Chesterton Accounting

The Federal Budget for the 2022/23 financial year

The Federal Budget for the 2022/23 financial year

 

 

The Federal budget for the 2022/23 financial year has recently been handed down in Parliament.
Below is the list of key tax measures and changes that are included in the budget.

Business:

  • Small businesses will be able to claim a 20% bonus on external training courses used for the upskilling of employees. The expenditure can be incurred between the 29 March 2022 to 30 June 2024, however the bonus’ cannot be claimed until 2023 onwards
  • Small businesses will also be able to claim an extra 20% deduction for the cost of technology purchases that support digital adoption such as cloud-based services, portable payment devices and cyber security expenses. The expenditure can be incurred between the 29 March 2022 to 30 June 2024, however the bonus’ cannot be claimed until 2023 onwards
  • COVID-19 Business support grants will be considered non-assessable non-exempt income, meaning that they are not assessed as taxable income and no tax is payable on them

Individuals:

  • Increase to the low- and middle-income tax offset (offset increased to reduce a taxpayers income tax liability from $1,080 to up to $1,500) for the 2022 income year based on their taxable income
  • The Medicare levy low-income thresholds will be increased for the 2022 income year (taxpayers will not be required to pay the levy until their income exceeds the threshold)
  • COVID-19 testing costs will be claimable when these have been taken to attend work
  • A one-off $250 cost of living payment will be available to eligible individuals who are currently receiving Government payments, allowances, or pensions, or are concession card holders

For more details, please visit the budget website at https://budget.gov.au/index.htm

April Newsletter

Welcome to our April monthly newsletter!

Taxpayers that have been affected by the recent floods in NSW and QLD states will have flood support available from the ATO. This support will include automatic lodgement deferrals for those in affected local government areas as well as payment plan options for any debts owing. The ATO emergency support line is 1800 806 218 and can be used to speak to a support officer regarding the support available for taxpayers.

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Monthly tax tip:

Australians are unfortunately affected by many natural disasters but grants and recovery support payments are usually available. If a taxpayer has been affected by drought, flood/fire, or other natural disaster then they may receive a payment from a local, state, or federal agency and each payment has a different tax consequence. Australian Government Disaster Recovery Payments (DRP’s) are treated as exempt income, meaning it is not taxable, but it does need to be included in the recipient’s tax return. Examples of non-taxable payments that aren’t included in the recipient’s tax return are assistance payments from a charity or community group as well as gifts from family and friends. It’s important to be aware of the tax implications of any support payments that you may receive so that income can be correctly reported and taxed, and extra tax is avoided. If a taxable support payment is received, then this will affect your total taxable income and the rate of income tax that is paid so adjustments may be required if paying tax instalments. Any payments received throughout the year should be discussed with your accountant for tax planning measures.

If you would like to schedule a consultation with us then please jump onto our website where you can see our availabilities and book a time that suits you.

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Important Dates!

21 April:

  •       Lodge and pay March 2022 monthly business/instalment activity statement
28 April:
  •       Lodge and pay quarter ending 31 March 2022 activity statement if lodging by paper
  •       Make super guarantee contributions for quarter ending 31 March 2022 to funds by this date
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March Newsletter

Welcome to our March monthly newsletter!

The ATO have released a publication on starting a self-managed super fund (SMSF). This publication explains the following:

  • What is an SMSF
  • Choosing a structure
  • Outline of your obligations
  • Registering your SMSF
  • Getting professional advice

https://www.ato.gov.au/Forms/Lifecycle-publications-to-help-you-navigate-your-SMSF/

We recommend reading this publication if you are considering an SMSF or have recently established one. If you would like more information or would like to discuss your options, then please contact our office for an appointment.

 

 

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Monthly tax tip:

A superannuation fund pays a set rate of 15% income tax on taxable income earned. Making personal super contributions (before-tax) can save money and make a great tax deduction if you personally pay more than 15% tax on your income. The contribution caps for this financial year are $27,500 per member for before-tax contributions (tax-deductible) and $110,000 per member for after-tax contributions. If you operate an SMSF then you have greater control of what you invest in. You can choose to invest in assets using your SMSF instead of investing in your personal name to save even more tax on the income earned. An example of a great tax strategy for a small business owner paying more than 15% tax is listed below. If you are interested in learning more about SMSF’s or investing in super, then please contact our office. We also recommend discussing your investments and strategy with a financial adviser before investing in anything new.

