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Business Tax Tips – Reducing Red tape in Australia

Business Tax Tips – Reducing Red Tape In Australia

Reducing Red Tape In Australia

Did you know there is a current 4 year plan where the ATO is working hard at reducing red tape in Australia for tax payers?

The ATO says at Reducing red tape Reforms to the Australian Taxation Office

In the 2015–16 Budget, the Government announced it will provide funding over four years to deliver an improved experience for clients in their dealings with the Australian Taxation Office (ATO).

Red tape will be reduced and future administrative savings delivered through investment in three foundational initiatives: a digital by default service for provision of information and making payments, improvements to data and analytics infrastructure and enhancing streamlined income tax returns through the my Tax system for taxpayers with more complex tax affairs.

The package of service improvements supports the Government’s commitment to reduce red tape and forms part of the Government’s digital transformation agenda.

This measure delivers on the Government’s election commitment.

Click for links with information on the legislation

A detailed website on tracking the initiative is https://www.cuttingredtape.gov.au/  – It says –

The Government has committed to reducing the cost of unnecessary or inefficient regulation imposed on individuals, business and community organisations by at least $1 billion a year. An important part of this commitment is the development of a Framework to review the performance of Commonwealth regulators.

This Framework isn’t just for regulators. It will benefit business and the community, including individuals. Find out more.

What are YOUR thoughts and experiences? Comment below! Call for FREE 30min advice / strategy session today!

Call 0407 361 596 Aust and also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

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Business Tax Tips – Taxable Payments Annual Report – Building Industry

Business Tax Tips – Taxable Payments Annual Report – Building Industry

Taxable Payments Annual Report – Building Industry

Are you a business in the building and construction industry? You will probably need to report the total payments you make to each contractor for building and construction services each year.

If you’re a business that is primarily in the building and construction industry, you need to report payments you make to contractors if both of the following apply:

  • you make payments to contractors for building and construction services
  • you have an Australian Business Number (ABN).

Contractors can be sole traders (individuals), companies, partnerships or trusts.

You need to report these payments to us on the Taxable Payments Annual Report by 28 August each year.

Activities and services that are considered to be building and construction are broad. Some examples include architectural work (including drafting and design), certification, decorating (including painting), engineering, landscaping and construction, project management and surveying.

Payments you need to report

Report only payments you make to contractors for building and constructions services.

Contractors can be sole traders (individuals), companies, partnerships or trusts.

If invoices you receive include both labour and materials, whether itemised or combined, you report the whole amount of the payment, unless the labour component is only incidental.

The definition of building and construction services is broad – it includes any of the activities listed below if they are performed on, or in relation to, any part of a building, structure, works, surface or sub-surface:

  • alteration
  • assembly
  • construction
  • demolition
  • design
  • destruction
  • dismantling
  • erection
  • excavation
  • finishing
  • improvement
  • installation
  • maintenance (excluding the maintenance, service or repairs of equipment and tools)
  • management of building and construction services
  • modification
  • organisation of building and construction services
  • removal
  • repair (excluding the service or repairs of equipment and tools)
  • site preparation.

Get more details from the ATO website HERE             

Need help? Not sure? Call for FREE 30min advice / strategy session today!

Call 0407 361 596 Aust and also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

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Business Tax Tips –GST Error Correction – How to put it right

Business Tax Tips –GST Error Correction – How to put it right

Business Tax Tips –GST Error Correction – How to put it right

On the Australian Tax Office (ATO) website has information on what to do when you find you have a GST error correction to make – and how to put it right in a way that is easier than revising a prior statement, as well as you can save penalties (see!… the ATO is really NOT your business enemy!)

Correcting GST Errors –

If you make a mistake (that fits the definition of a GST error) when reporting GST on an activity statement, you can correct that error on a later activity statement if you meet certain conditions.

The benefit of correcting a GST error on a later activity statement is that you will not be liable for any penalties or general interest charge (GIC) for that error.

Generally, it is easier to correct a GST error on a later activity statement than to revise an earlier activity statement. Revising an earlier activity statement that contains an error can incur penalties or GIC.

Here are a series of links about correcting GST errors –

o    options for correcting an error

o    definition of a GST error

o    types of GST errors

o    correcting credit errors

o    correcting debit errors

o    how to make corrections on a later activity statement

o    when a credit or debit error cannot be corrected on a later activity statement

o    what is not a GST error

o    example of correcting GST errors on a later activity statement

o    record keeping

o    more information.

