Australians can experience a range of natural disasters, such as floods, bushfires, tropical cyclones, severe storms and even earthquakes. These events can cause devastation to communities and financial hardship for individuals and businesses.

While FBT may not be at the forefront of your mind when helping your employees after an emergency, it can result in potential exemptions depending on the assistance provided.

It is worthwhile to know what kinds of benefits you, as a business owner, can provide for different emergencies that will be excluded from FBT. Businesses that provide benefits to employees during an emergency situation are likely to have assistance costs be exempt from fringe benefits tax (FBT).

Exemptions will apply to benefits you provide to employees who are being impacted by or will be potentially impacted by:

  • A natural disaster such as a bushfire, flood or cyclone.
  • An accident such as a car accident.
  • A serious illness such as cancer.
  • An armed conflict such as a war.
  • A civil disturbance such as a riot.

The benefits you provide to your employees that can be exempt from FBT include health care, temporary repairs or emergency needs such as food supplies, clothing, accommodation, transport or household goods. These can be of great use to employees looking to get back on their feet.

Short-term benefits you provide to an employee, such as temporary repairs to damaged property due to a natural disaster, are exempt from FBT. However, long-term employee benefits after an emergency event will not be exempt, such as a replacement car, new house or ongoing renovations.

When providing health care, certain requirements must be followed. FBT exemptions only apply to health care provided:

  • For an employee of yours or from a related company.
  • On your premises or the premises of a related company
  • By a company doctor at an accident site.
  • At or near an employee’s worksite.

If you decide to pay for your employee’s ongoing medical or hospital bills, then the FBT exemption will not apply.

The benefits costs would be deductible to the employer but not assessable to the employee and will not appear as part of their salary and wages on their payment summary.

These benefits can be of use to not only the individual employees but to your business as well. Regarding FBT, exempt benefits can be a great way to lower the tax bill. They also provide a way to assist your employees during times of great hardship.

However, to ensure you’re maximising your FBT benefits potential, consult with a registered tax agent or adviser for the right information and assistance in handling these matters.

Doing the numbers might not necessarily be your thing if you work in sales or marketing – especially when it comes to your tax. Tax time might seem like a distressing situation in that case, but that’s when you can come to someone like us (a tax professional) for the help that you need when it comes to lodging your tax return.

Like with every profession, you will be able to claim back some of the work-related expenses that you may incur during your work for the year in the form of tax deductions. This can help to reduce the due amount that you may have to pay in the long run.

Typical Tax Deductions For The Marketing/Sales/Communication Professional

No matter how far in your career path that you may have progressed, you will always have to pay some form of tax. Depending on what you may be able to claim, you may be able to offset some of the amounts that you may owe to the ATO (or increase what the ATO owes you in your tax refund).

For those individuals who may be employed in the marketing, sales or media/communication fields and sectors, there are some tax deductions that you may be able to apply for unilaterally.

Motor Vehicles

If your position requires you to travel you may be able to claim back on the motor vehicle expenses for travelling for work. This may involve the transportation of bulky equipment when visiting clients, travelling between places of work, or if you have to travel between offices.

Devices, Technology And Bills

If you have been required to work from home or had to use your personal devices for work-related purposes, you may be able to claim back on the percentage of the cost that is work-related.

You may also be able to claim back on devices bought for work usage, according to the percentage of time versus use that the device was used to complete tasks/work with.

Home Office

If you have had to work from home over the last year, you may be able to claim on the home office occupancy costs. This may even include a percentage of the rent, mortgage interest, rates or insurance, among others. But be careful of the Capital Gains sting.

Client Gifts

Client gifts bought for work purposes by salespersons who are entitled to receive commission income – this could include a Christmas hamper, a bottle of alcohol, gift vouchers, flowers or more.

Training/Certifications

If you are renewing a sales certificate or professional body membership, this may be a tax deduction that you can claim on your tax return.

