Tax Relief For Distilleries, Brewers And The Industry

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.

When Does A CGT Concession Or Exemption Apply To Your Small Business?

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.

Charitable Donations, Gifts & The Taxman – What You Need To Know

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.

The Past Year May Have Pushed You Over The Tax-Free Threshold – Here’s Why

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.

Don’t Get Stung! You May Need To Pay Extra Tax On These Relief/Support Payments.

Have you, over the course of the past financial year, received a government assistance payment, support payment or disaster relief supplement?

There have been a number of cases where people who received financial assistance from the government were hit with additional owed tax to the ATO, due to their payments increasing their income threshold.

When lodging your individual income tax return this year, you will need to declare certain Australian Government payments, pensions and allowances in your tax return. If you did not elect to pay tax on those payments, this could affect the payment received from your return (or mean that you actually owe money to the ATO).

Some of the taxable payments that you may need to include in your tax return include:

  • the age pension
  • carer payment
  • Austudy payment
  • JobSeeker payment
  • Youth allowance
  • Defence Force income support allowance (DFISA) where the pension, payment or allowance to which it relates is taxable
  • veteran payment
  • invalidity service pension, if you have reached age-pension age
  • disability support pension, if you have reached age-pension age
  • income support supplement
  • sickness allowance
  • parenting payment (partnered)
  • disaster recovery allowance (but not in relation to 2019–20 bushfires)

Most of these pensions, payments and allowances will pre-fill in your tax return if you lodge online. You will need to make sure that all information submitted is correct though. Verify the pre-filled information with your own records to ensure that you are lodging the right information, and not missing anything.

Do you have concerns about your tax return this year? Uncertain about deductions, or if certain taxes will apply to you? Want a little more help or information about your government payments?

Be prepared for your individual income tax return with a consult with us. We can advise you on your tax returns, and potentially help you minimise the tax you will end up paying.

Do You Need A Receipt For That Claim? ATO Cracks Down On Work-Related Expenses

The ATO is warning those submitting their tax returns this year to take care when submitting ‘other’ work-related deductions to claim back, as they are closely scrutinising. If you are planning on claiming work-related deductions this tax return season, you will need to show:

  • That the money that was spent was on yourself and was not reimbursed
  • That the expense was directly related to earning your income
  • That there is a written record of the amount being claimed

To ensure that you remain compliant with your tax obligations when claiming work-related expenses, you should ensure that you have access to all of the relevant information that you will need to prove that the amount being claimed is eligible as a deduction.

Here is a guide as to what we will require from you to prepare your income tax return. Please note that these documents may not apply or be needed by everyone.

Income

To prove income, you will need to give us evidence of the following:

  • Payment summaries for any jobs you have had over the past year
  • Bank interest statements showing interest received
  • Allowances
  • Dividend statements
  • Foreign income
  • Rental property income
  • Business income
  • Any other income earth

Work-Related Expenses 

You will need to provide us with documentary evidence of the following to claim these as deductions:

  • Motor vehicle expenses  (estimation of kilometres if no logbook is kept, otherwise logbook and expense details)
  • Travel (fares and accommodation)
  • Uniforms/work-wear
  • Self-education and professional development
  • Union fees, registrations, subscriptions, memberships
  • Home office costs
  • Telephone, computer, internet fees
  • Details of asset purchases (with the portion of personal and work usage)

Other Expenses

You will need to provide us with evidence of the following:

  • Income Protection Insurance
  • Investment expenses
  • Rental property expenses
  • Cost of maintaining tax affairs

You may also be able to claim a deduction for the expenses that are incurred while performing your work duties at home if you are a current employee working from home. You will also need to have accurate records, receipts and information irrespective of the method that you use to claim (Shortcut, Fixed Rate or Actual Cost).

Accurate record-keeping of all documentation regarding income, work-related expenses and other expenses will help expedite the process of lodging your tax return by us. If you require any additional information regarding what you need to provide in terms of documentation for your tax return, you can speak with us.

Tax Treatments Will Differ Depending On Payment Types, Says ATO

The ATO is looking to make tax season a little bit easier this year, particularly in light of the unique but significant challenges that Australians have been facing over the last year, and are continuing to face. If you received a financial assistance payment, grant or scheme package during the 2020 financial year, you need to be aware of your taxable requirements. There are different tax treatments for different payments that you may have received.

Jobkeeper

Payments that were received from Jobkeeper as an employee will be automatically included in your income statement as either salary and wages, or as an allowance. Sole traders who have received a Jobkeeper payment on behalf of their business will need to include the payment as assessable income for the business.

Jobseeker

All information will be included in your tax return (in the Government Payments & Allowances question) when ready. Lodging your return prior to the information being available will require you to add it yourself. Leaving out income will slow your return, so it is important to ensure that you have all of the information when lodging.

Stand Down Payments

If you were the recipient of a one-off or regular payment from your employer after being temporarily stood down due to COVID-19, these payments will be automatically included in your return as they are taxable.

COVID-19 Disaster Payment For People Affected By Restrictions

The Australian Government (through Services Australia) COVID-19 disaster payment for those who were affected by restrictions is a taxable payment. This must be included when lodging your tax return.