Get a FREE 30 min answer to your query, and FREE ongoing email or phone support – No-one offers as much! Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

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Business Tax Tips – Small Business Tax Breaks To Help Your Business – 2017-18 Budget

Business Tax Tips – Small Business Tax Breaks To Help Your Business – 2017-18 Budget

Small Business Tax Breaks To Help Your Business – 2017-18 Budget

There are (still proposed) small business tax breaks to help your business soon to be finalised. From the ATO website, here are details of proposed changes to tax and superannuation legislation and policy, and how the ATO proposes to administer the changes. From the ATO website –

Budget 2017–18

The Government handed down the 2017–18 Budget on 9 May 2017, with several proposed changes to tax and superannuation laws. Below is a list of the announced measures. You can access the Budget papers here: budget.gov.au

The Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016External Link has been passed by both houses, but is not yet law. The proposed Bill will do the following:

In the 2016–17 Budget, the Government announced that it intended to progressively reduce the corporate tax rate from 30 per cent to 25 per cent. These changes were outlined in the Enterprise Tax Plan 2016 Bill. Amendments were made to this Bill by the Senate on 31 March 2017. The amendments were accepted by the Government and received Royal Assent on 19 May 2017.

Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017 was introduced to the House of Representatives on 11 May 2017 to increase the scope of which corporate entities would be eligible for the lower corporate tax rate in future years.

The corporate tax rate is reduced from 28.5% to 27.5% for the 2016–17 income year for small business entities. The aggregated turnover threshold to qualify as a small business has been increased from $2 million to $10 million.

In 2017–18 the threshold increases from $10 million to $25 million and in 2018–19 to $50 million. From 2017–18, corporate entities eligible for the lower tax rate will be known as base rate entities, i.e. the small business definition will remain at $10 million from 2017–18 onwards while the base rate entity threshold will continue to rise. Click for more info.

In the 2016-17 Budget, the Government announced an increase to the small business entity turnover threshold from $2 million to $10 million. From 1 July 2016, business with a turnover of less than $10 million will be able to access a range of concessions which are currently only available to business entities with a turnover of less than $2 million.

The current $2 million turnover threshold will be retained for access to the small business capital gains tax concessions.

Access to the unincorporated small business tax discount will be limited to entities with turnover less than $5 million.

We will accept tax returns as lodged during the period up until the outcome of the proposed amendment is known. Once the outcome of the proposed amendment is known taxpayers will need to review their positions back to their 2016-17 income year.

For what to do if the law is enacted or if it is not, click here

In the 2016–17 Budget, the Government announced an increase to the tax discount for unincorporated small businesses incrementally over 10 years from 5 per cent to 16 per cent.

From 1 July 2016, the tax discount will increase to 8 per cent, remain constant at 8 per cent for eight years, then increase to 10 per cent in 2024–25, 13 per cent in 2025–26 and reach a new permanent discount of 16 per cent in 2026–27.

The increases will coincide with staggered cuts in the corporate tax rate for certain entities to 25 per cent. The current cap of $1,000 per individual for each income year will be retained.

The tax discount applies to the income tax payable on the business income received from an unincorporated small business entity. The discount is provided by way of a small business income tax offset which you claim in your individual tax return.

From 1 July 2016, the discount will be extended to individual taxpayers with business income from an unincorporated business that has an aggregated annual turnover of less than $5 million.

Administrative treatment

The ATO will accept all tax returns as lodged during the period up until the law change is passed by Parliament.

What to do if the law is passed or not, click here.

For a list of all the Measures, click here.

Get a FREE 30 min answer to your query, and FREE ongoing email or phone support – No-one offers as much! Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

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Business Tax Tips – 14 End of Financial Year 2017 tips to PREPARE for 30 June! Time to ACT NOW!

Business Tax Tips – 14 End of Financial Year 2016 tips to PREPARE for 30 June! Time to ACT NOW!

14 End of Financial Year 2016 tips to PREPARE for 30 June! Time to ACT NOW!

Time to plan for a good finish for EOFY and here are 14 tips to get started and prepare for 30 June.

1. Consider the ideal timing for asset sales

If you are thinking of selling a profitable asset this financial year, but are likely to earn a lower income in the next year, it may be worth postponing the sale until after 30 June; however, if you expect an income windfall or higher from 1 July, it may be worth bringing the sale forward. As always, your decisions depends on your expectations for future asset prices, so don’t postpone a sale for tax purposes if you are expecting your investment to fall in value! Ask your Tax advisor.

2. Delay sales invoicing if in profit

Most businesses are taxed on income when it is invoiced (accrual). Some small businesses may be taxed only when income is received (cash basis). Income from construction contracts is generally taxed when progress payments are invoiced or received. If you are making a good profit (which is good if you want to sell) and want to reduce business tax, it may help to delay invoicing the June work until July, after 30 June – talk to your tax advisor for your situation.

3. Accounts receivable – write off by 30 June

If you have clients that have closed or all manner of collection has failed – sometimes it is best to move on and write off. Keep looking for better clients!