Example – Kevin Smith runs a successful business in a company entity and pays an annual salary to himself. The commercial offices that the company leases have just come up for sale and he would like to purchase them but is considering which entity will own the property. Table below shows three different scenarios.

 

  Scenario 1 – Kevin purchases the offices Scenario 2 – the company purchases the offices Scenario 3 – the superfund purchases the offices
Individual – Kevin Smith Annual salary = $100,000.
Purchases commercial property, leases to company, and earns net rent of $26,000.
Taxable income is $126,000.
Income tax = $31,687.
Tax rate is 25.15%.
Annual salary = $100,000.
Income tax = $22,967.
Tax rate is 22.97%.
Annual salary = $100,000.
Income tax = $22,967.
Tax rate is 22.97%.
Company – Smith & Co. Pty Ltd Annual profits = $200,000.
Lease deductions = $36,000
Taxable income is $164,000
Company tax = $42,640
Tax rate is 26%.
Annual profits = $200,000.
Property deductions = $10,000
Taxable income is $190,000
Company tax = $49,400
Tax rate is 26%.
Annual profits = $200,000.
Lease deductions = $36,000
Taxable income is $164,000
Company tax = $42,640
Tax rate is 26%.
SMSF – Smith Superfund N/A – not established under this scenario. N/A – not established under this scenario. Net rental income = $26,000
Income tax = $3,900
Tax rate is 15%.
       
Total tax liability $74,327 $72,367 $69,507

The clear winner is scenario three which shows a total tax savings of $4,820 annually. This comes up to a total saving of $96,400 over a twenty-year period. Kevin can also choose to make extra before-tax contributions to save even more tax as he personally pays 7-8% more of tax on income than the superfund entity.

If you would like to schedule a consultation with us then please jump onto our website where you can see our availabilities and book a time that suits you.

 

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Important Dates!

21 March:

  • Lodge and pay February 2022 monthly business/instalment activity statement

 

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February Newsletter

Welcome to our February monthly newsletter!

The borders have been opened and now the virus is continuing to spread, and many employers are wondering what it is they are meant to pay their staff who are affected or are ordered to isolate/work from home. The below table outlines the requirements as set by FairWork Australia.

Situation Employer requirement
Employee is isolating at home and working from their home office. Employer must pay their standard rate for the hours worked.
Employee has tested positive, and they are isolating at home. Employer must pay any personal/carers (sick) leave available during the isolation period.
Employee is a close contact, and they are isolating at home. The employee is NOT entitled to sick leave however can come to an agreement with their employer to be covered by annual/unpaid leave.
Employee is a close contact, and they have been isolating at home and then test positive. The employee IS entitled to sick leave from the day they test positive or become unwell.
Employer has requested that an employee take a test when it’s not required by Government regulation. The employee IS entitled to be tested during work hours and be paid for the time taken.
Employee chooses to take a test or is required to by Government regulation. The employee is NOT entitled to be paid for the time taken.

 

wear your mask! on Behance

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Monthly tax tip:

Many workplaces are supplying protective items for COVID-19 such as face masks and sanitiser which is of course deductible to the business, but what about individuals that must supply their own protective items? We hope you have all been keeping receipts for these purchases as they may be deductible. Taxpayers will be entitled to a tax deduction for the cost of these items if their employer has not supplied them, they must use them because they are in close contact with others and they aren’t able to work from home. E.g. A retail employee working in a café who is not supplied a face mask by their employer but is supplied with hand sanitiser can claim the costs of a face mask but cannot claim a deduction for their own hand sanitiser purchases. An IT worker who is working from home during the pandemic cannot claim the cost of a face mask as it would be used during personal time only. We always recommend keeping receipts if unsure on deductibility and then having a conversation with us about it at tax time.

If you would like to schedule a consultation with us then please jump onto our website where you can see our availabilities and book a time that suits you.

 

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Hello, February! – Writer and Illustrator

 

Important Dates!

