VIC Business Support Fund open for application

The Victoria Government has established an economic survival package to support Victorian businesses and workers through the devastating impacts of the COVID-19 pandemic.

The Fund is part of the package, totaling $500 million is available for business.

Fund Overview:
Funding of $10,000 per business is available and will be allocated through a grant process.

Eligibility:
Small businesses are eligible if they:

1. Hold an ABN at 16th March 2020 and Have been engaged in carrying out the operation of
the business in the Australian State of Victoria on 16 March 2020.

2. Employ staff

3. have been subject to closure or are highly impacted by Victoria’s Non-Essential Activity
Directions issued by the Deputy Chief Health Officer to-date (Non Essential Activity Directions)

4. have a turnover of more than $75,000; (Meaning that you must registered for GST)

5. have payroll of less than $650,000 (For business with payroll amount more than $650,000,
state government of Victoria is refunding payroll tax of 2018-2019 and waiving the payroll tax of
2019-2020).

What sectors are defined as Non-Essential Activity Directions for grants?

1. Pubs, bars, clubs, nightclubs and hotels

2. Recreational facilities

3. Entertainment facilities

4. Place of worship

5. Non-essential retail facilities including beauty and personal care facility, auction house(but can
operate remotely), market hall etc…

6. Food and drink facilities such as cafe, restaurant, fast-food store, cafeteria and canteen. Take away
food and delivery food is allowed, there are other permissions, please refer to the above link.

7. Accommodation Facilities such as camping ground and caravan park, other types of
accommodation is currently allowed with certain requirements.

8. Swimming pools

9. Animal facilities

10. Real estate auctions and inspections

Not listed Non-Essential Activity Directions?

You can still apply if you meet all the other eligibility criteria and consider that the shutdown
restrictions have highly impacted on your business. Your application will be assessed against the
guidelines.

How can the funding be used?
Meeting business costs, including utilities, salaries, rent
Seeking financial, legal or other advice to support business continuity planning;
Developing the business through marketing and communications activities;
Other supporting activities related to the operation of the business.

There are certain areas that the fund can not be used, the Applicants will be subject to audit by the
Victorian Government or its representatives and will be required to produce evidence, such as payroll
reports to demonstrate impact, at the request of the Victorian Government for a period of four years
after the grant has been approved.

Documents Required Lists:
A recent BAS
Recent Payroll report
Other supporting materials

All questions in the application must be completed and any requested documentation attached to
ensure timely assessment and grant payment

MNY Group 2019 July Newsletter – Sale of small business

Access to the full version by clicking the link below:

MNY – Special Edition – 2019

In July we have included Business & Accounting Topics including:

1. Sale of small business

2. Manage capital gains tax

3. Maximise super contribution

4. Case Study

*Please feel free to inbox us if you/ your companies would like to be included in our Monthly Newsletter Email List for free

MNY Group 2019 July Newsletter – Penalty interest deduction claim

Access to the full version by clicking the link below:

MNY-July-2019

In July we have included Business & Accounting Topics including:

1. Penalty interest deduction claim

2. Carrying forward concessional super contribution

3. Best business trading structure

4. Event-based reporting mistakes for SMSFs

5.  Same business test & similar business test

*Please feel free to inbox us if you/ your companies would like to be included in our Monthly Newsletter Email List for free

MNY Group 2019 June Newsletter – Work-related expenses claiming

Access to the full version by clicking the link below:

MNY-June-2019

In May we have included Business & Accounting Topics including:

1. Work-related expenses claiming

2. Taxable payments annual report

3. Trust risk rules & tax avoidance

4. Car parking expenses deductions

*Please feel free to inbox us if you/ your companies would like to be included in our Monthly Newsletter Email List for free

MNY Group 2019 May Newsletter – Alternatives to a tax invoice for certain GST credit claims

Access to the full version by clicking the link below:

MNY-May-2019

In May we have included Business & Accounting Topics including:

1. Alternatives to a tax invoice for certain GST credit claims

2. ATO’s system of tax rulings and determinations

3. Changes of director penalty regime

4. Super downsizer scheme essentials

5. ATO’s “living expenses” tool to help tackle the cash economy

*Please feel free to inbox us if you/ your companies would like to be included in our Monthly Newsletter Email List for free

MNY Group 2019 April Newsletter – Federal Budget 2019 issue

Access to the full version by clicking the link below:

