’s Be aware of what you share video was viewed more than 800,000 times. The ATO also maintains multiple web pages with information for businesses and individuals about scams, covering topics such as identity security and protecting your information. The most popular page is Verify or report a scam. Continue reading “Stay Alert for Scams and Fraud” →

ATO Spells Out Its Big FBT Concerns

12 March 2018

March 31 and the end of the FBT year is around the corner, so to help taxpayers get things right, the ATO has made public the fringe benefits tax issues that attract its attention.

Broadly (not just in relation to FBT), the ATO says the following behaviours and characteristics tend to raise a red flag:

  • tax or economic performance not comparable to similar businesses
  • low transparency of tax affairs
  • large, one-off or unusual transactions, including transfer or shifting of wealth
  • tax outcomes inconsistent with the intent of tax law
  • lifestyle not supported by after-tax income
  • accessing business assets for tax-free private use
  • poor governance and risk-management systems.

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Rental Property Owners Lose Some Deductions

12 March 2018

Legislation that came into law in the last half of 2017 makes certain measures first announced with the 2017 Federal Budget now a reality.

The “housing tax integrity” bill solidifies the government’s intention to deny all travel deductions relating to inspecting, maintaining, or collecting rent for a residential investment property. As well, second-hand plant and equipment that came with an investment property are now off the table as far as depreciation goes.

The measures will apply from July 1, 2017, so will affect returns for the current financial year. However the changes to depreciation are dependent on when assets were purchased (more below).

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