Income Tax

May Newsletter

Well, it’s safe to say that no business owner could have possibly predicted what 2020 had in store for them! After devastating bush fires and now the Coronavirus pandemic, the economy has certainly taken a hit. Small business owners and their workers have been greatly affected over the last few months. We encourage all of our business clients to apply for as many Government concessions, payments, reimbursements and subsidies that are available to them. The Government has made many announcements over the last few weeks so there certainly is a lot of information to wrap your head around – please contact us for a consultation (we also offer phone and video consultations) to discuss what your business is eligible for. We also ask kindly to respect our response times as we are busier than ever assisting clients in need and wrapping our own heads around the new legislation that is being passed. Most of all, we want to say that we are here for you and hope that you trust us as your advisor during this hard time – we only want to see your business flourish!

Monthly tax tip:
The ATO has announced a new and easier method for claiming home office expenses due to the increase of people working from home due to the COVID-19 lockdown. Workers will now be able to claim hours worked in their home at a rate of 80 cents per hour. This method will cover all home office expenses from 1st of March 2020. If a person worked from home prior to this date then the usual method of claiming home office expenses would be used. However, you can still choose to use the pre-existing method after March if you prefer to do so or it will result in a higher claim. Examples of the two different methods are listed below:

Pre-existing method

Hours spent working at home (this covers electricity and home office furniture) = 456 hours x 52 cents per hour = $237.12
Home internet – 60% for work purposes = $162
Mobile phone – 40% for work purposes = $84
Depreciation of laptop – 70% for work purposes = $116
Total claim = $599.12

New method

Hours spent working at home (this covers all home office expenses) = 456 hours x 80 cents per hour = $364.80
As seen in the above calculations, in this instance the pre-existing method will result in a higher claim. We recommend that if you are working from home then you keep records of all hours spent in your home office as well as receipts for home office expenses. This will allow you to then compare which method will be best to claim 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.
Book an Appointment

Important Dates!

15 May:

  • Lodge and pay tax returns for the year ending 30 June 2019 for all entities that did not have an earlier lodgement date

21 May:

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

26 May:

  • Lodge and pay quarter ending 31 March 2020 activity statement if lodging electronically

28 May:

  • Lodge and pay quarter ending 31 March 2020 superannuation guarantee charge statement if contributions were not paid on time*

*Superannuation guarantee charge is not tax deductible

Click to email us about the above

Working From Home Deductions

The ATO has announced a new easier method for claiming home office expenses due to the increase of people working from home due to the COVID-19 lockdown.

Workers will now be able to claim hours worked in their home at a rate of 80 cents per hour. This method will cover all home office expenses from 1st of March 2020.

If a person worked from home prior to this date then the usual method of claiming home office expenses would be used. However, you can still choose to use the pre-existing method after March if you prefer to do so or it will result in a higher claim.

 

Examples of the two different methods are listed below:

Pre-existing method

Hours spent working at home (this covers electricity and home office furniture) = 456 hours x 52 cents per hour = $237.12

Home internet – 60% for work purposes = $162

Mobile phone – 40% for work purposes = $84

Depreciation of laptop – 70% for work purposes = $116

Total claim = $599.12

 

New method

Hours spent working at home (this covers all home office expenses) = 456 hours x 80 cents per hour = $364.80

 

As seen in the above calculations, in this instance the pre-existing method will result in a higher claim.

We recommend that if you are working from home then you keep records of all hours spent in your home office as well as receipts for home office expenses. This will allow you to then compare which method will be best to claim at tax time.

https://www.ato.gov.au/Media-centre/Media-releases/New-working-from-home-shortcut/

Economic Response to the Coronavirus

 

The Federal Parliament voted last night in acceptance of the $84 billion economic stimulus package. The bills have been passed in both the House of Representatives and the Senate.

Below is the list of key tax measures and payments that are included in the package.

Business:

  • The instant asset write-off threshold is set to be increased from $30,000 (for businesses with a turnover of less than $50 million) to $150,000 (for businesses with a turnover of less than $500 million) from 12th of March to 30th of June 2020
  • Immediate 50% deduction of the cost of an eligible asset with the balance to be depreciated under current depreciation rules for assets purchased from 12th March 2020 to 30th June 2021
  • Tax-free payments from $20,000 to $100,000 for eligible small and medium businesses that employ staff based on their PAYG withholding obligations – this will be applied as a credit of 100% of the PAYG withheld when lodging an activity statement from March to June 2020 with the ATO
  • Relief from the ATO for some tax obligations for persons affected by the Coronavirus outbreak – deferral of certain lodgements and payments
  • Temporary relief for directors from any personal liability for trading whilst insolvent
  • Wage subsidies to support employers who pay apprentices and trainees – employers who employ less than 20 full-time employees may be entitled to apply for a wage subsidy that will cover 50% of an apprentices or trainees wages for up to nine months from 1st January to 30 September 2020 with a maximum subsidy of $21,000 for each employee

Individuals:

  • Coronavirus supplement being paid by Centrelink at a rate of $550 per fortnight for eligible individuals
  • Tax-free payments of $1500 to social security, veteran and other income support recipients and eligible concession card holders
  • Temporary early release of superannuation of up to $10,000 during the 2020 financial year and a further $10,000 in the 2021 financial year – these payments will be tax-free and will not affect Centrelink payments
  • Government assistance to regions and communities that have been severely affected by the outbreak

Timing of Assistance:

