What can I claim against my tax?

What can I claim against my tax?

It’s tax time again. What can you claim to reduce your tax?

Take two minutes to read this blog article and we’ll explain:

  • Deductions you can claim
  • The importance of a fantastic tax accountant
  • The “tax trap” you need to avoid
  • Links to more information about specific deductions

 

Deductions you can claim

According to the Australian Taxation Office (ATO) website, there are three things you need to claim a work-related deduction:

  1. You must have spent the money yourself and weren’t reimbursed;
  2. It must be directly related to earning your income; and
  3. You must have a record to prove it.

 

The ATO allows you to claim up to $300 for work related expenses without having kept any receipts – but you must have spent the money and it must be related to your employment.

If the expense was for both work and private purposes, you can only claim a deduction for the work-related portion.

If the cost of any item is over $300, it will have to be depreciated (a portion of the cost claimed each year over its effective life).

 

The importance of a fantastic tax accountant

Many accountants seem to be working for the ATO. Instead of trying to maximise what you claim, they’re often too scared of upsetting the ATO rather than fighting to get you the largest legal tax deductions.

Rather than using an accountant who “works for the ATO” – use an accountant who works in your best interest.

At James Gock & Co – we’ll help you to claim every last dollar you can, and make sure you stay out of jail by not claiming anything you shouldn’t. Our team are aware of everything you can and can’t claim and what you should do this year to give you a bigger tax refund next year.

Our extraordinary accountants are all highly trained specialists at legally reducing your tax – so talk with us today!

 

The “tax trap” you need to avoid

Everyone wants to increase their tax refund (or reduce their tax payable). We’re here to help you to do this!

Tax saving strategies generally involve you spending money on “something” which creates for you a tax deduction. The “something” you spend your money on could be an expense, an asset, or an investment related payment (like superannuation or prepaid interest on an investment loan).

However – please don’t fall into a common trap of spending money just to get a tax deduction. You only save tax based on the marginal tax rate proportion on the amount you spend, NOT the full amount you spend.

For example, if you earn say $85,000 a year, your marginal tax rate (including Medicare levy) is 34.5%. This means any extra dollar you earn will be taxed at 34.5%, and any extra dollar you claim as a deduction will save you 34.5%.

So, if you spend $100 on something that you can claim a deduction for, you will get back $34.50 from the ATO. But it will still cost you $65.50. So only spend money on what you NEED, not just to create extra tax deductions for yourself.

 

Links to more information about specific deductions

It’s our job as your accountants to make the lodgement of your Tax Returns as easy and simple as possible.

We do this every day, so we know all the ins and outs of what to claim to make it easy for you.

If you want to have a look at some of the specific deductions you can claim, here are links to the ATO website (it’s actually pretty good for the ATO):

 

We’re here to help you!

To make an appointment with us to discuss and prepare your 2017 Tax Return – CLICK HERE  or phone 02 9267 1688 now.

 

General advice disclaimer

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.]

Your 2017 EOFY Tax Minimisation Tips

Another financial year is about to finish! As a business owner, there are many obligations that you need to consider and action just before and after 30 June. Some of these will help to minimise your tax. We have outlined these action points below to assist you.

Tax season is comingReady for tax season?

 

 

 

 

 

 

Date Action Required
BEFORE

30 June 2017

  • Ensure your employee superannuation payments are received and allocated by your employees’ super fund prior to 30 June 2017 to ensure a tax deduction for this year. Any payments made between 1 July 2017 and 28 July 2017 will count towards your Superannuation Guarantee requirement but will not be tax deductible until the 2018 financial year.
  • If you operate through a trading company, review shareholder loan accounts and make minimum loan repayments (may need to declare dividends).
  • If you operate through a discretionary family trust, ensure that a Trust Distribution Resolution for each Trust is signed by 30 June 2017.
  • Review 2017 LAST MINUTE strategies below to reduce your tax prior to 30 June 2017.
  • Carry out a stocktake by 30 June 2017 (companies with turnover over $10 million)
1 July 2017
  • Superannuation guarantee rate is still 9.5%
  • 2% Temporary Budget Repair Levy ceases.
14 July 2017 or before
  • Provide 2017 PAYG Payment Summaries to all employees
28 July 2017
  • Quarterly Superannuation contributions due for employees (for the period 1 April 2017 to 30 June 2017).  THIS IS A KEY DEADLINE!

