ATO Tax Time focus areas

29 June 2023

With the end of the financial year on our doorstep, the ATO has announced its three key focus areas for 2022-23 Tax Time – rental property deductions, work-related expenses, and capital gains tax (CGT). To maximise your claims in this area and protect yourself from ATO audits and adjustments, be sure to keep the appropriate records.

Work-related expenses

This year the ATO is particularly focused on ensuring taxpayers understand the changes to the working from home methods and are able to back up their claims. To claim your working from home expenses as a deduction, you can use the actual cost method, or the revised fixed rate method, provided you meet the eligibility and record-keeping requirements as follows:

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How to claim an early tax deduction on SG contributions

24 June 2023

Are you an employer who needs to make superannuation guarantee (SG) contributions for your employees? If so, it may be worthwhile bringing forward these SG contributions to before 1 July to benefit from a tax deduction this financial year.

However the timing of when SG contributions are deductible to an employer can be tricky if employers pay SG contributions for their employees via a superannuation clearing house (SCH).

Recap – what is a SCH?

The ATO’s free Small Business Superannuation Clearing House (SBSCH) is the only ‘approved’ clearing house – none of the many commercial clearing houses have this status. The SBSCH is a free service that small businesses with 19 or fewer employees, or an annual aggregated turnover of less than $10 million, may use to make superannuation contributions to employees.

The SBSCH aims to reduce compliance costs for small business employers by simplifying and streamlining the process of making employee superannuation contributions, by allowing employers to make a single lump payment of their contributions to the SBSCH each quarter. That lump sum payment is broken into individual payments by the SBSCH, and then contributed to each employee’s respective super fund or RSA.

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Generous depreciation in its final days

7 June 2023

The May federal budget confirmed that temporary full expensing (TFE) is now in its final days.

To recap, TFE will cease and be replaced by a $20,000 instant asset write-off (IAWO) from 1 July 2023.

Under this change, small businesses (aggregated annual turnover of less than $10 million) will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2024. Assets valued at $20,000 or more (which cannot be immediately deducted) will be placed into a small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter.

For larger businesses, the write-off threshold is cut to $1,000 also from 1 July 2023.

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Super pensions and the Commonwealth Seniors Health Card

4 June 2023

Are you a self-funded retiree who does not qualify for the Age Pension? If you’ve answered yes, then help may be available for certain living expenses by way of the Commonwealth Seniors Health Card (CSHC).

What is the CSHC?

The CSHC is a concession card enabling access to cheaper health care and some discounts if you’ve reached Age Pension age.

Benefits of the CSHC

With a CSHC you may receive benefits such as:

Cheaper medicine under the Pharmaceutical Benefits Scheme (PBS)
Bulk billed doctor visits – this is up to your doctor
A refund for medical costs when you reach the Medicare Safety Net, and
Depending on your state or territory government and local council, lower electricity and gas bills, property and water rates, and public transport.

Who can get the CSHC?

To get this card you must meet all of the below conditions:

Be of Age Pension age or older
Meet residency rules
Not be receiving an income support payment (such as the Age Pension) from Centrelink or the Department of Veterans’ Affairs
Give Centrelink your Tax File Number (including your partner’s TFN) unless you’re exempt from doing so
Meet identity requirements, and
Meet the income test.

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Employee or contractor? – the Federal Court weighs in

13 May 2023

A recent Federal Court case has highlighted important superannuation guarantee (SG) implications for businesses that engage certain types of contractors.

Background facts

The case of Jamsek v ZG Operations Australia Pty Ltd (No 3) [2023] FCAFC 48 (24 March 2023) concerned two truck drivers who previously drove delivery trucks for a company, ZG Lighting, and its related and predecessor companies for just under 30 years. The drivers provided their services via a partnership with their spouses.

The drivers commenced proceedings against ZG Lighting claiming they were employees for the purposes of section 12(3) the Superannuation Guarantee (Administration) Act (1992).

In the first appeal decision more than two years ago, the Federal Court held that Mr. Jamsek and his colleague Mr. Whitby were employees of ZG Lighting within the ordinary, common law, meaning of that term.

The court, in the first appeal decision, did not consider whether the ‘expanded meaning’ of employee in section 12(3) applied.

The expanded meaning provides that “if a person works under a contract that is wholly or principally for the labour of the person, the person is an employee of the other party to the contract”.

