How Does The Tax-Free Threshold Work If You Have Multiple Jobs?

It’s important to know how the tax-free threshold works, especially if you’re earning income from more than one job.

Many people mistakenly claim the tax-free threshold from multiple employers, which can lead to an unexpected tax bill.

This guide will help you understand how to manage the tax-free threshold while juggling multiple sources of income, so you can keep your finances in check.

Getting to Know the Tax-Free Threshold

The tax-free threshold allows you to earn up to $18,200 each year without paying any tax. It’s a great benefit for Australian residents, especially for those on lower incomes. Understanding how this threshold works is key to making sure you’re not caught off guard when tax time rolls around.

Which Incomes Count Toward the Tax-Free Threshold?

It’s important to remember that the tax-free threshold applies to your total income, not just what you earn from one job. This includes:

  • Salaries and wages from your employers
  • Payments from government agencies
  • Income from work done under an Australian Business Number (ABN)

How to Claim the Tax-Free Threshold

You can only claim the tax-free threshold from one employer at a time. When you start a new job, your employer will ask if you want to claim the tax-free threshold. If you’re already claiming it from another job, you should let them know by answering “no.” This will help you avoid any tax-related issues later on.

What Happens If You Claim the Tax-Free Threshold from Multiple Employers?

If you mistakenly claim the tax-free threshold from more than one employer, you might not have enough tax withheld from your total income. This can happen if:

  • Your combined income from all employers exceeds $18,200, and
  • You’ve claimed the tax-free threshold from more than one job

When this happens, you could end up with a tax bill that needs to be paid as a lump sum at the end of the financial year. No one likes surprises like that, so it’s best to get it right from the start.

How to Avoid an Unexpected Tax Bill

To steer clear of any tax surprises at the end of the financial year, here’s what you can do:

  • Claim the Tax-Free Threshold from Just One Employer: Choose the employer who pays you the most.
  • Notify Your Other Employers: If you need to stop claiming the tax-free threshold from one of your jobs, simply fill out a Withholding Declaration form and give it to your employer.
  • Keep an Eye on Your Income: Make sure you’re aware of how much you’re earning from all sources so you don’t exceed the threshold without enough tax being withheld.

Managing Study or Training Support Loans with Multiple Employers

If you have a study or training support loan, like a HECS-HELP or SFSS loan, it’s important to let each of your employers know. You’ll need to make compulsory repayments if:

  • You still have a study loan when you lodge your tax return, and
  • Your repayment income is above the minimum threshold

Steps to Take

  • Inform Your Employers: Make sure all your employers know about your study loan so they can withhold enough for your compulsory repayments.
  • Adjust Withholding Amounts: You can use a Withholding Declaration form to ensure your employers are withholding the right amount to cover your loan repayments.

Making Voluntary Repayments

You’re always welcome to make voluntary repayments to reduce your study loan balance. But remember, if your repayment income is above the threshold, you’ll still need to make compulsory repayments even if you’ve made voluntary ones.

Managing Tax If You’re a Sole Trader or Earn Through Online Platforms

If you earn income as an employee and also as a sole trader or through online platforms, managing your tax is crucial to avoid surprises.

Prepaying Tax on Business Income

As an employee, your employer takes care of withholding tax from your pay. But as a self-employed individual, you’re responsible for the tax on your business income. To avoid a big tax bill at the end of the year:

  • Pay As You Go (PAYG) Instalments: You can prepay tax on your business income throughout the year using PAYG instalments. This spreads out your tax liability, making it easier to manage than paying a large sum at tax time.

Understanding and managing the tax-free threshold is key to staying on top of your finances, especially if you have multiple sources of income.

By claiming the tax-free threshold from only one employer and carefully managing any study loans or additional income, you can avoid unexpected tax bills and keep your financial situation under control.

If you’re ever unsure about your tax situation, don’t hesitate to seek advice from a tax professional.

What Do I Do If I Have A Mistake On My Tax Return

Tax time can be stressful, and it’s not uncommon to discover errors or omissions after submitting your tax return.

Fortunately, the Australian Taxation Office (ATO) provides a straightforward process for amending your tax return.

This guide will walk you through the steps and considerations involved in changing your lodged return.

Why Amend Your Tax Return?