(Note: If you fail to meet your requirements by 28 July 2017, you must complete a Superannuation Guarantee Charge Statement and forward it to the ATO together with underpaid superannuation plus administration fees and interest by 14 August 2017. Superannuation Guarantee Charge payments are NOT tax deductible.)

14 August 2017 or before
  • Lodge your 2017 Annual PAYG Payment Summary Statement (for employees) with the ATO. Penalties apply for late lodgement.
28 August 2017
  • Taxable Payments Annual Report due for lodgement with the ATO (building and construction industry)

 

 

Key changes from 1 July 2017

Businesses need to take note of many key tax changes that apply from 1 July 2017. These include:

  • Small Business Entity (SBE) threshold turnover increased to $10 million. This allows many more business to access tax concessions that improve cashflow, simplify reporting, and bring forward tax deductions.
  • SBE Company Tax Rate reduced to 27.5%.
  • The temporary budget repair levy for high income earners is abolished. This reduces the highest marginal tax rate from 49% to 47%.

 

Your 2017 EOFY Reminders & Action Items

SBE Company Tax Rate reduced to 27.5%

Effective 1 July 2017, the company tax rate for SBE (Small Business Entities) reduces by 1% from 28.5% to 27.5%.  To be considered an SBE, your group aggregated turnover must be less than $10 million.  This key concession for 2017 applies again in 2018.

 

$20,000 Immediate Deduction for SBE’s

From 7:30pm on 12 May 2015, small business entities (SBEs) were able to claim an immediate deduction for depreciating assets costing less than $20,000.

Depreciating assets costing $20,000 or more will be allocated to the SBE’s general small business pool and will depreciate at a rate of 15% in the income year in which the assets are first used or installed ready for use. The assets will then be depreciated as part of that pool at 30% in subsequent income years.

If the balance of the general small business pool is less than $20,000 at the end of the income year, this balance is also written off.

 

Trust Distributions – Timing of Resolutions

Trustees (or directors of a trustee company) need to consider and decide on the distributions they plan to make by 30 June 2017 at the latest (the trust deed may actually require this to be done earlier).  Decisions made by the trustees should be documented in writing by 30 June 2017.

If valid resolutions are not in place by 30 June 2017, the risk is that the taxable income of the trust will be assessed in the hands of a default beneficiary (if the trust deed provides for this) or the trustee (in which case the highest marginal rate of tax would normally apply).

 

Please contact our office before 30 June 2017 so that we can properly prepare this document for you to sign.

 

You might not need to do a Stocktake

Small Business Entities (operational businesses with an aggregated turnover below $10 million) have access to a range of tax concessions.  One of these concessions is the simplified trading stock rules.  Under these rules, you can choose not to conduct a stocktake for tax purposes if there is a difference of less than $5,000 between the opening value of your trading stock and a reasonable estimate of the closing value of trading stock at the end of the income year.  You will need to record how you determined the value of trading stock on hand.

If you would like to take advantage of the simplified trading stock rules, call us today to make sure you are eligible to use the simplified rules and to discuss how to use them properly.

 

Deadline for 2017 PAYG Payment Summaries

You need to provide 2017 PAYG Payment Summaries to your employees and other workers by 14 July 2017.  These must then be submitted to the ATO by 14 August 2017 or penalties will apply.

If you have any doubt about how to correctly complete your 2017 PAYG Payment Summaries, please contact us for assistance BEFORE you prepare them.

 

Building and Construction Industry Reporting

From 1 July 2012, new tax reporting rules apply for businesses in the building and construction industry. Businesses will have to lodge an annual report with the ATO setting out details of payments made to contractors. This will assist the ATO to reduce the “cash economy” by ensuring tax is paid on all income including “cash” payments.

You will need to record the following details of all payments made to contractors for building and construction services:

  • The ABN of the contractor
  • The name and address of the contractor
  • The gross amount paid for the financial year, including GST
  • The total GST included in the gross amount paid

If you use computerised accounting software, your system should be able to track this information for you and prepare the required Taxable Payments Annual Report.

 

Ensure that you lodge your Taxable Payments Annual Report with the ATO no later than 28 August 2017.

 

Payroll Tax

Payroll tax applies to all entities that have an Australian payroll that exceeds state-based limits.

You should note that in addition to normal salaries and wages, the following items are generally also included in payroll expenses if payroll tax applies:

  • fringe benefits based on the grossed-up taxable value of fringe benefits;
  • all employer contributions to superannuation on behalf of employees; and
  • some contractor or sub-contractor fees.