You may also be able to claim back on work-related short training courses (such as first aid, OHS, bookkeeping etc) or self-education course fees on your return. This may include the cost of books, stationery, equipment and travel required for the course.

In spite of the many challenges that have faced many industries across the country during COVID-19’s persistence and ongoing effects, the retail industry through their continued, adapted operations has continued to progress.

As a result, retail workers across many stores may find that the taxable income from their work may have been affected by the changed situation. This may be a result of additional income, less income, or stagnation of their taxable income as a result of stand-downs, business closures or a forced pause in their operations.

No matter the situation though, retail workers will still need to ensure that all of their taxable income has been accurately reported and lodged in their tax returns.

If you are a retail worker earning your income or have earned your income in the industry over the course of the previous year, you will need to know:

  • What income and allowances you may need to report
  • What can and cannot be claimed as a work-related deduction
  • What the records are that you may need to keep track of

This information may be applicable to income earned in the 2020-21 financial year, or to income earned over the next year.

Income and Allowances That You May Need To Report

On the 30th of June, you should have received an income statement or payment salary that shows what you have earned as a retail worker throughout the year. This should include your salary, wages or allowances for that income year.

You should include all of the income that you received during the year in your tax return, regardless of when you earn it.  This may include:

  • Any salary or wages that you may have earned as income.
  • Any bonuses that may have been earned during the year.
  • Any allowances that you may have received to compensate for an aspect of your work or to help to pay for certain expenses when you have travelled for work.

Allowances can also be if an employer pays you based on an estimated amount of what you might spend (e.g. paying cents per kilometre if you use your car for work). It may also be for the actual amount spent on the expense before or after the expense is incurred.

You may receive allowances

  • For work that may be unpleasant, special or dangerous
  • In recognition of holding special skills, such as a first-aid certificate or
  • To compensate for industry peculiarities, such as work on public holidays.

Your employer may not include some allowances on your income statement or payment summary but may include them on your payslips. These can include travel allowances or overtime meal allowances (as paid per industrial law, award or agreement).

If that allowance isn’t on your income statement or payment summary and you spend the entire amount on deductible expenses, it should not be included in the tax return as income or claimed as a deduction. If you spent more than what was your allowance, you include the allowance as income in your tax return and can claim a deduction for your expense.

If your employer pays for the expenses that you occur exactly, that payment is considered a reimbursement. This is not included or considered to be an allowance, and as such, cannot be included as income in your tax return or claimed for a deduction.

Deductions That You May Be Able To Claim

If you are a retail worker looking for claimable deductions that may specifically apply to your profession, you need to:

  • Have spent the money, and were not reimbursed for the work-related expense
  • Have proof that the expense directly relates to earning your income
  • Have a record that proves the expense was incurred (a receipt is usually acceptable).

You can only claim a deduction for the work-related portion of an expense. You can’t claim a deduction for any part of an expense that is not directly related to earning your income or that is private.

Some of the deductions that may be eligible as deductions for retail workers include:

    • Car expenses – if you drive between separate jobs on the same day, or drive to and from an alternate workplace for the same employee on the same day.
    • Clothing expenses – the cost of buying, hiring, mending or cleaning certain uniforms that are unique and distinctive to your job, or protective clothing that your employer requires you to wear.
  • Meal expenses – the cost of overtime meals on the occasions where you worked overtime and took an overtime meal break and your employer paid you an overtime meal allowance.
  • Self-education expenses – if your course relates directly to your current job.
  • Seminars and conferences
  • Technical or professional publications
  • Union and professional association fees
  • Phone and internet usage if your employer needs you to use your personal devices for work.

Record-Keeping Tips

Always keep proof of any expenses that you may have incurred for which you want to claim deductions. This is usually a receipt but can be another form of written evidence (such as an invoice). Those records must show what you purchased, when, where, and how much you spent. They must be in English

There are a few exceptions to the rule. These include small expense receipts, hard to get receipts, overtime meal expense receipts and travel and meal expense receipts. These have special rules and conditions that you need to follow if attempting to claim on these.

