Are you drowning in paperwork and confused about all the legislation that is constantly changing. And also how it is affecting your business? Then it may be time that you start looking for someone to help you. They will manage your books, payroll and give you the extra support so you can continue running your business. There is no better time than today to start looking for the best tax accountant. That is going to help you with all your financial accounting needs. And also assist you in navigating the challenges that you are faced with. As a business owner, you cannot understate how important it is to correctly file your taxes, be up-to-date with all employee tax regulations. And meticulously keep correct records in the case that the Australian Taxation Office burdens you with an audit. 

You may be left wondering if you need a bookkeeper OR a tax accountant or both for that matter. To answer your question, bookkeepers and accountants both have common goals. But their services are used at different points of your financial cycle. A bookkeeper fulfills tasks like recording financial transactions including purchases, sales, issuing invoices, chasing up payments, producing receipts, and executing payroll payments for a business. They ensure that everything is recorded, and your books are left clean and healthy for an auditor to review. 

On the other hand,

A tax accountant also records financial transactions, however, they also sort, store, summarise, and retrieve your financial information. And also presents your financial transactions in a way that you can make informed decisions on your business based on its financial health. An accountant can present you with reports that assist you in analysing strategic financial matters like operating costs and forecasting. The main purpose of a tax accountant is to produce you with an understanding of your business’s profitability. As well as giving you an understanding of how your cash flow is impacting your business. Tax accountants use the information that has been made available by the bookkeepers.

And of course, tax accountants can file your tax returns. And also have the ability to access any extending Australian Taxation Office submission dates for tax returns. If you decided that a tax accountant is a right path for your business, know that your investment will cover you for accounting. Also tax planning and preparation, payroll services, and strategic advice on how you can grow your business.

Before you make the decision whether you choose a bookkeeper or a tax accountant, it is important that you: 

1. Are clear with what service you need. Be specific – don’t feel the need to hire a bookkeeper if you need a tax return. And don’t work with an accountant if you just need data entry.  
2. Understand if you want a one-off service, a weekly, monthly, or yearly service.
3. Write down what your requirements are. 
4. Have a budget in mind for bookkeeping and or tax accountant services. 
5. Find out the going rate for bookkeepers and accountants to understand costings. In general, bookkeepers charge a lower hourly rate than tax accountants. 

You could possibly work with both a bookkeeper or a tax account. Since a bookkeeper is cheaper than an accountant you save money if they do the data entry. And then your books can be handed over to a tax accountant to finalise and lodge all your taxes. Or, the better option for you may be to work with a tax accountant. If that has an in-house bookkeeper to keep your costs down.  

For business,

Advice, finance, and accounting needs – we believe a tax accountant is the right start to guarantee your small business is receiving the right guidance, implementing the right processes, and ensuring your business taxes are completed in a timely matter. When your small business continues to grow, your issues may start to become more complicated and your taxes become too confusing for you to handle, which is why working alongside a tax accountant for a small business will benefit you. They can assist small business owners to take on financial tasks that you are no longer able to overcome. 

A tax accountant is a real necessity for your business rather than a nice to have. You need to view your tax accountant as a partner for your business. It cannot function without rather than a business luxury expense. A tax accountant has your business’s best interest in mind. And they ensure that you avoid issues with the Australian Taxation Office. When you hire a tax accountant, you can take advantage of their services and they can become a partner to work together with. Your tax accountant can track your sales, expenses, cash flow, outgoings and if they have a bookkeeper in-house, the bookkeeper can pay your invoices in a timely manner. They are specialised in small business financial needs and can partner with you to assist in business growth, identifying key growth and cost-saving opportunities, and advise on your company finances. 

In addition,

A very important feature to be aware of – tax accountants for small businesses can also run your payroll! This means that you do not need to have an in-house payroll employee, and your tax accountant service can stay on top of all legislation that is required for your business. Your tax accountant is like a one-stop-shop for your business. 

You need to be able to count on your tax accountant – they need to feel like they are part of your team. It is best for you to do your research and meet with at least three tax accountant firms to find the best tax accountant for small businesses. And when you do meet with prospective firms, be aware of all the services they offer to gain the most out of your outsourcing investment. A tax accountant service for small businesses is an important part of your company’s success. You need a firm that is reliable and there for you when an issue arises.

When you choose an accountant firm for a small business, they can manage your accounting tasks and offer your business advice and support. Start your accounting firm search today, by getting in touch with us at R T Taxation & Accounting Services. You can take advantage of our Outsourced CFO Services to leave the administrative hassle of running your small business to the experts and for you to do what you know best.

Although paying taxes is a must for every business, taxation can be a hassle for many people. There’s a lot of paperwork involved, and everything needs to be in order to work. Even the slightest error can cause a lot of trouble. So, it’s essential that you provide your accountant with all the right information and documents.

If you’re in the eastern suburb, you can reach out to the tax accountants in your region to help you with your taxes. However, to ensure that the entire experience is seamless, a bit of research is necessary. You need to submit some documents to your accountant so that they can get your taxation ready. 

If you’re taking accountant services for small businesses in the eastern suburb, here are the things you need to give your accountant:

Things to Give your Accountant at Tax Time:

Identification Information:

To begin with, you need to provide legal identification information for yourself as well as your business. Legal identification includes your name, address, contact information, and social security number. If you have your social security card, you should take it with you as well. 

