Category: Tax


3 Things to Do to Get Ready to Submit Your Tax Return

By Heaney Business Group
tax time

tax timeTax time is fast approaching and you don’t want to get caught short. Start by getting support and advice from a Business Accountant. HBG Tax & Accounting offer advice when it comes to your personal tax return as well as your business deductions and has the expertise to help you on matters relating to your Individual Tax Returns.

To claim deductions against the tax you have paid, you need to have made the deductions in the relevant year and in some cases that can before the deduction is actually due. There are main areas where an accountant can advise you on the best timing to pay invoices to maximise the benefit that you will receive, this advice needs to be tailored to your specific circumstances.

Here are 3 broad areas to consider before the end of the tax year.

Keeping Your Documents in Order Using Simple Steps

  • Tax Deductions
  • Log Books
  • Claiming GST

Tax Deductions

When running a business or working as a sole trader you need to know what deductions you can claim so you can reduce your assessable income which in turn will reduce the amount of tax you have to pay. To support your deductions, you must keep the relevant tax receipts with a transaction record showing the expenditure items.

Log Books

Using a vehicle for work purposes or if your business is supplying vehicles record keeping may be required. Travel that exceeds 5,000 km each year must be documented, keeping a log book in your vehicle for yourself or staff with the odometer readings noted can be used as vehicle expenses, running costs and depreciation. Don’t forget to mark any personal use separately in your log book. Logbook records need to be kept for a continuous 12 week period and redone every 5 years. See the ATO’s Logbook method for more details or speak to your accountant.

Claiming GST

Certain items in business can be claimed for the whole amount of GST that you pay however you can only claim a portion of GST on items that are also used for personal use. For instance, if you purchase a car and you use the vehicle half the time in the business and then half time for personal use, you can only claim for 50% of the cars GST.

Needing to Know More About How to Get Your Tax Matters in Order?

The team at HBG Tax & Accounting are your local accountants in Rockingham who have all your tax needs covered; not just business, for individual tax returns and accounting matters too.

Call the team at HBG Tax & Accounting to make an appointment on 08 9594 1963 to discuss all your tax needs.

  Category: Tax
  Comments: None

Warning on tax for overseas incomes

By Heaney Business Group
Tax

Tax payment on overseas income have been highlighted in recent cases as to why people are paying more tax than they thought they would be when income was made outside Australia.

As an Australian resident earning an income in another country which could include money from overseas investments, the sale of overseas property or dividends from foreign shares / trusts; you will need to declare this income on your Australian Tax Return.

Claiming Foreign Income Tax Offset

Often this foreign income will be taxed at the appropriate rate in the country of origin. You may be able to use the tax that you have paid to claim a foreign income tax offset that can then be used to reduce your Australian Tax bill.

Problems arise when there is a difference in rates of tax or how the tax is applied to the gain; this can mean that you may not have paid enough tax on the gain to claim the offset as ruled by the ATO.

Here is a recent example of where a taxpayer had to pay more tax than expected.

 “The taxpayer in this case, was a resident of Australia but was taxed in the US on gains they made on interests in US real estate. Most of the gains they made were taxed at a concessional rate of 15% (rather than the normal rate of 35%) because the interests had been held for more than one year. Some of the gains were ultimately taxed at 35% in the US.

The capital gains were also taxed in Australia and qualified for the general CGT discount of 50%.

As the taxpayer was a resident of Australia and had paid tax on the US gains, the taxpayer claimed a foreign income tax offset for all of the US tax they paid. However, the ATO amended the tax assessment and only allowed a tax offset for slightly less than 50% of the tax they paid in the US.

The problem for the taxpayer was that while the US and Australia both have tax concessions for longer term capital gains, they operate quite differently. The US applies a lower rate to the whole gain while Australia applies a normal tax rate to half of the gain. Unfortunately for the taxpayer, the Federal Court held that the Commissioner’s approach was correct. If foreign tax has been paid on an amount that is not included in your assessable income, then you cannot claim a foreign tax offset on it. In this case, the portion of the capital gain that was exempt from Australian tax because of the CGT discount was not included in assessable income.”

Different tax concessions

Although the United States and Australia both allow for tax concessions on longer term capital gains, their systems operate quite differently. When it comes to capital gains the US considers the whole gain and applies the lower rate to all of it however in Australia half the gain will be taxed at your normal rate and the other half will attract the reduced rate of tax. Therefore, capital gains exemption will only be applied to a portion of the foreign tax that was paid and can be used to reduce your Australian tax liability.

Other countries have different rules as well if the foreign tax has been paid on an amount of income earnt overseas you may not be able to claim the full amount as a foreign tax offset.

When it comes to foreign assets it is not always as clear cut as it may seem when it comes to offsetting taxes that have been paid overseas. Please consult an accountant to see what is available for your exact situation.  

Call the team at HBG Tax & Accounting to make an appointment on 08 9594 1963 to discuss all your tax needs.

This article was written based on information supplied from Knowledge Shop Newsletter February 2019.

The material and contents provided in this article is of informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.