There are several reasons why you might need to amend your tax return, including:

  • Incorrect income or deductions reported.
  • Forgotten deductions or income.
  • Misreported credits or rebates.
  • Errors in personal information.

When to Amend Your Tax Return

It’s essential to amend your tax return when you discover an error. Delaying corrections can lead to interest and penalties, mainly if the error results in underpaid tax. Generally, you can amend your tax return within two years of the original assessment date. However, different rules apply to complex cases or specific taxpayer categories.

Methods for Amending Your Tax Return

1. Online via myTax

The quickest and most convenient way to amend your tax return is through myTax. Follow these steps:

  1. Log in to myGov: Access your myGov account linked to the ATO.
  2. Navigate to ‘Manage tax returns’: Select the relevant tax year.
  3. Select ‘Amend’: Follow the prompts to make the necessary changes.
  4. Review and submit: Ensure all amendments are accurate before submitting.

2. Using a Registered Tax Agent

If you used a tax agent to file your original return, you might prefer to have them handle the amendment. They can provide professional advice and ensure all changes comply with tax laws.

3. Paper Amendments

For those unable to amend online, a paper form option is available. Complete the Request for Amendment of Income Tax Return form and send it to the ATO.

Key Considerations When Amending

1. Record-Keeping

Keep detailed records of all changes made, including supporting documents. This is crucial if the ATO requests further information or audits your return.

2. Interest and Penalties

You might incur interest and penalties if your amendment makes additional tax payable. The ATO may reduce these charges if you voluntarily disclose the error.

3. Refund Adjustments

The ATO will process the additional amount if the amendment increases your refund. Conversely, you must repay the difference if it reduces your refund.

4. Processing Time

Amended returns typically take up to 20 business days to process. However, complex cases or those requiring additional information may take longer.

Common Scenarios for Amendments

1. Missed Deductions

It’s common to overlook deductions such as work-related expenses, donations, or investment losses. Ensure you have proper documentation to support these claims.

2. Incorrect Income Reporting

Errors in reporting income, such as wages, dividends, or rental income, are also common. Cross-check with your records and financial institutions to ensure accuracy.

3. Adjusting for New Information

Sometimes, new information, such as revised payment summaries or financial statements, becomes available after lodging your return. Use this information to amend your return accordingly.

Amending your tax return in Australia is generally straightforward and can help you correct errors and ensure compliance with tax laws.

Whether you amend online, through a tax agent, or via a paper form, timely and accurate amendments can save you from potential penalties and interest charges. Always keep thorough records and seek professional advice if needed.

By taking these steps, you can have peace of mind knowing your tax affairs are in order.

Vehicles, Expenses & The Tax Return

Making the most of available tax deductions for your business can be an important aspect of starting the new financial year. It’s why planning and strategising with your tax advisor could lead to different and new perspectives regarding tax in areas of your business.

One area where you can significantly benefit is through claiming motor vehicle expenses.

Here’s how to navigate the process and ensure you claim the maximum allowable deductions.

What Can You Claim?

As a business owner, you can claim a tax deduction for several business-related motor vehicle expenses. These include:

  • Fuel and oil
  • Repairs and servicing
  • Interest on the motor vehicle loan
  • Lease payments
  • Insurance cover premiums
  • Registration
  • Depreciation of the vehicle

However, the method you use to claim these expenses will depend on the type of vehicle you have and your business structure.

Choosing the Best Method for Your Business

If you operate your business as a sole trader or partnership, you have two primary methods to claim motor vehicle expenses: the cents per kilometre method and the logbook method. Let’s explore both to determine which might work best for you.

1. Cents Per Kilometre Method

Using the cents per kilometre method allows you to claim a set rate for each kilometre travelled for business purposes. You can claim up to 5,000 business kilometres per year using this method. It’s a straightforward option if you have a lower amount of business travel and prefer simplicity in record-keeping.

2. Logbook Method

The logbook method requires more detailed records but can be more beneficial if you use your vehicle extensively for business. You need to keep a logbook or diary for a continuous 12-week period, documenting every trip and the purpose of each journey. This logbook will help you determine the percentage of time you use your vehicle for business purposes. Based on this percentage, you can then claim the relevant proportion of all your vehicle expenses.