MNY-April-2019(Federal Budget 2019 issue

In March we have included Business & Accounting Topics including:

1.  Next month’s federal election

2.  2019-20 Forecast return surplus

3.  Proposed changes to Division 7A will be deferred

4.  Useful changes to superannuation

5.  Benefits to older pre-retires

*Please feel free to inbox us if you/ your companies would like to be included in our Monthly Newsletter Email List for free

MNY Group 2019 April Newsletter – Home office expenses deductions

Access to the full version by clicking the link below:

MNY-April-2019

In March we have included Business & Accounting Topics including:

1.  Home office expenses deductions

2.  Single touch payroll for smaller employers

3.  Investment income tax deductions

4.  Deductions for donations

5.  Staff training costs deductions

*Please feel free to inbox us if you/ your companies would like to be included in our Monthly Newsletter Email List for free

MNY Group 2019 March Newsletter – The same business test to be replaced by a “similar business” test

Access to the full version by clicking the link below:

MNY-March-2019

In March we have included Business & Accounting Topics including:

1.  The same business test to be replaced by a “similar business” test

2.  Removing tax deductibility of “non-compliant” payments

3.  New “consumer” rules for GST and online purchases

4.  Travel expenditure related to residential rental properties is not deductible

5.  Appropriate valuation of property and safety grey zone

*Please feel free to inbox us if you/ your companies would like to be included in our Monthly Newsletter Email List for free

MNY Group 2019 February Newsletter – Tax incentive for angel investors in start-ups

Access to the full version by clicking the link below:

MNY-February-2019

In February we have included Business & Accounting Topics including:

1.  Tax incentive for angel investors in start-ups
2.  Guide to making motor vehicle expense claims
3.  Compliance issues for diverting personal services income to SMSFs
4.  Clarity of “Itinerant” when certain travel expense claims

*Please feel free to inbox us if you/ your companies would like to be included in our Monthly Newsletter Email List for free

MNY Group 2018 December Newsletter Available – Subscribe Now!

MNY Group’s December Newsletter is Now Available!

Access to the full version by clicking the link below:

MNY-December-2018

featuring:
– Monthly Business & Accounting Tips
– Case Studies Sharing
– Event Invitations to our future Networking Events, Seminars & Training Courses

In December we have included Business & Accounting Topics including:
1. Business partner agreements
2. Taxpayer alert
3. Investment tax issues
4. Tax of compensation paid from financial institution 

*Please feel free to inbox us if you/ your companies would like to be included in our Monthly Newsletter Email List for free

MNY Group 2018 November Newsletter Available – Subscribe Now!

MNY Group’s November Newsletter is Now Available!

Access to the full version by clicking the link below:

MNY-November-2018

featuring:
– Monthly Business & Accounting Tips
– Case Studies Sharing
– Event Invitations to our future Networking Events, Seminars & Training Courses

In November we have included Business & Accounting Topics including:
1. Three-quarter FBT year compliance check-up
2. How much do we need for retirement
3. FBT and Christmas party
4. Rent out part of your home
5.
Carrying on a business through your SMSF

*Please feel free to inbox us if you/ your companies would like to be included in our Monthly Newsletter Email List for free

MNY Group 2018 October Newsletter Available – Subscribe Now!

MNY Group’s October Newsletter is Now Available!

Access to the full version by clicking the link below:

MNY-October-2018

featuring:
– Monthly Business & Accounting Tips
– Case Studies Sharing
– Event Invitations to our future Networking Events, Seminars & Training Courses

In October we have included Business & Accounting Topics including:
1. Crowdfunding
2. Income Tax Return Amendment
3. Private Ruling
4. Personal Services Income

*Please feel free to inbox us if you/ your companies would like to be included in our Monthly Newsletter Email List for free

MNY Group 2018 September Newsletter Available – Subscribe Now!

MNY Group’s September Newsletter is Now Available!

featuring:
– Monthly Business & Accounting Tips
– Case Studies Sharing
– Event Invitations to our future Networking Events, Seminars & Training Courses

In September we have included Business & Accounting Topics including:
1. Self-employed: claim a deduction & save for retirement
2. Share and Tax
3. GST apportioning option
4. New LRBA rules and SMSF

*Please feel free to inbox us if you/ your companies would like to be included in our Monthly Newsletter Email List for free

Changing a will after a death?

Changing a will after a death? A deed of family arrangement can make it possible!

