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:

1. Revised fixed rate method (with new rules applying)
2. 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).

Continue reading “New work from home record keeping requirements” →

4 February 2023

The ATO has released its new year resolutions…and there is not a gym in sight! According to the ATO the five new year’s resolutions to keep if you want to stay on top of your tax and super in 2023 are:

1. Know if you’re in business or not

Are you earning an increasing income from a side-hustle?

If you answer yes to a few of the following questions, the more likely it is your activities are a business:

• Do you intend to be in business?
• Do you intend and have a prospect of making a profit from your activities?
• Is the size or scale of your activity sufficient to make a profit?
• Are your activities repeated and continuous?
• Are your activities planned, organized, and carried out in a business-like manner? For example, do you:
  • keep business records and have a separate business bank account?
  • advertise and sell your goods and services to the public, rather than just to family or friends?
  • operate from business premises?
  • maintain required licences or qualifications?
  • have a formal business plan or budget?
  • have a business name or an ABN?

We can help you make this call as to whether your side-hustle may be a business.

Continue reading “ATO New-Year Resolutions” →

13 December 2022

The ATO has issued new draft guidelines around a new method (the revised fixed rate method) of calculating work-from-home running expenses from 1 July 2022 (as an alternative to calculating the actual work-related portion of all running expenses).

The new revised fixed rate method will replace both:

• the 52 cents fixed-rate method set out in paragraph 5 of Practice Statement PS LA 2001/6 (for electricity and gas expenses, home office cleaning expenses and the decline in value of furniture and furnishings), and
• the short-cut (COVID-19) 80 cents method (for all additional running expenses).

You are eligible to use the revised fixed-rate method from 1 July 2022 if you:

• work from home to fulfil your employment duties or to run your business (a separate home office or dedicated work area is not required)
• incur additional running expenses that are deductible, and
• keep and retain records of the time spent working from home and of the additional running expenses incurred.

Continue reading “New work from home deduction rules” →

5 December 2022

Christmas is traditionally a time of giving, including employers showing gratitude to their workers for a job well done throughout the year. However, depending on the nature and value of the gift, and also who it is gifted to, such magnanimity can potentially attract unwanted tax consequences. So how as an employer do you gift most tax-effectively this festive season?

Continue reading “Xmas gifts from employers” →

2 November 2022

Business and Individual Taxation

The confirmation of lucrative income tax cuts, and the scrapping of a tax offset for low and middle-income earners were the big-ticket items. That said, labor’s first federal Budget in nine years was as noteworthy for the changes it didn’t make as for those that it did. Unmentioned were current outstanding issues impacting the taxation of trusts, the long-awaited simplification of 7A, the future of business depreciation after this financial year and more.

Continue reading “Federal Budget” →

6 July 2022

With residential property values on a sharp upward trajectory, from a tax standpoint, what does this mean for owners and investors of this style of dwelling?

 Introduction

Domain’s End of Year Wrap revealed that in 2021, Australian house prices rose an astonishing 21.9%, the fastest annual rate of growth on record! Viewed through a taxation prism, these increases mean practically nothing unless the owner is selling or otherwise disposing of their property. If the property is retained, then the increases are merely a “paper gain”. By holding onto the property there generally won’t be any CGT consequences.

The obvious question then arises, what are the consequences from a tax perspective where an owner does decide to cash in on the boom and sell their residential property?

Continue reading “Tax and Property Price Increases” →

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” →