 

For more detailed information about whether payroll tax applies to your business, please contact our office.

 The Annual Return/Reconciliation for payroll tax must be lodged by 21 July 2017 with your State Revenue Office.

 

 

WorkCover/WorkSafe

Your WorkCover/WorkSafe insurer sends an annual reconciliation to all registered employers at the end of the financial year.

In completing your annual reconciliation, you will need to include the following items in addition to normal salaries and wages:

  • fringe benefits based on the taxable value of fringe benefits (do not gross-up);
  • all employer contributions to superannuation on behalf of employees; and
  • some contractor or sub-contractor fees.

For more detailed information about what items to include in the reconciliation statement, please contact our office.

Once the reconciliation is received and processed by your WorkCover/WorkSafe insurer, you will be issued with a final assessment or a refund depending on the instalments you have paid during the year.

 Complete and lodge the Annual Reconciliation with your WorkCover/WorkSafe insurer by the due date.

 

 

Goods and Services Tax (GST)

A reconciliation of GST should be performed as at 30 June 2017 to determine if there has been an under or over-payment of GST in the 2017 tax year. If a discrepancy has arisen, then it is possible to adjust a subsequent Business Activity Statement (BAS) to rectify the error, however there are limits imposed on adjustments that can be made in this way.

Income declared on your BAS should be reconciled to income declared on your income tax returns.

Also, please note that you are required by law to substantiate all Input Tax Credit claims with a complying Tax Invoice, and you need to retain these documents for a minimum of 5 years.

Complete the annual GST reconciliations, and check that you have all required tax invoices and other supporting documents.

 

 

ATO Audit Activity

Please note that the ATO and State Revenue Office are constantly increasing their audit activities. There has been an increase in audit activity for PAYG Withholding, Payroll Tax, WorkCover, GST, Division 7A loan accounts from companies, and Trust distributions from Discretionary Trusts.

We can offer a review of your records and record-keeping procedures if you are concerned about your ability to satisfy an audit.

Please contact our office if you would like to request this service.

 

 

Want to talk?

Feel free to call our office any time on 02 9267 1688 or email us at admin@gockcpa.com.au  – We can’t wait to provide you with better advice now for a beautiful future.

 

General advice disclaimer

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

2017-2018 Federal Budget Update

 

We at James Gock & Co are here to help you make smart financial decisions now so you can have a beautiful financial future. One way we do that is through careful tax planning! If you haven’t met with us yet, now is the time to contact us to arrange a tax planning meeting, so we can help you limit your tax payments, and grow your wealth.

In prior years, there were many changes to superannuation and small business taxation. This year’s Budget only had a few changes in these areas.

Here’s a brief summary of what the James Gock & Co team believes are the key changes that may affect many of our clients.

 

Taxation

Small business depreciation

The Government will extend by 12 months (to 30 June 2018) the ability for businesses with aggregated annual turnover less than $10 million to immediately deduct purchases of eligible assets costing less than $20,000, first used or installed ready for use by 30 June 2018. Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool (the pool) and depreciated at 15% in the first income year and 30% each income year thereafter. The pool can also be immediately deducted if the balance is less than $20,000 over this period (including existing pools). From 1 July 2018, the immediate deductibility threshold will reduce back to $1,000.

 

Increase in Medicare levy

From July 2019, the Medicare levy will increase by half a percentage point from 2.0 to 2.5 % of taxable income. Other tax rates that are linked to the top personal tax rate, such as the fringe benefits tax rate, will also be increased.

 

Lower threshold for HELP debt repayments

From 1 July 2018, a new minimum threshold of $42,000 will be established with a 1% repayment rate and a maximum threshold of $119,882 with a 10% repayment rate.

 

Disallow certain deductions for residential rental property

From 1 July 2017, the Government will disallow deductions for travel expenses related to inspecting maintaining or collecting rent for residential rental property. Also, plant and equipment depreciation deductions will be limited to outlays actually incurred by the investors in residential real estate properties. These changes will apply on the prospective basis, with existing investments grandfathered. Plant and equipment forming part of residential investment properties as of 9 May 2017 (including contracts already entered into at 7:30PM (AEST) on 9 May 2017) will continue to give rise to deductions for depreciation until either investor no longer owns the asset, or the asset reaches the end of its effective life. Subsequent owners will no longer be able to claim deductions for plant and equipment purchased by its previous owner.

