Crawford Accountants News & Updates
$20,000 instant asset write-off is extended Small business instant asset write off is extend to 30 June 2026. If a business has an aggregated annual turnover of less than $10 million, they may be able to use the instant asset write-off to immediately deduct the business portion of the cost of eligible assets that are $20,000. Eligible assets must be first used between 1 July 2025 and 30 June 2026. The $20,000 limit is per asset. Cash in hand sales The ATO is cracking down on businesses that use cash to avoid paying tax, employer and business obligations. Some examples of such situations are: Failure to report all sales Failure to pay GST, income tax, PAYG withholding, super guarantee, insurance and work cover Reporting income below $75,000 to avoid GST registration Failure to meet employment awards and work cover Workers who are paid cash-in-hand risk losing their entitlements and if they are injured at work, they may not be protected. Contractors income Data matching records indicate some contractors are incorrectly reporting or omitting income. Contractors need to report all their income in their tax return, including payments made by businesses for their contracting work. Note that, as part of the taxable payments reporting system, businesses in some industries must lodge a Taxable payments annual report to report contractor payments for providing the following services: Building and construction; Courier; Cleaning; Information technology; Road freight; and Security, investigation or surveillance. Contractors who provide the above services must note that the businesses they contract to report their payments to the ATO on their TPAR. Contractors must then report their income in their tax returns to avoid data matching discrepancies. If the ATO suspects a contractor may have omitted TPRS income on their tax return, it may contact them to request they amend their tax return. If the contractor does not take action, the ATO may conduct a review and audit of their business, and penalties and interest may apply. Government payments programs The ATO is reminding taxpayers that receive government payments for delivering services under a Commonwealth program, such as healthcare, disability support or child care, that they have an obligation to: Keep accurate records; and Report any such income they receive in their tax return. The ATO recently advised that it would be contacting taxpayers and tax agents in February by email to ensure that income received from government agencies such as the Aged Care Subsidy or under the National Disability Insurance Scheme is reported correctly in their tax returns. The ATO has updated its Government Payments Program data-matching program protocol to better detect non-compliance, and work more effectively with other government entities. Work-related expense claims rejected by ART The Administrative Review Tribunal recently disallowed a taxpayer's claims for many different types of work-related expenses. The taxpayer was employed full-time as an engineer, working from home two days a week. For the 2023 income year, he claimed deductions totalling over $61,000, in relation to car expenses, travel expenses, clothing expenses, and home office expenses, all of which he claimed were work-related. The ATO largely disallowed these deductions, and the ART affirmed the ATO's decision, primarily due to problems with substantiating these claims. For example, in relation to the car expenses, the ART noted that none of the log books were contemporaneous, and the log book entries were inconsistent with independent records. In relation to travel expenses, the ART noted that the taxpayer did not provide evidence clearly identifying which travel expenses had been reimbursed by his employer, and the ride share documentation did not include the date, time or destination of travel. In relation to home office utility expenses, the ART noted that the taxpayer only provided calculations estimating the business use proportion of those expenses, without providing any documentary evidence to substantiate the expenses. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.
Cash acceptance is mandated for essential purchases From 1 January 2026, food and grocery retailers must accept cash for in-person transactions of $500 or less between 7am and 9pm. Small businesses with aggregate annual turnover under $10 million are generally exempted from the mandate. However, this mandate still applies to small businesses that share a trademark with a large retailer. The Government noted that, in addition to the cash mandate for fuel and groceries, consumers also already have the option to pay their bills, including utilities, phone bills and council rates, in cash at their local Australia Post outlet through Post Billpay. The Government will review this mandate after three years, to ensure it is functioning as intended. ATO child support data-matching program ATO will acquire child support data from Services Australia for the 2025 to 2027 income years, including the following: The ATO estimates that records relating to up to 300,000 individuals will be obtained each financial year, which will be matched against ATO records. The objectives of this program are to: allow Services Australia to more accurately assess child support obligations, and maximise opportunities to collect child support debts; and identify and educate individuals who may be failing to meet their lodgment obligations and help them to finalise their lodgment obligations, or notify the ATO that an income tax return is not required. Paying super guarantee Employers need to pay a minimum of 12% of each employee's ordinary time earnings into a complying super fund on a quarterly basis (the due date for the March 2026 quarter is 28 April 2026). In most cases, employees can choose the super fund. Employers who do not pay in full, on time or to the correct super fund will have to pay the SG charge, which is made up of the super they owe, nominal interest on those amounts (currently 10%), and an administration fee of $20 per employee, per quarter. These payments must be made through SuperStream. Small Business Superannuation Clearing House service will be permanently closed from 1 July 2026. Existing users should switch to an alternative method to pay their employees' super guarantee. When new employees start, employers must comply with the 'choice of fund rules' if the new employee does not choose a super fund. Employers may now need to request the new employee's 'stapled super fund' details from the ATO. Time limits on GST and fuel tax credit claims GST credits and fuel tax credits will expire if not claimed within the 4-year credit time limit (generally four years from the due date of the original BAS in which the taxpayer could have claimed them). Once credits expire, the ATO has no discretion or ability to amend the assessment to include those credits. There may be situations where the ATO is able to amend for overpaid or underpaid GST or overclaimed credits, but additional credits cannot be included in an amendment assessment. If credits are near expiry, taxpayers should consider: claiming the credits in their next BAS that is still within the 4-year credit time limit; requesting the amendment by lodging a revised BAS for the tax period to which the credits are attributable; or lodging a valid objection against their assessment for the period to which the GST credits are attributable before the end of the 4-year credit time limit. Departure Prohibition Orders for overdue tax debts The ATO is actively using departure prohibition orders as part of a broader shift towards debt collection. A DPO is an enforcement action available to the ATO to prevent certain persons with tax liabilities from leaving Australia without paying their outstanding tax. Since July 2025, the ATO has issued 21 DPOs, more than the total number issued in the entire financial year ended 30 June 2025. The ATO notes that a taxpayer was recently prevented from boarding a flight in the early hours of the morning due to a DPO imposed because of deliberate non-payment of a significant debt. The dog breeding activities treated as an enterprise The ART recently held that a taxpayer had carried on an enterprise of dog breeding for GST purposes. He had lodged activity statements for the quarters ended 30 September 2018 to 31 December 2021 inclusive, claiming input tax credits for the dog breeding activities he carried on from his home. The ATO disallowed the taxpayer's claims for the above periods, arguing that enterprises were not carried on, and that there was a lack of appropriate substantiation. The ART however held that the taxpayer's dog breeding operation was an enterprise for GST purposes, noting that his activities had "the necessary commercial character." Therefore, the taxpayer was entitled to ITCs for that enterprise. However, the ART affirmed the ATO's decision to reduce the taxpayer's other ITC claims, such as in relation to stamp duty on the acquisition of a property and for café and grocery expenses. The ART also admonished the taxpayer for apparently using artificial intelligence in the presentation of his case, as he appeared to rely on cases and principles that did not exist. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.
December 2025 Superannuation Guarantee is due on 28 January 2026 Employee super contributions for the quarter ending 31 December 2025 must be received by the relevant super funds by 28 January 2026. If the correct amount of SG is not paid by an employer on time, the employer must lodge a superannuation guarantee statement and pay the superannuation guarantee charge which includes admin fees and interest. ATO Small Business Superannuation Clearing House is closing ATO Small Business Superannuation Clearing House will close on 1 July 2026. Employers must make arrangements to move to an alternative clearing house now to avoid any unexpected delays with superannuation payments. Following are few key dates in relation to the clearing house. 10 December 2025 — Super payments, along with instructions, must be received by 5.30 pm AEDT on this date. Payments received after this time will be processed from 2 January 2026. 28 January 2026 — December SG due February to March 2026 — Employers should move to an alternative clearing house 28 April 2026 — March SG due 30 June 2026 — Final day of the service. Make final payments. Employers may already have other options readily available so they can exit from using the SBSCH ahead of time and your existing software and payroll packages may already include super functions they can use to pay SG. Popular software packagaes such as Xero contain their own clearing house. ATO's approach to holiday home expenses ATO now takes the view that, if a taxpayer's rental property is also being used as a private holiday home, certain deductions relating to holding it will not be deductible in total as opposed to being apportioned. Expenses relating to ownership and use of the holiday home such as interest, rates and maintenance will not be deductible, unless the holiday home is 'mainly' used to produce assessable income. Whether a holiday home is used 'mainly' to produce assessable income will be determined based on a consideration of a number of factors. However, this will generally not apply to expenses incurred in relation to holiday homes that are rental properties before 1 July 2026, if those expenses are incurred under an arrangement entered into prior to 12 November 2025. ATO warns about barter credit tax scheme The ATO is warning the community to steer clear of an emerging tax scheme involving barter credits — a type of alternative currency used in some business networks. A tax scheme that involves artificially inflating deductions for donations of barter credits to deductible gift recipients is on the rise. While it may seem enticing, promoters and taxpayers could face potentially significant consequences if they are involved. The ATO is concerned that such schemes are being enabled by several barter exchanges that are allowing participants to access barter credits with a nominal face value that is much more than any payments actually made to the exchange. Participants then donate these barter credits to a DGR and claim a larger tax deduction than they are entitled to. Dental expenses are not deductible ATO has noted a number of claims for dental expenses this tax time. Dental expenses, including preventative and necessary dental treatment, medical expenses and other costs relating to personal appearance are not deductible. These expenses are generally private expenses, even if an employer expects an employee to maintain a certain appearance, or pays them an allowance to cover grooming expenses. A deduction can only be claimed for an expense that directly relates to earning their income. Private expenses cannot be claimed as a deduction. Taxpayers should have written evidence of all their expenses, and be able to show a direct connection with those expenses to their employment income. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.