Along with your personal information, you need to provide information about your business as well. The name, address, and whereabouts of your company, along with other identification documents, are required. You need to provide your Employer Identification Number (EIN) to be eligible for accountant services for small businesses in the eastern suburb.

Previous Tax Returns:

Although this isn’t a must, this can make the entire process much more efficient. If you have tax records of your previous taxes, your accountant will better understand your business. 

Furthermore, if you have former tax returns, it’s very easy to calculate how much profit or loss your business made in the fiscal year. This makes calculating tax for your current year much more comfortable.

However, if you’re a new business paying taxes for the first time, you don’t have to show previous tax documents. 

Income Statement:

Your income statement is the most important document of your business. It contains details of your yearly income and expenditure. The income statement should include how much your business made in the fiscal year and whether it was a profit or a loss. Your income will play a key role in determining your tax.

Balance Sheet:

The balance sheet is where your assets are described. The liquid assets you have, as well as the liabilities, should be mentioned here. Furthermore, if you have any loans or rents that you have to pay, you should mention it in the balance sheet. 

Make sure all of your investments that affect your business is mentioned in your balance sheet. Otherwise, it will cause a fair bit of legal hassle for you in the long run.

However, only mentioning assets or loans would not be sufficient. You have to attach relevant proof of your assets as well. These include bonds, receipts, loan documents, etc. 

Payroll Information:

If you have hired employees, it’s crucial that you mention their payroll in your documents. Whether they have health insurance or not, the amount of money they receive, etc., are essential factors you need to look into.

You can currently use payroll management software to easily arrange the relevant data you’d need regarding your employees. However, if you don’t have anyone working under you, payroll information isn’t necessary.

Information on deductible expenses:

When you’re receiving your accountant services for small businesses in the eastern suburb, there are a few things you need to keep in mind. There are some expenses that are deductible from your taxes. These include:

• Home Office expenses;

If you have a home office, you can be eligible for some tax cuts. However, the home space should be used exclusively for your business purposes. Other residential areas wouldn’t be considered for the cut.

• Uniform:

If your profession requires you to wear a uniform exclusive to your job, you will receive tax cuts on buying and cleaning your uniform.

However, this is a bit technical because the dress has to be exclusive to your work area. For example, if you work as a waiter and wear a shirt with the restaurants’ logo on it, you can receive tax cuts on buying and cleaning the shirt. However, if you wear a generic waiter’s attire that you can wear outside your workplace, you won’t be eligible for tax.

Furthermore, if you have to wear protective gear for your safety at work, the cost of your protective equipment will be eligible for a tax deduction

• Mileage and Travel:

Suppose your business requires you or your employees to travel to multiple places. In that case, you can receive a tax deduction on travel costs. However, you’d need a detailed mileage log for it. Make sure to calculate your mileage and record it correctly in a log that you can submit with other documents.

• Donations:

If your company makes a considerable amount of donations, make sure to bring receipts and proof for it. You might receive tax cuts and benefits for your charity.

Inventory Details:

The value of your inventory is essential in determining the amount of tax you’re eligible for. Do an inventory count of the amount of good you have in stock currently and the number of goods sold since the beginning of the year. You might also need to submit the Cost of Goods Sold (COGS) when you go for accountant services for small businesses in the eastern suburb for taxes.

Conclusion:

Paying taxes is a complicated process. There’s a lot of paperwork and planning that goes into it. Therefore, getting your taxes done by a professional accountant is a good idea. However, even if you have professionals to help you, you’d need to get some work done.

It is recommended that you prepare some documents before getting accountant services for small businesses in the eastern suburbs. In this article, we’ve discussed these documents in detail. We hope you find them useful!

Does your job require you to wear a suit for professionalism, or a uniform that displays the company logo, or in the case you work in a clothing store – is it obligatory that you purchase your work clothes from your store of work? Many small businesses require that their employees wear a work uniform, and other businesses impose a specific dress code. As an employee, if you have to spend money on work-related expenses, you may be eligible for a tax deduction.

However, if you choose to purchase expensive clothing to comply with your company dress code, it does not always mean you can claim a tax deduction for your work clothes. The Australian Tax Office allows you to receive a tax deduction on work clothes and uniforms if you satisfy a number of requirements, that are specific to your occupation and aren’t everyday attire. To claim a work clothes tax deduction, you will always need to provide the right evidence that you purchased the correct clothing that adheres to your role and has evidence of cleaning costs. If you provide your employees with an allowance – or you receive an allowance from your employer, you need to state the amount of the allowance for work clothes when completing tax returns. 

Clothing deduction requirements

Clothing that is specifically not related to your employment treated as a private expense. And also required for your taxable income. Whatever the situation is for your and your business, employees need to conform to the employer’s dress policy to be eligible to receive tax deductions for work clothes. 

Firstly,

To receive the tax deduction for work clothes and the expense of cleaning them, employers must document that they require you to wear specific clothing as a condition of your employment. The ATO also requires that the clothing is not appropriate for personal wear. This means that you cannot claim things like a business suit, black pants, jeans, or white shirts. If, however, an employer requires the white shirt to feature the business logo, you can then deduct the cost. One of the biggest mistakes employees make with trying to complete their tax deduction for work clothes, is trying to claim a deduction for ordinary clothing they bought for work. 

