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.
The Australian Tax Office (ATO) has released draft guidelines changing its previous stance on Fringe Benefits Tax (FBT) for utes. Amendments originated from reports that dodgy tax returns were responsible for a loss of $8.7 billion in income tax due to wrongful claims. Failure to comply with new requirements listed below may result in a 20 percent FBT imposed on the cost of the vehicle.
The requirement of a logbook New rules require employers to ensure their workers using these vehicles keep detailed logbooks. Whether the logbooks are electronic or hard copy, it is vital that the process be effective for returns lodged in the 2019 FBT year, when the law takes effect. Employers receive confirmation via email from employees using the vehicles at the end of the 2019 FBT year with their logbook including all regulated diversions and private use.
Diversions and private use rules The guidelines introduce capped limits for the log books to comply with. Professional travel means that the vehicle must not deviate more than 2km from its usual route. However, 1000 km of non-work related travel is allowed, provided that there is no single trip exceeding 200 km. Such regulations provide greater flexibility than previous guidelines. What the ATO deems “minor” or “irregular trips” like carpooling the children to and from school or an occasional trip to visit relatives will not render you non-compliant so long as it is recorded as non-professional use.
