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Common EOFY Mistakes Made That Can Be Fixed Before 30 June

Posted on June 20, 2024 by admin


Finding yourself increasingly more busy as the EOFY approaches, particularly with meeting your tax obligations? It’s coming on tax time, so it’s time to ensure you’re prepared for your tax returns. This period can be stressful and complicated, leading to common mistakes that can result in financial penalties or missed opportunities for tax savings. Here’s a guide on avoiding common EOFY tax mistakes to ensure a smooth and efficient tax lodgement. 1. Errors in Claiming Deductions Mistake: Many taxpayers either overclaim or underclaim deductions, which can lead to audits or missing out on tax savings. Solution: Understand What You Can Claim: Familiarize yourself with deductible expenses related to work, such as home office expenses, work-related travel, and self-education costs. Use the Australian Taxation Office (ATO) website as a resource. Keep Accurate Records: Maintain detailed and accurate records of all deductible expenses throughout the year. Use apps or digital tools to track receipts and expenses. Avoid Personal Expenses: Ensure that personal expenses are not claimed as work-related deductions. Mixing these can lead to disallowed claims and potential penalties. 2. Incorrect Reporting of Income Mistake: Failing to report all sources of income, including side gigs, investments, or rental income, can lead to […]


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The Instant Asset Write-Off Continues To The 2024-25 Financial Year

Posted on May 28, 2024 by admin


In a move aimed at bolstering small business cash flow and reducing compliance costs, the Government has announced an extension of the $20,000 instant asset write-off for another 12 months. This extension, part of the 2024–25 Budget released on 14 May 2024, will see the measure continue until 30 June 2025. This initiative allows small businesses with an aggregated turnover of less than $10 million to immediately deduct the full cost of eligible assets costing less than $20,000. To qualify, these assets must be first used or installed and ready for use between 1 July 2023 and 30 June 2025. Eligibility Eligibility to use instant asset write-off on an asset depends on: your aggregated turnover (the total ordinary income of your business and that of any associated businesses) the date you purchased the asset when it was first used or installed ready for use the cost of the asset being less than the threshold. You are not eligible to use the instant asset write-off on an asset if your aggregated turnover is $500 million or more. If temporary full expensing applies to the asset, you do not apply the instant asset write-off. How Does It Work? The $20,000 threshold applies […]


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Trust Tax Return Compliance: A Guide

Posted on May 6, 2024 by admin


Managing a trust comes with its share of responsibilities, especially regarding tax compliance. To assist trustees and administrators, the ATO has provided a checklist that can be used to streamline the tax process. This is a crucial tool for ensuring that the trust’s affairs are managed efficiently and effectively in accordance with tax regulations. Let’s delve deeper into what the Resolutions Checklist entails: Distribution Resolutions: One of the primary tasks is to determine how income will be distributed among beneficiaries for the financial year. This resolution must be documented and finalised before 30 June to optimise tax outcomes for the trust and its beneficiaries. Trustees must consider each beneficiary’s tax position and financial circumstances when making distribution decisions. Trustee Resolutions: Trustee decisions throughout the year, such as acquisitions or disposals of trust assets, loan agreements, or changes to the trust deed, need to be documented and ratified through resolutions. These resolutions serve as formal acknowledgments of the decisions made by the trustees and provide a clear record of the trust’s activities. Trust Income Allocation: Trust income comprises various components, including assessable income, exempt income, and deductions. Trustees must accurately determine and record each component to ensure compliance with tax laws. […]


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No More Shortcuts: The Methods You Can Use To Claim WFH Expenses

Posted on March 25, 2024 by admin


Ensure you’re up to date on how to claim your working-from-home expenses! As the business landscape shifts back and forth between office, hybrid and home-based work opportunities, it’s important to remember what methods are available to you when it comes to claiming. If part of your role allows you to work from home, you may be able to claim certain expenses on your tax return this year using one of the following methods. The Revised Fixed Rate Method: Under the revised fixed rate method, individuals can claim 67 cents per hour worked from home during the relevant income year. This rate includes additional running expenses, such as home and mobile internet or data, phone usage, and electricity and gas for heating, cooling, and lighting. Importantly, using this method, you cannot claim separate deductions for these expenses. To use this method, taxpayers must maintain records of the total number of hours worked from home and the expenses incurred while working at home. Additionally, they must keep records of expenses not covered by the fixed rate per work hour, demonstrating the work-related portion of those expenses. What Records Do You Need? Previously, taxpayers required a dedicated workspace at home. From 1st March […]


