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Capital Gains Tax Can Be Tricky – That’s Why We’re Here To Help

Posted on September 13, 2021 by admin


If you have disposed of any assets (which can include the loss, destruction or sale of an asset) which are subject to capital gains tax, you need to let us know as soon as possible. These are known as capital gains events, which can affect the way in which a capital gain or loss is calculated, and when it is included in a net capital gain or loss. The type of CGT event that applies to your situation may affect the time of the CGT event’s occurrence, and exactly how to calculate your capital gain or loss. As mentioned earlier, a CGT event can involve the loss of an asset, the destruction of an asset or the sale of an asset. The Sale Of An Asset If there is a contract of sale, the CGT event happens when you enter into the contract. A common CGT asset involved with contracts of sale that is often sold is the house. The CGT event, in that case, happens on the date of the contract, not on the date of settlement. If there is no contract of sale, the CGT event is usually when you stop being the asset’s owner. Your capital gain […]


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Renovations, DIY and Repairs – Here’s The Tax Information You Need To Know As A Property Investor

Posted on August 23, 2021 by admin


As a property investor, you might find yourself implementing repairs and renovation work onto a property to ensure that you are maximising its value on the market. However, though both can be claimed on your tax return, it’s of paramount importance that you know how to claim them. Getting it wrong can be both costly, and unlawful. A rental property improvement is a renovation where something is improved beyond its original state and must be claimed with depreciation. This means that you are claiming a deduction for the decline in the value over the effective life of the renovation. For example, a rental property improvement that could be claimable by a property investor could include a bathroom getting retiled. Maintenance and repairs however can be claimed differently, with all records kept containing accurate information on that work. This will assist in working out the depreciation of assets of the property. A depreciation schedule is a report that outlines all available tax depreciation deductions for a residential investment property or commercial building. These depreciations can be claimed in your tax return each financial year and could help you to save thousands. Investors who renovate and lodge their tax returns prior to […]


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When Does A CGT Concession Or Exemption Apply To Your Small Business?

Posted on August 2, 2021 by admin


Small businesses are facing a set of challenges once again that can make fulfilling tax obligations seem like a daunting task. However, as a small business, capital gains tax concessions on assets used to conduct your business may be of interest to you. These assets are known as “active assets” and can, for example, be a tangible asset (such as commercial property), or an intangible asset (such as goodwill). The turnover threshold for such CGT concessions is $2 million, according to the ATO.  If your turnover is more than $2 million, then you need to satisfy an assets test. There are stringent eligibility requirements and conditions that you must meet in order to access these concessions. If you have owned an active business asset, you may only be required to pay tax on 25% of the capital gain when the asset is disposed of. If you are 55 years of age or older, and are retiring or are permanently incapacitated (and have owned an active business asset for at least 15 years), you may not have to pay any CGT when disposing of an asset by sale, gift or transfer. You might also be able to contribute the amount that […]


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Receive A Relief Or Support Payment? Here’s What You Need To Watch Out For This Tax Season

Posted on July 12, 2021 by admin


Have you, over the course of the past financial year, received a government assistance payment, support payment or disaster relief supplement? There have been a number of cases where people who received financial assistance from the government were hit with additional owed tax to the ATO, due to their payments increasing their income threshold. When lodging your individual income tax return this year, you will need to declare certain Australian Government payments, pensions and allowances in your tax return. If you did not elect to pay tax on those payments, this could affect the payment received from your return (or mean that you actually owe money to the ATO). Some of the taxable payments that you may need to include in your tax return include: the age pension carer payment Austudy payment JobSeeker payment Youth allowance Defence Force income support allowance (DFISA) where the pension, payment or allowance to which it relates is taxable veteran payment invalidity service pension, if you have reached age-pension age disability support pension, if you have reached age-pension age income support supplement sickness allowance parenting payment (partnered) disaster recovery allowance (but not in relation to 2019–20 bushfires) Most of these pensions, payments and allowances will […]


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ATO Says Different Payments Will Have Different Tax Treatments.

