7 July 2019

When completing your tax return, you’re entitled to claim deductions for some expenses, most of which are directly related to earning your income.

To successfully claim a deduction for work-related expenses, it’s important that you must have spent the money yourself and weren’t reimbursed, it must be directly related to earning your income, and importantly you must have a record to prove it.

You can only claim the work-related part of expenses. If an expense relates to both work and personal use, the ATO will expect that you apportion use on a reasonable basis and only claim the work-related portion.

Continue reading “Records for claiming work-related expenses” →

25 April 2019

If you produce assessable income at home, or some of it, and you incur expenses from using that home as your “office” or “workshop”, the ATO will generally allow that a taxpayer could be in a position to be able to claim some expenses and make some deductions. Otherwise the ATO takes the view that expenditure associated with a person’s place of residence is more likely to be of a private nature.

Continue reading “The approach to tax when you’re working from home” →

25 March 2019

There are times when getting a valuation becomes necessary, especially to estimate the cost of transactions that are not arm’s-length or when no actual cash changes hands.  A common example of this is in respect of property, and especially for transactions when a valuation is necessary for tax purposes.

For example, let’s say that Humbert transfers his rental property to his daughter Dolores for no consideration. The tax law, specifically the CGT rules, requires that the transfer be made at “market value”. If Humbert has held the property for a lengthy period of time and the property has increased significantly in value at the time of transfer, then he could be up for quite a hefty CGT bill, even with the general discount. This is so even though he has not received a single cent by gifting his property.

Continue reading “When valuations of property are important for tax” →

6 March 2019

The ATO recently highlighted significant non-compliance with the rules prohibiting taxpayers claiming travel expenses related to residential rental properties.
Late last calendar year, the ATO revealed that it had identified 26,000 taxpayers who had incorrectly claimed deductions for travel to rental properties during tax time 2018, despite recent changes to the law in this area.

New rules, introduced just over a year ago (and therefore perhaps not ingrained in many people’s minds), mean that investors can no longer claim travel expenses relating to inspecting, maintaining or collecting rent for a residential rental property as deductions, unless they are carrying on a rental property business or are an excluded entity.

This measure was introduced to address concerns that some taxpayers were claiming travel deductions without correctly apportioning costs where there was a private component to the travel, or claimed travel costs that were exclusively for private purposes.

Continue reading “Rental travel expenses mostly off the table” →

5 February 2019

Being able to make claims for work-related travel expenses is generally an enviable deduction situation, and one that a good many taxpayers would like to achieve — especially given that the status of being deemed an “itinerant” worker brings with it an expectation of a lot of travel kilometres.

While itinerant work is generally held to be undertaken by certain trades or classifications of workers, such as those working in primary production or mining, “itinerancy” can equally apply to any individual worker subject to their employment satisfying certain characteristics and criteria.

Broadly, the definition of “itinerant” refers to shifting places of work. However, as the term is used by the ATO in determining eligibility to make claims for certain travel expenses, it is important to get it right.
Continue reading “Travel expense claims: the term ‘itinerant’ needs clarity” →

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.
Continue reading “Consumers Compensated by Financial Institutions Still Need to Consider Tax” →

11 November 2018

It’s not quite Christmas time yet, but most businesses will be in the process of thinking ahead to the yuletide festivities, if not already into well-advanced planning. One of the perennial questions is if and how fringe benefits tax applies to these activities.

Continue reading “The work Christmas party” →

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.

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