Are Those Investment Returns on Revenue or Capital Account?

30 November 2017

Investment returns can be on revenue or capital account. Similarly investment expenditure could also be on revenue or capital account. The distinction between revenue and capital is not always clear and the characterisation of a receipt will ultimately depend on the circumstances that apply to the taxpayer.

The distinction between an income and capital receipt has been likened to the fruit and the tree, where the capital amount is the tree and the fruit being the return of income from the capital. Generally an income receipt is regarded as an amount that is regular, recurrent or periodic and income tax applies to a net amount of income. A good example is dividend returns from a shareholding.

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Small Business Car Parking FBT Exemption

28 November 2017

A business becomes liable for fringe benefits tax where it provides car parking benefits in the form of a car parking facility for more than four hours on its premises to its employees, and the relevant car parking facility is situated within one kilometre of a commercial car park where the minimum all day cost is more than the current parking fringe benefit threshold ($8.66 a day for the 2017-18 FBT year).

  • Note that this one kilometre is a radius, and “by the shortest practicable route, from a car entrance to those premises”. Also this can be travelled by any means, as long as this produces “the shortest practicable route”.

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Immediate Deductions for Start-up Costs

28 November 2017

Historically, taxpayers may have been able to claim a deduction for the costs associated with setting up a business or raising finance, including the costs incurred in:

  • establishing a company or other business structure
  • converting a business structure to a different structure
  • raising equity for the business
  • defending it against a takeover
  • unsuccessfully attempting a takeover
  • stopping carrying on business (including liquidating a company).

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Considering ride-sharing for income? Tips and traps

4 November 2017

Have you or someone you know considered taking up ride-sharing (also called ride-sourcing) to earn extra income, or even as an alternative form of employment? When providing ride-sharing services through Uber or GoCatch and other facilitators for a fare, there are things you will need to know, and traps you need to be aware of.

The first issue to make plain however depends on if you have already started offering ride-share services without considering the tax outcomes. If this is indeed the case, be pre-warned that come financial year’s end there’s a very real possibility that you may have built up a tax debt. Some drivers can be former salaried workers who don’t always realise how small business works (and may not even realise they are a small business now), and many think of sharing-economy services as “money on the side” without realising that tax rules still apply.

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Accelerated Depreciation for Small Business

15 August 2017

In the 2015-16 federal budget, the government increased the small business immediate deductibility threshold from $1,000 to $20,000, which was originally due to end at June 30, 2017. But a law amendment bill has recently been passed by Parliament that extends that measure by 12 months until June 30, 2018, after which the deductibility threshold will revert to $1,000.

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Tax and the Sharing Economy

15 August 2017

he concept of a “sharing economy” has been around for long enough now to have had a very real impact on how we transact. Think Uber, think Airbnb.

By now, most people will have realised that the “sharing” part of the concept does not refer to an absence of any monetary exchange, but rather to the use and access of shared physical or human resources or assets. The means of these transactions is usually conducted online, and there are many who therefore argue that rather than “sharing economy” a more accurate term that could or should have been adopted would be “access economy”.

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Be Prepared: What You Need to Bring to Your Tax Return Appointment

15 August 2017

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 to turn up prepared with some records or electronic access to them.

To “be prepared” is not just a great scouting motto, but a wise approach for everyone, especially at Tax Time. It will also save 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 or access to it if online. This should have your personal details, tax file number, income streams, tax offsets, deductions, and other relevant information previously claimed. Also have your bank account details in the event that you’re entitled to a refund.

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Claiming the cost of travelling to our office to manage your tax affairs

5 August 2017

The ATO recently issued what it calls a “tax determination” which more clearly spells out the circumstances of what may be an allowable claim (under the general heading of “managing tax affairs”). The fact that you can deduct the fee that we charge you is the most widely known of these allowable deductions, but not everyone is aware that you can also make a claim for the costs of travel you incur where the purpose of the journey is to have your tax return prepared.

The Taxation Commissioner’s view, as stated in the tax determination, is that such costs should be deductible. But, as with deducting the fee charged for such professional services, a non-negotiable stipulation is that the task must be carried out by a “recognised tax adviser”.

The costs included in allowable claims (that are involved with managing tax affairs) include accommodation, meals, public transport fares and even travel insurance. Continue reading “Claiming the cost of travelling to our office to manage your tax affairs” →

Getting deductions for clothing and laundry expenses right

24 June 2017

The ATO allows certain taxpayers to claim a deduction for the cost of buying and cleaning occupation-specific clothing, items of protective wear and for certain unique, and usually distinctive, uniforms.

To claim a deduction it is generally expected that you will be able to provide evidence that you purchased the clothing concerned, and will have diary records or other evidence of your cleaning costs.

If you receive an allowance from your employer for clothing, uniforms, laundry or dry-cleaning, it will be necessary for us to show the amount of this allowance on your tax return.

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