ATO Focus on Small Business The ATO is actively identifying and addressing errors among businesses with turnovers between $1 million and $10 million. Key industries under scrutiny include property and construction, as well as professional, scientific, and technical services such as engineering, IT, design, and consulting. Common issues observed include: Omitted income or sales in Business Activity Statements and tax returns, including income from related entities. Overstated expenses or GST credits. Private expenses incorrectly reported as business-related or not properly apportioned. Failure to register for GST when required. Incorrect R&D tax incentive claims for ineligible activities. Lack of independent advice from registered tax agents, particularly in contractor arrangements. By highlighting these issues, the ATO aims to help small business operators improve compliance and avoid common mistakes. Dual Cab Utes and FBT Dual cab utes are not automatically exempt from fringe benefits tax. If an employer provides a dual cab ute for work purposes and it is available for personal use, it may be subject to FBT. To qualify for an exemption, the vehicle must: Be an eligible vehicle , meaning it is designed to carry at least one tonne, more than eight passengers, or it is not primarily designed for passenger use. Be used only for limited private purposes , such as minor, infrequent, or irregular trips. If these conditions are not met, the employer may be liable for FBT. Employers should monitor employee vehicle use and maintain proper documentation to determine eligibility. Claiming Business Expenses Taxpayers can claim deductions for most business expenses if they comply with the ATO’s three key rules which are: The expense must relate directly to business use. If the expense has both business and private use, only the business portion can be claimed. Taxpayers must keep records to substantiate their claims. New ATO Data-Matching Programs The ATO continues to enhance its data-matching programs to improve compliance, detect errors, and prevent fraud. Data is used to pre-fill returns, verify accuracy, and identify taxpayers who may need assistance. When discrepancies arise, the ATO may contact tax agents or their clients to clarify the differences. Rental Properties ATO will issue letters to taxpayers where its data suggests that rent income was omitted or incorrect in previously lodged returns. If you receive such a letter, please contact our office for assistance. Offshore Merchant Data-Matching The ATO will collect merchant transaction data from Australia’s major banks for the 2025–2027 financial years. Around 9,000 offshore merchant records will be acquired annually. SMSF Compliance and Release Authorities The ATO has noted an increase in self-managed super funds failing to comply with release authorities such as excess contributions or Division 293 tax. Common issues include: Failure to respond within the required 10 business days. Incorrect responses, such as not releasing the full amount or not submitting a release authority statement. Non-compliance can attract significant penalties. Trustees should ensure robust systems are in place to respond promptly and correctly to ATO release authorities. The information in this publication is general in nature and should not be relied upon as professional advice. Individuals should seek specific guidance to ensure applicability to their personal circumstances.
Reminder of September Quarter Superannuation Guarantee Employee super contributions for the quarter ending 30 September 2025 must be received by the relevant super funds by Tuesday, 28 October 2025. If the correct amount of SG is not paid by an employer on time, they will be liable to pay the SG charge, which includes a penalty and interest component. Dealing with rental property repairs Taxpayers who have had work done on their rental property should ensure the expense is categorised correctly to avoid errors when completing their tax return. A deduction for repairs and maintenance expenses can be claimed for work done to remedy, or prevent defects, damage or deterioration from using the property to earn income. These expenses can be claimed in the year they were incurred. However, some capital expenditure may not be immediately deductible, such as for initial repairs, capital works, improvements and depreciating assets. Initial repairs include fixing any pre-existing damage or deterioration that existed at the time of purchasing the property, even if the damage or deterioration was unknown to the taxpayer at the time of purchase. Initial repairs are treated as part of the acquisition cost and included in the cost base of the property for CGT purposes, unless they are capital works or depreciating assets. Capital works are structural improvements, alterations and extensions to the property, and can generally be claimed at 2.5% over 40 years. Capital works deductions can only be claimed after the work has been completed, regardless of when the taxpayer pays the deposit and instalments. Improvements or renovations that are structural are also capital works. Work that goes beyond remedying defects, damage or deterioration that improves the function of the property is regarded as an improvement. Repairs to an entirety are capital and cannot be claimed as repairs. Repairs to an entirety generally involve the replacement or reconstruction of something separately identifiable as a capital item. ATO warns private use of work vehicles and FBT Employers who provide vehicles to their employees need to check how the vehicles are used and whether any exemptions apply to determine if they attract fringe benefits tax. FBT generally applies when a work vehicle is made available for private use, even if it is not actually used. Private use includes any travel not directly related to the employee's job. Exemptions may apply depending on the vehicle's specifications and the nature of the private use. The most common issues the ATO sees include: incorrectly treating private use as business use; assuming dual cab utes are exempt from FBT — exemptions only apply if the vehicle is eligible for the specific FBT exemption and private use is limited; incorrectly classifying vehicles; poor record keeping that does not support the claims or the FBT calculations made Tips to help sole trader clients The ATO is seeing sole traders make mistakes in the following areas: not reporting all income — this includes income earned outside their business (like a 'side hustle'), cash jobs, or payments in-kind/barter deals; overclaiming expenses — this includes claiming the portion of an expense related to personal use, or overstating the cost of goods sold and other business expenses; calculating business losses; incorrectly claiming and offsetting losses from non-commercial business activities against other income sources; misreporting personal services income ('PSI') to gain tax benefits; not registering for GST if they are in the taxi or ride-sourcing industry, or when they reach the GST threshold; and not keeping accurate and complete records. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.
Are you covered in the event of an audit or a review? With government revenue authorities increasingly using data matching, artificial intelligence, and even social media, they can compare disclosures made in your lodged tax returns to those of other taxpayers or benchmarks. If a data matching check escalates to an official audit, inquiry, investigation, or review, costs in defending your position can accumulate quickly, regardless of whether any adjustments are made to your returns The Audit Shield service is designed to cover such unexpected costs in the event of an audit or a review, and the policy is underwritten by AAI Limited. Benefits of our Audit Shield service: Audits and reviews of Employer Obligations (PAYG/FBT/SG), Income Tax, and GST covered. Previously lodged returns are covered automatically. Fees of any other external specialist (e.g. taxation lawyers) or relevant consultant engaged or instructed by us to assist us in a response to audit activity are also covered. Payment is tax deductible. Please contact our office for more information. Reducing student debt is now law 2026 Federal budget announcement of reducing student debt is now law. A 20% reduction will apply to Higher Education Loan Program debts and other student loans that were incurred before 1 June 2025. The minimum repayment threshold is also increased from $54,435 to $67,000 in 2026 financial year and a new marginal repayment system will apply to taxpayers with income above $ 67,000 for repayment calculations. Previously the repayments were based on a percentage of the repayment income. Small Business Superannuation Clearing House is closing The Small Business Superannuation Clearing House will close on 1 July 2026. SBSCH is a free online service provided by the Australian Government through the ATO to enable superannuation payments. New user registrations will close on 1 October 2025. Existing users must now transition to alternative solutions such as Xero. ATO will include on hold debts in account balances From August 2025 ATO will be including debts on hold in taxpayer ATO account balances. A debt on hold is an outstanding tax debt which ATO has previously put debt collection actions on hold. ATO is currently offsetting such debts on hold against any refunds or credits the taxpayer may get, and ATO has not historically recorded these debts on taxpayer statements of account. If you have debts on hold, more than $100, you will receive a letter before it is added to your ATO account balance. If you have a debt on hold of less than $100, the debt will be included in their ATO account balance but will not receive a letter. PAYGW reminders for activity statements ATO will be sending employers a reminder to lodge their activity statements which include the amounts the ATO has on record for them such as PAYGW reported via STP, GST instalments and PAYG instalments. The ATO's reminders are intended to provide a timeframe for employers to review the prefilled information before lodging activity statements. If the employers do not lodge by the specified date, the ATO will lodge the activity statements based on the information they have, and the debt will be payable. If employers do not make any changes to correct the data or lodge by the due date and the activity statement has been finalised by ATO, they will need to adjust these amounts by lodging a revised activity statement. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.