If you would like further assistance or information on how you can handle your tax return as a retail worker for this current financial year or for last year’s return, you can speak with us. We can assist you in the process, and make sure that your tax return is lodged correctly.

Though you may not be expecting a tax bill, having one turn up in your inbox does not have to be an unexplainable mystery. The Australian Tax Office may send you a tax bill after you have lodged your income tax return for a number of reasons.

You may receive a tax bill if:

  • Your employer has not withheld enough tax from the payments that they have made to you as an employee (this often occurs where you change jobs during the year).
  • You are a sole trader who hasn’t made enough tax payments to the ATO throughout the year (also known as PAYG instalments).
  • You receive other income where no tax was withheld (e.g. the money received from an investment property or dividends).
  • A change in income affects your single or family income threshold and you need to pay the Medicare levy or Medicare levy surcharge (MLS).
  • The amount of private health insurance rebate you receive changes or is too much.

How To Prevent A Tax Bill

If you earn income as an employee, your employer usually makes tax payments on your behalf throughout the year. Through these Pay As You Go withholding amounts, your annual tax obligations can be met and you generally will not have a tax bill waiting for you after lodgement.

However, if you earn income that does not have tax withheld or does not have enough tax withheld, you can prevent a tax bill by increasing tax withheld from payments, voluntary entry into PAYG instalments or tax prepayments.

If you know or can estimate that the annual tax bill you might receive won’t be covered by the amount of tax withheld through PAYG withholding, you can ask one or more of your payers to increase the amount of tax that they withhold. This is what is known as an upwards variation.

If your tax is not withheld when you receive payments from income earned as a sole trader or investments, you can voluntarily enter into PAYG instalments. This method of prepaying tax reduces your chances of having to pay a large amount of tax at the end of the income year. If you are in your first year of sole trading, this is a recommended practice to undertake.

Tax prepayments can be made at any time, and as often as needed to make tax management a bit easier for you. The ATO can hold the prepaid amounts made towards your expected bill unless you (or your agent) request a refund.

If something arises and you cannot pay your tax bill on time, you should speak with us as soon as possible so that we can make arrangements on your behalf.

As a property investor, you might find yourself implementing repairs and renovation work onto a property to ensure that you are maximising its value on the market. However, though both can be claimed on your tax return, it’s of paramount importance that you know how to claim them. Getting it wrong can be both costly, and unlawful.

A rental property improvement is a renovation where something is improved beyond its original state and must be claimed with depreciation. This means that you are claiming a deduction for the decline in the value over the effective life of the renovation. For example, a rental property improvement that could be claimable by a property investor could include a bathroom getting retiled.

Maintenance and repairs however can be claimed differently, with all records kept containing accurate information on that work. This will assist in working out the depreciation of assets of the property.

A depreciation schedule is a report that outlines all available tax depreciation deductions for a residential investment property or commercial building. These depreciations can be claimed in your tax return each financial year and could help you to save thousands.

Investors who renovate and lodge their tax returns prior to ensuring that they have updated their tax depreciation schedule correctly could get caught out in making a mistake between the two types of work. Those who fail to properly record rental property improvements in a tax depreciation schedule risk making inaccurate claims and inviting the scrutiny of the Australian Taxation Office (ATO).

Your tax obligations and entitlements when renovating your property may change depending on how you go about it. Depending on whether you are a personal property investor, engaged in the profit-making activity of property renovations or carrying on a business involved in renovating properties, you will have to abide by certain requirements outside of maintaining the depreciation schedule.

Personal Property Investor

As a personal property investor engaging in renovations to a property:

  • The net gain or loss gained from the renovation is treated as a capital gain or capital loss.
  • Capital gains tax concessions such as the CGT discount and the main residence exemption may reduce your capital gain.
  • You will not be required to register for GST as you are not conducting an enterprise.