There are times when the terms of a deceased’s will are not suitable and the beneficiaries involved seek to have the will varied. There are various situations where this may be the case, such as changing circumstances over a long period of time from when the will was first drafted, or an the estrangement between family members is healed (or vice versa).

This is where a deed of family arrangement can be utilized, however, it is an option that requires all interested parties to agree on the outcome.

This can, however, result in the settlement outside of litigation, which can otherwise tie up an estate for months or even years.

Deeds of family arrangement can be used in a number of circumstances, such as:

– where there are doubts about the meaning of a will
– where beneficiaries wish to rearrange the distribution of the estate between them
– to compromise a claim against the estate where there is a challenge to the will
– to create an estate proceeds trust under taxation legislation.

Where the will is varied through a deed of arrangement which meets certain requirements, generally the parties may disregard the resulting capital gains or losses. Care needs to be taken however as there can be some variation on the rules from state to state, such as stamp duty. Note also that a deed of family arrangement that would act to reduce the benefits accruing to a minor or a disabled person may require court approval.

Care needs to be taken with any deed of arrangement, and the advice of a professional is highly recommended.

Are Self-Education Expenses Claimable?

To be able to claim certain expenses relating to self-education is a tax concession that is not to be overlooked, but to be eligible your present employment and the course you undertake must have sufficient connection for the self-education expenses to qualify as a work-related tax deduction.

In other words, if the course of study is deemed to be too general in nature, and can be viewed as having little relevance to your income-earning activities, the connection between them (and eligibility for a tax deduction) may not be seen to be viable by the ATO.

Deductions are also not generally available if the subject of self-education is designed to obtain new employment, or to open up a new income-earning activity. By way of examples of relevant connections, the ATO gives the following scenarios:

the taxpayer is upgrading their qualifications for their current employment – for example, upgrading from a Bachelor qualification to a Masters

they are improving specific skills or knowledge used in their current employment – for example, a course that will allow them to operate more or different machinery at their current job

they are employed as a trainee and are undertaking a course that forms part of that traineeship – for example, an overseas trained person employed as an  intern while completing a local bridging course

they can show that at the time they were working and studying, their course led, or was likely to lead, to an increase in employment income – for example, a teacher who will automatically get a pay increase as a result of completing the course.

MNY Group 2018 August Newsletter Available – Subscribe Now!

MNY Group’s August Newsletter is Now Available!

featuring:
– Monthly Business & Accounting Tips
– Case Studies Sharing
– Event Invitations to our future Networking Events, Seminars & Training Courses

In August we have included Business & Accounting Topics including:
1. Claim self-education expenses
2. How to deal with SMSF trustee dispute
3. Change a will by a deed of family arrangement
4. GST Credit

*Please feel free to inbox us if you/ your companies would like to be included in our Monthly Newsletter Email List for free

MNY Group 2018 July Newsletter Available – Subscribe Now!

MNY Group’s July Newsletter is Now Available!
featuring:
– Monthly Business & Accounting Tips
– Case Studies Sharing
– Event Invitations to our future Networking Events, Seminars & Training Courses

In July we have included Business & Accounting Topics including:

1. The pension loans scheme
2. Tips for tax return
3. Division 7A Compliant

*Please feel free to inbox us if you/ your companies would like to be included in our Monthly Newsletter Email List for free

World Cup 2018 – Income averaging for Sportsperson

With the World Cup 2018 Russia now very much on the way, we want to share some tax tips about Income averaging for special professionals (SPIA), especially for Sportsperson.

According to the ATO,you are a special professional if you compete in sporting activities where you primarily use physical prowess, physical strength or physical stamina. A navigator in car rallying, a coxswain in rowing or a similar competitor is also a special professional. In order to apply for SPIA, you must earn a taxable income of more than $2,500 in the financial year from the above activities.

As a special professional who is also an Australian resident for tax purpose, you may eligible for the tax concession which allow you to apply lower tax rates to your sports derived income to lower your overall tax liability.

Apart from that, Sportsperson can claim work-related deductions. Tax rulings have determined that sportsperson may be eligible to claim home to work travel expense deduction, and also expenses related to following journeys, such as training, matches and competitions, appointments with medical professionals, airports for sports related travel, and public promotional appearances.

In addition, there are other expenses can be claimed as deductions, such as Player management fees; Travel, accommodation & insurance expenses for sporting related travel; Expenses whilst attending training camps; Purchase of supplements and sporting clothing; Depreciation & Maintenance on training equipment; Regular medical sporting related fees, etc.