Secondly,

The ATO has stated, that in the case of an audit, you should be able to provide evidence on how your laundry expenses are calculated, why you need to wear specific clothing for work, and how your tax deduction to figure was calculated. Claims for under $150 are not required to keep records, you need to show how this was calculated. Interestingly, the ATO has discovered that over 1.6 million taxpayers claim a deduction of exactly $150. ATO Assistant Commissioner Kath Anderson stated, “We expect many of these claims to be legitimate but the results of our random audits show that people are making mistakes.” In addition, when it comes to cleaning expenses (washing, drying, and ironing), the ATO considers $1 per load is reasonable, or 50c per load if you included your personal items. 

To assist you in adhering to the Australian Taxation Office policies, and make the out of your tax deductions for work clothes, we have put together a guide that outlines what you can and can’t claim. Firstly, it is important to understand that tax deductions for work clothing must fall into one of four specific categories:

1. compulsory work uniform
2. non-compulsory work uniform
3. occupation-specific clothing
4. protective clothing

1. Compulsory work uniform

A compulsory work uniform is required to perform your role as an employee. It is a strictly enforced policy while you’re at work. 

You may be able to claim a tax deduction for shoes, socks, and stockings. Where they are an essential part of a distinctive compulsory uniform. And where their characteristics (colour, style, and type) are specified in your employer’s uniform policy. Often, employers have specially designed uniforms that employees must wear every time they are at work. Examples of this include airline flight attendants, fast-food chain employees, supermarket employees. 

If your employer does not reimburse you for the expense of purchasing your work uniform. And also do not provide a laundry allowance as part of your wages. Then you may be eligible to receive a tax deduction for work clothes and all uniform related expenses. 

Additionally, you may be able to receive a tax deduction for shoes, socks, and stockings. If they are an essential part of your distinctive compulsory uniform. 

2. Non-compulsory work uniform

You cannot claim expenses or receive a tax deduction for work clothes. If it is for non-compulsory work uniforms unless the business has registered the design with AusIndustry. The only way to claim for a non-compulsory uniform is if the uniform is unique. And also distinctive to the organisation you work for. For the clothing to be unique, it is designed and produced by the employer. It has the company logo attached and the clothing is not available to the general public. 

If the uniform is generic clothing that can also be used for personal use. Then you are unable to receive a tax deduction for work clothes. 

3. Occupation-specific clothing

Come occupations require specific clothing that isn’t in everyday nature. And also allows the general public to recognise an occupation even though it is not their official uniform. Some examples include nurse’s and doctors’ scrubs, factory worker’s hairnets, or a chef’s chequered trousers. The clothing that is specific to your occupation can be eligible for a tax deduction for work clothes.

In relation to claiming the cost of laundering occupation-specific clothing. Employees may be able to claim laundry expenses for occupation-specific clothing if they are compulsory to their occupation. However, it is best to review the occupation and industry-specific guides to correctly claim your tax deductions for work clothes. 

4. Protective clothing

Clothing and footwear that protects employees from the risk of illness or injury are eligible to receive tax deductions for work clothes. You can claim the cost of purchasing and maintaining your protective clothing. Ordinary clothing that does not provide you with protective qualities. They are not classified at protective clothing and are not eligible for tax deductions. For the items of clothing to be considered protective clothing, they must provide protection. Examples of protective clothing that can be used as a tax deduction for work clothes. This includes fire-resistant and sun-protection clothing, steel-capped boots, personal protective equipment, or high visibility clothing. Also rubber boots, non-slip nurse’s shoes, safety-colored vests, fire-resistant, and sun-protection clothing, gloves, overalls, and heavy-duty shirts and trousers. 

You can claim a tax deduction for work clothes if your protective gear falls into one of the eligible protective clothing categories. If you’re unsure about tax deductions for work clothes, or if you prefer outsourcing all your tax needs – give us a call at our Eastern Suburbs tax accountant practice. We work effortlessly to understand and simplify all the taxable deductions that your business can be eligible for. Our aim is to help you focus on your business while you leave the boring tax stuff to us. We want you to have the confidence to run your business while our tax experts work on ensuring you are up-to-date with your tax requirements. 

Personal and Business Tax planning has never been more pertinent than currently with the impact of COVID-19. The last thing you need during these times is that you are required to pay more tax than what is legally required. Being halfway through the 2021 Financial Year, it is a good time to get on top of your tax planning strategies. It should be before the end of the financial year on 30^th June 2021.

Superannuation

Maximise contributions to your own superannuation each year (for both you and your spouse). This is the best tax planning available. You are essentially getting a tax deduction for investing in your own future. Most people can claim a deduction for personal contributions they make into their super account up to your contribution cap. You are free to make a personal contribution at any time during the year. And claim a tax deduction in your tax return. This can be useful towards the end of the financial year if you have not reached your concessional contributions cap of a total of $25,000.

Carrying forward your concessional contributions cap (for low balance members)
The super rules were changed to allow low balance members (under $500,000) to use any of their unused concessional contributions cap on a rolling basis for five years. This means if you do not use the full amount of your concessional contributions cap in a particular year, you can carry-forward the unused amount and take advantage of it up to five years later. Any amount not used after five years expires.