 

Capital gains tax changes for foreign investors

From 7:30PM (AEST) on 9 May 2017, Australia’s foreign resident capital gains tax (CGT) regime will be extended to deny foreign and temporary tax residents access to the CGT main residence exemption. However, existing properties held prior to this date will be grandfathered until 30 June 2019.

From 1 July 2017, there will be an increase in the CGT withholding rate foreign tax residents from 10% to 12.5%, and a reduction of the CGT withholding threshold from $2 million to $750,000.

 

Taxable payments reporting

From 1 July 2018, the courier and cleaning industries will join the building and construction industry in needing to complete taxable payments reporting each year. More red tape!

 

Cash economy crack-down

The ATO now have an additional $32 million to target the cash economy. Expect more ATO audits with the data matching capabilities. Cafés, restaurants and other businesses that accept cash should ensure their point of sale systems have proper audit trails that match their cash deposits.

 

GST on new residential property and sub-divisions

In an approach designed to crack down on some property developers failing to make GST payments to the ATO, property developers will no longer manage the GST on sales of newly constructed residential properties or new subdivisions.  Instead, the Government will require purchasers to remit the GST directly to the ATO as part of the settlement process.

 

Superannuation

Contribute the proceeds of downsizing to superannuation for older Australians

From 1 July 2018, a person aged 65 or over will be able to make a non-concessional contribution of up to $300,000 from the proceeds of selling their home. These contributions will be in addition to those currently allowed under the existing rules and caps and will be exempt from the existing age test, work test and the $1.6 million balance test for making non-concessional contributions.

* This measure will apply to sales of a principal residence owned for the past 10 or more years and both members of a couple will be able to take advantage for the qualifying home. *

 

First Home Super Save Scheme

To encourage home ownership, voluntary contributions to superannuation made by first home buyers from 1 July 2017 can be withdrawn for a first home deposit, along with associated deemed earnings. Concessional contributions and earnings that are withdrawn will be taxed at marginal rates less a 30% offset. Under the measure, up to $15,000 per year and $30,000 in total can be contributed (within existing contribution caps). Contributions can be made from 1 July 2017. Withdrawals will be allowed from 1 July 2018 onwards. Both members of a couple can take advantage of this measure to buy their first home together.

 

Foreign Workers

There has been lots of news recently about the removal of the 457 visa program. Businesses that employ foreign workers on certain skilled visas will pay a levy that will be channelled into the Skilling Australians Fund. From 1 March 2018, Businesses with turnover of less than $10 million per year will make an upfront payment of $1,200 per visa per year for each employee on a Temporary Skill Shortage visa and make a one-off payment of $3,000 for each employee being sponsored for a permanent Employer Nomination Scheme.

 

 

Book in your End of Financial Year Meeting with us Today!

This is just a general summary of how the Budget may affect you. If you haven’t met with us yet, now is the time to contact us to arrange an End of Financial Year meeting, so we can to help you limit your tax payments, discuss your goals and plans for the next year, and grow your wealth. Remember, we both need time to implement any appropriate tax savings strategies for you well before 30 June 2017.

 

 

General advice disclaimer

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

 

 

Do you have your tax debts under control?

      Taxes Due      Tax Debts

Do you have tax debts?

 

From 1 July 2017, a new tax measure will come into play for small businesses, and we’re here to help prepare you for this tax change.

 

Businesses that haven’t engaged with the Australian Taxation Office (ATO) to get their tax debts under control could have their tax debt information disclosed to credit reporting agencies by the ATO.

Initially, the ATO will be applying this new disclosure measure to businesses with a tax debt greater than $10,000 and is in default (at least 90 days overdue). If your tax debt is disclosed by the ATO, your credit rating will be adversely affected for the next 5 years.

 

What do you need to do?

If you have a tax debt that is 90 days or more overdue, you need to secure a payment arrangement with the ATO before 30 June 2017, regardless of how big or small the tax debt is.

We also encourage everyone who has outstanding tax payments not yet in default, to get these paid as soon as possible.

Tax debts, once disclosed to credit reporting agencies, will go on your credit rating file for 5 years which could greatly impact your chances of securing finance in the future or enter in to credit arrangements with your suppliers.

So, it is important to get your tax debts under control as soon as possible, and well before 1 July 2017.

 

How we can help you!

As your tax agent, we can help you negotiate an effective payment arrangement with the ATO without negatively affecting your cashflow.

Get in touch with us today to discuss your options and get control of your tax debts.

 

General advice disclaimer

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.