Taxpayers who need to lodge a TPAR Taxpayers may need to lodge a Taxable payments annual report online by 28 August if they have paid contractors to provide any of the following services on their behalf: building and construction; cleaning; courier and road freight; information technology; or security, investigation or surveillance. If the ATO is expecting a TPAR from a taxpayer who does not need to lodge one, they can complete a 'TPAR non-lodgment advice form' by 28 August. Taxpayers who no longer pay contractors can also use this form to tell the ATO they will not need to lodge a TPAR in the future Please contact our office if you need assistance with completing and/or lodging a TPAR. Note that paper lodgments of TPARs will no longer be accepted after 28 August 2025. Changes to tax return amendment period for business Businesses with an annual aggregated turnover of less than $50 million now have up to four years from the date of their tax return assessment to request amendments increased from two years. This applies to assessments for the 2024/25 and later income years. If businesses make a mistake on a tax return and need to request an amendment, they should lodge their requests well before the end of the amendment period to make sure the ATO can process it within the time limit. They should keep accurate and complete records to support their amendment request. Paid parental leave changes have now commenced As from 1 July 2025, the amount of Paid Parental Leave available to families increased to 24 weeks, and the amount of Paid Parental Leave that parents can take off at the same time has also increased from two weeks to four weeks. Superannuation will now also be paid on Government Paid Parental Leave from 1 July 2025, at the new super guarantee rate of 12%, paid as a contribution to their nominated superannuation fund. Parents will also benefit from an increase in the weekly payment rate of Paid Parental Leave, increasing from $915.80 to $948.10 (in line with the increase to the National Minimum wage). This means a total increase of $775.20 over the 24-week entitlement. ASIC warning about pushy sales tactics urging quick super switches ASIC is warning Australians to be on alert for high-pressure sales tactics, click bait advertising and promises of unrealistic returns which encourage people to switch superannuation into risky investments. The warning comes amid increasing concerns from ASIC that people are being enticed to invest their retirement savings in complex and risky schemes. These calls may not have the hallmarks of a typical scam. The caller will seemingly have your best interests at heart, and they say they want to help you find a better super product or locate lost super for free. Consumers should always ask questions about salespeople's connections to funds, particularly in circumstances where a particular fund appears in the pitch, as there may be a commission arrangement. Taxpayer's claim for travel expenses denied In a recent decision, the Administrative Review Tribunal denied an offshore worker's claim for work-related travel expenses, although it did allow his claim for home office expenses. During the relevant period, the taxpayer resided in Queensland with his family, while his employment as an engineer was primarily based at an offshore facility located off the coast of Western Australia. In his tax return for the 2022 income year, the taxpayer claimed work-related expenses of over $30,000, relating to accommodation, meal and incidental expenses for stays in Perth, Darwin and Broome between rotations on the offshore facility. The ART noted that the taxpayer's permanent work location was the offshore facility. It accordingly largely disallowed the work-related expenses on the basis that they were "either preliminary to the commencement of those duties, or occurred after employment duties had ceased, and the taxpayer was on leave." The ART also did not accept the taxpayer's claim for travel-related expenses with reference to the substantiation exception, as the allowances he received were not 'travel allowances'. However, the ART did accept the taxpayer's claim for home office expenses of $579, noting that "As an engineer, he is required to engage in continuing professional development and the Masters and other studies completed in the home office were for this purpose." The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.
Welcome to the start of the new financial year, we sincerely thank you for your support and for partnering with us over the past 12 months. Our team is up to date with the changes to tax rules this year, so it’s time to start thinking about completing your 2025 tax returns. If you have not yet organised your tax appointment, please book an appointment using the link below or get in touch with us asap. We conduct appointments at the office, via Zoom or Phone. Level 1, 86-88 Charles Street Kew VIC 3101 03 9853 1000 admin@crawfordaccountants.com.au Are you Audit Safe? The possibility of being selected for an audit or investigation is increasing each year as the Australian Taxation Office (ATO) and other government agencies widen the scope of their investigation activities utilising data collection/detection capacity, data matching and benchmarking/risk profiling. Even if you can substantiate your claim for an allowable deduction, if queried you must still go through the audit process. To alleviate the cost and stress we have offered you to take out our audit protection and you should have received an offer letter from us few weeks ago. It is a cheap and efficient way of dealing with an ATO audit. For more information, please contact our office. Tax Deductions Tax deductions will help you minimise your tax, but there are three golden rules for tax deductions: Expenses must be related to business/ work and not private. If a portion of the expense if private, the deduction must be apportioned. You must have records to prove the deduction such as receipts The expense must not be reimbursed The super guarantee rate is increasing Businesses that have employees, or hire eligible contractors, will need to ensure that their payroll and accounting systems are updated to reflect the new super guarantee rate of 12% for payments of salary and wages that are made from 1 July 2025. Businesses need to calculate super contributions at 12% for their eligible workers for payments of salary and wages they make from this date. Super contributions for the quarter ending 30 June (due by 28 July 2025) are still calculated at the 11.5% rate for payments of salary and wages made prior to 1 July. Changes to car thresholds from 1 July The car limit for the 2026 income year is $69,674. This is the highest value that a taxpayer can use to calculate depreciation on a car where they use the car for work or business purposes and they first use or lease the car in the 2026 income year. If a taxpayer is buying a car and the price is more than the car limit, the highest input tax (GST) credit they can claim except in certain circumstances is one-eleventh of the car limit. For the 2026 income year, the highest input tax credit they can claim is $6,334. The luxury car tax threshold for the 2026 income year is $91,387 for fuel-efficient vehicles, and $80,567 for all other luxury vehicles. Input tax credits need to be claimed within the four year time limit. A taxpayer cannot claim an input tax credit for luxury car tax when they buy a luxury car, even if they use it for business purposes. Taking charge of upcoming employer obligations As the end of the financial year has just past, the ATO is reminding employers that they should check what they need to do and take note of the following upcoming key dates. From 1 July 2025, some withholding schedules and tax tables will be updated. If you are using a software such as Xero, this will automatically be updated. Employers should complete an STP finalisation declaration by 14 July 2025 and lodge a finalisation declaration for all employees they have paid and reported through STP, so they have the right information to lodge their income tax returns. Employers should also 'finalise' all employees they have paid in the financial year, even those they have not paid for a while, such as terminated employees. Finally, employers who change payroll software providers should finalise their records before they change, to ensure they and their employees have accurate information during tax time. Notice of data exchange for skilled visa program compliance The Department of Home Affairs will obtain data from the ATO to identify whether business sponsors are complying with their sponsorship obligations and whether temporary skilled visa holders are complying with their visa conditions. The Department will provide to the ATO biographical details (including name, address and date of birth) of clients who are, or were in the three most recent financial years, holders of Skills in Demand or Temporary Skills Shortage (subclasses 457 and 482) primary visas. These details will be electronically matched against ATO data holdings. Where there is an identity match, the ATO will return Single Touch Payroll employment data for the relevant individual to the Department. It is estimated that records will be shared relating to around 58,000 individuals . TBAR for June quarter due 28 July All SMSFs must report relevant transfer balance account events using transfer balance account reporting. All events must be reported regardless of the member's total superannuation balance. TBARs for the June quarter are due by 28 July 2025. If an SMSF does not lodge a TBAR by the due date, it may result in compliance action and penalties and could also negatively impact a member's TBA. Taxpayer's claim for home office and car expenses successful The Administrative Review Tribunal recently held that a taxpayer was entitled to claim deductions for home office and car expenses incurred during the COVID-19 pandemic. The taxpayer was employed full time by the ABC producing the ABC Sport Digital Radio station and producing ABC live sports broadcasts, mainly NRL football. During the 2021 income year, due to the restrictions imposed in response to the COVID-19 pandemic, the taxpayer undertook all of his Digital Role from a second bedroom in his apartment which he was renting with his wife, and he undertook most of his Live Role from the ABC's Southbank Studios in Melbourne. The taxpayer claimed deductions for occupation expenses being the proportion of rent for his apartment referable to the use of his home office in performing his Digital Role, and for car expenses incurred in driving between his home and the ABC studios at Southbank on days when he performed both roles. The ART allowed the taxpayer's claims for occupation expenses in full, as the COVID-19 restrictions required him to earn most of his income at his home, and so a proportion of rent was incurred in gaining his assessable income. The ART also allowed the car expenses in full on the basis that on the days when the taxpayer "closed his laptop at home, picked up his car keys and drove to the Southbank Studios . . . he was at work the entire time and his travel was therefore 'on work' . . ." The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office. For all of Crawford Accountants articles and news, visit our website https://www.crawfordaccountants.com.au/blog