This means you may be entitled to make additional deductible contributions. And above $25,000 this year to catch-up any missed contribution amounts in prior years to boost your super balance and potentially reduce tax.

Employers
As an employer, the super contributions are deductible for the year the superannuation fund receives them. So, paying your staff’s superannuation into their fund so it is there prior to 30 June ensures your business will receive a tax deduction in this year.

Instant Asset Write-Off

Under instant asset write-off eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used or installed ready for use.

Instant asset write-off can be used for:

• multiple assets if the cost of each individual asset is less than the relevant threshold
• new and second-hand assets.

When purchasing new assets to access the instant asset write-off, there are several dates and thresholds to you are required to consider now with the new laws being passed:

Limits – Motor vehicles
If you purchase a car (a passenger vehicle, except a motorcycle or similar vehicle, designed to carry a load less than one tonne and fewer than nine passengers) for your business, the instant asset write-off is limited to the business portion of the car limit of $59,136 for the 2021–21 income tax year. You cannot claim the excess cost of the car under any other depreciation rules.

Bad Debts

As a business it a good idea to check all the people who owe you money before the end of the financial year. If the debt is not able to be recovered it should be written off as bad debt on or before 30 June. Be realistic, if they have not paid before COVID-19 it is unlikely they are in a better position now. Write it off.

Inventory

If you are a Business with inventory, ensure a stocktake is done on the 30th June. Your inventory can be valued at market value, cost, or replacement value. Usually whichever is lower. The different valuations can make a significant difference to your tax outcome. All you need to do is complete the stocktake, and we will advise on the best valuation method for tax treatment.

Prepayments

Consider bringing forward your expenditure. Look at your cashflow. You could bring costs forward into this year and reduce tax payable.

Interest deductions for prepaid interest are generally available for interest expenses associated with investment income (as well as some other eligible expenses).

If you are a small business with an aggregated turnover of less than $10 million per year, then prepaid expenditure may be immediately deductible under the 12-month rule. This rule can generally be applied to deductible expenses such as Rent, Insurance, Lease Payments, Interest, and other business expenditure.

If you are struggling with your business tax planning for the coming financial year, it is never too late (or early) to start planning for your future. We are experienced in assisting you with all your tax planning requirements to ensure you pay no more tax than what is required. If you would like to discuss further or need help, please contact us and one of our Accountants will be in touch with you shortly.

Bushfires, floods, blackouts, cyclones, and infectious diseases are disasters that have brought Australia and the world to a halt in 2020. These disasters also impact businesses and interrupt work. COVID-19 has put pressure on many small businesses and has caused business owners to be challenged and finding solutions on how their business is to function through a pandemic. Unfortunately, when business owners operate reactively, they have no effective disaster recovery and business continuity plan. This impacts the payroll services significantly, as employees are left without wages, taxes unpaid, and leave entitlements undistinguishable. During any disaster – the payroll function is always a critical service to a business. In fact, COVID-19 has brought to light how payroll business continuity needs to be at the forefront of business planning. Business owner’s need to consider payroll as a business necessity, its importance (whether your business utilizes external partners or has an in-house payroll team), how prepared all stakeholders involved with payroll are, security management, and how to mitigate the effects of any natural disaster or pandemic can have on their business. 

How to avoid a disastrous failure

You can’t expect that in one year, so many unexpected situations would hit our borders. Yet here we are, twelve months into a year where we have seen so much heartache and our work-life has become intertwined with our home-life. Having a contingency business payroll plan in place is crucial for your business, and is key to your business surviving years like 2020. The aim of developing a contingency plan is to minimise disruptions to payroll processing. After all, employees still need to be compensated and taxes paid. 

A well planned out payroll continuity plan can be the deciding factor whether your employees are paid on time or not at all. A payroll services continuity plan identifies events/disasters that may affect your company and has details on how your people can respond and recover from these pressures. 

As a business owner, you may feel that investing time into a payroll continuity plan may not be valuable for your business. However, even a simple and straightforward list of policies and processes to follow is useful for your payroll teams to continue functioning in times of crisis. While all businesses – small, medium, and large enterprises are impacted by business interruptions, smaller businesses may not have the ability to recover from a crisis.  

Payroll contingency planning isn’t just for major disasters and pandemics; it also covers you for technology outages, loss of data, changes to legislation, and minor errors that occur in your business-as-usual operations. Payroll continuity plans will have you examine your business and how it adapts to changes in the marketplace, risk management, and disaster recovery. A payroll continuity plan will be specific to your business needs and will ensure that your staff is still receiving their salaries. Your payroll contingency plan will focus on how your people (stakeholders involved to complete payroll tasks), technology, and processes needed to complete payroll tasks. 

Below are some areas that need consideration when examining your payroll risk exposure and assessing the payroll function continuity readiness. Having a clear plan and answers to specific questions will help you build a resilient payroll function – ready to attack any crisis that come their way.

1. Payroll organisation 

Who is responsible for completing your payroll activities, and how are they performed? Are they working on paper or using software (cloud-based or desktop software)?

2. Staff capabilities

Are your payroll staff qualified and up-to-date on the latest regulations and technology? 

Are there arrangements and specifications in place that cover overtime and limited staff availability? 

3. Working in-office or offsite

Do your employees need to be working on site or can also function offsite?