SPIA is also available for Authors or inventors, performing artists, production associates and performers.

Don’t miss your Home to Work travel deduction

What is “itinerant work”?

As many people know, the cost of transport between home and the normal work place is generally not tax deductible. However, in the case of an employee’s work is itinerant, a deduction is allowable for the cost of travelling between home and work.

In general, travel MUST be a fundamental feature of an employee’s duties then the work can be classified as ITINERANT.

So when can you consider your home as a workplace?

You cannot consider your home as a workplace unless your work can be classified as itinerant, that is, the duty to incur the travel expenses arose from the nature of your work, and you are travelling to perform your duties from the moment of leaving your home. The following factors/characteristics may indicate itinerancy:

  • Travel is a fundamental feature of your work, NOT just for you or your employer’s convenience;
  • You have shifting workplaces, and continually travel from one workplace to another throughout the day;
  • You have a ‘network’ of work sites in your regular employment, that is, you must regularly work at more than one work place before travelling back to your usual place of residence;
  • Your home constitutes as your base of operations;
  • You do not have a regular pattern of work routine and often uncertain of the location in your employment;
  • An allowance in recognition of your need to travel continually between different workplaces is provided by the employer;
  • You have to carry bulky equipment from home to different workplaces

 

In practice, there will be cases where the eligibility of claiming a travelling deduction is less clear, while the nature of an employment is not inherently itinerant. It is important to classify your own circumstances to check if you are entitled to claim the travel expenses between your home and your regular workplace, or even your alternative workplace.

It’s now buyers’ obligation to pay GST to the ATO for their new residential properties

住宅需要缴纳GST

According to the current law, the property developer collects the GST (as part of the payment) from the property buyer and pays it to the ATO. This payment method is consistent with other industries.

However, The ATO is changing the way of collecting goods and services tax (GST) on some property transactions during the settlement process.

 

From 1 July 2018, buyers who purchase new residential premises or potential residential land need to withhold an amount from the purchase price and pay it directly to the ATO on or before settlement.

 

How the change may affect the buyers and property developers?

For property developers:

You need to let the buyer know when you sell residential premises or potential residential land if the buyer needs to withhold an amount. You can include this information in the sale contract or in a separate document.

Please note that, you don’t have to tell the buyer if you are selling:  commercial residential premises   or potential residential land where the buyer is a GST – registered business purchasing the property for a creditable purpose.

For buyers:

If you need to withhold an amount, you must also include the details listed below:

  • your name and Australian Business Number
  • the amount you need to withhold and pay to the ATO
  • when you need to make the payment
  • if the purchase includes a non-cash payment (such as land swaps), the GST-inclusive market value of that part of the payment
  • other information as stated in the regulations.

There are no changes to the GST rate or the way you normally lodge the BAS.

Small Business – benchmark reporting,STP & Modern Awards

 

MNY X Bank of Melbourne Business Elite Networking Mixer highlights

It was our pleasure to meet all the retails and F&B leaders at our business elite networking mixer event with Bank of Melbourne last night.

During the event, our director, Mr Ben Gu, has shared his fruitful insights with fellow elites on topics such as Industrial Benchmark, the upcoming Single Touch Payroll & Employee Modern Awards.

Thank you again for Bank of Melbourne & Element Zero Consultancy for making this event so successful.

We are looking forward to sharing more Accounting & Business Insights with all of your in our future events.

*Contact MNY Group for future event collaboration opportunities!

2018 Federal Budget – Health and Aged Care Budget

In 2018, 4 areas within the health & aged care category will be changed, including:

1. Medical services in rural and remote areas 
2. National immunization program
3. Access to aged care at home
4. New listings on the pharmaceutical benefits scheme (pbs)

More info as below.

1. Medical services in rural and remote areas

Financial assistance is proposed to be increased for the Royal Flying Doctor Service to improve the delivery and availability of dental, mental health and emergency aeromedical services in rural and remote areas. This is part of measures to achieve stronger rural, regional and remote health outcomes by aligning the distribution of the health workforce to areas of greatest need and building the capability of Australia’s medical practitioner workforce.

2. National immunization program

Certain vaccines are proposed to be listed on the National Immunisation Program from 1 July 2018. Vaccinations introduced on the list include those to prevent whooping cough in pregnant women, influenza in people aged over 65, and the prevention of meningococcal in children.