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Fringe Benefits Tax Considerations For Australian Businesses

Posted on March 4, 2024 by admin


For businesses operating in Australia, navigating the intricacies of the Fringe Benefits Tax (FBT) is essential to ensure compliance with tax regulations and minimise financial liabilities. FBT is a tax paid on certain employee benefits in addition to their salary or wages. From understanding what constitutes a fringe benefit to managing FBT reporting requirements, here are the important considerations for Australian businesses. What Constitutes a Fringe Benefit? Businesses must understand what qualifies as a fringe benefit under Australian tax law. Fringe benefits can include perks such as company cars, health insurance, housing allowances, entertainment expenses, and more. Even seemingly minor benefits provided to employees may be subject to FBT, so it’s essential to review all employee benefits carefully to determine their tax implications. Types of Fringe Benefits Fringe benefits can be categorised into various types, each subject to specific tax treatment. Common types of fringe benefits include: Car fringe benefits: These are provided when employers make cars available for private use by employees. Expense payment fringe benefits: Reimbursements of expenses employees incur, such as entertainment or travel expenses. Residual fringe benefits: Any benefits that don’t fall into the other categories, such as providing property or services. Exemptions and Concessions While […]


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Explaining The New Reporting Regime For The Sharing Economy

Posted on February 12, 2024 by admin


The Sharing Economy Reporting Regime (SERR) represents a significant development in Australia’s tax landscape, requiring certain businesses operating in the sharing economy to report specific transactions to the Australian Taxation Office (ATO). Commencing from 1 July 2023 for selected industries and expanding further from 1 July 2024, SERR aims to enhance tax compliance, increase transparency, and gather valuable insights into sharing economy activities. Let’s dive into the key aspects of SERR and outline what small businesses need to know to ensure compliance. Scope and Purpose of SERR: SERR applies to transactions facilitated through Electronic Distribution Platforms (EDPs), encompassing activities such as ride-sourcing, short-term accommodation, and the hiring of assets or services. The regime aims to collect information on transactions connected with Australia to enhance tax integrity, identify non-compliant participants, and inform compliance strategies. What Is An Electronic Distribution Platform  (EDPs) Under SERR, an EDP refers to a service that enables sellers to offer supplies to buyers through electronic communication channels. This encompasses various online platforms such as websites, internet portals, applications, and marketplaces. EDPs play a crucial role in facilitating transactions within the sharing economy and are central to the reporting requirements under SERR. Reporting Obligations for EDP Operators EDP […]


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Understanding Non-Assessable Non-Exempt (NANE) Income Through Disaster Grants

Posted on January 22, 2024 by admin


The recent spate of extreme weather events during the summer in various parts of Australia has presented unprecedented challenges for small businesses. As a result, the pressing concerns they face may not necessarily revolve around their tax obligations. However, amidst these trying times, business owners must be aware of the tax implications associated with the grants they may have received for support. This may include knowing whether their grants are deemed assessable or non-assessable income and the implications of either for their tax returns. Non-Assessable Or Assessable Income? In the wake of challenging times, many businesses have been fortunate enough to receive grants aimed at helping them navigate through financial difficulties. As businesses gear up to file their tax returns, a fundamental question arises – is the received grant considered assessable or non-assessable income? In general, grants are treated as assessable income, adding to the taxable revenue of the business. However, a subset of business support grants is formally declared as non-assessable, non-exempt (NANE) income. This distinction is crucial as it determines whether the grant needs to be included in the tax return or can be excluded under specific eligibility criteria. Understanding Non-Assessable Non-Exempt (NANE) Income Non-assessable non-exempt income refers […]


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Unlocking the Secrets of Deductions: A Holiday Home Owners’ Essential Checklist

Posted on December 4, 2023 by admin


It’s essential for property owners to understand the intricacies of deductions associated with their cherished holiday retreats. However, as the holiday season approaches, they may find that their holiday retreats become a valuable source of income. To ensure you make the most of your potential deductions, it’s crucial to navigate the rules surrounding holiday home expenses and be aware of potential pitfalls. What Do You Need To Know? The primary rule is simple: you can only claim deductions for holiday home expenses if they are incurred with the aim of generating rental income. This means that any personal use of the property must be carefully considered to avoid discrepancies in deductions. One key consideration is whether the holiday home is used or reserved by you during peak periods when it could reasonably be rented out. Deductions should be adjusted accordingly during these periods to reflect the reduced potential for rental income. Likewise, if there are unreasonable conditions placed that hinder the likelihood of their property being rented, deductions should be reevaluated. This might include restrictive terms in advertising or setting rents significantly above market values. To help determine the validity of your claimed deductions, here are a few essential questions […]