Time for Tax Planning The month of June is ideal for business owners and taxpayers to take some time to look at tax minimisation strategies, consider legislative changes and requirements, ensure compliance and review your financial position and aspirations. With ever changing legislative requirements, take some time to make sure your compliance obligations are fulfilled. This will allow you to steer clear of expensive penalties and also put you in an optimum position if you need to borrow funds. Reviewing your superannuation and making voluntary contributions, may achieve substantial tax savings, but you need a carefully prepared strategy. Employers may pay superannuation guarantee obligations early to take advantage of the deduction during the current financial year. Instant asset write-off may assist with business assets. Key areas for small and medium entities are: Trust distributions Dividends from private companies Super contributions Tax governance PAYG instalments STP requirements TPAR requirements Pensions and TBAR events A meeting with your accountant in June for a tax planning session may add value to your overall financial position and minimise tax. Please contact us if you wish to discuss this further. Getting ready for business These are the 'top 7 things' taxpayers need to know when starting a business. Use digital tools and maintain accurate records to help them manage daily activities and cash flow. There are some registrations you will need to complete when you start a business (for example, registering for an ABN or a business name). You can claim a tax deduction for most business expenses if the expense is directly related to earning income. Remember to keep records and only claim the business portion of mixed-use expenses. The type of business structure will affect the tax and registration requirements, so you need to choose the right business structure and understand its obligations. If you are an employer, you have extra responsibilities and obligations (e.g., super guarantee and Single Touch Payroll). You need to lodge and pay your taxes on time. You can prepay their estimated income tax liability through PAYG instalments. Businesses that maintain accurate records, lodge and pay on time and avoid errors not only steer clear of penalties and general interest charges but also become more resilient when facing challenges. Taxi service and ride-sourcing providers must be registered Taxpayers that provide taxi, limousine or ride-sourcing services must register for GST regardless of their turnover. They must collect and pay GST and income tax on all their rides and all other business income. The ATO is advising drivers in this industry who do not have a TFN, ABN or GST registration that they need to register now and collect, report and pay GST on all their future rides. They also need to report all their income from their rides in their next tax return. Penalties and interest may apply to drivers who do not register for GST. Drivers who have not declared all their income for ride-sourcing in prior years can amend a previous tax return. Partial release from tax debt on serious hardship grounds In a recent decision, the Administrative Review Tribunal held that a taxpayer should be released from payment of part of his tax debt on the grounds of serious hardship. As at the 2022 income year, the taxpayer had an accumulated tax debt of approximately $528,000, comprising income tax, late lodgment penalties, PAYG instalments, and the general interest charges on the PAYG and unpaid income tax. Much of the taxpayer's tax debt had arisen as a result of the taxpayer deriving income protection insurance payments from his insurer. These payments had been made since around 2002, and arose from a serious injury the taxpayer had suffered in a fire at his restaurant business. The ART noted that there were a number of factors which weighed against the taxpayer, including his failure to make payments to meet the tax debt and his 'extremely poor' tax compliance history. However, the ART decided that some relief was justified, given the extent of hardship, concerns about the taxpayer's health, and recoverability time for the tax debt. The ART accordingly reduced the total tax debt (including penalties) to $250,000. $20,000 instant asset write-off for 2024/25 Taxpayers who have purchased or are purchasing a business asset this financial year should remember that the instant asset write-off limit is $20,000 for the 2025 income year. If a taxpayer's business has an aggregated annual turnover of less than $10 million and they use the simplified depreciation rules, they may be able to use the instant asset write-off to immediately deduct the business part of the cost of eligible assets, as follows. The full cost of eligible depreciating assets costing less than $20,000 that are first used or installed ready for use for a taxable purpose between 1 July 2024 and 30 June 2025. New and second-hand assets can qualify, although some exclusions and limits apply. If the taxpayer claimed an immediate deduction for an asset's cost under the simplified depreciation rules in an earlier income year, they can also immediately claim a deduction the first time they incur a cost to improve that asset if it is incurred between 1 July 2024 and 30 June 2025 and less than $20,000. The $20,000 limit applies on a per-asset basis, so taxpayers can instantly write off multiple assets as long as the cost of each asset is less than the limit. The usual rules for claiming deductions still apply. Taxpayers can only claim the business part of the expense, and they must have records to prove it. The information provided in this update is general in nature, and if you have any queries or require further information or assistance with the above, please contact our office.
Minimum pension drawdown reminder An SMSF must pay a minimum amount each year to a member who is receiving an account-based pension. This minimum amount is calculated by applying the relevant percentage factor based on the member's age by the member's pension account balance calculated as of 1 July 2024, or on a pro-rata basis if the pension commenced part way through the 2025 financial year. If the minimum payment is not made by 30 June, this could result in adverse taxation consequences for the member. How to avoid common CGT errors The ATO wants taxpayers to know that having a foreign resident capital gains withholding clearance certificate does not mean they do not have any further CGT obligations. If taxpayers have sold property, they still need to include capital gains, losses or an exemption or rollover code in their tax return. Keeping not-for-profit records up to date Taxpayers should remember that they are legally required to keep certain records for their not-for-profit. All organisations including NFPs are required to keep accurate and complete records of all transactions relating to their tax and superannuation affairs. Generally, for tax purposes, taxpayers must keep their records in an accessible form for five years . Records that NFP taxpayers are required to keep include: governing documents; financial reports; documentation relating to grants; and registrations and certificates. A good record-keeping system will help taxpayers run their NFP successfully and manage their tax and super obligations. If a taxpayer's NFP is endorsed as a deductible gift recipient, they must keep records that explain all transactions and other acts relevant to their organisation's status as a DGR. This requirement applies to both endorsed DGRs and listed by name DGRs. Increase to rate for working from home running expenses PCG 2023/1 outlines the ATO's new method ('the fixed-rate method') for calculating additional running expenses while working from home, which has applied from 1 July 2022. The fixed-rate method allows taxpayers to claim at a rate of 70 cents per hour for the following additional running expenses for working from home: energy expenses (electricity and gas) for lighting, heating, cooling, and electronic items used while working from home; internet expenses; mobile and home phone expenses; and stationery and computer consumables. However, PCG 2023/1 does not cover occupancy expenses relating to a home, such as rent, mortgage interest, property insurance and land tax. Taxpayers are not required to use the above fixed-rate method - as from 1 July 2022, they can instead continue to claim the actual expenses they incurred as a result of working from home and keep all records necessary to substantiate their claim. Truck driver entitled to claim meal expenses In a recent decision, the Administrative Review Tribunal upheld a truck driver's claim for meal expenses, notwithstanding that those expenses had not been fully substantiated. The taxpayer was employed as a long-haul truck driver in Western Australia. He was away from home for considerable periods each year. The taxpayer sought a deduction for meal expenses of $32,782 in the 2021 income year, apparently calculated by multiplying the number of days he was away from home (310) by the maximum reasonable daily allowance under Taxation Determination TD 2020/5 . The ATO only allowed the taxpayer a deduction for meal expenses of $5,890 based on a review of his logbook, fatigue diary and bank statements. This was an average of $19 per day multiplied by 310. The ART found on the balance of probabilities that the taxpayer incurred the claimed expenditure, and it found that the taxpayer had met his burden of proof. In this regard, the ART determined that the taxpayer incurred the disputed expenses in gaining or producing his assessable income, and it did not agree with the ATO that there was an insufficient linkage between the expenditure on bank statements and the taxpayer's work. The ART held that the exception to the substantiation provisions applied to the taxpayer, as: a travel allowance was paid by the taxpayer's employer which covered the expenses; the taxpayer incurred the expenditure in gaining or producing his assessable income; and the expenditure fell within the ATO's reasonable travel amounts set out in TD 2020/5. The ART accordingly allowed the taxpayer's claim for travel expenses in full. The information provided in this Newsletter is general in nature, and if you have any queries or require further information or assistance with the above, please contact our office.