3. Access to aged care at home

The Government proposes to increase the number of high level home care packages by 14,000 over four years. It will be introduced over four years from 2018-19. The intention is to support the choice of older Australians who wish to stay at home and avoid going into residential care.

4. New listings on the pharmaceutical benefits scheme (pbs)

The Government has introduced new and amended listings on the PBS, including Spinraza for the treatment of spinal muscular atrophy. Changes will apply over various dates from 1 January to 1 July 2018. The medicines are intended to treat or prevent spinal muscular atrophy, breast cancer, refractory multiple myeloma, relapsing-remitting multiple sclerosis or HIV.

[2018 MNY x Silver Star Motors Business Elite Networking Mixer]

MNY x Silver Star Motors Mercedes-Benz Business Elite Networking Mixer Event was a blast last night.

During the event, our Director, Mr. Ben Gu, has shared with fellow business and community leaders on how companies can upgrade their core business activities with accounting outsourcing service and how to maximize your tax benefit through vehicle purchase before the end of financial year.

Thank you again for Silver Star Motors & Element Zero Consultancy for making this event so successful.

We are looking forward to sharing more Accounting & Business Insights with all of you in our future events.

*Inbox MNY Group for future event collaboration opportunities!

[29/5 MNY X Silver Star Motors Business Elite Networking Mixer]MNY X Silver Star Motors Mercedes-Benz Business Elite Networking Mixer Event was a blast last night.During the event, our Director, Mr. Ben Gu, has shared with fellow business and community leaders on how companies can upgrade their core business activities with accounting outsourcing service and how to maximize your tax benefit through vehicle purchase before the end of financial year. Thank you again for Silver Star Motors & Element Zero Consultancy for making this event so successful.We are looking forward to sharing more Accounting & Business Insights with all of your in our future events.*Inbox MNY Group for future event collaboration opportunities!

Posted by 卓誠立和会计师事务所 on Wednesday, 30 May 2018

How will the 2018 Federal Budget affect your Personal Income Tax?

The 2018 Federal Budget has been released, and how will your Personal Income Tax be affected?

The upper threshold for the 32.5% marginal tax rate bracket will increase from $87,000 to $90,000. It will apply from 2018-19.

Implemented to address the issue of bracket creep, it is anticipated that the adjustment to the marginal tax bracket will stop a further 200,000 Australians from entering the 37% marginal tax rate bracket.

Moreover, from 1 July 2022, there will be further adjustments to the brackets. The upper-income threshold for the 32.5% bracket will be increased from $90,000 to $120,000. In addition, the upper-income threshold for the 19% rate will increase from $37,000 to $41,000.

By 2024 the 37% bracket will be scrapped completely, leaving a 32.5% rate up to $200,000.

Better Targeting The R&D Tax Incentive

For companies with an aggregated annual turnover of $20 million or more, the Government will introduce an R&D a premium that ties the rates of the non-refundable R&D tax offset to the incremental intensity of R&D expenditure as a proportion of total expenditure for the year. 

The maximum amount of R&D expenditure eligible for concessional R&D tax offsets will be increased from $100 million to $150 million per annum.

For companies with an aggregated annual turnover below $20 million, the refundable R&D offset will be a premium of 13.5 percentage points above a claimant’s company tax rate. 

Cash refunds from the refundable R&D tax offset will be capped at $4 million per annum.

R&D tax offsets that cannot be refunded will be carried forward as non-refundable tax offsets to future income years.

The changes will apply for income years starting on or after 1 July 2018.

MNY Group 2018 May Newsletter Available – Subscribe Now!

[Don’t start your franchise before reading our May Newsletter]

MNY Group’s May Newsletter is Now Available!
featuring:
– Monthly Business & Accounting Tips
– Case Studies Sharing
– Event Invitations to our future Networking Events, Seminars & Training Courses

In May we have included Business & Accounting Topics including:
1. Franchising and tax
2. Interest deductibility of income-producing activity ceases
3. Superannuation contributions “work test’ for over 65s
4. Testamentary trusts

*Please feel free to inbox us if you/ your companies would like to be included in our Monthly Newsletter Email List for free

What Is Happening When Your Online Shopping Order Is Above $1000 AUD?

Relevant facts to keep in mind include:

– For goods that are worth $1,000 or less, there are at the present time no duties, taxes or charges to pay (however see below*).