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Claiming Motor Vehicle Expenses On Your Tax Return

Posted on November 13, 2023 by admin


As a business owner, one of the perks is the ability to claim tax deductions for expenses related to motor vehicles used in your business operations. This includes cars and certain other vehicles that play a role in running your business smoothly. The good news is that claiming motor vehicle expenses can help reduce your tax liability. Let’s explore how you can maximise this opportunity, particularly if you’re a sole trader or part of a partnership. The Logbook Method: A Simple Way to Claim Tax Deductions Sole traders and those operating in partnerships can claim tax deductions for vehicles used in their businesses using the logbook method. It’s a relatively straightforward approach, but it does require diligent record-keeping of your vehicle-related expenses. The expenses you can claim when using your vehicle for business purposes typically include: Fuel and oil Repairs and servicing Interest on a motor vehicle loan Lease payments Insurance cover premiums Registration Depreciation (decline in value) Calculating Your Claim with the Logbook Method To make the most of the logbook method and ensure you’re accurately recording your expenses, consider enlisting the help of a registered tax agent. To work out the amount you can claim using this method, […]


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Claiming The Small Business Technology Investment Boost

Posted on October 23, 2023 by admin


Could your small business claim a 20% bonus deduction on technology expenditure that supports their digital operations or the digitisation of their operations? The small business technology investment boost is a broad measure intended to cover a wide range of business expenses and assets; however, questions may arise when you go to claim. Can I Claim The Boost?  To access the small business technology investment boost, your business needs to meet the standard aggregated annual turnover rules (with an increased $50 million threshold). The expenditure must: already be deductible for your business under taxation law be incurred between 7:30 pm AEDT 29 March 2022 and 30 June 2023. If the expenditure is on a depreciating asset, the asset must be first used or installed ready for use for a taxable purpose by 30 June 2023. What Can I Claim With The Boost?  A good indicator of eligibility is to consider if the small business would have incurred the expense if they didn’t operate digitally. That is if they hadn’t sought to adopt digital technologies in the running of their business. Using this rule of thumb, the costs below are eligible: advice about digitising a business leasing digital equipment repairs and […]


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Common EOFY Mistakes Made That Can Be Fixed Before 30 June

June 20, 2024

Finding yourself increasingly more busy as the EOFY approaches, particularly with meeting your tax obligations? It’s coming on tax time, so it’s time to ensure you’re prepared for your tax returns.

This period can be stressful and complicated, leading to common mistakes that can result in financial penalties or missed opportunities for tax savings.

Here’s a guide on avoiding common EOFY tax mistakes to ensure a smooth and efficient tax lodgement.

1. Errors in Claiming Deductions

Mistake: Many taxpayers either overclaim or underclaim deductions, which can lead to audits or missing out on tax savings.

Solution:

2. Incorrect Reporting of Income

Mistake: Failing to report all sources of income, including side gigs, investments, or rental income, can lead to discrepancies and potential audits.

Solution:

3. Missing Deadlines

Mistake: Missing the tax return filing deadline can result in penalties and interest charges.

Solution:

4. Incomplete or Inaccurate Documentation

Mistake: Submitting incomplete or inaccurate documentation can delay your return processing and potentially trigger an audit.

Solution:

5. Overlooking Superannuation Contributions

Mistake: Neglecting to make superannuation contributions or misunderstanding the rules can lead to missed tax benefits.

Solution:

6. Ignoring Tax Offsets and Rebates

Mistake: Not claiming eligible tax offsets and rebates can lead to higher tax liabilities than necessary.

Solution:

7. Failing to Review Past Returns

Mistake: Overlooking errors or missed claims from previous years can result in lost refunds or uncorrected mistakes.

Solution:

Avoiding common EOFY tax mistakes requires careful preparation, accurate record-keeping, and timely action.

By understanding deductible expenses, accurately reporting all income, meeting deadlines, maintaining comprehensive documentation, maximising superannuation contributions, claiming eligible offsets, and reviewing past returns, you can ensure a smoother, more efficient tax filing process.

If in doubt, consulting with a tax professional like us can provide peace of mind and help optimise your tax situation.