Important Considerations

When deciding which method to use, consider the following:

  • Ease of Record-Keeping: The cents per kilometre method is simpler but may limit the amount you can claim if you travel extensively for business.
  • Potential Deductions: The logbook method, though more time-consuming, can potentially yield higher deductions if you use your vehicle heavily for business purposes.

Private Use of Your Vehicle

Remember, you cannot claim any motor vehicle expenses related to the private use of your vehicle. This includes commuting from home to work unless your home is your primary place of business.

Record-Keeping Requirements

Knowing what records to keep and for how long is crucial. Most records need to be kept for five years, and they should be stored in a safe place. Ensure that all records are written in English or easily convertible to English. Keeping accurate and detailed records will make it easier for you to lodge your tax returns and defend any claims if audited.

Final Tips

  • Stay Organized: Implement a good record-keeping system. This could be digital or physical, but ensure it’s reliable and easily accessible.
  • Plan Ahead: If you choose the logbook method, start your 12-week logbook period at a time representing your typical business vehicle use.
  • Consult a Professional: If you’re unsure which method is best for you or need help setting up a record-keeping system, don’t hesitate to consult a tax professional.

By carefully considering your options and maintaining meticulous records, you can maximise your tax deductions for motor vehicle expenses and ensure compliance with tax regulations.

If you have any questions or need further assistance, please reach out. We’re here to help you make the most of your business deductions.

Not-For-Profit Sporting Organisations & Tax

Starting from the 2023-24 income year, not-for-profit (NFP) organisations, including sporting clubs, societies, and associations with an active Australian Business Number (ABN), must lodge an annual NFP self-review return to maintain their income tax exemption status.

It’s time to ensure that, if this applies to you, you are aware of the critical steps and considerations for sporting organisations to prepare for this new requirement.

Lodging the NFP Self-Review Return

The NFP self-review return is designed to help your sporting organisation evaluate its purpose and activities against the criteria for income tax exemption. Here are the essential points:

  • Lodgment Period: The first NFP self-review return for the 2023-24 income year must be lodged between 1 July and 31 October 2024.
  • Individual Lodgment: Each organisation with its own ABN must lodge its own self-review return, even if it is part of a larger sporting group.

Preparing for Annual Reporting

To ensure your organisation is ready to lodge the NFP self-review return, follow these steps:

  1. Verify ABN Status:
    • Check that your organisation has an active ABN using the ABN Lookup.
  2. Update Contact Information:
    • Notify the ATO if your organisation’s address or responsible persons’ details need updating. This ensures access to important tax information and the ability to lodge the return.
  3. Review Main Purpose and Governing Documents:
    • Identify and document your organisation’s main purpose, which must be the encouragement of a game, sport, or animal racing.
    • Ensure that any non-sporting activities are incidental, ancillary, or secondary to the primary purpose.
  4. Early Self-Review:
    • Conduct an early self-review to confirm your organisation’s eligibility for income tax exemption.
  5. Set Up Digital Access:
    • Set up myGovID with either Standard or Strong identity strength.
    • Link myGovID to your organisation’s ABN in the Relationship Authorisation Manager (RAM) to access Online Services for Business.
  6. Stay Informed:
    • Subscribe to the ATO’s monthly Not-for-Profit news for the latest tax and super updates, tips, and advice.

Consequences of Not Lodging

Failure to lodge the NFP self-review return may make your organisation ineligible for income tax exemption, and penalties may apply. Ensuring timely and accurate lodgment is crucial to maintaining your tax-exempt status.

Identifying Your Sporting Organisation’s Main Purpose

Your organisation’s main purpose must be encouraging a game, sport, or animal racing. Here’s how to determine and document this:

  • Governing Documents: Review these documents to clarify the purpose for which your organisation was established.
  • Activities Review: Ensure that your organisation’s activities during the income year primarily support the encouragement of the game, sport, or animal racing.
  • Non-Sporting Activities: Assess whether any non-sporting activities are merely incidental or ancillary to the primary purpose. Your organisation must be able to justify that its main purpose is the encouragement of a game, sport, or animal racing.

For many sporting organisations, the primary purpose will be evident through activities directly related to their game, sport, or animal racing.

