Archive for 'Tax'
The ATO has released the Taxation Determination 2019/9, which outlines changes to the fringe benefits tax (FBT) car parking threshold.
The car parking threshold for the year commencing on 1 April 2019 is $8.95. This replaces the amount of $8.83 which applied to the FBT year ended 31 March 2019. The increase has been set by adjusting the previous year amount by a factor equivalent to the movement in the Consumer Price Index (1.3%).
Section 39A of the Fringe Benefits Tax Assessment Act 1986, sets out a number of conditions that must be met before car parking facilities provided by an employer to their employees will be subject to FBT. These conditions include:
- A commercial car parking station is located within a one-kilometre radius of the employer-provided car park.
- The lowest fee charged by the car park operator is more than the car parking threshold.
- The car is parked for more than four hours between 7 am and 7 pm on any day.
There are circumstances where car parking benefits are exempt from FBT. These exemptions may apply to:
- Employers who meet the conditions of a small business entity.
- Institutions of certain research, education, religion and charity.
- Employees with a disability (irrespective of the type of employer).
The ATO has developed a new toolkit that helps small business owners to understand their entitlements and avoid mistakes in their tax returns.
The 2019 Tax Time Toolkit Small Business covers information about:
- Three of the most common expenses: home-based business, motor vehicle, and business travel.
- Single Touch Payroll (STP) for small employers.
These toolkits are designed to highlight areas that small businesses may struggle with at tax time. Subjects include:
- Information about claiming deductions for home-based business expenses.
- Types of motor vehicle expenses that you can claim.
- The importance of accurate record keeping.
- How to differentiate between business and private use.
One of the factsheets, in particular, provides options and support for employers using STP. Some of the important topics outlined in the fact sheet include:
- What information you need to report and when you need to report it.
- How to correct the amounts reported.
- The changes to payment summaries.
- Information you need to provide to your employees.
- Available exemptions.
As it is common for there to be confusion around these topics, taking the time to understand your obligations as a business owner can streamline the returns process and help to ensure correct reporting.
The Australian Taxation Office (ATO) is warning taxpayers to keep an eye out for people posing as tax agents who are not registered with the Tax Practitioners Board (TPB). Only a registered tax agent can charge a fee to prepare and lodge your tax return.
There are concerns from the ATO about the number of people claiming to be tax agents, often promising refunds that sound too good to be true, or providing discounted services much cheaper than registered, legitimate tax agents. Unregistered preparers will often use a taxpayer’s personal login details to access their ATO Online account through myGov to lodge tax returns.
To protect yourself from a large tax bill or from facing penalties, check that your tax agent is registered on the TPB website or ask to see their Certificate of Registration of Tax Agent. Protecting your myGov login details and password will also ensure safety as a legitimate tax practitioner will never ask for your myGov credentials. Registered tax agents can access the information they need themselves through ATO online services dedicated to lodging returns for their clients.
Individuals should also be aware that if you use an unregistered tax or BAS agent and they are negligent, you will not be protected under the safe harbour provisions set out in the Taxation Administration Act 1953.
The ATO has developed a new rental property owners toolkit for property investors to ensure that mistakes are avoided in their tax returns.
Each year, the tax office identifies fairly common mistakes being made with tax claims made in regard to investment properties. In a recent review of individual tax returns, nine out of 10 taxpayers with a rental property were found to have made a mistake in their tax return.
The newly developed toolkit focuses on areas were mistakes are most commonly being made. These include:
- Renting out a room, a unit, or a whole house on an occasional basis through the sharing economy (such as Airbnb).
- Repairs, maintenance and capital expenditure.
- Any borrowing expenses incurred when taking out a rental property loan.
- Interest on a loan that is taken out to purchase a rental property.
Fact sheets within the toolkit are also available to be downloaded individually. The toolkit is designed to assist rental property owners to get the information they need in order to lodge correctly and to avoid any lodgement mistakes in the future.
The ATO is developing new online services systems as AUSKey will be retired in March 2020
Replacing AUSKey will be myGovID and Relationship Authorisation Manager (RAM).
MyGovID is an authentication service that will allow individuals to prove who they are online. This system will work by establishing your identity once online and then using your myGovID credentials to access government services you need online.
Relationship Authorisation Manager (RAM) is an authorisation service that allows you to link your myGovID to an ABN, managing authorisations across government services, for businesses and their staff. RAM gives you the ability to add multiple businesses, access the business portal on behalf of multiple businesses, modify authorisations, customise and delegate the level of business authorisation for employees and nominate who can act on behalf of your practice.
MyGovID and RAM are currently available in a public beta for eligible businesses to access the ATO Business Portal and will soon be available for online services for agents. AUSkey can still be used to access online ATO services while myGovID and RAM are being developed.
The ATO advises that in preparation for the changes you check your ABN details are up-to-date in the Australian Business Register (ABR).
Small business owners may be able to claim deductions for the costs of using your home as a principal place of business when filing your 2019 income tax return.
Tax deductions may be claimed for the business portion of expenses that include electricity, cleaning, rent payments or mortgage repayments. However, it can be difficult to ensure you are claiming expenses you are entitled to. How you operate the business out of your home will determine the types of expenses that may be claimed. Your business structure will also affect your entitlements and obligations when claiming deductions on home-based business expenses.
