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SHEPPARTON NEWS, FRIDAY, JULY 3, 2015
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Tax time Tax man is looking for over-claiming The Australian Taxation Office will focus on unusually high work-related expense claims across all industries and occupations in 2015, a much wider approach than in previous years. Assistant commissioner Adam Kendrick said the ATO’s ability to identify and investigate claims that differ from the ‘norm’ is improving each year due to enhancements in technology and the use of data. “These enhancements mean that every return is scrutinised and it is becoming a lot easier to identify claims that are significantly higher than those claimed by people with similar occupations and employment income,” Mr Kendrick said. Shepparton Veterinary Clinic nurse Felicity Woods is continuing to study while working and has claimed self-education expenses at tax time.
Tax help for upskilling Employees may be eligible for tax deductions for workrelated self-education expenses. Cockram and Cockram Mooroopna accountant Tanya Trevaskis said some costs incurred from training, which are directly related to an individual’s employment, can be claimed. “There must be a direct link between the job you are currently doing and the training. For example a welder, who must undertake a course to learn to use a new piece of welding equipment, could claim those expenses, if they weren’t covered by the employer,” Mrs Trevaskis said.
Alternatively, she said a welder undertaking an unrelated course, perhaps in floristry, could not claim those expenses. Tuition fees, stationery, text books, a percentage of home office costs and travel expenses could be claimed, along with meals, accommodation and parking fees incurred if travelling away from home in certain instances. Mrs Trevaskis said it was important to keep receipts and travel logs to support any claims. She said many of her clients, from professionals to trades people and apprentices, claimed self-education expenses and viewed the scheme as invaluable to maintaining and improving skills. Generally, the first $250 of
self-education expenses can’t be claimed. However, Mrs Trevaskis said this figure could be offset by childcare or travel expenses that were not eligible under the scheme.
“There must be a direct link between the job you are currently doing and the training.” Tanya Trevaskis
Shepparton Veterinary Clinic nurse Felicity Woods is studying Certificate IV in Veterinary Nursing through Goulburn Ovens Institute of TAFE’s
Wangaratta campus and will claim self-education expenses for a portion of her tuition fees. Mrs Woods said her lifelong love of animals led to her career change from administration to veterinary nursing two-anda-half years ago, and in that time she has also completed Certificate III in Companion Animal Studies. “I’ve always wanted to work with animals so I would have undertaken the study anyway, but it’s been helpful to get some assistance,” Mrs Woods said. She is undertaking the course part-time for two years, which enables her to work at the Wanganui Rd and Kialla veterinary clinics to gain practical experience. – Sharon Wright
In addition to focusing on work-related expense claims that are significantly higher than expected, the ATO will also pay particular attention to claims that have already been reimbursed by employers, and for private expenses such as travel from home to work. Mr Kendrick said it was important for people claiming to carefully review their deductions before lodging their tax return to avoid a delay in getting a return. He said there were three key points for people to remember when claiming work-related expenses: you must have spent the money yourself, it must be related to your job and you must have a record to prove it. When claiming work-related travel, it’s important to remember you cannot claim for a normal trip between home and work, unless you use your car to carry bulky tools or equipment which you use for work and can’t leave on the work premises, your home is a base for employment or you regularly work at more than one place each day. The ATO website has a series of videos to help with getting deduction claims right. For more information, go to www.ato. gov.au/deductions or phone 132 861.
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SHEPPARTON NEWS, FRIDAY, JULY 3, 2015
Tax time Tax cuts for small business A Shepparton accountant has described the May federal budget as the best business-focused budget in five years. Choice Group managing director Jamie Cox said the tax cuts and new depreciation rules offered real incentive for businesses to grow and re-invest. “Small business is the biggest employer in Australia; measures that encourage business to invest in technology or new staff will only stimulate the economy,” Mr Cox said. He said Choice Group, which has offices in Shepparton and Benalla, had received many requests from clients seeking more information about the $20 000 instant asset write-off. “People tend to hear ‘tax benefit’ and spend but business needs to follow the normal rules; if what they intend to purchase isn’t going to help or improve their business, it’s probably not the best investment,” Mr Cox said. Harvey Norman Computers franchisee Angus Jewell reported a significant increase in sales before the end of financial year.
The Australian Taxation Office said from July 1 small companies — those with an annual turnover up to $2 million — get a 1.5 percentage point cut in their company tax, bringing the rate down to 28.5 per cent.
Retailers see result of budget boost way for them to upgrade some of their peripheral requirements and claim those expenses back in July,” Mr Jewell said.
Shepparton Harvey Norman Computers franchisee Angus Jewell noticed an immediate upturn in sales from business customers following the announcement of the jobs and small business package in the May federal budget.