Are they equipped with the right tools and hardware (laptop, internet, safe working spaces, remote access to applications, etc.)?

4. IT infrastructure

Is your IT infrastructure secure?

What are your infrastructure weaknesses? 

5. Processes

Does your payroll value chain have physical processes that cannot be eliminated? 

If access is not available, how will the impact be mitigated? 

6. Access to payroll data

Can your employees access the payroll system remotely and is this secure?

Are your monthly files up-to-date, and are files, pay-slips, pay register, and other payroll files readily available for employees to access? 

Outsourcing your payroll services

Payroll is a business necessity. Being sloppy with your payroll function, not adhering to legislation, and not paying your taxes can get you and your business into a lot of trouble. Hefty fines are involved and, in some states, – it is a felony. 

Outsourcing your payroll to an experienced vendor is an effective way to protect you and your business against any crisis that may come your way. It will also ensure that your payroll continues to function and is protected against anything that can threaten payroll delivery. Outsourcing to a tax and payroll partner can minimise your software, staff, and training costs. They are experienced and mitigate risk with their dedicated teams of experts. They focus on your payroll, saving you the headache of relying on internal employees that may not have the experience or expertise to focus on payroll. Payroll specialists also have access to industry best practices and save time by leveraging the most effective ways to complete payroll tasks. Your payroll vendor can work together with you and have a deep understanding of your processes and employment conditions – and each of their team members can apply that knowledge to processing your payroll. 

In addition, once you decide on outsourcing your payroll services, it allows you to take advantage of your vendor’s payroll continuity plans. Their plans are well-developed and tested. Their staff is also trained to implement contingency plans in the case of a crisis. 

Outsourcing your payroll function and contingency plan

Implementing your payroll backup plan can be a complex task if your employees do not have the right awareness and training. Outsourcing your payroll can provide you with assistance and protection against the crisis, an absent payroll employee, or office site technology outages to ensure your employees are receiving their correct wages on time. 

It is important to consider: in times of disasters and global pandemics, can you protect your employees and continue to give them the stability they need or would you benefit more from outsourcing the function to a tax accountant who specialises in business payroll. 

Nothing you can do will stop natural disasters, pandemics, or IT outages. But acting now, you can prepare your business on how to deal with challenges that arise during this crisis. When thinking about payroll and disasters that can occur, there are so many things that need to be considered to continue working at full capacity. Your payroll function is a necessity for your business. It’s not a cost center, but the source of how your business functions. Having up-to-date payroll software will not only benefit your time but also your business. Our Eastern Suburbs Payroll Services work effortlessly to understand and simplify payroll changes and adapt them to each individual business. We can help you focus on your business while you leave the boring payroll stuff to us. Our payroll service consultants can discuss the payroll digital transformation and how your business can benefit from its implementation efficiency. Our aim is to streamline your payroll function and give you the confidence that you’re adhering to all policies and thresholds.

People from another country who have decided to go on a holiday in Australia should know about taxes. Lodging your tax return may be one of the last things on your mind. After all, you may have just arrived in Australia, and you look forward to exciting adventures, certainly not paperwork.

However, you should be aware of your responsibilities as a taxpayer, especially if you plan to work.

Working in Australia

Many holidaymakers are simply in the country to enjoy the sights. However, you probably want to earn some cash while here. Before you do, it is important that you get a Tax File Number (TFN). This number applies to all citizens, as well as non-citizens who wish to work in Australia.

It is a requirement to get a TFN for yourself. Failing to get a Tax File Number is not an entirely serious offense. However, you should be prepared to get slashed 45% off your income. With such a deduction, it makes sense to apply for a TFN.

If you require assistance in obtaining a TFN, please do not hesitate in reaching out to the tax agents at R T Accounting & Taxation Services. We will be more than happy to help you with obtaining a TFN.

What is your residency status?

Even if you stay for a long period in Australia, being a working holidaymaker regards you as a non-resident. Therefore, you will be taxed at a special rate, as mentioned above.

Those who are considered non-residents for tax purposes will only be taxed on the earnings they have received while in the country. Therefore, if you have another job overseas or in your own country, that income will not be taxed by the government.

But since you are not a resident, you cannot claim any expenses that you may have made. Residents can claim a tax refund for their travel and work-related purchases. Additionally, you are not entitled to the “living away from home” allowance, which is customarily deducted against taxable incomes for Australians.

These rules may look unprofitable for holidaymakers, but there is good news. You do not have to pay the Medicare levy because you are not an Australian resident for tax purposes. Residents must pay a two percent Medicare levy to cover certain medical costs. Your taxes will only be based on your income in the country. Also, the interest on your bank accounts will only be taxed at 10%.

In November 2019, the Full Federal Court decided that working holidaymakers who are Australian residents for tax purposes should be taxed at ordinary rates. If this situation applies to you and you are from the countries listed below, you could get a refund once the final decision has been given:

• United Kingdom
• Japan
• Norway
• Finland
• Chile
• Turkey
• Germany

Currently, the rate remains, which is 15% for $37,000, which applies to both residents and non-residents. If you wish to get a refund from your taxes, you should provide records, including your residency status (as an Australian resident) and locations where you spent and stayed in the country. These documents can be anything from your credit card and bank statements to rental receipts. You should also provide employment and travel records, along with your visa applications.