4. Spouse and family wages

Paying family must be reasonable and legitimate for work performed.

5. Super liabilities

Employer and/or self-employed superannuation contributions must be paid to, and received by, the super fund before 30 June and must be within the contributions cap ($35,000 for individuals aged 49 or over on 30 June 2016, otherwise $30,000)

6. Depreciation – Accelerated Write off – up to $20,000

The accelerated depreciation write-off for assets up to $20,000 acquired by small businesses was announced in the May 2015 budget and is available to June 30, 2017. The write off threshold was previously $1,000 and the concession only applies to businesses in 2016/17 with an aggregate annual turnover of less than $2 million. As a boost for small businesses, the Government will extend access to a number of small business tax concessions by increasing the annual turnover eligibility threshold from $2m to $10m. These measures will apply from July 1, 2016.

7. Pre-pay income protection premiums 

If you are a self-employed director or self-employed, income protection insurance provides peace of mind about the security of your income in the event you are unable to work due to illness or injury. Premiums for this insurance are generally tax deductible; prepaying your annual premium prior to 30 June will allow you to claim a full year of cover in advance as a tax deduction.

8. Get a super top up from the government

If you earn $35,454 – $51,021 pa, of which at least 10% is from employment or a business, and make a personal after-tax super contribution, you could qualify for a Government co-contribution of up to $500. 

9. Boost your partner’s super and reduce your tax

If you have a spouse who earns less than $10,800 pa, consider making an after-tax super contribution on their behalf, and you could receive a tax offset of up to $540.

10. Use super to manage capital gains tax

If you make a capital gain on the sale of an asset this financial year and earn less than 10% of your income from eligible employment, you may be able to claim a tax deduction for a contribution to superannuation, which could reduce or offset your capital gain. You will need to be eligible to contribute to superannuation (which means you are under the age of 65, or under 75 and meeting the work test (2017 now abolished), and be comfortable having your contribution preserved in super until you meet a condition of release (eg retirement decision).

11. Make tax deductible super contributions

If you earn less than 10% of your income from eligible employment (eg you are self-employed or not employed), you are generally able to claim a tax deduction for personal contributions to superannuation. As with super, you will need to be eligible to contribute to superannuation (which means you are under the age of 65, or under 75 and meeting the work test), and be comfortable having your contribution preserved in super until you meet a condition of release (eg retirement). If you claim a deduction for it, the contribution you make will be taxed at 15% in your super fund, so your tax saving will be the difference between your marginal rate and 15% – which could be up to 34%.

12. Review your portfolio

Review your portfolio and consider a strategic re-allocation of your investments. Consider portfolio allocations – is your portfolio heavily over- or underweight in specific industry sectors or stocks? Are you continuing to carry stocks that have exceeded your price targets or continue to under-perform – this may be an opportunity to re-balance. If you have an SMSF, now is the time to ensure your fund is invested in line with your documented investment strategy – your auditor will be confirming this after 1 July.

13. Offset capital gains with capital losses 

Generally, if you have incurred capital losses on your investments, you are able to offset these capital losses against any capital gains you have made. You can also use losses you have carried forward from previous years. Remember, income losses can only be offset against income; capital losses can only be offset against capital gains.

14. Best tip of all

Get advice specific to your business and situation that considers your personal position – both go together!

If you need a referral, call me – 0407 361 596 – plan NOW don’t delay!

Need help? Not sure? Call for FREE 30min advice / strategy session today!

Call 0407 361 596 Aust and also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!


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Business Tax Tips – GST and Hire Purchase

Business Tax Tips – GST and Hire Purchase

GST and Hire Purchase

Many businesses acquire assets such as equipment by entering into hire purchase or leasing agreements to pay for and use the equipment over a period of time rather than paying the full cost up front. Then also they need to know how GST applies. Here is some information from the ATO website to explain –

How does hire purchase work?

Under a hire purchase agreement, you:

  • Purchase goods through instalment payments;
  • Use the goods while paying for them;
  • Do not own the goods until you have paid the final instalment.

Where the supply of goods to you under a hire purchase agreement is a taxable supply, the price you pay for the goods includes GST. If you use the goods in your business, you can generally claim a GST credit.

You treat a hire purchase agreement as a stand-alone sale or purchase in a tax period – that is, the same rules apply as they would for any sale and purchase of goods under an ordinary sale agreement. A hire purchase agreement is not treated as a sale or purchase made on a progressive or periodic basis.

Paying GST on hire purchases

If you enter into a hire purchase agreement on or after 1 July 2012, all components of the supply made under the agreement are taxable, whether or not the credit component is separately disclosed. Any associated fees and charges, such as late payment fees incurred under the terms of the hire purchase arrangement, are also subject to GST.

