Self-employed? You could claim a deduction for saving for your retirement

7 January 2019

A change to the rules around superannuation means that more Australians may be eligible to claim a tax deduction for putting money into super.

Before June 30, 2017, if more than 10% of your income was sourced from salary or wages from an employer, you were rendered ineligible to claim any tax deduction for after-tax contributions you may have made to your superannuation fund.

But this rule has been removed, effective for the 2017-18 financial year and onwards, so now anyone who puts their own money into super — called personal contributions or (in the lingo of superannuation professionals) non-concessional contributions — may be able to claim a tax deduction for it.
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Consumers Compensated by Financial Institutions Still Need to Consider Tax

16 December 2018

With the ongoing financial services Royal Commission, and likely future cases brought before various courts for compensation — or indeed the present building of class action lawsuits on the back of various revelations to come out of the Royal Commission — the ATO has felt the need to run over the rules (as they stand) regarding the taxation of compensation paid to individuals for advice from financial institutions.
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Shares and tax: A stockmarket investment primer

12 November 2018

Investing in the stockmarket is a lot more common than it was years ago, with ordinary Australians having experience with shares and the stockmarket either directly or through managed funds or via their superannuation fund.

Recent research conducted by the Australian Securities Exchange (ASX) found that around 60% of Australians hold share investments outside of their institutional superannuation fund, and 31% directly own listed investments. Over the past five years the proportion of 18 to 24 year olds investing in shares has doubled from 10% to 20%, and over the same time the proportion for 25 to 34 year olds has increased from 24% to 39%.

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Renting out part or all of your home

1 November 2018

If you rent out part or all of your home, the rent money you receive is generally regarded as assessable income. This means:

  • you must declare your rental income in your income tax return, and you can claim deductions for the associated expenses
  • you may not be entitled to the full main residence exemption from capital gains tax (CGT), which means you’ll have to pay CGT on part of any capital gain made when you sell your home.

Goods and services tax (GST) doesn’t apply to residential rents, so you’re not liable for GST on the rent you charge, but also you can’t claim GST credits for associated costs.

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A tax boost for low and middle income earners

15 September 2018

If you or anyone you know are earning income at lower or middle income levels, there’s a new tax offset that has been available since July 1 that was originally announced in the 2018 federal budget last May. But no-one will see any benefit from the new Low and Middle Income Tax Offset (LMITO) until about a year from now, when a lump sum credit will be recorded in next income year’s tax assessment, courtesy of the ATO.

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Claiming self-education expenses

18 August 2018

The value of a good education is widely accepted, and it is a common experience over one’s working lifetime to find that further learning is required along the path of one’s chosen career.

Changing technology and evolving workplaces means that at some stage in every taxpayer’s life, an educational re-boot could become necessary — as the adage says, “you’re never too old to learn”. Therefore supplementary education mid-career is a valuable, and hopefully income-boosting, pursuit.

Funding for that education however is another consideration, although this is generally also seen to be worthwhile pursuing — to use another quote, “if you think education is expensive, try ignorance”. Fortunately, Australia’s tax system is set up to provide some breaks to help the motivated among us get ahead.

To be able to claim certain expenses relating to self education is a tax concession that is not to be overlooked, but to be eligible your present employment and the course you undertake must have sufficient connection for the self-education expenses to qualify as a work-related tax deduction.

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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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