Individuals that operate a business as a sole trader or partnership are entitled to claim a deduction for the costs of running their business from home. There are two types of expenses that can be claimed, running expenses or occupancy expenses. Running expenses refer to the increased costs of using your home’s facilities for the running of your business. Occupancy expenses are those that you pay to own or rent your home.
Typically, those that are eligible to claim occupancy expenses can also claim running expenses. Records that need to be kept include written evidence, tax invoices and receipts, which should substantiate your claims for all home-based business expenses. You may consider consulting a trusted advisor or registered tax agent to ensure that you meet all obligations when claiming deductions in your tax return.
In the 2019-20 Federal Budget, the Government announced their plans to change and build on the Personal Income Tax Plan. These changes affect the low and middle-income tax brackets and were passed on 5 July 2019.
The Budget proposed that from the 2018-19 income year:
- There will be an increase to the low and middle-income tax offset from a maximum amount of $530 to $1,080 per annum and an increase in the base amount from $200 to $255 per annum.
- Taxpayers with a taxable income which does not exceed $37,000 will receive a low and middle-income tax offset of up to $255.
- Taxpayers with a taxable income which exceeds $37,000 but is not more than $48,000 will receive $255, plus an amount equal to 7.5% to the maximum offset of $1,080.
- Taxpayers with a taxable income which exceeds $48,000 but is not more than $90,000 will be eligible for the maximum low and middle-income tax offset of $1,080.
- Taxpayers with a taxable income which exceeds $90,000 but is not more than $126,000 will be eligible for a low and middle-income tax offset of $1,080, less an amount equal to 3% of the excess.
Assessments for returns that have already been lodged are expected to be issued from 12 July and into the following week, which is in line with the normal processing of refunds for the end of financial year. Individuals and tax professionals will not need to request these assessments.
Amended notices of assessment can be accessed through the ATO website. For those individuals that have linked the ATO to their myGov account, they will be notified in their myGov Inbox.
Single Touch Payroll (STP) will change how employers report their employee’s end-of-year information to both employees and the ATO. The first year of STP for employers with 20 or more employees will soon come to an end at the completion of this financial year.
Employers that are reporting through STP will no longer need to:
- Provide payment summaries to their employees for amounts reported and finalised through STP, as an income statement will get sent to employees’ through their ATO online services account (accessed through myGov) instead.
- Lodge a PAYG payment summary annual report to the ATO for information that is reported and finalised through STP, as long as the finalisation declaration is completed by the due date.
Employers who started reporting through STP in the 2018-19 financial year will have until 31 July 2019 to make the finalisation declaration through their STP-enabled solution. The declaration states that you have completed your reporting for the financial year. Employers should ensure that all STP information is true and correct before making their finalisation declaration. Employee payment summaries and PAYG payment summary annual reports are still required for all payments that are not reported and finalised through STP, due 14 July 2019 and 14 August 2019 respectively.
The ATO has recently replaced the Taxation Ruling (TR) 93/7W on whether penalty interest is deductible to the new TR 2019/2. This new ruling highlights the circumstances in which penalty interest is deductible and the situations where it is not.
“Penalty interest” refers to an amount charged by a lender to a borrower under a loan agreement if instalments are not paid. The payable amount is then calculated by reference to a number of months of interest that would have been received.
TR 2019/2 says that penalty interest is generally deductible under section 8-1 where:
- The borrowings are incurred when gaining or producing your assessable income; or
- It is necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income.
Penalty interest that is incurred to discharge a mortgage is also deductible under section 25-30, to the extent that borrowed funds were used to produce assessable income. The ATO makes a note that unlike the general deduction provisions, there’s no influence from the expense being capital or revenue in nature.
You cannot deduct a loss or outgoing under section 8-1(2) to the extent that:
- It is of capital or capital in nature.
- It is of a private or domestic nature.
- It is incurred in relation to gaining or producing your exempt income; or
- A provision of the Act prevents you from deducting it.
Although the 2018-19 financial year is coming to an end, there are still a number of tactics you may be able to employ to ensure that you get the most out of your tax return.
Bring forward expenses:
It is a common recommendation at tax time for small business owners to claim all of the appropriate deductions that are available. These can include rent, utilities, repairs for the business, or work-related travel. You may also consider bringing forward as many expenses as possible to before 1 July, such as pre-paying rent or repair expenses. This can allow you to claim the necessary deductions in your 2018-19 tax return.
Take advantage of the instant-asset write off:
More business owners can take advantage of the instant-asset write off this financial year, as it has now been extended to include businesses with a turnover from $10 million to less than $50 million. These businesses can claim a deduction of up to $30,000 for assets purchased or installed and ready for use from 2 April 2019 until 30 June 2020. This could be particularly helpful for individuals who rely on tools, cars or other assets.
Keep strong records:
As a good recommendation to keep in mind for the end of each financial year, keeping up-to-date records can make tax time a little easier next year. It’s never too late to start getting your records in order, so consider keeping all of your documents together once you have filed your 2018-19 tax return. As an added benefit, a well-detailed set of records is the easiest way to resolve any issues that you may face with the ATO.