Adhering to the new requirement of lodging an annual NFP self-review return is essential for not-for-profit sporting organisations to maintain their income tax exemption.

By following the outlined steps and ensuring that your organisation’s purpose and activities align with the criteria for tax exemption, you can avoid penalties and continue to benefit from this status.

For more tailored support and guidance, why not speak with your trusted tax adviser?

7 Mistakes Often Made At EOFY You Can Rectify

Finding yourself increasingly more busy as the EOFY approaches, particularly with meeting your tax obligations? It’s coming on tax time, so it’s time to ensure you’re prepared for your tax returns.

This period can be stressful and complicated, leading to common mistakes that can result in financial penalties or missed opportunities for tax savings.

Here’s a guide on avoiding common EOFY tax mistakes to ensure a smooth and efficient tax lodgement.

1. Errors in Claiming Deductions

Mistake: Many taxpayers either overclaim or underclaim deductions, which can lead to audits or missing out on tax savings.

Solution:

  • Understand What You Can Claim: Familiarize yourself with deductible expenses related to work, such as home office expenses, work-related travel, and self-education costs. Use the Australian Taxation Office (ATO) website as a resource.
  • Keep Accurate Records: Maintain detailed and accurate records of all deductible expenses throughout the year. Use apps or digital tools to track receipts and expenses.
  • Avoid Personal Expenses: Ensure that personal expenses are not claimed as work-related deductions. Mixing these can lead to disallowed claims and potential penalties.

2. Incorrect Reporting of Income

Mistake: Failing to report all sources of income, including side gigs, investments, or rental income, can lead to discrepancies and potential audits.

Solution:

  • Comprehensive Income Tracking: Track all income sources, including salaries, freelance work, investments, and rental income. Use a financial management tool to consolidate this information.
  • Cross-Check Statements: Compare your records with the income statements provided by employers, banks, and investment platforms to ensure accuracy.
  • Report All Income: Even small amounts of income must be reported. The ATO cross-checks data with other financial institutions, so transparency is crucial.

3. Missing Deadlines

Mistake: Missing the tax return filing deadline can result in penalties and interest charges.

Solution:

  • Mark Your Calendar: Set reminders for key dates, including the 30 June EOFY and the 31 October tax return deadline for individuals.
  • Early Preparation: Start gathering necessary documents and information early. Don’t wait until the last minute to file your return.
  • Use Online Lodgement: Utilize the ATO’s myTax platform for online lodgement, which is efficient and provides guidance throughout the process.

4. Incomplete or Inaccurate Documentation

Mistake: Submitting incomplete or inaccurate documentation can delay your return processing and potentially trigger an audit.

Solution:

  • Create a Checklist: Make a checklist of all necessary documents, including income statements, receipts, and records of deductions.
  • Review Before Submission: Double-check all information for accuracy before submitting your return. Ensure all figures match your records and are correctly entered.
  • Seek Professional Help: If you’re unsure about the documentation, consider consulting a tax professional to review your return before submission.

5. Overlooking Superannuation Contributions

Mistake: Neglecting to make superannuation contributions or misunderstanding the rules can lead to missed tax benefits.

Solution:

  • Maximise Contributions: Understand the contribution limits for concessional and non-concessional contributions and make additional contributions before the EOFY if financially viable.
  • Keep Records: Maintain records of all contributions to avoid exceeding the caps, which can result in excess contribution taxes.
  • Super Co-contribution: Check eligibility for the government co-contribution and ensure you meet the criteria to receive this benefit.

6. Ignoring Tax Offsets and Rebates

Mistake: Not claiming eligible tax offsets and rebates can lead to higher tax liabilities than necessary.

Solution:

  • Research Eligibility: Review available tax offsets and rebates such as the Low and Middle Income Tax Offset (LMITO) and the private health insurance rebate.
  • Claim Correctly: Ensure you meet the eligibility criteria and claim these offsets correctly on your tax return.

7. Failing to Review Past Returns

Mistake: Overlooking errors or missed claims from previous years can result in lost refunds or uncorrected mistakes.

Solution:

  • Amend Past Returns: Review past tax returns for any missed deductions or errors. The ATO allows amendments to previous returns within a certain period.
  • Carry Forward Losses: Ensure you properly carry forward any capital or business losses to offset future gains.