Lodging Your Tax Return

Since the financial year ends on the last day of June, you should lodge your return after this date. Some employers may not take enough tax out of your income. If it is your case, you will have to pay the remaining amount that you still owe to the government. On the other hand, if your employer did pay more than what is required, you will get a refund.

Get in touch with the registered tax agents at R T Accounting & Taxation Services to maximize your refund and ensure that you are taxed at the rate you should be.

Considering interest rates are dropping to the lowest levels we have seen in years, along with a still booming house market. An investment property is a very tempting proposition for many taxpayers. Especially when it comes to tax benefits.

A landlord can have multiple ways to reduce their annual tax bill. And these deductions are often the difference between a negative cash flow and a positive one.

A key point to note is that investors can only claim deductions on their property. During periods in which it was tenanted or genuinely available for rent. And they can only claim a portion of an expense that was used for business purposes. And also must keep records to prove these expenses.

Here are the top tax deductions for investment properties.

Rental Advertising Costs

Landlords need to find tenants or re-let properties and do so through a range of advertising.

If you market your property using online, print media, brochures, and signs, you can claim these advertising expenses against your income. But only in the same year that you paid for them.

Loan Interest

Investors can claim the interest charged on a loan for an investment property and any bank fees for servicing that loan.

For example, if you incur $20,000 interest on your loan. And $200 in loan fees, you can claim these on your personal tax return. You can’t, however, claim your repayments on the principal sum. And you can’t claim interest on the entire size of the loan. As you refinanced a portion of the loan for private purposes. Regardless of whether equity in an investment property was used as security in that loan. 

Council Rates

Rates can be deducted in the year that they are paid, although you can only claim them during periods in which the house was rented.

For example, if your investment property was only rented for 180 days of the year, then you can only claim your rates for that period. This means you would claim 49.3% (180/365) of the total amount you paid in council rates for your investment property that year.

Land Tax

If you have a rented dwelling on your investment property, you can use land tax as a deduction. 

However, the levy differs significantly between states. As does the timing of when you can claim the cost. Consult your local tax agent at R T Accounting & Taxation Services to ensure you are claiming the correct amount in the right year.

Strata Fees

If your property is on a strata title, you can claim the cost of body corporate fees. 

But if the fee includes maintenance and garden expenses, you cannot claim these expenses separately.

Building Depreciation

Depending on when your investment property was built, you may be able to claim a deduction. But only on the depreciation of the building’s structure. And any renovations you make to the property.

If the property was built before 16 September 1987, you won’t be able to claim depreciation on the original construction costs. If it was built after that date, you can claim a depreciation deduction on these costs of 2.5% a year for 40 years. This would mean that, if the building were built for $100,000 in 1990, you could claim a depreciation deduction of $2,500 a year until 2030.

Similarly, you can’t claim depreciation deductions on renovations that took place before 27 February 1992. But you can claim depreciation deductions on structural improvements that took place after this date, at a rate of 2.5% for 40 years.

As always, though, you can only claim deductions for the period in which the property was rented or available for rent.

Appliance Depreciation

When offering a rental, landlords often install dishwashers, washing machines, air conditioners, stoves, and other assets. 

Just like the building itself, these appliances decline in value. And landlords can claim this depreciation over several years, usually in line with each asset’s “effective life”.

However, landlords can only claim depreciation on assets when they meet certain criteria.

You can only claim deductions on both brand-new and second-hand depreciating assets in residential rental properties. If you bought the property before 7:30 pm on 9 May 2017 and installed the asset before 1 July 2017. Otherwise, you can only claim depreciation on an asset’s purchase price. If the asset was brand-new, or if no one had previously claimed depreciation on the asset. Because the property was either newly constructed or recently significantly renovated. 

Repairs & Maintenance

You can claim repairs as an immediate deduction if they relate directly to wear and tear. Which is to say, if you replace a few broken roof tiles after a storm or repair an appliance, you can claim the costs of hiring a professional to make these repairs as an immediate deduction. But if you replace an appliance, you will need to claim this cost as a depreciation deduction, over the course of the asset’s lifespan.

Similarly, you replace an old fence or install new carpets purely in a bid to increase the value of the property. Then you will need to claim these costs as a capital works deduction, at 2.5% a year for 40 years.

Pest Control

Depending on who paid for the service, the tenant or the landlord can claim an immediate deduction for the cost of hiring a professional pest controller.

Garden and Maintenance

Property owners can claim the maintenance and replacement of plants and structures as an immediate deduction. However, you can not immediately deduct the cost of any new plants or changes that add extra value to the property. These are deemed as “improvements” and must be depreciated accordingly.

Insurance

You can claim the cost of insuring a rental property. Your provider should be able to give you an annual breakdown of the cost.

Bookkeeping Costs

The numbers can become confusing with property investments. So most landlords have an accountant.

You can claim the costs of advice, preparation of tax returns. And also expense incurred for management of your rental accounts in the same year the costs were incurred.

Be aware, that you cannot claim a deduction against your rental property for the cost of preparing your personal tax return. However, you can submit this as a write off when doing your own income statement for the year.

Agent Fees

Fees or commissions paid to agents who collect rent, find tenants and maintain your rental property are tax-deductible.

Travel Costs

A mum and dad property investor can no longer claim the costs of travel to inspect a rental property or carry out repairs. 

