18 February 2017

Home office expense claims are subject to the same general substantiation requirements as other deductions – that is, it is a requirement that records should be kept for at least five years.

But in practice, full compliance with the substantiation rules may be difficult. It may be simple to keep a receipt for a printer purchased for a home business, but not so easy to prove the deductible proportion of a specific utilities bill. So the ATO has provided some administrative guidelines to ease this burden.

Continue reading “Home office deductions: What substantiation will the ATO accept?” →

2 February 2017

The ATO has issued guidance on making claims for mobile phone use as well as home phone and internet expenses.  It says that if a taxpayer uses any of these for work purposes, they may be able to claim a deduction if there are records to support claims. But the ATO points out that use for both work and private use will require a taxpayer to work out the percentage that “reasonably relates” to work use.

Substantiating claims
The ATO requires that records are kept for a four-week representative period in each income year to claim a deduction of more than $50. These records can include diary entries, including electronic records, and bills. “Evidence that your employer expects you to work at home or make some work-related calls will also help you demonstrate that you are entitled to a deduction,” its guidance says.

Continue reading “Substantiation for Mobile, Home Phone and Internet Costs” →

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” →