ATO's new focus for small business The ATO is currently focusing on the following 'specific risk areas', where it is concerned "small businesses are getting it wrong": Contractors omitting income — with a focus on data matching to ensure all income is reported. Quarterly to monthly BAS reporting for GST purposes — The ATO will move around 3,500 small businesses with a history of non-compliance to monthly reporting from 1 April 2025. The ATO will also continue its focus on non-commercial business losses, small business CGT concessions, business income that is not personal income, incorrect claims for 'small business boosts', GST registration and income of taxi, limousine and ride-sourcing services. Reminder of March 2025 Quarter Superannuation Guarantee Employers are reminded that employee super contributions for the quarter ending 31 March 2025 must be received by the relevant super funds by Monday, 28 April 2025. If the correct amount of SG is not paid by an employer on time, they will be liable to pay the SG charge, which includes a penalty and interest component. The SG rate is 11.5% for the 2025 income year. FBT record keeping and plug-in hybrid exemption changes With the 2025 FBT year having just ended on 31 March, the ATO is reminding employers of some changes that might impact their FBT obligations. Alternative record keeping changes For the 2025 and succeeding FBT years, employers can use existing records instead of travel diaries and declarations for some fringe benefits. If using existing corporate records, employers need to meet the minimum required information at the time of lodging the FBT return. Keeping the right records ensures employers can correctly calculate the taxable value of the benefit and support their FBT position. Plug-in hybrid electric vehicle changes The FBT exemption for plug-in hybrid electric vehicles ('PHEVs') broadly ended on 31 March 2025, so the 2025 FBT year may be the last year that employers can claim the exemption. However, an employer can continue to apply the exemption if that PHEV was used, or available for use, before 1 April 2025 (and that use was exempt), and they have a financially binding commitment to continue providing private use of the vehicle on and after 1 April 2025. Taxable payments annual report lodgment reminder Businesses that pay contractors for Taxable payments reporting system services may need to lodge a Taxable payments annual report by 28 August each year. This includes businesses paying contractors in the building and construction, cleaning and IT industries. From 22 March, the ATO will apply penalties to businesses that have not lodged their TPAR from 2024 or previous years. General transfer balance cap will be indexed on 1 July 2025 The transfer balance cap will increase from $1.9 million to $2 million on 1 July 2025. The general TBC amount is used for a number of purposes, including to determine the total capital amount that can be transferred to the pension phase, and to determine eligibility for making non-concessional contributions. This increase has flow through impacts for individuals who have started a retirement phase pension, as they will be entitled to an increase to their personal TBC if they have not previously been at, or exceeded, their cap. The ATO will calculate an individual's personal TBC based on the information reported to and processed by the ATO. To help individuals have a clear understanding of their position, the ATO encourages funds to report all 'TBC events' when they occur and as early as possible before the 1 July 2025 indexation start date. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.
New tax cuts for individual taxpayers in 2027 and 2028 The individual tax rates will reduce effective 1 July 2026. The current 16% tax rate will be reduced to 15% from 1 July 2026 and will be further reduced to 14% from 1 July 2027. The personal income tax rates (excluding the Medicare levy) for the 2025 and 2026 income years are in the following table, along with the proposed changes to the tax rates for the 2027 and 2028 income years: Australian resident individual tax rates Income threshold Tax Rate 2025 & 2026 2027 2028 $ 0 - $ 18,200 0% 0% 0% $ 18,201 - $ 45,000 16% 15% 14% $ 45,001 - $ 135,000 30% 30% 30% $ 135,001 - $ 190,000 37% 37% 37% $ 190,001+ 45% 45% 45% A taxpayer earning between $18,201 and $45,000 will get a tax cut of up to $268 in the 2027 income year and up to $536 from the 2028 income year. I ncreased Medicare levy thresholds The Medicare levy thresholds were increased from 1 July 2024 per below: No Medicare levy payable below 2024 2025 Individuals $ 26,000 $ 27,222 Families not eligible for SAPTO $ 43,846 $ 45,907 Single individuals eligible for SAPTO $ 41,089 $ 43,020 Families eligible for SAPTO $ 57,198 $ 59,886 For each dependent child or student, the family income thresholds will increase by a further $4,216 up from $4,027. Student loan amendments The government will reduce all outstanding Higher Education Loan Program and other student debts by 20%, subject to the passage of legislation. The 20% reduction is in addition to the recent indexation reforms. The repayment threshold will be increased from $54,435 in the 2025 to $67,000 in the 2026. Energy bill relief Eligible households and small businesses will receive two $75 bill rebates directly off their electricity bills until 31 December 2025. Expansion to Help to Buy scheme for first home buyers Under the Help to Buy scheme, the Government will provide an equity contribution of up to 40% to support eligible home buyers to purchase a home with a lower deposit and a smaller mortgage. The income caps for the scheme will be increased from $90,000 to $100,000 for individuals and from $120,000 to $160,000 for joint applicants and single parents. Small Business and Franchisee Support and Protection The ACCC and ASIC will be funded to: Strengthen regulatory oversight of the Franchising Code of Conduct. Improve its data analytics capability to better target enforcement activities to deter illegal phoenixing activities, particularly in the construction sector. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.
Employer obligations in 2025 Taxpayers who employ staff should remember the following important dates and obligations: Fringe benefits tax 31 March 2025 marks the end of the 2024/25 FBT year. Employers should remember the following regarding their FBT tax time obligations. They should identify if they have provided a fringe benefit. If they have, they should determine the taxable value to work out if they have an FBT liability. They should lodge an FBT return and pay any FBT owed by 21 May 2025. If their registered tax agent lodges electronically for them, they have until 25 June 2025. They should keep the right records to support their FBT position. PAYG withholding Taxpayers need to withhold the right amount of tax from payments they make to their employees and other payees, and pay those amounts to the ATO. Single touch payroll Employers should finalise their STP data by 14 July 2025 for the 2024/25 financial year (there may be a later due date for any closely held payees). Super guarantee 28 January, 28 April, 28 July and 28 October are the quarterly due dates for making SG payments; The SG rate is currently 11.5% of an employee's ordinary time earnings. From 1 July 2025, it will increase to 12% Taxpayers should ensure SG for their eligible employees is paid in full, on time and to the right super fund, otherwise they will be liable for the SG charge. ATO's tips to help taxpayers stay on top of their BAS If lodging online, or through a registered tax or BAS agent, you may be able to get an extra 2 or 4 weeks to lodge and pay. If you have nothing to report for the period, you must lodge a nil BAS. If you made a mistake on your last BAS, instead of lodging a revision, you may be able to use your current BAS to fix it. You can also use their BAS to vary an instalment amount. Claiming fuel tax credits when rates change Fuel tax credits changed on 3 February, and taxpayers could receive more savings for fuel they have acquired on and from this date. Different rates apply based on the type of fuel, when it was acquired and what activity it is used for. The ATO has the following tips for taxpayers to ensure they are claiming correctly. You can use the ATO's 'eligibility tool' on its website to find out if they can claim fuel tax credits for fuel they have acquired and used. You can use the ATO's online fuel tax credit calculator to work out their claim. ATO "busts" NFP myths As the Not-for-profit self-review return is due in March, the ATO has recently published a document 'busting' various NFP 'myths'. Myth 1: All NFPs are income tax exempt ATO response: This is not true. Some NFPs are income tax exempt and some are taxable. Myth 2: There is only one way to lodge the NFP self-review return ATO response: There are three ways, as follows: A 'principal authority' may be able to lodge using 'Online services for business'; It may be possible for the return to be lodged by phoning the ATO's automated self-help phone service on 13 72 26; and A registered tax agent can lodge the return through Online services for agents. Myth 3: Anyone can lodge the NFP self-review return online ATO response: If lodging via Online services for business, anyone authorised to access the return in Online Services can lodge. If a registered tax agent has been engaged, they can also prepare and lodge the return in Online services for agents. Myth 4: If a person is unsure whether their NFP has charitable purposes, then they do not need to lodge ATO response: The self-review return still needs to be lodged, even if it is not certain whether the NFP is charitable. Taxpayer's claim for input tax credits unsuccessful In a recent decision, the Administrative Review Tribunal rejected a taxpayer's claim for input tax credits on the basis that all the relevant GST returns (i.e., BASs) were lodged out of time. For the GST periods from 1 October 2015 to 31 March 2017, the taxpayer filed each of her GST returns more than four years after they were due. The taxpayer still claimed input tax credits totalling over $10,000 for this period. The ATO disallowed this claim, on the basis that none of the input tax credits were claimed within the four year period, as required by the GST Act. The ART upheld the ATO's decision, noting that, as the taxpayer did not file the GST returns within the four year period. ATO's appeal against decision that UPEs are not "loans" The Full Federal Court recently dismissed the ATO's appeal against an AAT decision that unpaid present entitlements ('UPEs') owing by a trust to a corporate beneficiary were not "loans" for Division 7A purposes. A corporate beneficiary had become entitled to a share of the income of a trust for the 2013 to 2017 income years. Parts of these entitlements remained outstanding, resulting in UPEs. The ATO treated these UPEs as loans from the corporate beneficiary back to the trust and, in consequence, as "deemed dividends" made to the trust. The AAT held at first instance that a loan had not been made in this case. The Full Federal Court upheld the AAT's decision, noting that a loan for Division 7A purposes requires an obligation to repay an amount, not merely the creation of an obligation to pay an amount such as when a trust distributes income to a beneficiary. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.