– For goods that are worth more than $1,000, you are generally required to fill out a special form called an Import Declaration, and pay duties, taxes and charges.

– You will need to pay duties and taxes on some goods (like tobacco or alcohol) regardless of their value.

Certain types of goods are not allowed to be brought into Australia, such as firearms, or else need special permits.

For more information:

In order for the commutation request to be valid under the ATO’s guidelines, it must not be subject to the discretion of the fund’s trustee or a member at a later date. Likewise, the commutation request must not be dependent on certain events occurring in the future.

Items that you buy over the internet from an overseas source are generally required to abide by the same rules and screening processes that apply to any other “import”. Also the usual duties or taxes should apply. Customs duties are regulated by the Department of Home Affairs (a recently formed body from December 2017, which now oversees the Australian Customs Service as well as Immigration and Border Protection).

The Department of Home Affairs may screen, x-ray or examine your goods just like any other imported items to make sure the goods are allowed into Australia. The Department of Agriculture may also need to clear and inspect items before they can be delivered to you.

*GST is to be extended to low value imports from 1 July 2018.

**Follow our Facebook page for more regular business & accounting tips**

How much tax should you pay for your Bitcoin?

For individuals, when buying items online for personal use or consumption, there is generally no income tax or GST implications.

Any capital gain or loss realised by disposing of bitcoin is generally disregarded (as a personal use asset), provided the value of the bitcoin is less than $10,000.

ATO advice is that certain records should be kept for any bitcoin transactions, including:

  • the date of the transactions
  • the amount in Australian dollars (which can be taken from a reputable online exchange)
  • what the transaction was for
  • who the other party was (even if it’s just their bitcoin address).

For more information:

Crypto-currency in Australia had until recently been subject to what was labelled “double taxation”. Legislation affective from July 1, 2017 aligned the goods and services tax (GST) treatment of digital currency with money. Before this, anyone using cryptocurrency as payment effectively paid GST twice — once when buying the bitcoin and again on its use in exchange for goods and services subject to GST.

The ATO deems bitcoin to be neither money nor foreign currency, but also holds that it can be regarded as an asset for capital gains tax (CGT) purposes.

As far as conducting transactions with bitcoin, the ATO states that it views such transactions as akin to barter arrangements.

In conducting a business transaction therefore, the same process would be followed as when, for example, receiving a non-cash consideration under a barter transaction, with the consideration recorded at fair market value. This can be obtained from a reputable bitcoin exchange.

MNY Group 2018 April Newsletter Available – Subscribe Now!

MNY Group’s April Newsletter is Now Available!
featuring:
– Monthly Business & Accounting Tips
– Case Studies Sharing
– Event Invitations to our future #NetworkingEvents, Seminars & Training Courses

In April, we have included Business & Accounting Topics including:
– Bitcoin & SMSF investment
– SMSF commutation request
– Online purchase from overseas
– Renting via Airbnb

*Please feel free to inbox us if you/ your companies would like to be included into our Monthly Newsletter Email List for free

2017 Fed Budget says: No! to travel deductible

Legislation that came into law in the last half of 2017 makes certain measures first announced with the 2017 Federal Budget now a reality.

The “housing tax integrity” bill solidifies the government’s intention to deny all travel deductions relating to inspecting, maintaining, or collecting rent for a residential investment property. As well, second-hand plant and equipment that came with an investment property are now off the table as far as depreciation goes.

The measures will apply from July 1, 2017, so will affect returns for the current financial year. However the changes to depreciation are dependent on when assets were purchased (more below).

The change to travel claims means that travel expenditure incurred relevant to gaining or producing assessable income from housing premises used as residential accommodation will not be deductible.

The travel expenditure will also not be recognised in the cost base of the property for CGT purposes.

It should be noted that the amendments do not affect deductions for travel expenditure incurred in carrying on a business, including where a taxpayer carries on a business of providing property management services.

Depreciation change

The government has also limited plant and equipment depreciation deductions to outlays actually incurred by investors. In essence, unless you as the buyer have physically purchased the items, you can no longer depreciate them. In other words, if otherwise depreciable assets came with the investment property you purchase, there will no longer be an option to continue depreciating those assets in your hands.

Being new rules however, there are calendar dates that may determine if you are affected or not. The amendments will apply from 1 July 2017 for assets purchased after 7.30 pm 9 May 2017 (when they were announced in the Federal Budget 2017).

