Chesterton Accounting

February Newsletter

Welcome to our February monthly newsletter!

JobKeeper has been a hot topic for small business employers and sole traders over the last year with many businesses receiving this assistance to enable them to continue to employ and trade as usual. The ATO are currently processing the last round of this payment scheme with March being the last month of the wage subsidy. Although JobKeeper has been extremely helpful and very much needed to many small business owners, the Government will have to cut this financial help eventually with the countries budget being exceeded. Businesses will have to adjust to the end of JobKeeper as well as other previous payments and subsidies being received after the affects of COVID-19 (cash-flow boosts, apprentice subsidies, etc.) and this may become a sore spot for businesses that have limited cash-flow and poor forecasting. Now is the time for small business owners to sit down and look at their financial position, adjust their budget and prepare for a decrease in cash-flow once all final subsidies and payments have been received. If you are unsure where to start with your budget or cash-flow forecast and require advice or assistance to keep your business on track and trading then please contact our office for an appointment (phone appointments are available).

Monthly tax tip:

We mentioned in our January newsletter that the shortcut method for home office expenses (80 cents per hour working from home between 1 March and 31 December 2020) had ended. Since then, the ATO have announced that this method of claiming home office expenses has been extended until 30 June 2021 since COVID-19 cases rose. This means that if you work from home during these dates at any point during your employment (or when carrying on a business) then you can claim this easy method. However, please ensure that you are keeping good records of the hours spent in your home office (e.g. timesheets, work diary entries). The ATO will most likely see a jump in home office expense claims this financial year with many taxpayers working from home. It is highly likely that these claims will become an ATO audit target over the next few years so we do recommend that you speak with your tax adviser to calculate the best claim for you and to ensure that you are claiming this expense correctly.

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.

Important Dates!

14 February:

  • Make the January monthly business declaration for the JobKeeper Scheme

21 February:

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

28 February:

  • Lodge and pay SMSF (self-managed superannuation fund) annual return for new registrants for the 2020 financial year
  • Lodge and pay quarter ending 31 December 2020 activity statement
  • Lodge and pay annual GST return for the 2020 financial year
  • Lodge and pay quarter ending 30 September 2020 superannuation guarantee charge statement if contributions were not paid on time

*Superannuation guarantee charge is not tax-deductible

 

January Newsletter!

Welcome to our January monthly newsletter!

Happy New Years and welcome to 2021, we hope you had a great Christmas and were able to put your feet up! The Chesterton team are back in business and ready for January so please pop into the office to say hello, we would love to see you!
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Monthly tax tip:
It is now January and that means taxpayers can no longer claim the shortcut method for home office expenses (80 cents per hour working from home between 1 March and 31 December 2020). Since the COVID-19 lockdowns, many taxpayers are choosing to continue to work from home – but how can they now claim their home expenses that are used for work? The fixed rate method allows a taxpayer to claim 52 cents per hour working from home which covers depreciation of furniture, electricity and repairs made to home office equipment. This method does not cover expenses relating to phone, internet, printing/stationery and the depreciation of computer equipment so these expenses would need to be calculated separately, including receipts and logbooks kept to show the calculation of the claims.

The other method available is the actual cost method. This method allows you to claim for all home office expenses (e.g. electricity, phone, internet, depreciation of furniture and office equipment, etc.) but you would need to calculate the portion they relate to work – which can deter taxpayers from using this method as opposed to the fixed rate method. This method would require substantiation to show how each expense was calculated, e.g. diaries, receipts, logbooks and phone call logs, so you must be a good record keeper. We recommend keeping substantiation for both methods so the claims can be compared and the highest claim is used. If you are unsure what records must be kept or how you would claim the expenses for your home office then please contact our office so we can advise you.

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.

 

Important Dates!
21 January:

  • Lodge and pay December 2020 monthly business/instalment activity statement

28 January:

  • Make super guarantee contributions for quarter ending 31 December 2020 to funds by this date
  • Make the December monthly business declaration for the JobKeeper Scheme

December Newsletter!

