2 December 2016

A recurrent topic of conversation and enquiry when it comes to possible tax deductions is when taxpayers travel to a work location, and the eligibility or otherwise of certain claims in regard to that travel.

Work-related travel is a hot focus area of the ATO as taxpayers can often get claims wrong.

While trips between home and work are generally considered private travel, you can claim deductions in some circumstances, as well as for some travel between two workplaces.

If your travel was partly private and partly for work, it is the general rule that you can only claim for the part related to your work.

Continue reading “Travel to a workplace: What’s in, what’s out” →

2 December 2016

You might be sick of the daily commute, or want more flexibility of hours – or it could be that you have a talent or skill and feel sure that this can translate into a fulfilling career in your own business. Or it could just be that the idea of working from home seems to offer a better work/life balance.

So if you’re in the position to be able to have your cake and eat it too, there just may be icing for that cake in the form of tax advantages.

Indeed Australian Bureau of Statistics (ABS) reports indicate that home-based work is prevalent in the Australian community. The 2006 Census showed that 426,523 Australians said they worked from home, and the 2011 survey had 443,939 similarly employed. The upward trend is expected to continue, and it will be interesting to see what data comes out of the recently completed 2016 Census.

Continue reading “5 tips to get home office deductions right” →

2 December 2016

Generally, if you rent out part or all of your home, the rent money you receive is  assessable. This means that you must declare your rental income in your income tax return, but you can also claim deductions for any associated expenses.

However, be warned. If you rent put part of your home, such as one room, you also may not be entitled to the full main residence exemption from capital gains tax (CGT). This means you will be required to pay CGT on part of any capital gain made when you sell your house.

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

Income and expenses

If you rent out your home at normal commercial rates you will generally be able to claim tax deductions for associated expenses, such as the interest on your home loan. But if only part of your home is used to earn rent, the ATO generally only allows deductions for the part of your expenses that relate to the rental income. As a general guide, you should apportion expenses on a floor-area basis – that is, based on the area solely occupied by the tenant, together with a reasonable figure for their access to the other general living areas.

Continue reading “Renting out part or all of your home” →

2 December 2016

Christmas parties and gifts can have Income Tax, GST and FBT consequences.  Please refer to the following flow charts that outline the often complex tax implications.
Continue reading “Christmas Celebrations – Implications for Businesses” →

2 August 2016

Many investment property owners may be missing out on valuable property depreciation entitlements, simply by not being up-to-speed on what is and is not depreciable.
Examples of assets that could qualify for tax deductions may surprise many taxpayers, and can even include items such as kids’ cubby houses or garden gnomes which form part of the investment property for example. But before you go out and splash cash on an upmarket Dopey or Sneezy, remember that conditions usually apply.
The ability to access the depreciation is limited to investors, and certain conditions and limitations may also have to be considered.

How do I claim a deduction?
Broadly speaking, depreciation and amortisation allow property investors to deduct a portion of the original cost of equipment and capital works on an investment property every financial year over the item’s “effective life” — which is the time over which the ATO or the legislation deems the depreciable asset will lose its value. Basically, the building and its assets are getting older and wearing out, so the ATO allows investors to claim part of their cost each year as a deduction.
Note special rules apply to building works deductions (see below).
Continue reading “House renovations: Overlooked tax deductions for investors” →

2 August 2016

The ATO has recently warned that it is continuing to see instances of scam emails, SMS messages or telephone calls where criminals try to steal money or information from taxpayers. These scams can be very convincing and many individuals fall victim to these each year.
To avoid becoming a victim, it is important that you know some of the common characteristics of a scam so that you can keep a sharp eye and ear out for potential fraudsters.
Continue reading “Tips to spot a scam (and what to do)” →

1 August 2019

Salary packaging is one way for an organisation to increase the take-home pay of its employees — and if done correctly, at no extra cost to the business but with a tax advantage to the employee.

What’s salary packaging?
Basically, an employee agrees with their employer to forego part of their future salary or wages in return for the employer providing benefits of a similar value. By paying for items out of pre-tax salary the employee can reduce taxable income. Benefits typically provided include cars by way of novated lease, provision of property (such as a computer) or payment or reimbursement of expenses.
For the employer, salary packaging has some advantages, such as the ability to attract employees, and it may also act as an incentive to reward employees.
Benefits that employees can package can be dependent on the type of organisation as well as the items the employer is willing to consider. There can however be additional administration costs to the employer in making sure that it is all processed correctly.
Continue reading “Considerations if your employee wants to salary package” →

27 July 2016

Be prepared

If you’re coming in soon to discuss your tax return for yourself or your business, try not to turn up completely empty handed, or at least come prepared with some records or access to them.
Being prepared is not only wise, but saves a lot of time and effort for both yourself and for us.
If you are a new client, it is always smart to arm yourself with last year’s tax return. This should have your personal details, tax file number, income streams, tax offsets, deductions, and other relevant information previously claimed. Also bring your latest bank account details in the event that you’re entitled to a refund.
If you use an online accounting solution, all or most your data should be available online for us to access. Most packages capture business transactions, and allow you to record data in real-time and in a format that we understand (as well as giving us access to it 24/7 so we can keep working on your return after the appointment is over).

What to bring?

Here is a brief general checklist of things to prepare for your tax return appointment. Not all of the following will be relevant for everyone, but will depend on your own circumstances. But as a checklist it should help you tick off what you do or don’t have in preparation for your next visit.

Continue reading “What you need to bring to your tax return appointment” →

20 October 2015

It’s something of a little white lie, isn’t it — the one told to aspiring small business owners and entrepreneurs is that hard work guarantees success.

Hard work is vital, but it’s not the only quotient. And while you may be told by starry-eyed blog writers or charismatic motivational speakers that you can’t lose if you try hard enough, the third of new businesses that fail each year can attest to a different reality.

In our experience, a lot of businesses fail because they don’t plan the tax side of things well enough. From payroll tax to super guarantee contributions to GST, we’ve seen businesses blindsided by hefty penalties and tax debts because they put their obligations out of sight and mind.

Here are the five most common tax mistakes that can trip up a small businesses – avoid these mistakes, and you’re likely to more than double your chances of making it.

Continue reading “Top 5 avoidable tax mistakes small business owners keep making” →

13 September 2015

Here are some misconceptions about deductions that many taxpayers commonly believe to be claimable, but are typically rejected by the Tax Office. While some are obviously not allowable, they have all been genuinely attempted to be claimed — and in most instances knocked back. Other disallowed claims, however, may surprise.

While the Tax Office may reject the following in the first instance, taxpayers who believe they have a “reasonably arguable position” should consult this office for more advice.

Continue reading “Tax deductions misconceptions: What you can’t claim” →