Newsletter

Welcome to our March monthly newsletter!

The ATO has recently warned taxpayers on paying too little tax through PAYG tax instalments. Individuals (including sole traders, partners in partnerships and beneficiaries of a trust) should be aware of their obligations if they have entered into the PAYG instalment system or risk paying interest to the ATO for underpayments of tax. If you are currently paying PAYG tax instalments and wish to vary the calculated instalment by the ATO, then you should contact our office first to avoid ATO fees.

Monthly tax tip:

PAYG tax instalments are instalments towards an individual’s income tax. If an individual (including sole traders, partners in partnerships and beneficiaries of a trust) has an amount payable of $1,000 or more on their tax return, then the ATO will commence PAYG tax instalments (usually payable on a quarterly basis) so that their tax is paid or mostly paid before their next tax return is due. If a taxpayer pays too much in instalments, then they will receive a refund, and if they pay too little, they will need to pay the difference. PAYG instalment notices will usually allow a variation of income tax if the estimate doesn’t fit the taxpayers income. This is calculated by the taxpayer as an estimate to reduce or increase the calculated instalment. However, if the taxpayer chooses to reduce their instalments and the total that they paid is less than 85% of their total tax payable, then they may have to pay a general interest charge on the difference as well as the shortfall interest.

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 2023 monthly business/instalment activity statement

Monthly tax tip:

The working from home tax deduction claim methods are changing this financial year. The shortcut method was available up to 30 June 2022 which allowed taxpayers to claim 80 cents per hour when working from home. This was introduced when taxpayers shifted to working from home during COVID-19 lockdowns and was meant to cover all home office expenses. The ATO announced the draft changes of these deductions recently which will be explained in detail below. We suggest keeping records, receipts and logbooks/diaries when working from home. This will allow you to compare your claim methods and choose the highest claim.

Fixed Rate Method:

• 67 cents per hour can be claimed when working from home
• This rate covers internet and mobile/home phone costs, electricity/gas, computer consumables and stationery
• A separate claim can be made for depreciation of home office assets such as computer equipment and office furniture
• A diary should be kept calculating the hours spent working from home
• This method is most popular for those that work from home every now and again

Actual Cost Method:

• All home office running costs can be claimed as per the appropriate work usage (electricity, phone/internet, computer expenses, stationery)
• All receipts should be kept and logbooks/diaries to calculate usage
• This method is most popular for those that work from home frequently

Method Comparison (Actual Cost):

• $90/month internet costs – claiming 15% = $13.50/month
• $60/month mobile phone costs – claiming 50% = $30/month
• $150/month electricity costs – claiming 5% = $7.50/month
• Total of $51/month tax deduction

Method Comparison (Fixed Rate):

• 20 hours per month x $0.67 = $13.40/month tax deduction

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 February:

• Lodge and pay December 2022 monthly business/instalment activity statement*
• Lodge and pay January 2023 monthly business/instalment activity statement

28 February:

•  Lodge and pay SMSF annual return for new registrants for the 2022 financial year
•  Lodge and pay quarter ending 31 December 2022 activity statement
•  Lodge and pay quarter ending 31 December 2022 superannuation guarantee charge statement if the contributions were not paid on time*

*Lodgement concession available for business clients with up to $10 million turnover, who report GST monthly and lodge electronically
*Superannuation guarantee charge is not tax deductible

Welcome to our December monthly newsletter!

The Chesterton Accounting team are taking a two week break this year and will be closing on Friday, the 23rd of December from 12pm and opening again on Monday, the 9th of January at 8.30am. We would love to thank all our loyal clients for their support this year and can’t wait to see what next year holds for our South Burnett businesses.

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 are non-entertainment based. Gifts to employees are also tax deductible if they are non-entertainment based 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. Please see below for more examples.

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

Staff Christmas lunch – light refreshments provided to all staff during work hours in the office
Claim tax deduction/GST credits? Yes
Fringe benefits tax liability? No

Christmas party – food and alcohol provided to staff/clients after work hours
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.

Important Dates!

21 December:

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

23 December:

•      Chesterton Accounting office will be closed from 12pm for the holiday period

Welcome to our November monthly newsletter!

The wet season has started and major floods have already affected parts of Victoria, Tasmania, Queensland and NSW. The ATO have support options available for flood-affected taxpayers. Tax would certainly be the last thing to focus on if you have been affected, so please reach out to ensure lodgement and payment deadlines can be postponed.

Monthly tax tip:

If your business holds trading stock then the closing value at the end of the year must be recorded as an asset which does reduce the amount than can be claimed as a tax deduction. E.g. a new business buys $10,000 worth of stock throughout the year and holds a value of $2000 on the 30^th of June which means the business will claim a total of $8,000 in stock deductions for that financial year. Trading stock can be valued at cost, replacement or selling price. The cost price valuation usually provides the highest tax deduction, so it is the most popular valuing method. However, for some, the other methods can be the best calculation for their situation. Trading stock deductions should also be reduced by private use. Some business owners may use their own stock for private use e.g. a café owner eating café food items each day whilst working or a cattle farmer that kills a beast for their own personal meat. The stock deductions should be reduced by the cost price of these items used personally. The ATO have provided set rates for hospitality business owners who use their own food for private use, to reduce paperwork (listed below). Please ensure you contact us about your stock deductions if you are unsure what is unable to be claimed 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.

Important Dates!

21 November:

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

25 November:

• Lodge and pay quarter ending 30 September 2022 activity statement

28 November:

• Lodge and pay quarter ending 30 September 2022 superannuation guarantee charge statement if the contributions were not paid on time*

*Superannuation guarantee charge is not tax deductible