Welcome to our December monthly newsletter!

This year has certainly flew by and I think it’s safe to say that we are all thankful to move on from 2020! We will be closing for the Christmas holidays on Friday the 18th from 3pm and will return in the New Year on Monday the 4th from 8.30am. The whole team at Chesterton Accounting wish you, your staff and your families a joyful and safe Christmas!
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Monthly tax tip:
It’s the time of year again for gifts, bonuses and parties! But what exactly is tax deductible? Gifts to customers can be tax deductible if they are given in hopes of increasing your taxable income (e.g. to retain a client or to encourage further sales) and gifts to employees are also tax deductible if they are consistent and are given to retain employees. Christmas parties are generally considered non-deductible entertainment however can be claimed in the correct circumstances. If the Christmas party is held on business premises, during paid staff hours and work continues once it ends then the food purchased would be considered a staff expense (e.g. a lunch-time pizza party). If however, the party happens after work hours at an external location then it won’t be tax deductible (e.g. drinks and nibblies at the local pub at 5pm after work). Please contact our office if you would like to know if your Christmas gifts and party expenses can be tax deductible.

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.

 

Important Dates!
1 December:

  • Pay income tax for medium and large taxpayers, including companies and superannuation funds for the 2020 financial year

14 December:

  • Make the November monthly business declaration for the JobKeeper Scheme

18 December:

  • Closing date of our office for the Christmas holidays – anything received after this date will not be processed/lodged until we return in January

21 December:

  • Lodge and pay November 2020 monthly business/instalment activity statement

November Newsletter

Welcome to our November monthly newsletter!

The Federal Budget for the 2021 financial year has been recently passed by Parliament and includes a number of income tax cuts, offsets and benefits for taxpayers. Please see below for just some of the changes that affect individuals and business owners:

Individuals:

  • Changes to personal income tax rates – the 19% income tax bracket has been increased from $37,000 to $45,000 and the 32.5% income tax bracket has been increased from $90,000 to $120,000. This means that taxpayers who earn between $37,000 – $120,000 will benefit from a decrease in income tax
  • Changes to the Low Income Tax Offset – the offset has been increased from $445 to $700

Businesses:

  • JobMaker Hiring Credit – a credit of $200/week will be available for each eligible employee between the ages of 16-29 years old and $100/week for each eligible employee between the ages of 30-35 years old. This incentive covers new employees that are hired from 7th of October and will expire after 12 months. An eligible employee has to work at least 20 hours per week, received the JobSeeker Payment, Youth Allowance or Parenting Payment for at least one month within the past three months before being hired and be in the first year of employment with the eligible employer. An eligible employer has no outstanding tax obligations, is reporting through Single Touch Payroll, can show that the hire is for a new job that has been created (e.g. not an employee that has replaced another) and they cannot be claiming the JobKeeper payments or any other wage subsidy.
  • Uncapped immediate write-off for depreciable assets – businesses with an annual turnover of less than $5 billion will be eligible for the immediate asset deduction for assets acquired from 6th of October. Small business pools can also be immediately deducted, claiming the full balance of the pool for the 2021 financial year.
  • Loss carry-back for eligible companies – companies with an annual turnover of less than $5 billion will be able to carry back tax losses from the 2020-2022 financial years to offset previous taxable profits from the 2019 financial year onwards. This will create a refundable tax offset in the year of the loss.

If you have any questions or require assistance in understanding the new taxation rules from the Federal Budget then please contact our office.

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Monthly tax tip:
The uncapped immediate write-off for depreciable assets is a great tax incentive for a small business. This write-off includes eligible assets only such as plant and equipment, motor vehicles, tools, etc. and does not include capital works assets such as buildings and sheds. This write-off is included in the simplified depreciation regime for small businesses and is optional. If a small business chooses to opt-out of the regime, they would usually have to then wait five years to re-enter. However, this has been suspended so a small business can opt-out and opt-in as they please. So, should your business opt-out or opt-in to the regime? Your business may choose to purchase some equipment this financial year but have it depreciated under the general depreciation rules because a taxable loss has already been made and so the immediate deduction is just not required and will be of no benefit. This will allow for a future depreciation deduction in subsequent years and may provide a tax benefit when a taxable profit has been made. If you have any questions about the simplified depreciation regime or would prefer to opt-out this year then please contact our office to discuss your options.