CGT withholding measures now law The Government recently passed legislation making changes to the foreign resident capital gains withholding laws (among other changes). Foreign resident capital gains withholding is relevant for all vendors selling certain taxable real property (e.g., Australian land). Even Australian residents can be caught by these laws because, if they do not have a valid 'clearance certificate' issued by the ATO at, or before settlement, tax must be withheld from the sale proceeds by the purchaser and paid to the ATO. The new legislation increases the foreign resident capital gains withholding rate to 15% (from 12.5%), and completely removes the threshold (currently $750,000) before which withholding applies. This means that all disposals of taxable real property are potentially subject to foreign residents' capital gains withholding requirements regardless of the market value of the CGT asset. These amendments take effect from 1 January 2025. ATO's notice of rental bond data-matching program The ATO will acquire rental bond data from State and Territory rental bond regulators bi-annually for the 2024 to 2026 income years, including details of the landlord and tenant, managing agent identification details, and rental bond transaction details. The objectives of this program are to identify and educate individuals and businesses who may be failing to meet their registration or lodgment obligations. The ATO expects to collect data on approximately 2.2 million individuals each financial year. Study/training loans — What's new The indexation rate for study and training loans is now based on the Consumer Price Index or Wage Price Index — whichever is lower. This change has been backdated to indexation applied from 1 June 2023 for all HELP, VET Student Loan, Australian Apprenticeship Support Loan, and other study or training support loan accounts. Consequently, indexation rates for 2023 and 2024 have changed to: 3.2% for 1 June 2023 (reduced from 7.1%); and 4% for 1 June 2024 (reduced from 4.7%). Individuals who had a study loan that was indexed on 1 June 2023 or 1 June 2024 do not need to do anything. Individuals whose study loan is in credit after the adjustment may receive a refund for the excess amount to their nominated bank account, if they have no outstanding tax or Commonwealth debts. When to lodge SMSF annual returns All trustees of SMSFs with assets as at 30 June 2024 need to lodge an SMSF annual return for the 2023/24 financial year. The SAR is more than a tax return — it is required to report super regulatory information, member contributions, and pay the SMSF supervisory levy. However, not all SMSFs have the same lodgment due date: Newly registered SMSFs and SMSFs with overdue SARs for prior financial years (excluding deferrals) should have lodged their SAR by 31 October 2024. All other self-preparing SMSFs need to lodge their SAR by 28 February 2025 (unless the ATO has asked them to lodge on a different date). For SMSFs that lodge through a tax agent, the due date for lodgment of their SAR is generally 15 May or 6 June 2025. SMSFs that have engaged a new tax agent need to nominate them to confirm they are the authorised representative for the fund. SMSF trustees must appoint an approved SMSF auditor no later than 45 days before they need to lodge their SAR. Before they lodge, they must ensure that their SMSF's audit has been finalised and the SAR contains the correct auditor details. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.
Can staff celebrations attract FBT With the holiday season coming up, employers may be planning to celebrate with their employees. Before they hire a restaurant or book an event, employers should make sure to work out if the benefits they provide their employees are considered entertainment-related, and therefore subject to fringe benefits tax ('FBT'). This will depend on: the amount they spend on each employee; when and where the celebration is held; who attends — is it just employees, or are partners, clients or suppliers also invited? the value and type of gifts they provide. Employers who do provide entertainment-related fringe benefits should keep records detailing all of this information so they can calculate their taxable value. Reminder of December 2024 Quarter Superannuation Guarantee Employers are reminded that employee superannuation contributions for the quarter ending 31 December 2024 must be received by the relevant super funds by 28 January 2025. If the correct amount of SG is not paid by an employer on time, they will be liable to pay the SG charge, which includes a penalty and interest component. The SG rate is 11.5% for the 2025 income year. SMSFs cannot be used for Christmas presents There are very limited circumstances where taxpayers can legally access their super early. Generally, taxayers can only access their super when they: reach preservation age and 'retire or turn 65 (even if they are still working) To access their super legally before then, taxpayers must satisfy a 'condition of release'. SMSF members who illegally access their benefits may be liable for additional income tax and administrative penalties, and they could be disqualified as a trustee. For taxpayers who have illegally accessed their super, returning it to the fund may be considered a new contribution. Depending on their contribution caps, this may result in additional tax on excess contributions. Taxpayer’s claims for various home business expenses rejected In a recent decision, the AAT rejected in full a taxpayer's claims for "several classes or categories of deductions." For the relevant period of 1 July 2021 to 30 June 2022, the taxpayer was (according to his employer) a 'technical architect'. However, the taxpayer also claimed he worked from home 6 am to 11 pm seven days a week, 365 days of the year (as he was ‘always on call’), and his income tax return for the 2022 financial year claimed a wide range of deductions, totalling approximately $40,000. The AAT separately considered each category of deductions claimed, and rejected each in turn. In relation to his home office 'occupancy expenses' (e.g., for home insurance, council rates, waste disposal, water rates, and repairs), the AAT noted that the 'home office' rooms (comprising floorspace occupying 31% of the dwelling’s total floor area) were not physically separate from the remainder of the dwelling, which the taxpayer shared with four other members of his family. Home office running expenses (e.g., gas, power and internet) were disallowed on the grounds that the taxpayer had "not properly established an entitlement to such deductions or otherwise appropriately apportioned them between private or work-related activities." The AAT found his 100% claim for the internet, on the basis that the other members of the household did not use the internet connection, "very difficult to accept". In relation to plant and equipment expenses, the evidence was "largely non-existent." In relation to consumable expenses, the AAT noted that they appeared to be for goods or services of a private or domestic nature (including medications, toilet paper, milk, tea, sugar and insect spray). The AAT also rejected the taxpayer's claim for "payments made to his spouse for tax management, office cleaning and document management/storage", noting that the services provided were generally of a private or domestic nature, and that the rendering of invoices by the spouse "has a degree of artificiality to it". ATO reminder about family trust elections Making an FTE provides access to certain tax concessions (assuming the relevant tests and conditions are satisfied), although there are important things to consider. In particular, once the election is in effect, family trust distribution tax ('FTDT') is imposed when distributions are made outside the family group of the 'specified individual'. FTDT is a 47% tax, payable by a trustee, director, or partner, as the case may be (depending on the entity). Taxpayers should review FTEs and IEEs annually to ensure they remain appropriate. Taxpayers can only revoke or vary FTEs and IEEs in limited circumstances and subject to certain conditions. Before making a distribution or annual trust resolutions, trustees should identify the members of the specified individual's family group. This will help avoid FTDT liabilities. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.
Hiring employees for the festive season As the festive season approaches, employers that hire new employees to help with their business should remember the following when it comes to their employer tax and super obligations: Employers should make sure they are withholding the right amount of tax from payments they make to their employees and other payees, especially as this will help their employees meet their end-of-year tax liabilities; Employers must pay super guarantee (currently at 11.5%) to all eligible employee's super funds in full and on time to avoid paying the super guarantee charge; and If employers are still not reporting through single touch payroll ('STP') and they do not have an approved exemption, deferral or concession in place, they should start reporting now. If they have just started a business or recently employed staff, they will need to report through STP from their first payday. Lodging and paying business activity statements The ATO is reminding taxpayers that it is important to lodge BASs and pay in full and on time to avoid penalties and interest charges. The BAS for the first quarter of 2024/25 is generally due on 28 October, but taxpayers will receive an extra: four weeks if they lodge through a registered tax or BAS agent; or two weeks if they lodge online. The cost of managing tax affairs is tax deductible for taxpayers, and a registered agent's help will allow them to focus on running their business. Deductions for financial advice fees The ATO has provided guidance about when an individual not carrying on an investment business may be entitled to a deduction for fees paid for financial advice. An individual is entitled to a deduction for fees for financial advice to the extent that the loss or outgoing is incurred in gaining or producing assessable income, unless the loss or outgoing is of a capital, private or domestic nature. Fees for financial advice an individual incurs may also be deductible to the extent that the advice relates to managing their 'tax affairs' (e.g., fees for advice in relation to salary sacrifice arrangements). However, fees for financial advice on a proposed investment prior to the acquisition of an asset, or about how to invest additional funds to grow an investment portfolio, will not be deductible. The individual must also have sufficient evidence of the expenditure to claim the expense as a deduction, such as a properly itemised invoice. ATO's notice of government payments data-matching program The ATO will acquire government payments data from government entities which administer government programs for the 2024 to 2026 income years, matching data on government payments made to service providers against ATO records, including service provider identification details and payment transaction details. The ATO estimates that records relating to approximately 60,000 service providers will be obtained each financial year, including approximately 9,000 individuals, with the remainder consisting of companies, partnerships, trusts and government entities. FBT on plug-in hybrid electric vehicles From 1 April 2025, a plug-in hybrid electric vehicle will not be considered a zero or low emissions vehicle under fringe benefits tax law and will not be eligible for the electric car FBT exemption. However, an employer can continue to apply the electric car exemption if: use of the PHEV was exempt from FBT before 1 April 2025; and they have a financially binding commitment to continue providing private use of the vehicle to an employee or their associate on and after 1 April 2025 (note that any optional extension of the agreement is not considered binding). If there is a change to a pre-existing commitment on or after 1 April 2025, the FBT exemption for the PHEV will no longer apply from the date of that new commitment. An employer is not entitled to an exemption from FBT after 1 April 2025 if there was no binding financial commitment to provide the car to a particular employee in place before then. Eligibility for compassionate release of superannuation The ATO has been responsible for the administration of the early release of superannuation on compassionate grounds since 1 July 2018. It will only approve a release of superannuation on compassionate grounds if the applicant meets all the conditions set out in the regulations, including that the applicant has no other means to pay the expenses. The five main grounds of eligibility are: medical treatment or transport (i.e., to treat a life-threatening illness or injury, or alleviate acute or chronic pain or mental illness) for the applicant or their dependant; accommodating a disability for the applicant or their dependant; palliative care for a terminal illness for the applicant or their dependant; funeral expenses for a dependant of the applicant; or preventing foreclosure or forced sale of the applicant's home. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.
