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Changes to GST payments at settlement

Posted on April 18, 2018 by admin


Buyers of new residential premises or subdivisions of potential residential land will need to pay the GST component of the purchase price to the Australian Tax Office (ATO) as of 1 July 2018. The amount of GST will not change. This change does not affect the sales of existing residential properties or the sales of new or existing commercial properties. Buyers will need to split the amount of GST from the total purchase price, pay the GST component directly to the ATO by a disbursement at settlement and pay the GST exclusive purchase price to the vendor. It is important to note settlements will not be conditional on the payment of GST to the Tax Office. It is the property developer’s responsibility to provide written notice to the buyers when they need to withhold. The liability for GST remains with the property developer.


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Fuel tax credit mistakes

Posted on April 16, 2018 by admin


Fuel tax credits are provided to businesses who acquire, manufacture, import or use fuel in part of running a business. These credits can greatly benefit business owners but it is important to get the claim right. The ATO sees common mistakes made when calculating and claiming fuel tax credits, including: Wrong calculationsA common error is to calculate fuel tax credits using the cost of the fuel rather than the quantity of fuel multiplied by the relevant rate. The correct formula is: quantity of eligible fuel x correct fuel tax credit rate = fuel tax credits. Inaccurate recordsYou must keep accurate records of your fuel purchases and how the fuel is used in your business. If you claim less than $10,000 a year in fuel tax credits, you can use a range of documents to support your claims. Using an incorrect rateFuel tax credit rates change every February. Check the rates before you lodge your BAS. The current rates for fuel acquired from 5 February 2018 to 30 June 2018 are as follows: Eligible fuel type Unit Used in heavy vehicles for travelling on public roads All other business uses (including to power auxiliary equipment of a heavy vehicle)1 Liquid fuels, […]


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ATO targeting holiday homes

Posted on April 6, 2018 by admin


The Tax Office has rental property owners in its sights this tax season with a large number of mistakes, errors and false claims made by some using their own property for personal holidays. The ATO is reminding owners they cannot claim deductions for holiday homes that are not actually available for rent or only available to friends and family. Private use is entirely legitimate although it does reduce an owner’s ability to earn income from the property. Properties must be genuinely available for rent to claim deductions. This means you cannot use the property for your personal use or let friends and family stay rent-free and claim a deduction. For those who rent the property to friends or family at “mates rates,” they must only claim deductions for expenses up to the amount of the income received. In addition to rental properties, the ATO is investigating cases where taxpayers claim their property is available for rent but there is no intention of renting it out. Rental rates well above market rates and unreasonable conditions for prospective renters are just a couple of ways owners can be doing this. The ATO will also be scrutinising incorrect rental property claims. Data matching […]


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Bitcoin tax scammers

Posted on March 28, 2018 by admin


The Australian Tax Office (ATO) is warning taxpayers to be aware of scammers impersonating the Tax Office and demanding cryptocurrency such as Bitcoin as payment for fake tax debts. The ATO became aware of these fraudsters late last year with over $50,000 paid in Bitcoin to scammers claiming fake ATO debts. Once scammers receive payment, it is virtually impossible to recover it as cryptocurrency operates in a digital world. The ATO is also warning taxpayers to be wary of other tax scams such as those demanding direct deposits into third-party bank accounts, demanding payment via iTunes cards or with a prepaid Visa gift card. Over 80,000 scams were reported to the ATO in 2017, accounting for almost $2.4 million lost to scammers impersonating the ATO. Almost one-third of victims were targeted with iTunes gift card scams, resulting in over $900,000 lost to scammers. More than half of all losses (roughly $1.2 million) were from deposits or transfers made directly into third-party bank accounts. Scammers are also targeting taxpayers’ personal information with many reports of scammers asking for an individual’s Tax File Number.


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Employers urged to act now for Single Touch Payroll

Posted on March 23, 2018 by admin


The Australian Tax Office (ATO) is urging employers with 20 or more employees to prepare for the introduction of Single Touch Payroll. Single Touch Payroll will be introduced from 1 July 2018, requiring employers to report their employee’s tax and super information to the ATO through Single Touch Payroll approved software. Employers will report each time they pay their employees, i.e., weekly, fortnightly or monthly. The information that will be reported includes withholding amounts, superannuation liability information or ordinary times earnings (OTE) and salary, wages, allowances and deductions. Single Touch Payroll will provide greater transparency and connect businesses to the ATO through their existing software. Employers must prepare by organising the following: A headcount of employees on 1 April 2018 to determine if there is 20 or more. If your numbers drop down to 19 or less, you will still continue to report through Single Touch Payroll unless you apply for and are granted an exemption. Talk to your software provider about how and when your product will be ready. Those without a software provider will need to find a provider that offers Single Touch Payroll. Update your payroll software when it’s ready. Start using Single Touch Payroll. Employers with […]


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Tax tips for property investors