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.

 

 

Important Dates!
14 November:

  • Make the October monthly business declaration for the JobKeeper Scheme

21 November:

  • Lodge and pay October 2020 monthly business/instalment activity statement

25 November:

  • Lodge and pay quarter ending 30 September 2020 activity statement if lodging electronically

28 November:

  • Lodge and pay quarter ending 30 September 2020 superannuation guarantee charge statement if contributions were not paid on time

*Superannuation guarantee charge is not tax-deductible

October Newsletter

Welcome to our October monthly newsletter!

We announced in June that we were going to donate $10 for every individual tax return lodged during tax time to Rural Aid. We have lodged 57 individual tax returns since then and will be donating $570.

Thank-you to all of our individual clients! If you would like to know more about Rural Aid or would like to make your own donation then please head to their website at https://www.ruralaid.org.au/ but don’t forget to keep your tax receipt!

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Monthly tax tip:
Are you like the many individuals around that spend plenty of money on work expenses but seem to always misplace those receipts? Well lucky for you, the ATO allows a deduction of up to $300 to cover those expenses. Yes, you heard right that you do not have to show receipts for work-related deductions up to $300. However, this does not mean that you are automatically entitled to a $300 tax deduction. You do have to explain how you calculated your deductions if the ATO choose to audit your tax return. For example, if you spent $100 on tools for work, $75 on protective clothing and $10 on sunscreen but cannot find the receipts, then you can claim $185. Please contact our office if you are unsure how to calculate deductions without receipts.
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.

 

Important Dates!

14 October:

  • Make the September monthly business declaration for the JobKeeper Scheme

28 October:

  • Make super guarantee contributions for quarter ending 30 September 2020 to funds by this date
  • Lodge and pay quarter ending 30 September 2020 activity statement if lodging by paper
  • Pay quarter ending 30 September 2020 instalment notice. Lodge the notice only if you vary the instalment amount
  • Lodge and pay annual activity statement for TFN withholding for closely held trusts where a trustee withheld amounts from payments to beneficiaries during the 2020 financial year

31 October:

  • Final date to be added to a tax agents client list to receive the lodgement concession for the 2020 tax return
  • Lodge 2020 tax return if not using a tax agent
  • Lodge PAYG withholding annual report no ABN withholding

September Newsletter

Welcome to our September monthly newsletter!

The JobKeeper payment scheme has had some changes once again due to the increase in COVID-19 cases in Victoria. Fortunately for us, they apply to all states. The Government has made changes to the current scheme that runs until the end of September so if your business is currently receiving these payments then this will apply to you. Previously, only employees who were employed prior to 1 March 2020 were eligible for the scheme. Under the new changes, employees who were employed prior to 1 July 2020 are now eligible. Businesses are required to offer the scheme to all employees who are eligible so if you have hired a new employee between 1 March and 1 July 2020 then you will be required to offer them the scheme payments. If you require assistance in assessing eligibility or applying for the payments then please contact our office.

Book an Appointment
Monthly tax tip:
Husband and wife partnerships can be quite the tax saving entity for some family businesses. The typical scenario is the husband acts as a sole trader paying all tax on the income earned, however the wife plays a vital role in the business as well but doesn’t receive a tax distribution. As individuals pay marginalised rates, the husband would be in the higher tax margin. If the business was instead to act as a partnership then the taxable income would be split which would lower their overall family tax by placing both partners in the lower tax margin. Please ensure that you consult your tax agent to set up this type of entity to avoid illegal income splitting situations.
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.

 

Important Dates!

14 September:

  • Make the August monthly business declaration for the JobKeeper Scheme

21 September:

  • Lodge and pay August 2020 monthly business/instalment activity statement
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