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STP extension for small businesses

Posted on February 21, 2019 by admin

The ATO has released a statement in relation to transitioning to Single Touch Payroll (STP) for small employers. Parliament has passed legislation to extend STP to include employers with fewer than 20 employees from 1 July 2019. STP is payday reporting by employers to the ATO as it happens. The initiative is designed to help keep up with advances in technology and firmly establish business reporting. As some small employers do not currently use commercial payroll software, the ATO is working with software providers to develop low and no-cost reporting solutions including simplifying payroll systems. It has been highlighted that to further assist in the transition, the ATO is offering: micro employers (1 to 4 employees) help to transition to STP and a number of alternative options. Small employers can start reporting any time from the 1 July start date to 30 September 2019. Deferrals will be granted to small employers who request additional time to start STP reporting. No penalties for mistakes, missed or late reports for the first year. Exemptions can be provided from STP reporting for employers experiencing hardship, or in areas with intermittent or no internet connection.

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“Building a Better Tax system” What does this mean for you?

Posted on February 14, 2019 by admin

The Australian government has launched the Better Tax campaign in order to help inform the public of tax reforms coming into effect. Designed to “better Australia”, here is a look at what this plan means for you. Individual Tax: New low to middle-income tax offset: Offering immediate relief of up to $530 after an individual lodges their tax return for each income year from 2018-19 until 2021-22. Increase to income tax rate thresholds: Changing over the next seven years so less tax is paid by Australian taxpayers. The first change took effect on 1 July 2018 with future changes in 2022-23 and 2024-25. Reduction in the number of tax brackets: In order to simplify the system, in 2024-25 the tax system will move from five tax brackets to four. Business Tax: Tax cuts for incorporated small and medium businesses, with a turnover of less than $50 million per annum. These companies will move to a 25 per cent tax rate by 2021-22. The small business income tax offset; increasing the rate of the tax discount for unincorporated small businesses with a turnover below $5 million Increasing the instant asset write-off threshold from $20,000 to $25,000 and extending it until 30 […]

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Travel allowance and expenses

Posted on February 7, 2019 by admin

On the occasion that you are required to travel overnight for work, you may be eligible to receive a travel allowance from your employer for accommodation, food, drink or incidental expenses. The reasonable amount of travel expenses is updated yearly and is based on job type and salary. From this allowance, tax deductions are to be withheld unless specified otherwise. Exceptions are: you’re expected to spend all of the travel allowance paid the amount and nature of the travel allowance is kept separately in accounting records the travel allowance is not for overseas accommodation the amount of travel allowance paid is less than, or equal to the reasonable travel allowance rate. Where the exceptions apply, your employer won’t withhold tax and will include the allowance on your payslip. It is important to keep detailed records of your travel expenses, length of trips and if it was overseas or domestic travel. If you need to claim anything from these trips in the future, you will need the appropriate documentation that covers all expenses, not just excess amounts. Vehicle, food, accommodation and incidental expenses need to be documented on a case by case basis: With travel allowance Written evidence need to be […]

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Instant asset write-off for small businesses to be extended and increased

Posted on January 31, 2019 by admin

As of 29 January 2019, the Instant Asset Write-Off Scheme will be extended to 30 June 2020 for assets purchased under $25,000. The Instant Asset Write-Off affects small businesses with a turnover of up to $10 million a year. It allows business owners to immediately deduct assets costing up to $25,000 which can then be claimed for tax return in that income year. The Prime Minister’s announcement on 29 January stated that “businesses who go out and invest today, whether it’s a vehicle, whether it’s a piece of plant or equipment, all of it, up to $25,000, immediate write down.” However, there are certain assets that are excluded from the scheme so it is best to check with your accountant or financial advisor. It is important to remember that the Instant Asset Write-Off Scheme reduces the tax your business has to pay, it is not a rebate. Your cash flow will still have to be sufficient enough to support the purchases. With the ATO reporting that the average claimed amounts were at $11,000 in 2016-2017, there are concerns that the scheme is underutilised. Fewer than 350,000 small businesses have taken advantage of the scheme in the 2016-2017 year. There is […]

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Single Touch Payroll to include all businesses in 2019

Posted on January 18, 2019 by admin

On 1 July 2018, the Australian Tax Office (ATO) rolled out Single Touch Payroll (STP). This changed the way employers with 20 or more employees report their employees’ tax and super information. Generally through payroll or accounting software that offer STP reporting (or through a third-party service provider), employers are expected to report information on withholding amounts, superannuation liability information or ordinary times earnings (OTE) and salary, wages, allowances and deductions. The STP currently affects businesses with 20 or more employees, but just last month, the Senate passed a Bill for the STP to include all Australian businesses, affecting at least an additional 700 000 businesses. Although the amendments to the STP are currently under review by the House of Representatives, the change is expected to be implemented on 1 July 2019.

