Shared economy – things you need to know

If you have a spare room, or some spare time, your friends may have suggested you to grab some cash by hosting your room on Airbnb or becoming an Uber driver.

You thought the idea of being able to generate extra cash without being tied up in an office 9-5, or having some flexibility on deciding when to work sounds cool, and (after a few drinks) your friends suggested that you do not need to report that as income, for whatever reasons.

Sounds too good to be true? Well, it sure is.

The ATO are focusing their attention on the “sharing economy” – the popular ones are Airbnb, Stayz, Uber and Taxify. Below are a few things to consider before starting your shared economy business.

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Updates from Office of State Revenue & ATO – January 2019

A few important updates from Office of State Revenue affecting businesses that is registered for payroll tax, or those who pays motor vehicle allowance to employees.

December 2018 Payroll tax lodgement due date extended

For businesses that are registered for payroll tax, the due date for lodgement and payment of your December 2018 payroll tax return has been extended to midnight 14 January 2019. You may still receive reminders to lodge by 7 January 2019 – feel free to ignore them.

New cents per km rate for work-related car expenses

The ATO has increased the cents per km rate from 66 cents/km to 68 cents/km from 1 July 2018. This change applies to eligible individuals who claims work-related car expenses under the cents per km method.

Using the new rate, eligible individuals can claim a maximum of $3,400 as tax deduction against their income.

Note the work-related car expenses deduction is still subject to the following:

  • You may be asked to show how you worked out your business km
  • There is no separate claim for depreciation expenses on the car
  • This amount includes all your vehicle running expenses.

Reasonable rate for motor vehicle allowance for Payroll tax purposes

Although the ATO has increased the reasonable rate for work-related car expenses claim to 68 cents per km from 1 July 2018, for payroll tax purposes, you are only entitled to claim 66 cents in your payroll tax returns for the 2018-2019 financial year. The 68 cents per km claim comes into effect on 1 July 2019 (2019-2020 financial year).

The motor vehicle allowance for payroll tax purposes refers to an allowance paid to an employee who uses their own car for business-related travel is exempt from payroll tax up to a reasonable amount (currently 66 cents per km for 2018-19 financial year). To claim this exemption, business km travelled must be recorded.

Do you know Aston Accountants can help you with your payroll tax matters?

We can help you in the following ways:

  • Answer your burning question: Do I have to register for payroll tax?
  • Register for payroll tax
  • Preparation and lodgement of payroll tax
  • Annual reconciliation of payroll tax
  • Liaise with Office of State Revenue in relation to your payroll tax matters

Have a specific payroll tax question? Contact us for help!

How to party smart this Christmas (and avoid being stung by FBT afterwards)

With Christmas fast approaching, a lot of business owners are starting to think (or already thinking!) about how they are going to celebrate Christmas with their employees and clients.

While it is a festive season where you normally spend a little more in treating your employees, their families and clients with good food, wine and some activities, enjoying the time and having some fun, business owners may unknowingly provide Fringe Benefits where it may end up costing you more.

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Who are you?

In life we play different roles which gives us different names. You can be a parent at home, a child of your parents, a customer at the shops, or, if you run a business, a business owner. But do you know the correct name to call yourself when you run a business?

Very often we get business owners ringing saying they are the director of their company, when in fact they may not even own a company to start with. Understanding what structure your business is in is very important to avoid confusion down the track. Below is a brief description of each business structure and how you can call yourself when speaking to your suppliers or customers.

Sole traders

If you run your business as a sole trader, you will have an ABN for yourself, and your business is run under this ABN. You do not hold a separate entity and therefore cannot call yourself a company director.

In this case, you can call yourself a business owner, or a sole trader.

Partnerships

A partnership involves two or more people (up to 20, with some exceptions) going into business together with a view to making a profit.

If you are running a business under a partnership with others, then (to put it simply) you are the business owner of the partnership.

Companies

A company is a separate legal entity that consists of directors and shareholders. A company director is someone who makes decisions on behalf of the company, whereas shareholders hold shares for the company and is eligible to receive any dividends declared by the company.

If you run your business under a company, and you are the director of the company, then you can legally call yourself a director when speaking to your suppliers or customers.

Trusts

A trust is a structure where a trustee carries out the business on behalf of the trust’s members (or beneficiaries). A trust is not a separate legal entity. You can have individuals or companies acting as trustee(s) of your trust, and individuals, companies or trusts to be a beneficiary of your trust.

If you run your business through a trust, you are the business owner of your business.

Wrapping up…

Only directors of a company can legally call themselves a director, if you run your business in any other format, you can call yourself a business owner.

If you are confused about what structure your business is in, we suggest going through your business documents eg bank statements for your business bank account which will contain the details of the account holder. Otherwise, if we run your books and prepare your tax return, give us a call.

Why you should consider moving onto the cloud

In recent years many desktop accounting systems started chasing after “the cloud” by establishing their online presence. Some are moving their software to the server/online environment, while the others completely revamped the look and functionality of their software to compete with other online software.

Cloud Accounting is the new, easy and efficient way for you to take control of your business paperwork and have more time to increase your profits or spend with your family.  What will you do with the time you save?

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