The exceptions to this rule are excluded entities. And landlords who are carrying on a business of property investing.

For example, John owns several rental properties through his Self-Managed Super Fund (SMSF). He regularly travels to the homes to conduct repairs and do the garden. John cannot claim travel expenses for this. 

Legal Expenses

Costs for legal advice and documents that relate to rental activities are tax-deductible. 

For example, if you are evicting a tenant or going to court over unpaid rent, then you can claim the costs of doing so. As well as the costs of preparing all relevant legal documents. 

Under the current government, investors can offset any losses they make on an investment property against their assessable income. This is to say, if an investment property’s rental income is less than its expenses, the landlord can deduct this loss from their taxable income. So that they pay less property tax.

Capital Gains Discount

Finally, if you make a capital gain on the sale of your investment property, you need to pay property tax on this profit.

If you bought and sold your property within 12 months, your net capital gain is simply added to your taxable income. Which, in turn, increases the amount of income tax you pay.

However, if you held onto the property for more than a year before selling it, you’re eligible for a capital gains discount of 50%. This means you only need to incorporate half of the capital gain into your personal tax return. 

This information is of a general nature only and does not constitute professional advice on the property tax. You should always seek professional advice in relation to your circumstances before acting.

1. Tax Agent Fees are tax-deductible

Did you use R T Accounting & Taxation Services or another tax agent to prepare and lodge your tax return last year? If yes, then great! You can claim the amount you paid last year on this year’s tax return. On your tax return, simply add the amount you paid last year into section D10 – “Cost of Managing Tax Affairs”. The fees you pay for your tax return are always tax-deductible. Of course, if you use R T Accounting & Taxation Services, we will automatically add the expense you paid last year as a deduction for the following year in any estimate.

2. Union/Membership Fees are tax-deductible

Are you part of a union? How about a membership body related to your profession? If you pay work-related union or membership fees, you can claim the total cost of these fees.

For example, SDA Union fees for Retail, Fast Food & Warehouse Workers are tax-deductible. AHPRA registration costs are also tax-deductible for nurses.

3. Work-Related Car Expenses

If you are required to use your personal car for work-related reasons, apart from driving to and from work. You can usually claim fuel and maintenance costs as a tax deduction. Things provided your employer has not reimbursed you for these costs and claimed the deduction themselves.

There are two methods for the calculation of this deduction. You can use a 12-week logbook (which generates numbers you can reuse for 5 years) or the cents per kilometer method.

The ATO defines work-related kilometers as kilometers traveled in your car while you are earning your income. The ATO assumes everyone has a workplace they need to travel to, and as a result, that is why kilometers to and from work are not tax-deductible. To be eligible, you must be the owner of the car and the travel must be part of the working day. For example, driving between offices, special trips to the post office or bank, or moving from one job site to another (common for tradesmen). There are special cases in which you can claim kilometers for trips between work and home, for instance, if you are carrying heavy equipment for work, or transporting heavy tools required to do your job. In this case, get in touch with our tax agents who will be more than happy to point you in the right direction.

Each taxpayer is different, so depending on your personal circumstances, either a logbook or the cents per kilometer may be a better method for you, this is why we at R T Accounting & Taxation Services are here to help you choose the method which gets you the largest tax deduction.

4. Claiming Home Office Expenses

COVID-19 has meant that many employees are finding working from home for the past 8 months. As a result, the ATO brought out a simple 80 cents per hour worked from the home method for calculating home office expenses from 1^st March 2020 to 30^th June 2020. This is simple enough for the 3-month period. However, what happens when the ATO remove this method and you are still stuck working from home as it has become the new normal to an extent.

The good news is that the ATO allows employees who must work from home occasionally to claim part of their home office expenses. This is most beneficial to those working entirely from home to claim the “occupancy cost” of your home office space as a tax deduction. These expenses include:

• Software
• Equipment
• Furniture
• Percentage of your rent/mortgage
• Electricity apportioned appropriately

The details on this can get a bit complicated, so it is a good idea to trust your local registered tax agent at R T Accounting & Taxation Services to help get it right. Just give us honest information and we will take care of the rest to help you maximize your tax refund.

5. Mobile Phone Tax Deduction

Everyone has a mobile phone these days. But do you use your mobile phone to take and make work calls? Due to ease of access do you call clients or other staff members on your personal mobile phone?

If you answered yes, then you can claim the cost of these calls as a deduction on your tax return. It is important to note that you can only claim the cost of your work-related calls and not your entire phone bill. It is probably wise to keep a logbook or record (for at least 1 month) of when you use your personal phone to determine the average percentage of your calls that are work-related.

For example.

Tom pays $50 a month for his mobile phone plan. He estimates that 50% of his mobile phone calls are work-related. Therefore:

50% of $50 = $25 per month

$25*12 = $300 per year

Tom can claim $300 on his tax return as a deduction for mobile phone expenses.

So, is it worth the trouble to claim the deductions? The short answer is yes.

While individually these items would seem small, added together they could save you a significant amount of money. For example, an extra $600 of deductions on a $50,000 a year income could see an increase in your tax refund of $180.

Get in touch with the registered tax agents at R T Accounting & Taxation Services to maximize your refund and ensure that you do not miss out on any deductions you are entitled to.