Profit-Making Activity of Property Renovations

Consider yourself a ‘flipper’ of properties? You will be required to:

  • Report your net profit or loss from the renovation in your income tax return as a result of the profit-making activity.
  • Have an Australian business number.
  • May be required to register for GST if the renovations are substantial.

In The Business Of Renovating Properties

If you are carrying out the business of renovating or flipping properties:

  • They are regarded as trading stock (even if you live in one for a short period of time.
  • The costs associated with buying and renovating them form part of the cost of your trading stock until they are sold.
  • You calculate the business’s annual profit or loss in the same way as any business with trading stock
  • You’re entitled to an Australian business number (ABN)
  • You may be required to register for GST if the renovations are substantial.

In this instance, CGT does not apply to assets held as trading stock. Similarly, the CGT concessions (such as the CGT discount, small business concessions and main residence exemption) will not be applicable to the income gained from the sale of the properties.

If you are concerned about any of the topics discussed above, or want to know more about claiming property improvements on your tax return, you can come and speak with us for further information and advice.

Did you know that salary packaging could reduce the amount of income tax you may have to pay as an individual?

If you agree to salary packaging, you and your employer can “package” your salary into an arrangement of less income received after-tax, in return for your employer paying for benefits out of your pre-tax salary (which could include things such as a car or a phone).

If you, for example, received a yearly salary of $100,000, you and your employer could come to an arrangement of packaging the salary into $80,000 per year as income, and $20,000 as a car benefit. What this arrangement does is reduce the actual taxable income to $80,000, which may benefit you in that you may end up paying less income tax.

Benefits that you may be able to receive in a salary packaging arrangement can include fringe benefits, exempt benefits and super. In the case of fringe benefits, your employer will pay Fringe Benefit Tax on those benefits, whereas exempt benefits will not require them to do so.

If you elect instead to put some of your pre-tax income into your super, your fund will tax those contributions at 15%, which is the same as what your employer contributions are taxed at. This may end up being taxed less than your actual marginal tax rate.

Salary packaging is generally more effective for those who earn a salary in the middle to higher income brackets. If you want to find out whether or not salary packaging may be a viable option for you, you should seek out professional tax advice. You can come and speak with us to discuss this as an option for you.

With around 600 brewers and 400 distillers across Australia, and up to two-thirds of those numbers operating in rural and regional areas, the alcohol industry has become one of Australia’s fastest-growing sectors. As a part of the 2021-22 Budget announcements in May, small breweries and distillers were to be the beneficiaries of $225 million in tax relief to support more jobs and investment.

The excise relief cap for small brewers and distillers (the mechanism by which beer and spirit productions is taxed) will be more than tripled, from $100,000 to $350,000 per year. From 1 July 2021, eligible brewers and distillers have been able to receive a full remission of any excise that they pay, up to an annual cap of $350,000. Previously, eligible brewers and distillers were entitled to a refund of 60% of the excise that they paid, up to an annual cap of $100,000.

Beer and spirits producers in Australia faced a tough tax regime, but the excise cut may put them at more of an even keel with the wine industry. The tax relief is projected to be of assistance in keeping these smaller businesses up and running while remaining profitable during the prolonged impact of COVID-19.

Are you a local brewery looking for more information about tax relief that you may be eligible for? You can come speak with us to find out more information and advice on the subject.

Small businesses are facing a set of challenges once again that can make fulfilling tax obligations seem like a daunting task. However, as a small business, capital gains tax concessions on assets used to conduct your business may be of interest to you. These assets are known as “active assets” and can, for example, be a tangible asset (such as commercial property), or an intangible asset (such as goodwill).

The turnover threshold for such CGT concessions is $2 million, according to the ATO.  If your turnover is more than $2 million, then you need to satisfy an assets test.

There are stringent eligibility requirements and conditions that you must meet in order to access these concessions.

