In this article we explore how businesses that have turnover less than $10 million can maximise their deductions to save on tax for 2018 year and other issues they need to be aware of – deadlines, things to do etc in the coming few weeks. We will touch on employee superannuation payments, $20,000 asset write off etc
This article will apply to businesses running as sole traders, companies, trusts and partnerships.
On 24 May 2018, the government announced the start of a Superannuation Guarantee Amnesty. The Amnesty will be available retrospectively from 24 May 2018 to 23 May 2019, subject to legislation passing.
The Amnesty gives employers a one-off opportunity to self-correct past super guarantee (SG) non-compliance without penalty. Catch-up payments made in the 12 month period will be tax-deductible.
To be eligible for the Amnesty and avoid harsher penalties the government requires employees to:
This won’t be final until the legislation is passed through Parliament however you can read more information about the government’s plan here.
Once the legislation is passed, we will be talking with clients that we believe may find this amnesty useful, or you are welcome to approach us for assistance.
The Treasurer handed down the Budget 2018/2019 on 8 May 2018. While there are a lot of proposed changes that will potentially affect individuals such as a 7 year Personal income Tax Plan to lower the income tax liabilities for individuals, there is no certainty as to whether they will become law in future. Meanwhile, let’s recap on the ones that are now law, and will affect taxpayers, especially small businesses immediately. The most important of these is the extension of the less than $20,000 immediate asset write off concession to 30 June 2019 for eligible small businesses.
Do you have a trading name attached to your ABN, or your company/trust’s ABN?
From November 2018, trading names will be removed from ABN Lookup. ABN Lookup is a tool run by Australian Business Register (ABR) to collect or update trading names. They were collecting trading names up till 28 May 2012 when Australian Securities & Investments Commission (ASIC) started a new service to manage the registration of business names. To keep your trading name, you will need to register it as a business name with ASIC. This applies to cases where you trade under a name that is different from your, or your entity’s name.
You can register for a business name through the ASIC website online here.
To check if your business name details are up to date or not, you can conduct a search from the Business Names Index, or log onto your ASIC Connect account. The link here provides instructions on how to conduct the search.
If you have ever lodged a tax return, you would know the pain in keeping records to substantiate your tax deductions. While it may be possible that some receipts are lost, perhaps it is a fuel receipt that is lost in the glovebox (or beneath the car seat!), or simply faded over time, it is important that you keep all the receipts as evidence that you have made the purchase as the receipt will include detailed line items of what was purchased.
There is a recent case where the Administrative Appeals Tribunal (AAT) knocked back a taxpayer’s claim for deductions. One of the reasons was that the claims were based on his bank statement transactions rather than on actual receipts/invoices.
In PSJF and Commissioner of Taxation (Taxation) [2018] AATA 678 (20 March 2018), the taxpayer was employed as a photographer. He claimed some travel expenses as tax deductions in his tax return. The AAT found that some of his deductions are disallowed.
During the Discussion, there were a few issues that were raised. However we would like to bring to your attention on the matters about the tax deductibility of expenses:
To put it simply, for an expense to be tax deductible, it needs to satisfy the following:
This means that merely having a bank statement showing the transactions is not a valid form of evidence to claim them as your tax deduction.
There are various ways to keep record of your work or business-related receipts. If you would like to hear about our options in keeping proper records of your receipt without having a shoebox, feel free to have a quick chat to us and we can work with you to find you a best solution.
If you are interested, or are unable to sleep at night, check out the full document here.