Avoid a tax time shock Individual taxpayers can take the following steps to ensure the correct amount of tax is being put aside throughout the year: Let your employer know if you have a student loan, such as a HECS or HELP debt Check you are only claiming the tax-free threshold from one employer Consider whether the Medicare Levy Surcharge may affect you this financial year Check your income tier is correct for your private health insurance rebate Consider voluntarily entering PAYG instalments and pre-paying tax throughout the year to avoid a large tax bill at tax time for investment or business income Reminder of September Quarter Superannuation Guarantee Employers are reminded that employee super contributions for the 1 July 2024 to 30 September 2024 quarter must be received by the relevant super funds by 28 October 2024 in order to avoid being liable to pay the SG charge. myGovId changing its name to myID The digital identity app 'myGovID' will soon be changing its name to 'myID'. While the name is changing, the login and security will not change. Taxpayers who have already set up their myGovID and use it to access government online services will not need to do anything when the app changes to myID. They will still have: The same details — there is no need to set up a new myID. Your login details and identity strength remain the same Continued use — once available your existing app should automatically update to myID or they can manually update it from the APP Store or Google Play Access to services — You can still use the app to securely access government online services. The new name aims to reduce the confusion between myGovID and myGov. ATO security safeguards for victims of fraud recently enhanced Where a taxpayer has been the victim of identity, tax or super fraud, the ATO may apply security safeguards to their account to prevent further harm. This may require the impacted taxpayer to contact the ATO each time they need to access their information and cause inconvenience for the taxpayer as well as their tax agents. The ATO has recently enhanced processes to improve ongoing access to ATO online services. Impacted taxpayers must contact the ATO for initial access and then set a Strong online access strength. To set a Strong online access strength, taxpayers need to: Set up your myGovID to a Strong identity strength using their Australian passport; Connect your myGovID to their myGov account; Sign in to myGov with your myGovID; and Go to ATO online services. Once set, taxpayers no longer need to contact the ATO every time they access their information. Impacted taxpayers must continue to use their Strong myGovID whenever they access ATO online services, or account access will be restricted to maintain ongoing protection of client information. Valuing fund assets for SMSFs One of the many responsibilities SMSF trustees have every income year is valuing their fund's assets at market value. The market value of an asset is the amount that a willing buyer and seller would agree to in an arm's-length transaction. These valuations will be used when preparing the fund's accounts, statements and SMSF annual return. Asset valuations will be reviewed by an approved SMSF auditor as part of the annual audit prior to lodgment of the SAR. The auditor will check that assets have been valued correctly and assess and document whether the basis for the valuations is appropriate given the nature of the asset. The auditor is not responsible for valuing fund assets. Taxpayers should ensure that they have their valuations done before going to the auditor. It is the responsibility of the SMSF trustee to provide objective and supportable evidence to their auditor for the valuation of the fund's assets, including all relevant documents requested to prevent delays in auditing the fund. Failure to do so could result in a potential late lodgment of their annual return or a contravention if mistakes have been made. SMSF trustees should start researching now to find what type of evidence they need to support the valuation as this can take time. For some asset types valuations must be undertaken by a qualified independent valuer. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.
Pre filling information is now updated With millions of pieces of information now pre-filled, including information from banks, employers, government agencies and private health insurers, the ATO has given the 'green light' to lodge your tax returns. The ATO reminds taxpayers that the rules regarding how and when you can claim a deduction can change, including in relation to car expenses and working from home costs. Therefore, you should not just 'copy and paste' your deductions from last year, and speak with our accountants for your claims. The ATO notes that taxpayers using a registered tax agent normally have the extended due dates. Business self-review checklist: GST classification of products GST classification errors can lead to significant under-reporting of GST for some taxpayers. The ATO recently issued guidance for small to medium businesses on self-reviewing GST classification of food and health products. The use of this guide is not mandatory, although the ATO encourages small to medium businesses to regularly self-review the GST classification of supplies, and adopt better practice processes and controls as listed in the accompanying checklist. The checklist provides practical, step-by-step guidance for entities to: self-review the GST classification of their supplies (products they import, purchase as stock or produce for sale); and assess the robustness of their business systems, processes and controls that directly impact their GST classification systems. Small business food retailers with turnover of $2 million or less may use one of the 'GST simplified accounting methods' to account for GST instead. Receiving payments or assets from foreign trusts Additional tax liabilities may arise when money or assets of a foreign trust are paid to a taxpayer or applied for their benefit, and they are a beneficiary of the foreign trust. These can include: loans to them by the trustee directly or indirectly through another entity; amounts paid by the trustee to a third party on their behalf; amounts that are described as gifts from family members, but are sourced from the trust; and distributions paid to them or trust assets transferred to them by the trustee. Taxpayers who receive money from a foreign trust may need to ask further questions to determine whether the amount must be included in their assessable income, including: whether they are a beneficiary of the foreign trust; where the foreign trust obtained the money; and why the money was paid to them, e.g., is it a payment for services, a gift, a distribution or a loan. Record keeping for work-related expenses Taxpayers need to consider what work-related expenses they will be looking to claim in the new financial year, and what records they will need to substantiate those deductions. Records can be kept as a paper version, an electronic copy, or a 'true and clear' photo of an original record. Working from home deductions Taxpayers can use two different methods to calculate their working from home deductions, and they each have different requirements: With the fixed rate method, taxpayers will need a record of the actual number of hours they worked from home for the whole financial year, and at least one record for each of the additional running expenses they incurred that the rate includes (e.g., an electricity bill). To use the actual cost method, taxpayers must also keep records for any additional running expenses they incurred, and the depreciating assets they bought and used while working from home, and show how they apportioned work-related use for their expenses and depreciating assets. Please contact our office if you need any assistance with your record keeping requirements, such as logbook requirements for car expenses. Tax incentives for early stage investors The ATO is reminding investors who purchased new shares in a qualifying 'early stage innovation company that they may be eligible for tax incentives. These tax incentives provide eligible investors who purchase new shares in an ESIC with: a non-refundable carry forward tax offset equal to 20% of the amount paid for their eligible investments – this is capped at a maximum tax offset amount of $200,000 for the investor and their affiliates combined in each income year; and modified capital gains tax ('CGT') treatment, under which capital gains on qualifying shares that are continuously held for at least 12 months and less than 10 years may be disregarded – capital losses on shares held less than 10 years must be disregarded. The maximum tax offset cap of $200,000 does not limit the shares that qualify for the modified CGT treatment. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.