If you have owned an active business asset, you may only be required to pay tax on 25% of the capital gain when the asset is disposed of.

If you are 55 years of age or older, and are retiring or are permanently incapacitated (and have owned an active business asset for at least 15 years), you may not have to pay any CGT when disposing of an asset by sale, gift or transfer. You might also be able to contribute the amount that you make from this exemption to your super fund without affecting your non-concessional contributions limits (you can speak with us about this if you are unsure about this process).

If you are under 55, the taxable 25% of the disposal of an asset can be paid into a complying fund or a retirement savings account. There is then a full CGT exemption on the sale of an active business asset of up to $500,000 (the lifetime limit). Any amounts earned from this exemption to CGT may be able to be paid into your super fund without affecting the non-concessional contributions limit).

Disposing of an active asset, but are going to buy a replacement asset or improve on an existing one? You can defer your capital gain in this instance until a later year. The replacement asset can be acquired one year before or up to two years after the last CGT event in the income year that you choose the roll-over for.

If the asset is a share in a company or an interest in a trust, there will be additional conditions that you will be required to meet as well. If you are a small business, there are other CGT exemptions, rollovers and concessions specific to small businesses that you may be able to access, if you meet the eligibility criteria. These small business CGT concessions will reduce the taxable capital gain and in some cases result in no tax being paid at all on the gain.

Speak with us to find out what you may be entitled to when it comes to CGT and your business to ensure that you are doing the right thing with your tax obligations after selling an asset.

Did you know that making a charitable donation isn’t just contributing towards a better outcome, it could also be tax-deductible?

Every $2 donated under the right set of circumstances counts against your taxable income, and though many charitable donations and gifts can be tax-deductible, not every donation will count.

If you are planning on claiming a tax deduction on any donations that you have made this year, it’s best to bear in mind these tips from the Australian Taxation Office (ATO).

A common misconception made by Australians is that every charitable donation or gift is tax-deductible. You need to ensure that the donation that you are attempting to claim is endorsed by the ATO as a deductible gift recipient (DGR). This is an organisation or fund that is endorsed by the ATO to receive tax-deductible gifts or donations – not all charities and not-for-profits are classed as DGRs.

You must also be able to prove that you made the donation – having evidence in the form of a receipt directly from the organisation, or third-party receipts (if the receipt identifies the DGR and states the fact that the amount is a donation to the DGR).

One exception to this rule, generally, is that of bucket collections. If you made a contribution or donation of $2 or more to “bucket collections” conducted by an approved organisation for natural disasters, you can make a claim for a tax deduction of up to $10 for the total of those contributions without a receipt.

Not sure if a claim you’d like to make in your tax return is tax-deductible, or want a little extra help determining the eligibility of a donation for a tax deduction? We are here to advise and assist you.

Did you know that, regardless of how many jobs you worked over the past year, once your income reaches $18,200 it has crossed the tax-free threshold?

 

The tax-free threshold is the maximum amount of income that you can earn in a year without having to pay any tax.  Currently, that limit is set to $18,200.

Did you also know that payments from the government could also be counted as taxable income, which contributes to your tax-free threshold?

The previous year has not been without challenge for many Australians, who may have faced difficult issues with maintaining employment during business shutdowns or disasters, and required supplemental income (such as payments from Centrelink, government support or disaster relief).

Those payments may have pushed you over the $18,200 threshold without you realising. This will create an issue particularly if you failed to elect to have tax withheld from the payments.

This could impact the amount of money that you might otherwise receive from your tax return claim, as it could push you into a different income bracket for your return.

Centrelink payments, disaster relief payments and government support packages may be considered as taxable income. This, on top of what you may have earned during employment, is what the ATO will consider when calculating your tax return claim.

Want to get the most out of your tax return for this upcoming financial year? Speak with us so that we can advise you on deductions, your income and other queries you might have that we could help with.