If you enter a hire purchase agreement before 1 July 2012, and the supplier:

  • Separately identifies and discloses the interest charge to you, you don’t have to pay GST on the interest as it is a financial supply;
  • Doesn’t separately identify and disclose the interest charge to you, you must pay GST on the total amount payable under the contract.

The interest charge is ‘disclosed‘ to you if the supplier tells you any of the following in the hire purchase agreement:

  • The dollar amount of the credit charge;
  • The interest rate;
  • The formula or formulas used to work out the credit charge amount;
  • Any other information sufficient to work out the credit charge amount.

A hire purchase agreement entered into before 1 July 2012 continues to be treated in this way even if there’s a subsequent change to the agreement, provided the change doesn’t result in a new agreement. That is, the supply of a separately disclosed credit component will continue to be an input taxed financial supply.

Claiming GST credits on hire purchases

If you account for GST on a NON-CASH (accruals) basis

You can claim the full GST credit on your hire purchase agreement in the tax period when either:

  • You make your first payment;
  • A tax invoice is issued to you, provided you haven’t already made your first payment.

For agreements entered into before 1 July 2012, you claim a GST credit only for the principal component of the agreement, not the credit component.

If you account for GST on a CASH basis

For hire purchase agreements entered into on or after 1 July 2012, you can claim input tax credits up front instead of waiting until each instalment is paid, in the same way as you would if you accounted for GST on a non-cash basis. As all components of a hire purchase agreement entered into on or after 1 July 2012 are subject to GST, you can claim one-eleventh of all components, including the credit component and any associated fees and charges that have been subject to GST under the agreement.

For hire purchase agreements entered into before 1 July 2012 you can claim one-eleventh of the principal component of each instalment in the period you pay it. If the supplier provides regular accounts or statements that show the principal and interest components for each instalment, you must use that information to work out GST credits in the relevant tax period. If you don’t know the principal component for each instalment, you need to take reasonable steps to find out from the supplier.

See some working examples further down the page at the ATO site HERE

Get a FREE 30 min answer to your query, and FREE ongoing email or phone support

No-one offers as much! Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

Email info@accountkeepingplus.com.au or call 0407 361 596 Australia


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Business Tax Tips – Instant asset write off 2017 – $20,000 claim limit ends 30 June 2017

Business Tax Tips – Instant asset write off 2017 - $20,000 claim limit ends 30 June 2017

Instant asset write off 2017 – $20,000 claim limit ends 30 June 2017

If you are a small business (aggregated turnover of less than $2 million) contemplating buying machinery or equipment, be aware that these are final months of the $20,000 instant asset write-off 2017.

With a final date of 30 June 2017, you may consider bringing forward any planned asset investments to the next few months – particularly in this current low interest-rate environment.

The ATO says

Small businesses can immediately deduct assets costing less than $20,000 purchased since 7.30pm 12 May 2015.

You can use the new threshold amounts in claiming deductions in your 2015 and 2016 income tax returns.

The deduction is claimed in the income year in which the asset is first used or installed ready for use.

What’s changed?

The instant asset write-off threshold has increased to $20,000 (up from $1,000). This allows you to immediately deduct the business use portion of a depreciating asset that costs less than $20,000.

The changes apply

  • To assets acquired after 7.30pm on 12 May 2015 until 30 June 2017
  • On a per asset basis, so several assets each costing less than $20,000 would qualify
  • To new and second hand assets.

Assets that cost $20,000 or more (which can’t be immediately deducted) will continue to be deducted over time using a small business pool.

The low pool value threshold will also increase to $20,000. This means that an immediate deduction is available if the pool balance is less than $20,000 at the end of an income year.

What’s not included?

There are a small number of assets that aren’t eligible for accelerated depreciation, for example horticultural plants that have specialised depreciation rules.

Record keeping

Just like any other business asset, you’ll need to keep records to support any claims for a deduction.

Find out about:

Simplified depreciation for small business where we read –

You can choose to use the simplified depreciation rules if you have a small business with an aggregated annual turnover (the total normal income of your business and that of any associated businesses) of less than $2 million.

Under these rules, you:

  • Immediately write-off – deduct their full cost in the year you buy them – most depreciating assets that cost less than $20,000* each that were bought and used, or installed ready for use from 7.30pm (AEST) on 12 May 2015 until 30 June 2017
  • Pool most other depreciating assets that cost $20,000 or more in a small business asset pool and claim
  1. A 15% deduction in the first year (regardless of when you purchased or acquired them during the year)
  2. A 30% deduction each year after the first year
  • Write-off the balance of your small business pool at the end of an income year if the balance – before applying any other depreciation deduction – is less than $20,000.

Need help? Not sure? Call for FREE 30min advice / strategy session today!

Call 0407 361 596 Aust and also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!