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Claiming deductions for business travel expenses

Posted on December 20, 2018 by admin

You can claim tax deductions for expenses related to business travel provided you follow the ATO’s rules. Eligibility requirementsYou must fulfil certain eligibility requirements for your tax deduction claims to be valid. You can only claim a tax deduction if you: Travel once your business has already started Keep records and documentation to provide evidence for your claim Record keeping rulesThe ATO has strict recordkeeping rules to ensure deductions are accurate. For one or more nights away from home ensure you keep documents like: Boarding passes Booking confirmations Receipts For travellers spending six or more consecutive nights away from home, a travel diary or similar document must be kept. You must record the detail of each business activity before your travel ends, or as soon as possible afterwards. You must log: The nature of the activity The day and approximate time the business activity began How long the business activity lasted The name of the place where you engaged in the business activity Business and private travel rulesMany travellers may integrate a holiday into their business trip. If you operate your business as a company or trust, fringe benefits tax may apply if the employee travel includes private activity paid […]

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Avoid these small business tax errors

Posted on December 14, 2018 by admin

Unwanted attention and penalties from the ATO can jeopardise your small business. Protect your business by avoiding these common small business tax errors. Not using an accountantTax laws frequently change, and compliance requirements can be time-consuming and demanding. A registered tax agent will streamline your financial processes, provide advice on maximising your finances and keep you compliant. Inaccurate tax returnsSmall businesses that do not declare their income and deductions accurately will attract the ATO’s attention and financial penalties. All foreign income, capital gains tax, business sales and bank interest must be declared. You must also have legitimate evidence supporting your tax deduction claims. Poor record keepingBusinesses that fail to keep accurate records will struggle to remain compliant. It is vital to keep: Cash, online, EFTPOS, bank statements, credit and debit card transactions Records showing when you use business purchases for private purposes to provide evidence for tax deduction claims Incorrect superannuation paymentsThe ATO will sanction employers that fail to pay their employees’ superannuation correctly and on time. Make your mandatory quarterly payments are paid at the correct rate of 9.5 per cent of your employee’s pay. The cash-flow benefits of delaying super payments and missing deadlines are not worth the […]

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Getting to know the ATO Business Portal

Posted on December 7, 2018 by admin

The ATO has introduced the Business Portal to allow small business owners to manage their tax affairs online at their convenience. Connect your ABN to your myGov account or a compatible AUSkey so you can access the business portal. The portal is accessible 24 hours a day, seven days a week. The portal can be used for the following services: Registering for GST or PAYG withholding Lodging, revising or viewing activity statements Requesting refunds or transfers between accounts Updating your business details Tracking the progress of refunds or transfer requests Communicating with us through a secure mailbox Refer to the ATO for direct links that will step you through how to use these services successfully. If you still have trouble with technology it may be worth consulting a registered tax agent to help you fulfil the ATO’s compliance requirements.

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ATO update: Tax deduction rules on travel to rental properties

Posted on November 29, 2018 by admin

The ATO has enforced strict guidelines on tax deductions for rental property owner’s travel expenses. As a rental property owner you are not able to claim deductions for travel expenses relating to inspecting, maintaining or collecting rent. If you have already claimed a tax deduction for the cost of travel to and from your property in your 2018 return, you will need to request an amendment. The law change came into effect on 1 July 2017 and affects tax returns from 2017-18 onwards. ExclusionsYou may claim these travel expenses on your tax return if you are carrying on a rental property business or are an excluded entity. An excluded entity is a: Corporate tax entity Superannuation plan that is not an SMSF Public unit trust Managed investment trust A unit trust or a partnership, all of the members of which are entities of a type listed above

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ATO updates Taxpayer’s Charter

Posted on November 26, 2018 by admin

The ATO has updated the Taxpayer’s Charter which prioritises a relationship with the public built on mutual trust, courtesy and respect in all interactions. Your rights regarding review of ATO decisions are clearly outlined by the Charter if you feel you have been mistreated. The Charter has also committed the ATO to use easy to understand language, so their information is accessible to the public. Some of the changes include: Simplified information about what to expect if your business goes through a review and audit process More details on the ATO’s digital interactions with small businesses Moving away from complex language to make things easier to understand Including a one-page overview of your rights and obligations Refer to the ATO to review the updated Taxpayer’s Charter for yourself.

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