As a result of the COVID-19 negative impact on small businesses, the Business NSW lobby group has been lobbying for payroll tax relief in the NSW annual state budget – stating that the relief in payroll tax will boost the economy and employment growth across the state.

Lobbying payroll tax has “paid” off. The New South Wales Treasurer, Dominic Perrottet has announced that the NSW payroll tax threshold will be increased to $1.2 million. Currently, the threshold sits at $1 million until 30 June 2021, and the current payroll tax rate is 5.45 percent. As Perrottet states “Our strong budget position has allowed us to weather the most severe economic storm in a generation, and we will continue to lead the way in job creation and supporting the business through the 2020–21 budget,”.

Earlier this month, NSW Premier Gladys Berekjiklian announced the government will allocate $250 million to support small and local businesses as a four-year program. The Jobs Plus program will provide payroll tax support to small businesses. This will include a four-year payroll tax-free period for businesses that create at least 30 new net jobs.  The Jobs Plus Program will commence on 15 December 2020 and conclude on 30 June 2022.

Business Council of Australia Chief Executive Jennifer Westacott is supporting the payroll tax relief announcement saying “Payroll tax is a tax on jobs, so payroll tax relief and removing investment-stifling red tape makes sense. We also welcome critical investment in programs to give workers in NSW access to the new skills they’ll need to get jobs in new industries”.     

What do I need to do for my payroll tax?

The payroll tax threshold differs in each Australian state and territory, and it is a tax paid to the state/territory. Your business payroll tax is determined by total monthly wages payable.

Your business may not need to pay payroll tax. Payroll tax is paid when your monthly wages are higher than the tax-free threshold. In NSW, employers who pay wages in NSW must be registered for payroll tax if their total Australian wages exceed the relevant monthly thresholds. You can find the payroll tax monthly thresholds >>here. These monthly thresholds will change from 1 July 2021 to account for the payroll tax threshold increase.

There are also exemptions from payroll tax that can benefit your business. Apprentices and trainees may be exempt from payroll tax – therefore their wages can be exempt from payroll tax. Additionally, motor vehicle allowances, accommodation allowances, and fringe benefits taxes are factors that determine if you are eligible for the full payroll tax threshold entitlement.

Furthermore, there is the issue of whether contractors are classified as “employees” or “external contractors”. Contractors and consultants’ salaries may be considered as wages for payroll tax purposes. Often employers make errors in classifying contractors versus employees resulting in the underpaid payroll tax. If caught out by the NSW Office of State Revenue, you need to have records that support your classification decisions. The NSW OSR has the right to penalize you if payroll tax is underpaid.

However, it is not as simple as filling in a form or incorrectly classifying employees in your payroll system to avoid paying payroll tax. All exemptions have requirements and/or thresholds that businesses must adhere to. If (or when) the OSR audit your business, they will look for documentation that supports all business expenses.

We recommend you have a chat with us at RT Accounting and Taxation Services. We care about all the payroll tax laws, exemptions, thresholds, and audits. It’s what we do best. We can ensure your business has all the right payroll tax documents in working order and all exemptions are correct. We want you to be ready if a payroll tax audit comes knocking on your door. Feel confident in our tax expertise and you focus on building your business.

The Australian Tax Office (ATO) has warned businesses not staying up to date with their obligations. It may impact their eligibility for future stimulus measures. Also, ATO readies to recommence its work to address key risks to the Tax and Superannuation system.

The ATO has indicated that it will continue to focus on implementing government stimulus measures. Then including those announced weeks ago in the Federal Budget, it will shortly recommence its work to address the key risk to the Taxation and Supersystem.

Businesses doing well will need to resume their obligations. Those facing ongoing hardship are encouraged to get in contact with their Registered Tax Agent so they can notify the ATO accordingly. It is tough for the ATO to identify exactly who is still impacted on ongoing communication will be critical to ensure compliance is met and any future stimulus measures are received.

The ATO stopped providing blanket extensions to small business audit cases in early September. They have recommended activity where the business is either not adversely affected by COVID-19 or are now able to progress.

Scammer Alert

It is important for clients to remain vigilant of any callers pretending they are from the ATO, demanding money to be paid in full immediately. There has been an increase in reported cases of these scammers taking advantage of those most vulnerable during these times.

The Australian Tax Office will generally not call the taxpayer demanding immediate payment of any tax debts or liabilities nor would accept payment in the form of gift cards.

Scammers often try to ‘phish’ for information by impersonating government agencies such as the ATO.

If you hand over your information, scammers might use it to:

• drain your bank account
• establish fake businesses in your name
• gain access to your online government services
• scam your clients and employees.

Scammers have many opportunities to trick you into giving away your valuable information.

There are some things your business can do to help stay safe:

• use complex passwords and change them regularly
• remove system access for people who no longer work for you
• log out of systems and lock computers when you are not using them
• maintain up-to-date security and anti-virus software on computers and other devices.

There are also some things you can do to stay safe when you are dealing with government services online:

• do not access services via a hyperlink in an email or SMS
• access services through an independent online search
• if you are ever in doubt, look up the service’s phone number separately and call them to check.

Unless you have heard anything different from your Registered Tax Agent, you should not engage with any of these scam calls.

If you have been in contact with any of these callers, it is important that you get in touch with the Police and cancel any card information you may have given to the given.