Avoiding common EOFY tax mistakes requires careful preparation, accurate record-keeping, and timely action.

By understanding deductible expenses, accurately reporting all income, meeting deadlines, maintaining comprehensive documentation, maximising superannuation contributions, claiming eligible offsets, and reviewing past returns, you can ensure a smoother, more efficient tax filing process.

If in doubt, consulting with a tax professional like us can provide peace of mind and help optimise your tax situation.

2024-25 FY Thresholds For Cars Newly Announced

The 2024-25 financial year is in sight, and significant changes have been made to car thresholds, which are crucial for business owners to understand for tax purposes.

Here’s a detailed overview of what’s new and how it might affect your business.

Income Tax: Car Limit Increase

The car limit for the 2024–25 income year has been set at $69,674. This figure is the maximum value you can use to calculate depreciation on a car, provided the following conditions are met:

  • The car is used for business purposes.
  • The car is first used or leased during the 2024–25 income year.

As a business owner, you can claim a tax deduction for expenses incurred for motor vehicles used for business purposes. However, if the vehicle is used for both business and personal purposes, you can only claim a deduction for the business portion. It’s essential to accurately track and record the percentage of business use to support your claim.

Goods and Services Tax (GST): Maximum Credit

When purchasing a car, if the price exceeds the car limit, the maximum GST credit claimable (with few exceptions) is one-eleventh of the car limit. For the 2024–25 income year, this translates to a maximum GST credit of $6,334 (calculated as 1/11 of $69,674).

It’s important to note that you cannot claim a GST credit for any luxury car tax (LCT) paid when buying a luxury car, even if it is used for business purposes.

Luxury Car Tax (LCT) Thresholds

The LCT thresholds for the 2024–25 income year have also been updated:

  • Fuel-Efficient Vehicles: The threshold is $91,387, reflecting an increase tied to the motor-vehicle purchase sub-group of the Consumer Price Index (CPI).
  • Other Luxury Vehicles: The threshold is $80,567, in line with the ‘All Groups’ CPI increase.

When considering the purchase of a luxury car, it is crucial to be cautious of schemes where a third party offers to buy the car from a dealer on your behalf at a discount. Such arrangements can be risky, potentially aiming to evade LCT. You might face issues related to inadequate insurance coverage or purchasing a defective vehicle.

Staying informed about these changes is vital for optimising your business’s tax deductions and ensuring compliance with the latest regulations. Proper documentation and adherence to these new thresholds can help you maximise your tax benefits while avoiding potential pitfalls.

For more information about purchasing a car for your business, why not consult with your trusted tax adviser?

Shares & What You Need To Know About Capital Gains

If you’re involved in shares, particularly on the selling side, you need to be aware of your tax obligations. Capital Gains Tax (CGT) is a crucial aspect of investing in shares and units in managed funds.

It applies to various transactions beyond merely selling your shares.

Let’s examine when CGT applies, the exceptions to its applicability, the records you need to keep, and the importance of identifying when shares were acquired.

When CGT Applies

The most common CGT event is the sale of shares or units. However, several other transactions can trigger CGT, including:

  • Redeeming Units in a Managed Fund: Switching units from one fund to another.
  • In Specie Transfers: Transferring assets in their current form rather than selling and then transferring cash.
  • Share Buybacks: Accepting an offer from a company to repurchase your shares.
  • Distributions from Unit Trusts: Receiving distributions that are not classified as dividends.
  • Non-Assessable Payments: Payments from a company that are not taxed as income.
  • Corporate Takeovers or Mergers: Holding shares in a company that undergoes a takeover or merges with another.
  • Liquidation or Administration: Owning shares in a company that enters liquidation or administration and the shares are declared worthless by the liquidator or administrator.

Whenever you sell shares or encounter another CGT event, it is necessary to calculate your CGT and report it in your income tax return.

When CGT Does Not Apply

Certain scenarios are exempt from CGT:

  • Dividends: These are taxed as ordinary income, not as capital gains.
  • Business of Share Trading: If you are engaged in a business of trading shares, profits from the sale are considered ordinary business income, not capital gains.