21 February:

  • Lodge and pay December 2021 monthly business/instalment activity statement for businesses that are covered by the lodgement concession*
  • Lodge and pay January 2022 monthly business/instalment activity statement

28 February:

  •  Lodge and pay SMSF annual return for new registrants for the 2021 financial year
  •  Lodge and pay quarter ending 31 December 2021 activity statement
  •  Lodge and pay quarter ending 31 December 2021 superannuation guarantee charge statement if the contributions were not paid on time*

*There is a lodgement concession for small business clients with up to $10 million turnover – lodgement of December 2021 monthly activity statement will be due 21 February
*Superannuation guarantee charge is not tax deductible

 

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Office 2, 192 Haly Street Kingaroy QLD 4610
PO Box 650 Kingaroy QLD 4610

07 4179 0106
www.chestertonaccounting.com
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January Newsletter

Welcome to our January monthly newsletter!

Happy New Year! We hope you all had a great Christmas with your families. The Chesterton Accounting Team will be back next week on Monday, the 10th of January at 8.30am.
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Monthly tax tip:

Vaccinations have been a hot topic lately and we have been answering a number of questions surrounding deductibility as there is a lot of confusion with this expense. Vaccinations are considered a private expense and therefore cannot be claimed as a tax deduction (even if it’s required by your employer/industry). Vaccination incentives are becoming popular among employers and would be treated for tax purposes as following:

Cash Payments:
If a cash payment is received for getting a vaccine then it should be treated as a bonus which should be included in the employees’ payslip with the appropriate tax withholding applied.

Non-cash Benefits:
If an employee receives a benefit for getting a vaccine (e.g. gift certificate, tickets, vouchers) then they would not need to declare that as income on their tax return however it may be treated as a reportable fringe benefit. Fringe benefits tax would not be payable as long as the benefit is offered and available to all employees.

Paid Leave:
Paid leave can be provided to employees to be able to get a vaccine and possibly also to recover from any side effects. This would be treated as usual paid leave and tax would be withheld from the payment.

If you would like to schedule a consultation with us then please jump onto our website where you can see our availabilities and book a time that suits you.

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Important Dates!

10 January:
  •       Chesterton Accounting office will be open again!
21 January:
  •       Lodge and pay December 2021 monthly business/instalment activity statement*
28 January:
  •       Make super guarantee contributions for quarter ending 31 December 2021 to funds by this date
*There is a lodgement concession for small business clients with up to $10 million turnover – lodgement of December 2021 monthly activity statement will be due 21 February

December Newsletter

Welcome to our December monthly newsletter!

The Chesterton Accounting team are taking a two week break this year and will be closing our doors on Thursday, the 23rd of December at 3pm and opening up again on Monday, the 10th of January at 8.30am. We would love to thank all of our loyal clients for their support this year and can’t wait to see what next year holds for our South Burnett businesses.

 

 

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Closed for holidays by Silvia Sánchez on Dribbble

 

Monthly tax tip:

It’s that time of year again to talk about the tax implications of Christmas gifts given to employees and clients/customers. If you are hoping to provide gifts to your staff this year then the best tax outcome is to give non-entertainment based gifts that cost less than $300 per employee as the full cost will be tax deductible with GST credits able to be claimed and no fringe benefits tax liability. Entertainment based gifts are generally not tax deductible and no GST credits can be claimed. Similar rules apply for gifts given to clients, contractors or suppliers. Please see examples below.

Non-entertainment-based gifts – hampers, wine, gift vouchers, flowers, jewellery, etc.
Claim tax deduction/GST credits? Yes, for both employees and clients
Fringe benefits tax liability? Only if spending more than $300 per employee

Entertainment-based gifts – movie tickets, tickets to sporting event, travel costs for a holiday/vacation
Claim tax deduction/GST credits? Clients – no. Employees – no tax deduction unless FBT applies (FBT applies once the gift is over $300 per employee)
Fringe benefits tax liability? Only if spending more than $300 per employee

If you would like to schedule a consultation with us then please jump onto our website where you can see our availabilities and book a time that suits you.

 

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Important Dates!

21 December:

  •       Lodge and pay November 2021 monthly business/instalment activity statement

23 December:

  •       Chesterton Accounting office will close for two weeks – please ensure any forms for lodgement are sent to our office before 3pm to ensure they are lodged before we close

 

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