Posted on June 30, 2021 by admin


The ATO is looking to make tax season a little bit easier this year, particularly in light of the unique but significant challenges that Australians have been facing over the last year, and are continuing to face. If you received a financial assistance payment, grant or scheme package during the 2020 financial year, you need to be aware of your taxable requirements. There are different tax treatments for different payments that you may have received.    Jobkeeper Payments that were received from Jobkeeper as an employee will be automatically included in your income statement as either salary and wages, or as an allowance. Sole traders who have received a Jobkeeper payment on behalf of their business will need to include the payment as assessable income for the business.   Jobseeker All information will be included in your tax return (in the Government Payments & Allowances question) when ready. Lodging your return prior to the information being available will require you to add it yourself. Leaving out income will slow your return, so it is important to ensure that you have all of the information when lodging.   Stand Down Payments If you were the recipient of a one-off or regular […]


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The ATO Warns Gig Economy Workers To Declare Their Income, Or Face Severe Penalties

Posted on June 21, 2021 by admin


The inexpensive and profitable side hustle is under the ATO’s watchful eye when it comes to declaring income this tax season. With many gig economy workers often earning their income as independent contractors, the ATO warns that a failure to report all income from all of the work that they carry out could land them with severe penalties.    The ATO is expected to employ advanced data-matching from platforms that play host to large proportions of Australia’s gig economy to ensure that tax is declared and paid on the income from workers of the gig economy. Those workers may include Uber workers, Doordash, Lyft, Airbnb and many more similar side hustle income earners.   There is a silver lining for gig workers this tax time. Many gig economy workers may find themselves more eligible for tax deductions – but are warned against claiming more than they are allowed to.   Gig workers are eligible to claim deductions for most costs incurred while earning their income (such as travel or vehicle expenses, financing and marketing). These deductions, however, can only be claimed for the work-related proportion of the claim. You won’t be able to claim the whole amount for the deduction […]


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Your First Tax Return: What You Need To Know

Posted on June 15, 2021 by admin


Tax return season is quickly approaching for individuals. You may need to begin thinking about the process sooner rather than later to ensure that you have everything ready for your accountant. If you’ve never had to complete a tax return before (and it’s your first time) or are still uncertain about what you need to do, this process can feel a bit like a Mount Everest you need to climb. Putting it simply, if you are earning or will earn more than $20,542 this year, you will need to lodge a tax return. However, if you haven’t made that amount but your employer has taken tax out of your pay, you should lodge a return anyway to receive some (if not most) of that money back. How much money you receive back from the tax return will be affected by how much income you have earned. Some debts (such as HECS or HELP) will begin to take money out of your return after reaching a certain income threshold level (currently set at $46,620). A tax return is where you report all of your income earned over the past financial year. It should include ATO-reported income (which you generally won’t have […]


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Crypto Tax Crackdown Announced By ATO

Posted on June 8, 2021 by admin


Cryptocurrency investments are on the ATO’s radar this tax return season, with 100,000 taxpayers to be alerted by the ATO of their tax obligations from their cryptocurrency investments this financial year. It’s an outcome that has resulted from a growing concern that many taxpayers who invest in cryptocurrency believe their gains to be tax-free, or only taxable when their holdings are cashed into Australian dollars. This proactive prompt to taxpayers is a repeat of the ATO’s 2020 attempt, which resulted (after contacting 100,000 taxpayers) in the lodgement of 140,000 returns. Cryptocurrency’s current popularity as an investment solution for many taxpayers, due to the fairly consistent returns, is causing the ATO to evaluate the digital asset’s tax implications further. Currently, those who invest in cryptocurrency need to be aware of the capital gains tax implications that may eventuate from selling or buying and any losses or gains that may come about due to investing, particularly in how it impacts their reportable income tax. The ATO will also be heading into tax time with access to more data and the ability to track those investing in crypto-assets and ensure they are meeting their tax obligations. The best way to ensure that your […]


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Don’t Copy/Paste Your Tax Return From Last Year