Posted on March 16, 2018 by admin


Property investors can access a wide range of tax deductions and items subject to depreciation for their rental property yet many miss out on unknown tax breaks, foregoing an average of $20,000 a year on a $1 million house. Here are four ways to maximise your tax deductions while complying with the tax office: Use a quantity surveyor Registered quantity surveyors can establish the value of purchased items and building construction costs by preparing depreciation schedules to maximise an investor’s claim. Items as diverse as kitchen equipment, bathroom fittings, outdoor furniture, air conditioning and swimming pools are all legitimate claims. A quantity surveyor will ensure valuations of the items in the building are at market value, avoiding the need to explain any valuations that are higher than expected to the ATO. The cost of using a quantity surveyor is also tax deductible. Apportion expenses It is common for investors to bundle a mix of properties under one single loan, i.e. the family home and a rental property may be funded by the same mortgage and expenses apportioned accordingly. However, having separate loans can increase deductions as the non-deductible debt can be paid down or even better linked to an offset […]


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Work-related expenses

Posted on March 9, 2018 by admin


The Australian Taxation Office is continuing to pay close attention to claims made as ‘work-related expenses’ throughout 2018. Making incorrect claims of work-related deductions can land you in hot water with the ATO, and thus it is important you can justify these claims. In order to claim correctly, you must be able to show that: You spent the money yourself and were not reimbursed. The expense was directly related to earning your income, and You have appropriate records and documentation to prove it. If you are making a claim for an expense that you use for both business and privately, you may only claim the portion of the expense that was related to business.


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Tax deductible legal expenses

Posted on March 5, 2018 by admin


While we like to think of business ventures as a platform to make money, there are also many expenses that will be incurred through running one. Luckily, there are many tax deductions a business owner can claim when it comes to the expenses their business incurs, in particular their legal expenses. Understanding what these tax deductible expenses are and how to apply for these deductions appropriately can see you save a considerable amount of money, which can be transformed into profit. Specific expenses incurred will or won’t be deductible depending on whether the expenditure is capital, domestic or private in nature. The following expenses are not deductible under regular legal expense deductions, due to being either capital or private in nature. Deductions can be claimed under a separate provision. These include: Preparations of income tax return Obtaining professional tax advice Borrowing expenses Mortgage discharge expenses Preparation of leases The circumstances in which legal fees incurred can be easily deducted for tax purposes, provided the correct procedure is followed and appropriate criteria is met, include the following: Defending wrongful dismissal action, defending defamation action brought against a company board and defending unauthorised use of trademark. Pursuing claims for workers’ compensation. When […]


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The ATO targeting record keeping of small businesses

Posted on February 23, 2018 by admin


The Australian Tax Office is honing in on small businesses failing to comply with guidelines regarding appropriate record keeping. Findings from the ATO’s Protecting Honest Business campaign indicated that one of the leading factors for small business failure is their poor record keeping practices. Small business owners are required to disclose particular information, and keep records of the following: Income tax records Income and sales records Expense or purchase records Year-end records Bank records Goods and services tax records Employees and contractors records Fuel tax records By law, all Australian businesses must keep these records for a period of five years. These records must be in writing, either on paper or electronically. Dedicating time each week, fortnight or month to compile all the above-listed information will prevent you incurring fines and possibly losing your business.


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Minimising the risk of fraud

Posted on February 16, 2018 by admin


The Australian Taxation Office is urging all businesses and individuals to take care in relation to avoiding the risk of fraud. With a focus on criminals lodging fraudulent returns in order to obtain unwarranted refunds through accessing banking information that is not their own, the ATO recommends businesses and individuals practice the following: Discussions with staff and clients Keep your employees and your clients about safe behaviours to protect them from being vulnerable to criminals, such as not clicking on downloads, hyperlinks or opening attachments in unsolicited emails. Protection on devices Ensuring the devices you use for confidential information such as transferring funds and purchasing goods and services are all up to date with protective software, such as malware detectors and firewalls. Also, ensure autofill forms are not saved or used. Proof of identity Before taking on new clients, ensure they provide numerous pieces of proof of identity. You should also question discrepancies before lodging their tax returns. Internal security Ensure all employees have access to only what they need in order to perform their role within the company. When employees cease employment, cancel their AUSkeys.


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How to catch out an illegal super scheme

April 18, 2018

When a super scheme seems too good to be true, it often is. Many illegal super schemes are operating in Australia, so it is crucial to understand the characteristics of such schemes.

A popular illegal scheme is one whereby an individual is enticed by being told they can access their super early to pay off a credit card debt, go on a holiday, buy a car and so on. Generally, such schemes are illegal as superannuation can only be accessed early by meeting a condition of release.

Those promoting such schemes usually:
– Encourage individuals to transfer super from an existing super fund to an SMSF to access super before they are legally entitled to;
– Target those under financial pressure or who do not understand the super laws;
– Claim you can use your super for anything you want;
– Charge high fees and commissions, and risk losing some or all of the individuals super to them.

Unfortunately, participating in these schemes subject the affected individual to identity theft from the promoter of the scheme. Identity theft is when someone uses another person’s details to commit fraud or other crimes.

Individuals need to be aware that super is usually only accessible once the preservation age is reached and they stop working. The preservation age is currently 55 years old for those born before 1 July 1960 and 60 years old for those born after 30 June 1964.

Superannuation can only be accessed early in special circumstances such as severe financial hardship and for specific medical conditions. There are severe penalties for illegally accessing your super early.