Records You Need to Keep

Maintaining accurate records is essential for calculating CGT. The necessary records, typically provided by your company, fund manager, or stockbroker, include:

  • Date of purchase
  • Purchase amount
  • Non-assessable payments
  • Date and amount of any calls (if shares were partly paid)
  • Sale price
  • Commissions paid to brokers
  • Details of events like share splits, consolidations, capital returns, takeovers, mergers, demergers, and bonus issues.

When buying multiple parcels of shares in the same company, keep detailed records for each parcel as they are considered separate CGT assets.

Identifying When Shares Were Acquired

When selling only some of your shares, it is crucial to identify which shares you are selling and their acquisition dates. This is important because shares bought at different times may have different costs, affecting your capital gain or loss.

For instance, transactions through the Australian Stock Exchange are recorded in the Clearing House Electronic Subregister System (CHESS). Using records from your CHESS holding statement or issuer-sponsored statement, you can select which shares you have sold and identify their costs.

Understanding when CGT applies, and the exceptions are fundamental for any investor. Proper record-keeping and identifying acquisition dates are vital for accurate CGT reporting. By following these guidelines, investors can navigate CGT complexities and manage their tax obligations effectively.

Keeping Up With The Instant Asset Write-Off

In a move aimed at bolstering small business cash flow and reducing compliance costs, the Government has announced an extension of the $20,000 instant asset write-off for another 12 months.

This extension, part of the 2024–25 Budget released on 14 May 2024, will see the measure continue until 30 June 2025.

This initiative allows small businesses with an aggregated turnover of less than $10 million to immediately deduct the full cost of eligible assets costing less than $20,000. To qualify, these assets must be first used or installed and ready for use between 1 July 2023 and 30 June 2025.

Eligibility

Eligibility to use instant asset write-off on an asset depends on:

  • your aggregated turnover (the total ordinary income of your business and that of any associated businesses)
  • the date you purchased the asset
  • when it was first used or installed ready for use
  • the cost of the asset being less than the threshold.

You are not eligible to use the instant asset write-off on an asset if your aggregated turnover is $500 million or more.

If temporary full expensing applies to the asset, you do not apply the instant asset write-off.

How Does It Work?

The $20,000 threshold applies on a per-asset basis, providing substantial flexibility for small businesses to acquire and immediately write off multiple assets. This can be particularly beneficial for businesses looking to upgrade equipment, invest in new technology, or make other capital improvements without the burden of prolonged depreciation.

The immediate deduction is unavailable for assets valued at $20,000 or more. However, these higher-cost assets can still be placed into the small business simplified depreciation pool. This method allows businesses to depreciate the asset at a rate of 15% in the first income year and 30% each year thereafter, providing a structured yet advantageous depreciation timeline.

The continuation of this measure is designed to aid small businesses by improving their cash flow and reducing the administrative burden associated with asset depreciation.

By allowing immediate deductions on lower-cost assets, the government aims to incentivise investment and growth within the small business sector. However, this will be dependent on the individual circumstances of businesses as to whether or not they may benefit from this measure.

What About The Legislation Of This Measure? 

It’s important to note that while these measures have been announced, they are not yet law. The Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023, which includes provisions for the $20,000 instant asset write-off for the 2023–24 income year, is still before Parliament.

Once passed, this legislation will formalise the extension and ensure small businesses can continue to benefit from these deductions through to the new deadline of 30 June 2025.

The $20,000 instant asset write-off extension could be a significant boost for small businesses, providing immediate financial relief and encouraging ongoing investment in business growth and development.

Small business owners should monitor the legislative process to ensure they can take full advantage of these provisions once they become law.

Speak With Us

If you have any questions about this measure or if it would be suited for your business, why not speak with one of our trusted team for answers? We are here to assist you with any questions or enquiries you may have in the lead-up to the end of the financial year.

Tax Planning Vs Tax Schemes: Where’s The Line?

As your trusted accountant, we’re here to help you navigate the complex landscape of tax planning and ensure that you make informed decisions about your financial future.

Tax planning is a legitimate practice that allows you to arrange your affairs to minimise your tax obligations. Still, it’s essential to be aware of the distinction between legitimate tax planning and unlawful tax schemes.

