Newsletter

The Federal budget for the 2023/24 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 deduction on spending that supports electrification and more efficient use of energy. Assets/upgrades will need to be purchased and ready for use between 1 July 2023 to 30 June 2024. Eligible assets include electrifying heating and cooling systems, upgrading to more efficient fridges and induction cooktops, installing batteries and heat pumps. The maximum bonus tax deduction is set at $20,000 per business.
Temporary full expensing will no longer be available from 1 July 2023. The new instant asset write-off for small business will be set at $20,000 per asset until 30 June 2024. Small business simplified depreciation rules will be available for assets that exceed this amount.
The loss carry back tax offset will no longer be available from 1 July 2023 for eligible companies.
There is a new lodgement penalty amnesty available for small business taxpayers that are lodging overdue forms between 1^st of June 2023 to 31^st December 2023. Failure to lodge penalties will be remitted for all overdue forms that were originally due between 1^st December 2019 to 28^th of February 2022.
Employers will be required to pay superannuation guarantee for employees at the same time that they pay wages. This will replace the quarterly payment deadline. This will come into effect from 1 July 2026.

Individuals:

The low- and middle-income tax offset will no longer be available during the 2023 income year. Taxpayers that previously received up to $1,500 in extra tax refunds will notice a reduction in their 2023 tax refund.
The Medicare levy low-income thresholds will be increased for the 2023 income year (taxpayers will not be required to pay the levy until their income exceeds the threshold).
Pensioners are now able to earn up to $11,800 per financial year before impacting on their pension.

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

May Newsletter

Welcome to our May monthly newsletter!

This month is extremely important for small business owners and accountants. The federal budget will be announced which will shape our tax system for the next twelve months. We recommend to complete annual budgeting and finalise tax planning after the budget announcement to allow for the most accurate estimates and reports. Please look out for the budget announcements later this month and as usual, our office will provide all our clients with a quick-read summary.

Monthly tax tip:

We already know one change that will apply to employers, and that is the increase of super guarantee from 10.5% to 11% on 1 July 2023. STP-enabled payroll software should automatically update; however, this is something to keep an eye on to avoid underpaying super for employees. This should also be acknowledged in budget/cash-flow reports to avoid a surprise later. This rise, including the annual award pay rate rise will continue to place financial pressure on employing entities so it’s important to understand what payments are liable for super guarantee and which payments do not need to accrue it. If employees and payments are not set-up correctly in payroll software, super may accrue on payments that do not require it which would mean an unnecessary expense to employers. Please see below for a breakdown of what payments accrue super, and what payments do not. However, if you are ever unsure then please contact our office to discuss any payroll queries.

	Accrues super guarantee	DOES NOT accrue super
Ordinary hours	✔️
Overtime hours		✔️
On-call allowance		✔️
Expense allowance		✔️
All other allowances	✔️
Bonus in respect of overtime		✔️
All other bonuses	✔️
Annual leave loading		✔️
Parental & ancillary leave		✔️
All other leave types	✔️

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!

15 May:

Lodge 2022 tax returns for all entities that did not have to lodge earlier
Pay 2022 income tax for companies and superannuation funds

21 May:

Lodge and pay April 2023 monthly business/instalment activity statement

26 May:

Lodge and pay quarter ending 31 March 2023 activity statement

28 May:

Lodge and pay quarter ending 31 March 2023 superannuation guarantee charge statement if the contributions were not paid on time*

*Superannuation guarantee charge is not tax deductible

April Newsletter

Welcome to our April monthly newsletter!

Welcome to April, the start of tax planning season! Now is the time to assess your profits and apply any tax saving strategies that you can! We are now taking tax planning appointments and are happy to provide anything from a simple chat about your potential taxes to a full tax planning service which includes a detailed estimate of taxable income, income tax payable and a tax savings report which explains which strategies can be applied to reduce income tax this year and potentially in future years. If you are unsure if this service would be beneficial or would like to know more then please contact our office.

Monthly tax tip:

Most taxpayers will assume that it’s always best to claim everything possible in each tax year to ideally pay the lowest amount of income tax. However, there are some deductions that you can choose to claim in a later year if the outcome is positive. These deductions can include depreciation of assets, super contributions, directors fees, certain prepaid expenditure, cash expenses and the list goes on. It may seem a bit backwards to not claim a deduction that is available but sometimes this creates a better tax outcome which will later be enjoyed. This is why tax planning can be so beneficial for small business owners.

If tax rates are set to be increased or certain tax offsets will be removed and not available, then it might make sense to save some tax deductions for a future year when it’s likely that income tax will increase for the tax-paying entity. For example, an entity may be claiming tax losses from a previous year that will reduce their tax liability in the current year. That entity will no longer have those losses to claim in future years so it might make sense to claim the least amount of deductions possible so that they can be claimed in a later year. Instead of paying a low tax rate or no tax in one year and then a very high tax rate in the next year, they instead pay the average tax rate which will save them money over those few years. For some, this may mean tax savings of a few thousand! We have certainly had clients with this outcome after tax planning has been applied. This is why tax planning is recommended and can make such a difference for some taxpayers.

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 April:

Lodge and pay March 2023 monthly business/instalment activity statement

28 April:

Lodge and pay quarter ending 31 March 2023 activity statement if lodging by paper

Make super guarantee contributions for quarter ending 31 March 2023 to funds by this date

March 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

February Newsletter

Welcome to our February monthly newsletter!

We hope that everyone has settled back in well after the holiday break. We have started contacting taxpayers who have not had their tax completed for the 2022 financial year. Please contact our office if requiring a list of information to gather for your tax lodgement or schedule an appointment.

We are welcoming a new team member this month. Fiona Franz will be joining us and commencing her role as an accounting assistant. Fiona has been working in the accounting industry for many years and is excited to learn more and develop her skills.

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

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 9^th of January at 8.30am.

Monthly tax tip:

Payroll after a holiday period can be painful for some employers but you will want to ensure that everything is listed correctly, and employees are paid accordingly. All part-time and full-time employees should be paid their ordinary hours for any public holiday that falls on a usual working day – even if annual leave is being taken over that period. However, if employees are working on a public holiday, then please check their relevant award to correctly pay them at public holiday rates.

If the holiday period requires more staff hours due to increase in customer sales then you could discuss the option of employees accruing “time off in lieu” instead of being paid at overtime rates. This could allow staff to take the accrued leave off in January when everything calms down and work is slow again. As the employer, you cannot force an employee to be paid under this arrangement but you can put together an agreement in writing for your employee to sign if they agree to it.

If employees are being paid a Christmas or end of year bonus then this can be claimed if it has been correctly listed in the payroll system and tax has been applied. It’s also important to note that an employer cannot just give a “cash” bonus that isn’t taxed, all bonus payments are required to be taxed and listed on employees payslips. Should you have any questions or need any assistance finalising payroll from the holiday period, then please contact our office.

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!

9 January:

Chesterton Accounting office will be open again from 8.30am

21 January:

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

28 January:

Make super guarantee contributions for quarter ending 31 December 2022 to funds by this date

*There is a lodgement concession for small business clients with up to $10 million turnover – lodgement of December 2022 monthly activity statement will be due 21 February