“The majority of Australian businesses are small businesses, so if business is spending jobs will increase, if people are making money they will spend; there’s a positive flow-on effect.”
A key element of the package, the immediate write-off of eligible assets valued up to $20 000, is available to businesses with a turnover of less than $2 million.
He said general discussions with other retailers about the $20 000 asset deduction had indicated the move was “positive on all fronts”.
Mr Jewell said he expected the budget announcements would encourage small businesses to spend money and in turn create jobs. “Generally speaking, small businesses with a turnover of less than $2 million can be cash poor. This is a fantastic
Mr Jewell said there had been a spike in businesses upgrading mobile phones, tablets, laptops, desktop computers and software programs.
ATO ruling The Australian Taxation Office said the Federal Government proposed to expand accelerated depreciation by allowing small businesses with an aggregated annual turnover of less than $2 million to immediately deduct each asset that costs less than $20 000.
Unincorporated businesses get a five per cent discount, capped at $1000. The measure applies to assets acquired from 7.30 pm on May 12, 2015 until June 30, 2017 and replaces the previous instant asset write-off threshold of $1000. The balance of a small business depreciation pool can also be immediately deducted if the balance is less than $20 000 at the end of an income year that ends on or after May 12, 2015 and on or before June 30, 2017 including existing pools. Assets that cost $20 000 or more can be deducted over time using a small business pool. Under the pooling mechanism, a deduction for 15 per cent of the cost is allowed in the first income year with a 30 per cent deduction allowed for each income year thereafter. The ATO said individual businesses should consult their accountants to ensure any planned purchases were eligible for immediate write-off. – Sharon Wright
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The Federal Government’s small business package, a key measure of its 2015–16 budget, aims to help small business to grow and create more jobs.
The cost to the federal budget is about $3 billion over four years. The other major component of the package, at a cost of $2.05 billion, is the $20 000 instant asset write-off for eligible purchases made between May 12, 2015 and June 30, 2017.
The nuts and bolts Small businesses with a turnover of less than $2 million a year are eligible for: Tax cuts: • 1.5 per cent tax cut for companies from July 1. The new company tax rate will be 28.5 per cent. • Businesses which are not a company will get a five per cent tax discount from July 1, capped at $1000 each year.
Asset deductions: • Businesses will be able to immediately depreciate any eligible asset which costs less than $20 000 which is purchased between 7.30 pm on May 12, 2015 and June 30, 2017. This means the business can deduct the assets in the financial year in which it first used or installed the asset. There is no limit on the number of eligible assets bought during this period.
Reducing red tape • From April 1, 2016 fringe benefits tax will not need to be paid on any portable electronic device that a small business provides to its employees for workrelated use, such as mobiles, laptops and tablets. • From July 2016, if a business turnover is less than $2 million a year and it changes the legal structure of the business, it will be able to rollover its capital gains tax liability.
Help for new small businesses • Professional costs relating to starting a small business, such as costs for legal and accounting advice, can be deducted in the financial year they are incurred, rather than writing off the costs over five years. For more information, go to www. business.gov.au/small-business
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SHEPPARTON NEWS, FRIDAY, JULY 3, 2015
25
Tax time Are you a contractor or employee? The Australian Taxation Office has issued clear guidelines to help workers determine if they are contractors or employees.
• keep records of your income (including invoices you issue) and business expenses;
• put money aside to pay for any holidays or if you get sick; and • work out if you are receiving personal services income.
A contractor is self-employed, runs their own business, manages tax and superannuation responsibilities and is not entitled to paid leave if sick or injured. Contractors may also be responsible for costs incurred by someone else if you cause an accident on someone else’s property.
• complete your tax return and the business and professional items schedule using your records; • look after your own superannuation unless you are contracted mainly for your labour;
An employee works in someone else’s business. That business will have to pay super for eligible employees and withhold tax to send to the ATO on their behalf.
• provide your own business insurances, including workers’ compensation;
A partial guide to the tax and super obligations for a contractor compared to an employee is outlined below.
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26 SNFEATURE
SHEPPARTON NEWS, FRIDAY, JULY 3, 2015
Tax time Consolidate super and save Young working Australians could be paying thousands of dollars in unnecessary fees every year by having too many separate superannuation accounts. Australian Taxation Office figures reveal 45 per cent of working Australians aged between 18 and 35 have more than one super account. Australian Prudential and Regulation Authority figures show the median figure for fees and charges paid by Australians for a low-cost superannuation account is $532/year, so the ATO is encouraging young workers with multiple accounts to consider combining their super into one preferred account. ATO superannuation assistant commissioner John Shepherd said young workers were not always as engaged with their super, but don’t realise they could be wasting thousands of dollars of their own money over time.