Posted on May 31, 2021 by admin


Due to the impacts of COVID-19, how Australians claim work-related expenses on their tax returns every other year is sure to be different this year. The ATO is warning Australians that they will be watching what is claimed and how the impacts of COVID-19 are reflected in tax returns. During the 2020 tax return season, up to 8.5 million Australians claimed nearly $19.4 billion in work-related expenses, with new trends and figures of claims reflected in their returns. Expenses in the 2021 tax return season are expected to reflect the changing nature of how Australians work, given the ongoing impact of COVID-19 is still being felt by workers. In 2020, the value of car and travel-related expenses decreased by nearly 5.5% (as a result of lockdowns, office closures and the pandemic). There was a slight increase of up to 2.6% in terms of clothing expenses (in part a result of frontline workers’ first time needs for items such as hand sanitiser and face masks so that they could continue doing their jobs. As an example, though working from home claims are expected to rise in this year’s tax returns, the ATO would not expect to see a marked increase in […]


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Stamp Duty Tax – The Invisible Cost To Purchases

Posted on May 25, 2021 by admin


When you’re buying a property, there’s a high likelihood that you’re going to need to pay a tax known as stamp duty on top of the price originally agreed on for that property. Stamp duty is a tax levied by all Australian states and territories on property purchases. It is considered one of the most expensive costs you will encounter when buying a property in Australia. It may also be incurred for motor vehicle registrations, insurance policies, leases and mortgages, hire purchase agreements and transfers of property. The amount that a buyer pays for stamp duty when it comes to a property, for example, is based on the property purchase price, location and loan purpose and can vary in rate depending on which state the property is purchased in. As a rule of thumb, the more expensive the property is when buying, the higher the amount of stamp duty to be paid. What you pay for stamp duty may vary depending on the state, as it depends on factors such as first home buyer benefits and concessions that some states may not currently have in place. A property that is worth $500,000 for example may incur an estimated stamp duty […]


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Capital Gains Tax Can Be Tricky – That’s Why We’re Here To Help

September 13, 2021

If you have disposed of any assets (which can include the loss, destruction or sale of an asset) which are subject to capital gains tax, you need to let us know as soon as possible. These are known as capital gains events, which can affect the way in which a capital gain or loss is calculated, and when it is included in a net capital gain or loss.

The type of CGT event that applies to your situation may affect the time of the CGT event’s occurrence, and exactly how to calculate your capital gain or loss. As mentioned earlier, a CGT event can involve the loss of an asset, the destruction of an asset or the sale of an asset.

The Sale Of An Asset

If there is a contract of sale, the CGT event happens when you enter into the contract.

A common CGT asset involved with contracts of sale that is often sold is the house. The CGT event, in that case, happens on the date of the contract, not on the date of settlement.

If there is no contract of sale, the CGT event is usually when you stop being the asset’s owner.

Your capital gain or loss for the assets is usually the selling price, less the original cost and certain other costs associated with acquiring, holding and disposing of the asset.

Loss Or Destruction Of An Asset

If a CGT asset that you own is lost, stolen or destroyed, then the CGT event happens when you first receive compensation for the loss, theft or destruction.  In this way, the capital gain for such an asset is the amount of compensation less the asset’s original cost. If you do not receive compensation for the asset, the CGT event happens when the loss is discovered or the destruction occurred. Replacing the asset may result in being able to defer (or “roll over”) the capital gain until another CGT event occurs (e.g. selling the replacement asset).

The best way to ensure that you are doing the right thing when it comes to CGT tax is to keep your records up to date. This will assist us in ensuring that you are remaining compliant Any CGT events that have occurred need to be recorded (including asset disposals for at least five years after the event occurred. The best way to ensure this is to keep track of:

Keeping accurate and well-maintained records for CGT events is of utmost importance, as it allows us to ensure that you are accurately reporting your transactions and lodging your return correctly. If they incur any net capital losses, this needs to be reflected in the return as they may be able to offset these against capital gains in a later year. Once a loss has been offset against a capital gain, you need to keep the records about that CGT event for two years (for individuals and small businesses) or four years (for other taxpayers).

If you are in the process of disposing of a capital gains asset, you will want to be certain that you are doing the right thing. Capital gains tax can be a tricky issue, with plenty of rigamarole. Come speak with us to ensure that your returns are lodged with the most accurate and correct information needed for submission.