Tax Treatment Of Other Assistance Payments

The tax treatment of other assistance payments may vary according to what is required and how the income is assessed as. It is best to double-check on the ATO’s website directly to determine how different disaster payments may impact your return.

Early Access To Superannuation

If you received early access to your superannuation under the special arrangements resulting from COVID-19, you do not need to declare that amount in your tax return. Any eligible amounts withdrawn under this program are tax-free.

If you require assistance with determining what is taxable income and what is not, or you’re not sure what payments that you received may be applicable to the ATO’s different tax treatments, come speak with us. We’re here to help.

Gig Economy Workers Are Warned That The ATO Is Watching

The inexpensive and profitable side hustle is under the ATO’s watchful eye when it comes to declaring income this tax season. With many gig economy workers often earning their income as independent contractors, the ATO warns that a failure to report all income from all of the work that they carry out could land them with severe penalties. 

 

The ATO is expected to employ advanced data-matching from platforms that play host to large proportions of Australia’s gig economy to ensure that tax is declared and paid on the income from workers of the gig economy. Those workers may include Uber workers, Doordash, Lyft, Airbnb and many more similar side hustle income earners.

 

There is a silver lining for gig workers this tax time. Many gig economy workers may find themselves more eligible for tax deductions – but are warned against claiming more than they are allowed to.

 

Gig workers are eligible to claim deductions for most costs incurred while earning their income (such as travel or vehicle expenses, financing and marketing). These deductions, however, can only be claimed for the work-related proportion of the claim. You won’t be able to claim the whole amount for the deduction if the claim is made because you picked up an Uber fare on the way back from your Grandma’s for example, it will only be deductible from when you picked up your passenger. 

 

Those who prepare their deductions based on a representative period are also warned to prepare an additional record for this period, as the pandemic has induced numerous tax challenges for many gig economy workers involved in declining and rising fields of the economy. 

 

Workers who fail to declare cash income from the gig economy may incur penalties in the form of interest on their tax bills or potential criminal charges. It is vital that you ensure your tax return is correctly lodged and all income is declared if you are a gig economy worker of any kind. If you need assistance regarding your tax return lodgment process, you can always contact us for advice.

The Federal Budget 2021-22: Low & Middle Income Tax Asset Rebate Extension Announced

The Low and Middle Income Tax Offset has been extended for another 12 months, meaning that taxpayers whose wage earnings situate them within a certain income bracket will again be able to receive a little extra cash back into their pockets again this year

to receive a little extra cash back into their pockets again this year.
Tax offsets are also known as rebates and directly reduce the amount of tax payable on your taxable income. Sometimes, this can lead to the payable amount lowering to zero, but these rebates cannot be used on their own to get a refund.

You are only able to receive this amount after you have filed your tax return at the end of the financial year and in a lump sum amount that is in accordance with which wage bracket you are in and the amount you will receive. 

You don’t need to complete anything in your tax return for your low or low and middle-income tax offset to be worked out for you. Instead, the amount of tax offset you will receive is worked out for you once your tax return is lodged.

If you earn under $37,000 this financial year, you will receive an offset of $225. For those who earn between $37,001 and $48,000, you will receive $255, with an additional 7.5 cents to every dollar above $37,000 up to a max of $1,080.

Those who earn between $48,000 and $90,000 a year are set to get the best deal, with up to $1,080 on the cards.

If you have any tax-related questions that the Federal Budget announcements have brought to your attention, speak with us for assistance.

Using Feedback As A Tool For Your Business’s Growth

Feedback is an essential element within the business sphere. It can be used to improve your business as a whole or help identify where you may make further improvements. It can be internally or externally driven and may not always be positive.

Essentially, feedback is a driving force behind a business’ growth and should be sought out and given by you to create a direct line of communication that the feedback is being received and put back into the business.

It is crucial to consider the following when you ask for feedback:

Who you are requesting feedback from and why
How to use the feedback effectively after receiving it
How your business can improve as a result of the feedback
What is/isn’t working for your business, and how you can address it

You can request feedback from:

Those who report to you (you can go down a few levels)
Those above you (you can go up a few levels)
Colleges in the same team/group
Colleges in other teams/groups
Vendors, suppliers and external contractors
Customers

As a business owner, it is crucial that you receive honest and constructive feedback while also providing it to your employees. To do so, one needs to ensure that the feedback is:

As specific and as close as possible to an event
Given and received in a safe place in an appropriate setting and time
Not judgemental or personal
Constructive and actionable

When receiving feedback, try to listen, reflect and respond.

Listen

Listen to the feedback provided to you, even if it makes you want to react immediately to it. Delay defending yourself, and listen closely to what exactly is being said. Internalise the feedback, and ask questions to clarify what they are saying to give yourself a concrete understanding.

Reflect

After receiving feedback, reflect on what was said with an open mind and understand the context in which the feedback has come from. Is it helpful feedback that you can use to improve or change accordingly? Rather than think “that wasn’t my intention” about the feedback, consider how it could have been perceived differently from the other’s view.

Respond

Giving feedback, particularly when it is negative, can be a daunting task. Respond with a thank you to the feedback, as it promotes a positive response irrespective of the nature of the feedback.