  • Immediately, with deductions to be included in 2019-20 tax returns – Increased instant asset write off, accelerated depreciation
  • As soon as practicable – Support for Coronavirus-affected regions and communities
  • From 31 March 2020 – First round of $750 payments to support households
  • Applications from early-April – Assistance for existing apprentices and trainees
  • Applications from mid-April 2020 – Temporary early release of superannuation
  • From 27 April 2020 – Income support and a Coronavirus supplement
  • From 28 April 2020 – First phase of Boosting Cash Flow for Employers (tax-free PAYG credits)
  • From 13 July 2020 – Second round of $750 payments to support households
  • From 21 July 2020 – Second phase of Boosting Cash Flow for Employers (tax-free PAYG credits)

For more details, please visit the treasury website at https://treasury.gov.au/coronavirus

Increase in tax benefits in response to the Coronavirus outbreak

The Government has announced an increase in tax benefits in response to the Coronavirus. Parliament will have a final sitting next week to consider the $17.6 billion economic stimulus package in hopes of protecting the economy and supporting businesses and workers. Below is the list of key tax measures and payments that are hoping to be included in the package. However, please note that the package of Bills has not been introduced yet and nothing can be confirmed or guaranteed at this stage. We will keep our clients and readers up to date as we hear the results of this package and hope to include them in our April newsletter.

  • The instant asset write-off threshold is set to be increased from $30,000 (for businesses with a turnover of less than $50 million) to $150,000 (for businesses with a turnover of less than $500 million) from 12th of March to 30th of June 2020
  • Immediate 50% deduction of the cost of an eligible asset with the balance to be depreciated under current depreciation rules for assets purchased from 12th March 2020 to 30th June 2021
  • Tax-free payments from $2000 to $25,000 for eligible small and medium businesses that employ staff based on their PAYG withholding obligations – this will be applied as a credit of 50% of the PAYG withheld when lodging an activity statement from March to June 2020 with the ATO
  • Tax-free payments of $750 to social security, veteran and other income support recipients and eligible concession card holders from 31st March 2020
  • Relief from the ATO for some tax obligations for persons affected by the Coronavirus outbreak – deferral of certain lodgements and payments
  • Wage subsidies to support employers who pay apprentices and trainees – employers who employee less than 20 full-time employees may be entitled to apply for a wage subsidy that will cover 50% of an apprentices or trainees wages for up to nine months from 1st January to 30 September 2020 with a maximum subsidy of $21,000 for each employee – applications are set to be taken from April 2020
  • Government assistance to regions and communities that have been severely affected by the outbreak

For more details, please visit the treasury website at https://treasury.gov.au/coronavirus

March Monthly Newsletter!

Chesterton Accounting is growing again and we are currently looking for an experienced accountant to join our small team in preparation for tax time. The accounting position will commence in April and we are very excited to introduce our next team member to all of our clients. Stay tuned by following our Facebook page to see who our new accountant will be next month.

Monthly tax tip:
Investment properties, including residential and commercial can be a great tax deduction. Any investment losses, including that from an investment property can actually be used to offset taxable income, which will reduce the tax liability. Investment property deductions can include council rates, landlord insurance, garden maintenance, general repairs, advertising, depreciation of fixtures and fittings as well the interest and fees paid on the property loan. These deductions will offset the rental income received and may result in a loss. This loss can then be claimed against other income received including wage, business and other investment income. Majority of investment properties are negatively geared, meaning that they are a long-term investment and you shouldn’t expect to really make some earnings until you sell the property. So, this investment can be a great choice for someone who has a high taxable income and can afford to invest some of their personal capital whilst reaping the tax benefits. We do recommend discussing your options surrounding investments with your financial advisor. However, if you would like to know more about claiming rental property deductions and losses then please contact us.
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 March:

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

31 March:

  • Lodge and pay tax returns for companies and self-managed superannuation funds with income of more than $2 million
  • Lodge and pay tax returns for individuals and trusts whose latest return resulted in a tax liability of $20,000 or more
Click to email us about the above

November Monthly Newsletter

Welcome to our November Monthly Newsletter! 

 

The due date for lodgement of an income tax return for the financial year ending 30 June 2019 was on the 31st of October. If you have returns that have not been lodged yet then do not stress – chances are you have quite awhile longer to lodge. If you are signed up as a client with a registered tax agent then you get to reap the benefits of the tax agent lodgement concession. This concession provides a later due date for lodgement and payment of your income tax return up until 15 May 2020.
We do however still encourage everyone to not hold off on lodgement as this can tie up other areas e.g. you may require your return to process Centrelink payments, to review or commence a loan or perhaps you would like to sell your business and a potential buyer would like to see some documents from your tax agent. So you can see there are benefits to lodging even before you are required to.

Monthly tax tip:

There is a lot of confusion surrounding food and drink for business purposes. Food and drink can sometimes be classified as entertainment which is generally not deductible but in certain situations it is a legitimate deduction. Food and drink which are purchased during travel (for business purposes of course) are tax deductible and the GST component can also be claimed. However, if you are purchasing food and drink at the work place then there is some criteria to be met. If you are purchasing general sustenance for your employees (e.g. tea and coffee, snacks) so that they can comfortably continue working then this type of food can be claimed. This may also include lunch purchased during a work day for staff, snacks for the conference room to be eaten by staff and clients and even dinner if your staff have been asked to work overtime.
If food has been purchased for simply entertainment purposes like food for a staff party then this cannot be claimed. Other non-deductible entertainment can also include a business meal with a client, after work drinks with staff, food and drink purchased at networking events. Categorizing food and drink can be a huge gray area when it comes to tax but when in doubt, please call your tax agent to confirm.

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.

Book an Appointment

Important Dates!

21 November:

  • Lodge and pay October 2019 monthly business/ installment activity statement

25 November:

  • Lodge and pay quarter ending 30 September 2019 activity statement if lodging electronically

28 November:

  • Lodge and pay quarter ending 30 September 2019 superannuation guarantee charge statement if contributions were not paid on time*

*Superannuation guarantee charge is not tax deductible

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