The changes apply to:

  • previously used plant and equipment acquired at or after 7.30 pm on 9 May 2017 unless it was acquired under a contract entered into before this time
  • plant and equipment acquired before 1 July 2017 but not used to earn income in either the current or previous year.

Investors who purchase new plant and equipment will continue to be able to claim a deduction over the effective life of the asset.

[Expanding the Empire] – While retaining the CGT main residence exemption

A question that surfaces now and then in regard to capital gains is whether the main residence exemption extends to additional land acquired after the time of acquisition of the residence.

The short answer is yes — provided that certain requirements are met. It should also be noted that where the exemption applies upon satisfaction of the following requirements, it applies to both pre- and post-CGT dwellings (before and after 20 September 1985).

The requirements are:
1. the additional land (including the area of land on which the dwelling is built) is adjacent to that on which the dwelling is situated;
2. the total area of land is not greater than two hectares;
3. the additional land is used primarily for private or domestic purposes in association with the dwelling; and
4. the CGT event that happens in relation to the additional land also happens in relation to the dwelling (that is, your ownership interest in it).

All you need to know for Partnership Start-up

Partnerships can be less expensive to set up as a business structure than starting business as a sole trader, as there will likely be greater financial resources than if you operated on your own.

On the flip side however, you and your partners are responsible for any debts the partnership owes, even if you personally did not directly cause the debt.
Each partner’s private assets may still be fair game to settle serious partnership debt. This is known as “joint and several liability” – the partners are jointly liable for each other’s debts entered into in the name of the business, but if any partners default on their share, then each individual partner may be severally held liable for the whole debt as well.

Other general factors to note about partnerships include:

• the business itself doesn’t pay income tax. Instead, you and your partners will each need to pay tax on your own share of the partnership income (after deductions and allowable costs)
• the business still needs to lodge a tax return to show total income earned and deductions claimed by the business. This will show each partner’s share of net partnership income, on which each is personally liable for tax
• if the business makes a loss for the year, the partners can offset their share of the partnership loss against their other income
• a partnership does not account for capital gains and losses; if the partnership sells a CGT asset, then each partner calculates their own capital gain or loss on their share of that asset
• the partnership business is not liable to pay PAYG instalments, but each partner may be, depending on the levels of their personal income
• as a partner you will need to take care of your super arrangements, as you are not an employee of the business
• money drawn from the business by the partners are not “wages” for tax purposes

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[ATO Warning] Check if you have made a mistake on GST

As tax professionals we have been reminded by the ATO of a misconception that some taxpayers continue to make each income year regarding their eligibility to make claims for GST credits.

The reminder, issued in the middle of the third quarter of the 2017-18 income year, seeks to enlist the help of tax agents at more of a “frontline” point — before an audit or ATO review uncovers these type of client errors.

The type of taxpayer practitioners need to keep an eye on, says the ATO, are those who conduct irregular activity that brings in occasional income but no profit. These taxpayers may not be aware that they may be engaged in a hobby, rather than a business. As such, they are unable to claim GST credits on any purchases made in relation to that activity.

To claim GST credits, the ATO reminds practitioners that client must be able to demonstrate they are in business with an intention to make a profit. It says there are factors it will look out for to support this, including:

  • having a current business plan
  • repetition of the income producing activity
  • the size and scale of the activity being consistent with other businesses in that industry
  • commercial sales
  • marketing and advertising their activity to attract clients.

For clients who are actually performing a hobby, and not a business, the ATO advice is to seek a cancellation of GST registration. It may also be necessary to look at amending past activity statements if the client has claimed GST credits for purchases associated with their activity.

If you are confused about whether you are in business or not, we can definitely help!

Tax treatment of digital currencies – bitcoin

Transacting with bitcoin

Transacting with bitcoin is akin to a barter arrangement, with similar tax consequences. Our view is that bitcoin is neither money nor a foreign currency, and the supply of bitcoin is not a financial supply for goods and services tax (GST) purposes. Bitcoin is, however, an asset for capital gains tax (CGT) purposes.

You need to keep the following records for bitcoin transactions:

  • the date of the transactions
  • the amount in Australian dollars (which can be taken from a reputable online exchange)
  • what the transaction was for
  • who the other party was (even if it’s just their bitcoin address)

Using bitcoin for personal transactions

Generally, there will be no income tax or GST implications if you are not in business or carrying on an enterprise and you simply pay for goods or services in bitcoin (for example, acquiring personal goods or services on the internet using bitcoin).

