8 June 2022

In the middle of May, the ATO announced that there will be four focus areas on their radar during Tax Time 2022 – record-keeping, work-related expenses, rental property income and deductions, and capital gains from crypto assets. It is reminding taxpayers that there are three golden rules when claiming a deduction:

1. You must have spent the money yourself and weren’t reimbursed
2. If the expense is for a mix of income producing and private use, you can only claim the portion that relates to producing income, and
3. You must have a record to prove it.

Continue reading “Four priorities for the ATO this Tax Time” →

9 April  2022

March 31 marks the end of the 2021/2022 fringe benefits tax (FBT) year which commenced 1 April 2021. It’s time now for employers and their advisors to turn their attention to instances where non-cash benefits have been provided to employees, and also where private expenses have been paid on their behalf.

Although it will generally fall to your accountant to prepare the FBT return, it may not always be apparent to them from your software file or other records, all of the instances where you have provided employees and their associates (e.g. spouse) with a potential fringe benefit. To assist you in bringing these potential benefits to the attention of your accountant, following is a general checklist (non-exhaustive):

Cars

• Did you provide or make available a car that your business (or an associate of the business) owned or leased, to an employee or their associate for private purposes?

Exemptions include minor, infrequent and irregular non-work-related use by an employee of certain commercial vehicles.

• Did you as an employer reimburse expenses of an employee in relation to a car they owned or leased?

Exemptions include where the business compensates the employee on a cents per km basis for estimated travel and where the car has not been used for private purposes.

Loans

• Did your business provide a loan to an employee or their associate?

Exemptions include where the loan is strictly related to meeting an employment expense (which must be incurred within sixth months of the loan being made).

Exemptions also include loans made by private companies to employees who are also shareholders but the loan is Division 7A compliant.

Continue reading “FBT Year-End Checklist” →

13 December 2021

Imagine you’re lucky enough to inherit, say, four post-CGT rental properties from a deceased parent – but what happens when your sibling also inherits a half-share of these?

While you both acquire a very valuable 50% interest across four properties, it’s safe to say that in most scenarios, you’d both rather have a 100% interest in two of them.

Continue reading “Inheriting rental properties jointly A dilemma?” →

26 October 2021

We know you want to get your tax right, so it may help you this tax time to know how to avoid making what the ATO has found are the most common tax mistakes.

To do this make sure you have:

• declared all income, including cash and online sales, dividends, interest, capital gains or one-off transactions such as selling equipment
• accurately recorded the value of goods taken for private use and directors’ fees or other money drawn out of your business
• correctly apportioned expenses that are used both privately and in your business, including adjusting your rent expenses if you store personal assets at your business premises
• only claimed expenses you’re entitled to claim (for example capital improvements can’t be written off as a repair)
• correctly claimed any business losses.

It’s important to have good records that are up to date. It can help to have a dedicated business bank account to help keep business transactions separate from your other finances.

Continue reading “Avoid common mistakes in your business return, and include appropriate income” →

16 June 2021

When you sell or otherwise dispose of real estate, the time of the event (when you make a capital gain or loss) is usually when one of the following occurs:

• You enter into the contract (the date on the contract), not when you settle. The fact that a contract is subject to a condition, such as finance approval, generally doesn’t affect this date.
• The change of ownership occurs if there is no contract – such as when a property passes to a beneficiary.
• The real estate is compulsorily acquired – the time of the event is earliest of
  • when you receive compensation from the acquiring entity
  • when the entity became the property’s owner
  • when the entity enters the property under a power of compulsory acquisition or takes possession under that power.

Continue reading “When it comes to real estate and CGT, timing is important” →

13 March 2021

While the ATO has lately been focusing on the rollout of stimulus measures, it has also flagged that audit work is not off the table completely.

In late July, when the ATO fronted a parliamentary Senate Select Committee on COVID-19, its representative said plans were to start tax audits sometime between September and October 2020. Time and efforts however were diverted to the rollout of the JobKeeper scheme and other stimulus measures, with the ATO sourcing staff for this work by redeploying people from initiating audits, saying it had been a “conscious choice” not to initiate new audits during the peak of the pandemic.

But that, as they say in the classics, was then — and this is now. The takeaway for everyone is that audits will not go away, and will come at some point, so taxpayers and SMSF trustees need to have their affairs in order.

Continue reading “Both tax and SMSF audits on still on ATO’s radar, but some leniency given” →

11 December 2020

Over the first quarter of this financial year, the government has initiated two new data matching programs, using data that the ATO holds.

Data matching involves bringing together data from different sources and comparing it. For example, records from different agencies or businesses are compared, with the results possibly identifying people who are being paid benefits to which they may not be entitled, or people who may not be paying the right amount of tax.

Continue reading “New data matching programs initiated by Federal Government” →

11 December 2020

The Federal Budget measure of allowing businesses to fully write-off eligible assets is a boon to Australian businesses, even though the measure is temporary. Just to recap, businesses with aggregated annual turnover of less than $5 billion will be able to deduct the full cost of eligible capital assets acquired from 7:30pm AEDT on 6 October 2020 (Budget night) and first used or installed by 30 June 2022.

“Full expensing” in the year of first use will apply to new depreciable assets and the cost of improvements to existing eligible assets. For small- and medium-sized businesses (with aggregated annual turnover of less than $50 million), full expensing also applies to second-hand assets.

Continue reading “What the “full expensing” write-off deduction means for business” →