Are you Audit Safe? The possibility of being selected for an audit or investigation is increasing each year as the Australian Taxation Office (ATO) and other government agencies widen the scope of their investigation activities utilising data collection/detection capacity, data matching and benchmarking/risk profiling. Even if you can substantiate your claim for an allowable deduction, if queried, you must still go through the audit process. To alleviate the cost and stress we have offered you to take out our audit protection and you should have received an offer letter from us few weeks ago. It is a cheap and efficient way of dealing with an ATO audit. For more information, please contact our office. Tips for correctly claiming deductions for rental properties Taxpayers to consider the following factors in determining claims for rental deductions. Repairs and general maintenance are expenses work done to remedy or prevent defects, damage or deterioration from using the property to earn income. These expenses can be claimed in the year the expense occurred. Initial repairs include any work done to fix defects, damage or deterioration existing at the time of purchase. These are capital repair expenses and cannot be claimed as a deduction. Capital works are structural improvements, alterations and extensions to the property, claimed at 2.5% over 40 years with some exceptions. Deductions for capital works can only be claimed afterthe work has been completed. Improvements or renovations that are structural are also capital works. Work going beyond remedying defects, damage or deterioration which improves the function of the property are improvements. Repairs to an 'entirety' are also capital and cannot be claimed as repairs. Repairs to an entirety generally involve the replacement or reconstruction of something separately identifiable as a capital item Depreciating assets must be claimed over time according to their effective life. Small business energy incentive Businesses with an aggregated annual turnover of less than $50 million that had upgraded or purchased a new asset that helps improve energy efficiency during the 2024 income year should consider the small business energy incentive. This new measure gives them the opportunity to claim a bonus deduction equal to 20% of the cost of eligible assets or improvements to existing assets that support more efficient use of energy. This incentive applies to eligible assets that were first used or installed ready for use for a taxable purpose between 1 July 2023 and 30 June 2024. Eligible improvement costs must have been incurred during this period to be eligible for the bonus deduction. Up to $100,000 of total expenditure is eligible under this incentive, with the maximum bonus deduction being $20,000 per business. This 20% bonus deduction is on top of other existing ones. Businesses can claim both the ordinary deduction for the expense as well as the bonus deduction. Claiming work-related expenses The ATO is advising taxpayers that having records to substantiate claims is essential to prove deductions can be claimed, having regard to the following in particular: A bank or credit card statement on its own will generally not be enough evidence to support a work-related expense claim. Taxpayers instead need detailed written evidence such as a receipt. If a taxpayer's total claim for deductible work expenses is $300 or less, they can claim a deduction without written evidence, but they must still be able to show that they spent the money and how they calculated the amount being claimed. While some deduction types do not require receipts (e.g., laundry expenses), some kind of record may still be necessary. Taxpayers may also need a record that shows their private and work-related use (e.g., a diary), and how the amount claimed as a deduction was calculated. Federal Court overturns AAT's tax resident decision The Federal Court has recently overturned an Administrative Appeals Tribunal decision that a taxpayer was a resident of Australia for tax purposes even though he was mostly living and working overseas during the relevant period. The taxpayer was a mechanical engineer who became an Australian citizen in 1978. He lived and worked in Dubai, United Arab Emirates, from September 2015 until 2020, and he spent less than two months in Australia for each of the 2017 to 2020 income years visiting his family. The AAT nevertheless held that he was a tax resident of Australia for each of the 2016 to 2020 income years, as he "maintained an intention to return to Australia and an attitude that Australia remained his home." On appeal to the Federal Court, the taxpayer succeeded in having the AAT's decision overturned. The Federal Court held, in considering whether the taxpayer was a resident of Australia according to 'ordinary concepts', that the AAT applied the wrong test, confusing it with the 'domicile test'. Also, in relation to the 'domicile test', the Federal Court noted that the AAT further misunderstood how to establish that a person had a 'permanent place of abode' outside of Australia. The Federal Court accordingly held that the taxpayer's appeal be allowed, and the matter be remitted to the AAT for determination according to law. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.
Welcome to the start of the new financial year, we sincerely thank you for your support and for partnering with us over the past 12 months. Our team is up to date with the changes to tax rules this year, so it’s time to start thinking about completing your 2024 tax returns. If you have not yet organised your tax appointment, please book an appointment using the link below or get in touch with us asap. We conduct appointments at the office, via Zoom or Phone. Level 1, 86-88 Charles Street Kew VIC 3101 03 9853 1000 admin@crawfordaccountants.com.au Book Now Are you Audit Safe? The possibility of being selected for an audit or investigation is increasing each year as the Australian Taxation Office (ATO) and other government agencies widen the scope of their investigation activities utilising data collection/detection capacity, data matching and benchmarking/risk profiling. Even if you can substantiate your claim for an allowable deduction, if queried you must still go through the audit process. To alleviate the cost and stress we have offered you to take out our audit protection and you should have received an offer letter from us few weeks ago. It is a cheap and efficient way of dealing with an ATO audit. For more information, please contact our office. Tax Deductions Tax deductions will help you minimise your tax, but there are three golden rules for tax deductions: Expenses must be related to business/ work and not private. If a portion of the expense if private, the deduction must be apportioned. You must have records to prove the deduction such as receipts The expense must not be reimbursed The super guarantee rate is increasing Businesses that have employees, or hire eligible contractors, will need to ensure that their payroll and accounting systems are updated to reflect the new super guarantee rate of 11.5% for payments of salary and wages that are made from 1 July 2024. Businesses need to calculate super contributions at 11.5% for their eligible workers for payments of salary and wages they make from this date. Super contributions for the quarter ending 30 June (due by 28 July 2024) are still calculated at the 11% rate for payments of salary and wages made prior to 1 July. ATO's main residence exemption tips The main residence exemption needs to be considered in a variety of situations when a taxpayer sells a property they have lived in. Following are the tips to consider. Taxpayers should consider if they have started earning income from their home (in which case they may need to get a market valuation for CGT purposes). When renting out a property that was their main residence, taxpayers need to consider whether to use the 6-year absence rule when they sell their property. Taxpayers can only have one property as their main residence at a time. The only exception is the 6-month period when they move from one home to another. Has the taxpayer's residency changed? If so, this may affect eligibility for the exemption. Family trust elections and interposed entity elections Family trust distribution tax ('FTDT') is a special, 47%, tax sometimes payable by a trustee, director or partner. It applies when a trust has made a family trust election ('FTE'), or an entity has made an interposed entity election ('IEE'),and makes a distribution outside the 'family group' of the specified individual in the election. Where such an election has been made by a trustee or another entity, it is important that the original election is retained in the approved form. FTEs and IEEs can be lodged with the ATO. Where elections are involved, taxpayers should consider the following on an annual basis: if the election is needed and whether it can, and should be, revoked; whether the specified individual remains the most suitable person and, if not, whether the specified individual can and should be varied; and the timeframes to vary or revoke elections (noting these are limited and that, outside these periods, the elections and the specified individuals cannot be changed). It is important to recognise who the members of the specified individual's family group are when making annual trustee resolutions, as distributions outside the family group will result in FTDT of 47%. ATO may cancel inactive ABNs The ATO regularly reviews, and sometimes cancels, inactive Australian Business Numbers. The ATO may review a taxpayer's ABN if the taxpayer has not reported business activity in their tax return, or there are no signs of business activity in other lodgments or third-party information. If the ATO thinks a taxpayer is no longer using their ABN, it will contact them by email, letter or SMS. If the taxpayer is still running a business, the ATO will tell them what they need to do to keep their ABN. If they are no longer in business, they do not need to do anything -— the ATO will cancel their ABN. Taxpayers who think they are still entitled to an ABN that has been cancelled need to reapply for it. If they restart their business activities, they should be able to reapply for the same ABN, provided that their business structure is not changing. New lodgment obligation for income tax exempt organisations Non-charitable not-for-profits with an active ABN, including community service organisations, need to lodge an annual NFP self-review return to notify their eligibility for income tax exemption. To be eligible to self-assess as income tax exempt, the organisation's main purpose must be a community service purpose. Any other purpose must be incidental, ancillary or secondary. Community service purposes are altruistic, which means the organisation must be established and operated for the wellbeing and benefit of others, and not for political or lobbying purposes. For example, a club or association that has been set up principally to improve the welfare of the community would be regarded as a community service organisation. This would not be the case, however, if its main purpose was to advance the professional interests of its members. Taxpayers able to apply CGT small business concessions The Administrative Appeals Tribunal ('AAT') recently held that a trust was entitled to apply the CGT small business concessions and, therefore, it could reduce a capital gain it made down to nil. In March 2015, a family trust entered into an agreement for the sale of its shares in a company for $3,500,000. In June 2015, the trustees of the trust passed a resolution apportioning the trust's income for that year between the four taxpayers (two brothers and their wives), and also distributing the capital gain made on the sale equally between those four taxpayers. The determination of the trust's net income for distribution to the beneficiaries took into account the 50% CGT discount and CGT small business concessions, relying on a valuation of the shares and underlying business being $3,500,000. The ATO, however, deemed the shares sold by the trust to have been disposed of for a market value of $10,640,000, based on an updated valuation report. This also meant that the trust was not entitled to the CGT small business concessions, as this valuation meant that it did not satisfy the CGT maximum net asset value. The ATO relied on the 'market value substitution' rule to substitute the value of $10,640,000 in place of the sale price of the shares. This meant that each taxpayer's share of the 2015 trust distribution was increased from $321,989 to $1,194,174. In relation to the MNAV test, the AAT needed to determine whether the net value of the CGT assets of the trust and its connected entities exceeded $6,000,000. The AAT preferred the approach taken by the valuers for the taxpayers, partly because they had given "more attention and consideration to this particular business and the circumstances and location in which it operates." The AAT accordingly concluded that the total net value of the CGT assets of the trust and connected entities was below $6,000,000, and so the MNAV test was satisfied, and the taxpayers' objections to the amended assessments should be allowed. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office. For all of Crawford Accountants articles and news, visit our website https://www.crawfordaccountants.com.au/blog
