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.