Understanding Tax Schemes

Tax schemes exploit loopholes or manipulate the tax and superannuation systems in ways that are outside the spirit of the law. While tax planning within the confines of the law is perfectly acceptable, engaging in unlawful tax schemes can have serious consequences, including the risk of losing your original investment, having to pay back taxes with interest and penalties, and facing legal action from tax authorities.

Identifying Warning Signs

It’s essential to be vigilant for warning signs that may indicate the presence of an unlawful tax scheme. These signs can include promises of unrealistic benefits, the arrangement’s secrecy, fees or commissions based on tax savings, and discouragement from seeking independent advice.

The scheme’s structure may also raise red flags, such as deferring income, hiding income offshore, inflating deductions, or creating artificial entitlements to tax offsets or credits.

Staying Informed and Seeking Advice

One of the best ways to protect yourself from an unlawful tax scheme is to stay informed and seek independent advice from qualified professionals. Before entering into any tax planning arrangement, it’s essential to do your due diligence, check for warning signs, and seek advice from professionals who have no connection to the scheme or its promoters.

Additionally, you can check for taxpayer alerts, verify the credentials of your tax agent, and review product disclosure statements to ensure that you’re making informed decisions about your financial affairs.

How We Can Help

As your accountant, we aim to help you achieve your financial goals while ensuring compliance with tax laws and regulations.

If you encounter an arrangement that appears suspicious or have concerns about the legitimacy of a tax planning strategy, don’t hesitate to contact us for guidance.

Together, we can review the arrangement, assess its potential risks and benefits, and determine the best course of action to protect your interests and ensure compliance with tax laws.

Tax planning is an essential aspect of financial management, but it’s crucial to approach it with caution and diligence.

By staying informed, being aware of warning signs, seeking independent advice, and consulting with trusted professionals like us, you can confidently navigate the complexities of tax planning and ensure that you’re making sound decisions for your financial future.

A Deceased Estate’s Tax Affairs: What You Need To Know

Finalising the tax affairs of a deceased estate is a crucial step in the estate administration process, ensuring compliance with tax obligations and providing closure for beneficiaries. To streamline this process and avoid potential liabilities, it’s essential to follow a comprehensive checklist.

  1. Lodging and Finalising Tax Returns

The first step in finalising the estate’s tax affairs is to lodge the date of death tax return for the deceased person and any outstanding tax returns for previous years. This includes submitting any other returns or information the deceased person requires, such as business activity statements. Ensure all returns are lodged accurately and promptly to avoid penalties or delays.

  1. Ceasing Taxable Activities

Once all necessary tax returns have been lodged, ensure that the deceased estate is no longer earning taxable income. This may involve finalising the deceased estate’s last trust tax return, if applicable, and ceasing any business tax registrations held by the estate, such as the Australian business number (ABN), GST, and pay-as-you-go (PAYG) withholding registrations.

  1. Settling Tax Liabilities

Separate the tax liabilities of the deceased person from those of the deceased estate trust, accounting for them separately while recognising that they are all liabilities of the same general deceased estate. Offset any refunds against liabilities to determine the net tax position of the estate. Ensure that all tax liabilities are paid or fully provided for before making final distributions to beneficiaries or a testamentary trust.

  1. Handling Insolvency

If the estate is insolvent and unable to cover its liabilities, familiarise yourself with the succession laws of the relevant State or Territory governing the administration of insolvent estates. Seek professional guidance if needed, and notify the Australian Taxation Office (ATO) of the estate’s financial position to assess the action required regarding tax liabilities.

  1. Seeking Certainty

Consider whether the estate meets the conditions outlined in Practical Compliance Guideline PCG 2018/4, which allows an authorised Legal Personal Representative (LPR) to finalise the estate without incurring personal liability for the deceased person’s tax. These conditions include obtaining probate or letters of administration, meeting specific asset and income criteria, and fulfilling all tax obligations of the deceased person.

Finalising the tax affairs of a deceased estate is a critical aspect of estate administration, ensuring compliance with tax laws and providing certainty for beneficiaries.

By following a comprehensive checklist and addressing each step diligently, Executors and LPRs can navigate the complexities of estate taxation, minimise risks, and achieve closure for all parties involved.

Where necessary, seeking professional advice and guidance can further facilitate the process and ensure compliance with legal requirements. Don’t be afraid to ask for help – a registered tax agent like us can assist you.