Where you use bitcoin to purchase goods or services for personal use or consumption, any capital gain or loss from disposal of the bitcoin will be disregarded (as a personal use asset) provided the cost of the bitcoin is $10,000 or less.

Using bitcoin for business transactions

If you receive bitcoin for goods or services you provide as part of your business, you will need to record the value in Australian dollars as part of your ordinary income. This is the same process as receiving non-cash consideration under a barter transaction. The value in Australian dollars will be the fair market value which can be obtained from a reputable bitcoin exchange, for example.

When receiving bitcoin in return for goods and services, a business may be charged GST on that bitcoin. If the supply of the goods and services was a taxable supply, the business will be able to claim input tax credits on the GST charged on the bitcoin they received as payment.

 

original link: https://www.ato.gov.au/General/Gen/Tax-treatment-of-crypto-currencies-in-Australia—specifically-bitcoin/

ATO says ordinary workers claiming expenses are the biggest problem

Dodgy work-expense claims and the cash economy are a far greater threats to Australia’s revenue base than profit shifting by multinationals, Tax Commissioner Chris Jordan says, ordinary workers claiming expenses are the biggest problem.

In a departure from the pervading political and societal narrative, Mr Jordan said ordinary wage and salary earners over-claiming for work-related expenses were responsible for the most significant revenue leakage.

ATO says ordinary workers claiming expenses are the biggest problem
Tax Commissioner Chris Jordan. Photo: The Tax Institute/Facebook

He said the next biggest problem came in the form of a willingness on the part of ordinary Australians to ignore the tax evasion implicit in paying cash for a kitchen renovation or cheap meal.

“Everyone is focusing on the large multinationals and the large corporates,” Mr Jordan told a Tax Institute conference in Adelaide on Thursday.

“Well I can tell you the total corporate tax base is something like $67 billion and the gap at that level is relatively modest because of the concentration of the companies in Australia and our assurance over that.”

What he means is that the ATO knows precisely who these taxpayers are and keeps a very close eye on them. But it was a different story with the 20 million or so individual taxpayers, he said.

“The big dollars are with us claiming work-related expenses,” Mr Jordan said.

“The biggest gap we’ve got in the system is us, not them.”

The tax system allows work and investment-related expenses to be deducted against salary income.

Personal income tax deductions totalled $31.4 billion in 2012-13. Of that, $19.7 billion was for work-related deductions and the remainder for investment-related category, mostly for negatively geared rental properties.

The ATO is working on a “tax gap analysis” for large corporates, which could be as low as $2 billion a year. It was due last year but has been delayed.

“Getting every single dollar out of multinationals and large corporates is not going to make a dent,” Mr Jordan said.

“The biggest of all is individuals, wage and salary earners, claiming work-related expenses. So that’s what’s we’ve actually got to focus on to make a real dent across this area.”

Mr Jordan was quick to add that the ATO should – and did – go after multinationals, private companies and wealthy individuals for unpaid tax. And people needed to know the ATO had those groups under control so they could have confidence in the system, he said. But they were not the full story.

In late 2015, Treasurer Scott Morrison gave the go-ahead for the House Economics Committee, which was then chaired by Liberal MP and successful businessman Craig Laundy, to examine deductions by individuals and companies. No report was produced.

In a submission to the inquiry, the Parliamentary Budget Office said the average work expense claim was $3000, and work-related expenses made up two-thirds of total deductions claimed in 2013, or $19.7 billion.

The most common claims were for car, home office and travel expenses. Taxpayers in the highest tax bracket claimed 12 per cent of the total value of deductions, and men claimed more than women at all levels of income.

The federal government is already planning a major crackdown on the cash economy.

As part of that, a working group headed by Board of Tax chairman Michael Andrew is examining options for change and will provide a report to governing within weeks.

Mr Jordan said it would be good if Australia could get to the same point as Scandinavian countries, were using cash to avoid paying tax was frowned upon.

“Ha ha I got $200 off a plumber, I’m great [is the attitude here],” he said.

“It’s not actually, if you multiply that out.

“Never can we audit our way out but it’s a very long program of education and changing social attitudes so it’s no longer okay to cheat a bit.”

The ATO has forecast tax assessments totaling $2 billion will be issued to seven global businesses in June, arising out of audits of multinationals.

While the tech companies have never been identified, they are believed to include Apple and Google.

This article first appeared on AFR.com.

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