On appeal, the High Court held that the workers were not employees within the ordinary, common law meaning of that term and remitted the matter back to the Federal Court to determine whether Mr. Jamsek and Mr. Whitby were ZG Lighting’s employees within the expanded meaning in s 12(3). That is, were the two workers engaged under contracts that were wholly or principally for their labour? If yes, then an SG obligation arose. That was the question that the Federal Court turned its mind to in March 2023.

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Top cyber security tips for business

13 May 2023

It is important you keep all your business, staff and client information secure. If your data is lost or compromised, it can be very difficult, time consuming, and costly to recover.

The federal government have created a list of top security tips to help keep your and your clients’ information safe.

Use strong and secure passwords

Regularly change passwords and do not share them.

Use multi-factor authentication where possible. This requires users to provide multiple pieces of information to authenticate themselves – for example, a text message to your phone when logging in to a website.

As a business owner, remember:

multi-factor authentication puts an additional layer of security on your accounts, making it harder for others to access your account
consider using a password that includes numbers and symbols which is easy for you to remember but difficult for someone to guess (for example, P!ne@pp1eP!zz@).

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FBT and car logbooks

15 April 2023

With the end of the FBT year now here, are your car logbooks in order?

The operating cost method is used by many employers to calculate their car FBT liability. This method is particularly effective where the business use of the vehicle is high. Keeping a logbook is essential to use the operating cost method.

Employees need to prepare a logbook for any vehicle that you provide them with where there is an element of private use. The logbook period is for 12-weeks, which must be representative of typical usage. For example, a period where an employee is taking a block of annual leave is not representative.

Where employees share a vehicle during a year, each employee will need to prepare a logbook to substantiate their respective business use percentage.

Logbooks are valid for five FBT years (including the year the logbook is prepared), provided there is no significant change in the vehicle’s business use. Once the five-year period expires, a new logbook will need to be kept if you wish to continue using the operating cost method. Therefore, if a logbook was last prepared in 2017/18, a new logbook is required for this FBT year (2022/23).

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Alliott Global Alliance Expands in Australia Through Appointment of i2 Advisory

27 March 2023

Alliott Global Alliance (‘AGA’), one of the largest and fastest-growing global multidisciplinary alliances with 215 member firms in 95 countries, has expanded its Australasian alliance by signing an agreement with Adelaide based i2 Advisory Chartered Accountants (‘i2 Advisory’).

Founded in 2012 and based in South Australia’s capital city, Adelaide, i2 Advisory is a seven-partner firm that offers accounting, tax compliance, business, and tax advisory, superannuation financial planning (i2 Wealth) and bookkeeping services.

The firm’s experienced partners are all ex-Deloitte and are supported by a team of professionals with backgrounds in property syndicate advising, business investment and long-term partnerships. Key sectors they provide services to include manufacturing, agribusiness, retail, health, high net worth individuals, hospitality & tourism, property, and private investors.

After achieving an impressive 13% growth over the last two years, the firm is looking to continue to expand its business consulting, property, and manufacturing services in the immediate future. Business is conducted at the firm in the Italian, Cantonese, Mandarin, Urdu, Hindi, Marathi, and English languages.

Partner David Inglis comments:

“By joining Alliott Global Alliance, we see an opportunity to allow us to maximise upon and build new trusted relationships with members in the region and globally, share best practices, expand on current client opportunities, and find support for our growing list of clients’ multijurisdictional needs that stretch beyond Australian borders.”

“For AGA and its members, we can add tangible value in this important and major global economy, and we are delighted to be AGA’s accounting and tax representative in South Australia.”

Alliott Global Alliance’s CEO, Giles Brake adds:

“Australia is the gateway to many international markets and is highly attractive to corporate and high net worth investors. Our growth strategy in the region is to appoint leading local accounting and law firms to represent us in the key business hubs. We are therefore delighted to welcome one of Adelaide’s fastest-growing firms, i2 Advisory. They join a growing group of well established, independent firms in the region that need to service their clients beyond their state and national borders. A very warm welcome to the i2 Advisory team.”

Through affiliation with AGA, local independent law and accounting firms can offer clients global reach and access to an extensive range of professional services that enable them to compete head-on with the larger international firms in their jurisdictions. Across the Asia Pacific region, AGA has member firms in China, Hong Kong, Bangladesh, Singapore, Indonesia, Malaysia, India, Australia, Papua New Guinea, New Zealand, Japan, South Korea, Nepal, Pakistan, Thailand, Taiwan, the Philippines, and Vietnam.