Top up super
house — there are still $5.8 billion worth of accounts in this category.”
may hold, as it will be cancelled once they close their account.
Mr Shepherd said people were able to combine their super accounts by accessing the myGov website.
“People should also make sure their super fund has their tax file number. They’ll pay less tax on their super and it will help us to make sure all their super accounts are displayed online,” he said.
“Simply log on and link to the ATO if you have not already done so. You’ll be able to see all your super accounts in one place and from there it’s simple to consolidate all your funds into a single account, saving you money in unnecessary fees.
For more information, go to www.ato.gov. au/superonline
Federal Government financial assistance is available to individuals to boost their retirement savings through two avenues: the superannuation co-contribution or the lowincome super contribution schemes. The super co-contribution scheme helps eligible low or middle income earners boost their retirement savings by matching after-tax contributions they make to their superannuation fund up to a maximum of $500 (in 2014–15).
“We’ve recently seen a significant increase in Australians merging their super into one preferred account, with more than 265 000 accounts with balances totalling $1.13 billion consolidated in the six months to December 2014. In one case, 17 accounts were consolidated.”
If you have more than one super fund and you want your co-contribution paid to a particular one, use the Australian Taxation Office superannuation fund nomination form.
Mr Shepherd advised people to consider any insurance cover their accounts
Retirees who no longer have an eligible super account that will accept the co-contribution can request a direct payment. The low income super contribution scheme helps those who earn $37 000 or less a year to save for retirement.
“Young people are often mobile in the workforce and it’s not uncommon to open a new account when they start a new job, instead of taking their preferred fund account with them,” Mr Shepherd said.
The LISC is 15 per cent of the before-tax super contributions you or your employer pays into your super fund for the 2012–13 to 2016–17 financial years. The ATO said individuals did not need to apply for either scheme; if you are eligible, have lodged your tax return and your fund has your tax file number, the contribution will be paid directly to your fund account.
“They might also have super accounts which they have lost track of, for example, they may not have updated their contact details with their funds when they moved
For more information, go to www.ato.gov.au
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SHEPPARTON NEWS, FRIDAY, JULY 3, 2015
27
Tax time Top tips for expense claims The Australian Taxation Office website lists eligible expenses taxpayers may be able to claim.
ATO focused on rental properties The Australian Tax Office will increase its focus on rental property deductions this tax time and is encouraging rental owners to double-check their claims are correct before lodging their tax return. In particular, the ATO is paying close attention to excessive deductions claimed for holiday homes, husbands and wives splitting rental income and deductions for jointly owned properties that is not supported, claims for repairs and maintenance shortly after the property was purchased, and interest
The ATO advises as a general rule of thumb, if you need to spend money to earn income you can usually claim a deduction, either immediately or over time. Receipts and documentation must be retained to support the claim.
deductions claimed for the private proportion of loans. While the ATO will be paying closer attention to these issues in 2015, it will also be active in educating rental property owners about what they can and cannot claim. The ATO will write to rental property owners in popular holiday locations, reminding them to only claim the deductions they are entitled to, for the periods the property is rented out or is genuinely available for rent. There are a few simple rules rental property owners should follow to avoid making mistakes on their tax return. First, it is important for all property
owners to keep accurate records. This helps to ensure they declare the right amount of rental income and they have evidence for claims made. Secondly, rental property owners should only claim deductions for the periods the property is rented out or is genuinely available for rent. If a property is rented at below market rates, for example to family or friends, deduction claims must be limited to the income earned while rented. Finally, costs to repair damage, defects or deterioration existing on purchase, or renovation costs, can’t be claimed as an immediate deduction. These costs are deductible across a number of years.
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To make a deductions claim, you must have made the purchase in the course of earning your taxable income and it must not be a private, domestic or capital expense. You can claim vehicle and other travel expenses directly connected with your work, but you can’t claim for normal trips between home and work — this is considered private travel. You can claim a deduction for the cost of buying and cleaning occupation specific clothing, protective clothing and unique, distinctive uniforms. You can only make taxdeductible gifts or donations
to organisations that have deductible gift recipient status. You may be entitled to claim deductions for home office expenses, including a computer, phone or other electronic device you are required to use for work purposes. You must keep records. You can claim a deduction if you are able to show you incurred expenses earning interest, dividend or other investment income. You may be able to claim a deduction for self-education expenses if your study is work-related. In some circumstances, the first $250 can’t be claimed. If you buy tools, equipment or other assets to help earn your income, you can claim a deduction for some or all of the cost. For a full list of eligible deductions, see your tax adviser.
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