About i2 Advisory Chartered Accountants:

As Alliott Global Alliances’s accounting and tax member firm in Adelaide, the team at i2 Advisory are dedicated to working closely with individuals and business owners locally and internationally to improve productivity, cash flow and importantly the life of those involved and has delivered impressive results since commencing practice in 2012.

With no issue too big or too small, i2 Advisory offers an extensive range of tax and business advisory services with a focus on providing clients with optimum results to develop wealth and continue to build success. Open, regular communications ensure there are no surprises, assuring clients peace of mind.

Seven experienced directors and a team of over twenty diversely trained and enthusiastic professional staff are the key to i2 Advisory’s success and their expanding client base, with the firm’s proud differentiator being their hands on approach and ability to assist organisations with key steps involved with the implementation and strategic management of operating their businesses.

About Alliott Global Alliance:

Founded in 1979, and with 215 member firms in 95 countries Alliott Global Alliance is an international alliance of independent, law, accounting, and specialist advisory firms, working across the world Together as One.

Each of our members share a common goal: to learn and share knowledge, resources, and opportunities to make the world smaller and their businesses stronger.
We work with a spirit of generosity and openness — so that together, we can continue to fulfil our ambitions, gain greater experience, and drive mutual success.

Alliott Global Alliance is expanding fast, and the alliance has its sights set firmly on growing its legal and accounting membership to 100 countries. Opportunities are available to independent professional firms in specific countries in Africa, but also in Europe, China, the ASEAN region, Australasia, the Gulf Cooperation Council region, Central and South America and in North America. For information about membership email membership@nullalliottglobal.com.

Super in 2023

18 March 2023

Already rolling into March…2023 is flying by!

From a superannuation standpoint, following are just some of the changes you can expect this year:

Super guarantee increase

Employers face an increase to their SG liability this year. The rate of SG will increase from 10.5% to 11% from 1 July 2023, before gradually hitting 12% on 1 July 2027.

SG is payable on ordinary time earnings (which therefore excludes overtime payments) and may be payable to contractors as well as employees. A liability to a contractor will arise where the contract they work under is wholly or principally for their labour or skills.

The increased rate of 11% will need to be applied to any payments of ordinary time earnings made on and after 1 July 2023, even if some or all of the relevant pay period relates to work performed before 1 July.

A cap to end all caps

As was announced on 28 February by the current government, a cap on the amount you can have inside superannuation taxed at 15% (not just in a tax-free retirement account) may be imminent. At present, the amount of super on which earnings are taxed at just 15% is unlimited. The government has announced that this 15% rate of tax will be limited to $3 million. Earnings on amounts exceeding that, will be taxed at 30% from 1 July 2025, the government has announced. However, even if this cap finds its way into law, 99.5% of individuals will not be impacted as they hold less than $3 million in their super fund

An extra $200,000 into super this year

Although indexation has adversely contributed to the cost of living, it does have a superannuation upside!

The massive 7.8% inflation rate has triggered what’s called a double indexation in super – and means that the amount of money that can be put into tax-free super is going to turbocharge super contributions.

From July 1, the amount an individual can have in super where the earnings are tax-free when commencing retirement phase will jump from $1.7 million to $1.9 million. This is a significant change – the tax-free limit has only moved higher once since it was introduced in 2016 (moving by $100,000, from $1.6 million to $1.7 million). The $200,000 increase is a formality unless the government announces an indexation freeze in the upcoming May federal budget.

New work from home record keeping requirements

4 March 2023

Are you one of the five million Australians who claim work from home deductions? If so, stricter record-keeping rules may now apply.

For this financial year and moving forward, there are now only two methods to calculate your work from home claim:

Revised fixed rate method (with new rules applying)
Actual costs method (unchanged).

The actual costs method has never been all that popular because you need to keep records of every expense incurred and depreciating asset purchased, as well as evidence to show the work-related use of the expenses and depreciating assets. By way of example, to claim electricity expenses, the ATO suggests that you need to find out the cost per unit of power used, the average amount of units used per hour (power consumption per kilowatt hour for each appliance) and the number of hours the appliance was used for work-related purposes.

For this reason, the fixed rate method has been preferred (or in recent years the COVID shortcut method where you could simply claim 80 cents for each hour worked from home. Note, however, that the COVID-method is no longer available).

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