  Category: Tax
  Comments: None

Did you know if you don’t meet your tax obligations your tax deductions will be denied?

By Heaney Business Group
Tax deduction

Tax deductions denied

If taxpayers don’t meet their PAYG withholding tax obligations from 1st July 2019, they won’t be able to claim a tax deduction for the following payments:

  • of salary, wages, commissions, bonuses or allowances to an employee;
  • of directors’ fees;
  • to a religious practitioner;
  • under a labour hire arrangement; or
  • made for services where the supplier does not provide their ABN.

For instance, if payments are made as a “contractor” but it should have been done under an “employee” and no PAYG has been withheld, a deduction can still be available if the correct information has been rectified voluntarily, although keeping in mind failure to withhold the right amount of tax could incur a penalty.

Important to know if you are in the road freight, IT or security, investigation or surveillance business

The Government has been keeping a close eye on the taxable payments reporting systems for the building and construction industry and the cleaning and courier services and now are branching out to the bigger scope in more industries about how flow of cash payments to contractors are made. If your business has an ABN, in road freight, IT, security, investigation or surveillance all payments to be made to contractor needs to be reported to the Australian Tax Office (ATO)

Know your industry

Know the definition of your industry and the subtitle of service it covers for instance “Investigation or Surveillance” includes Locksmiths as the definition is “protection from, or measures taken against, injury, damage, espionage, theft, infiltration, sabotage or the like.” If you are unsure ask your accountant.

Another example is IT services, “Specialising in computer hardware and software for the services of the client, covering areas of software installation, web development and design, computer management, software simulation and testing but that doesn’t apply to the selling of computer software or hardware leases.

Road freight has been expanded to cover the transportation of good by large vehicles such as log haulage, removal of furniture, taxi trucks, towing trucks etc this has been added to the existing delivery and logistic areas like courier deliveries services which were already required to disclose payments to contractors.

If you think your business will be impacted by these changes, speak to your accountant. As of the 1 July 2019,

you need get the following information for all your contractors

  • the ABN
  • name and address
  • gross amount paid

Having these records from the start will have reporting your first Taxable Payments Annual Report (TPAR), by 28 August 2020 easily and more accurate. Planning ahead will save you time and money in the long run.

Do you need to report?

Contractor payments obligation to report to the ATO are comprehensive and now include areas such as investigation, road freight, surveillance services, security and IT.

The following services are required to report contractor payments:

Service Reporting of contractor payments
Building and construction services From 1 July 2012
Cleaning services From 1 July 2018
Courier services From 1 July 2018
Road freight, IT or security, or investigation or surveillance services From 1 July 2019

For businesses providing mixed services, if 10% or more of your GST turnover is made up of affected services, then you will need to report the contractor payments to the ATO.

The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.  

This article was written based on information supplied from Knowledge Shop Newsletter December 2018.

  Category: Tax
  Comments: None

Are You Paying Tax on Your Shares?

By Heaney Business Group
Are You Paying Tax on Your Shares?

The ATO is retrieving records dating back to 2014 and comparing over 500 million records. The records that are being compared include price, time, quantity and full details of the individual share trades from information that they already have gained from share registries, brokers and exchanges.

By cross referencing this information the ATO is able to check if the correct tax obligations such as capital gains from the sale of shares has been added or losses claimed if applicable.

5 Million Australians Own Shares

With over 5 million Australians owning shares this information will help the ATO ensure that errors are kept to a minimum.

“Almost one third of all Australian adults own shares, and there is evidence that some taxpayers are getting it wrong when it comes to reporting their capital gains or losses from the sale of shares. In particular, we tend to see higher rates of error among those who don’t regularly trade in shares and who are not aware of the tax implications,” Assistant Commissioner Kath Anderson said.

Incorrect reporting of your tax obligations can result in penalties up to 75% of the value of the original tax. Keeping accurate documentation of your share transfers and trades including:

  • records of share purchase
  • sale prices
  • costs like brokerage fees.

If you are selling part of your share parcel you need to also document the amount of shares you are still holding.

Need Help With Your Tax On Your Shares?

The team at HBG Tax & Accounting are your local accountants in Rockingham. Please feel free to give our office a call on 08 9594 1963 to make an appointment to discuss your exact situation and requirements.

The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.  

This article was written based on information supplied from Knowledge Shop Newsletter December 2018.

  Category: Tax
  Comments: None

Not your typical accountant

By Heaney Business Group

It seems this is a very common perception of an accountant, but it couldn’t be further from the truth! Tax and accounting inspires us at HBG – shocking we know. Helping people through a transitional phase of their finances, or finding a solution to a more complex case is certainly inspiring for us. Even the straight forward tax and accounting jobs encourage us to utilise our skills to get the best solution for our clients.

What we really do as accountants is take on an ever-growing business advisory role, which essentially caters to the full business needs of our diverse clients. We partner with our clients help solve their business problems and offer advice on how to create more wealth and opportunity in their business.

So how can an accountant, or HBG, help you? Well, we can provide that sigh of relief and assurance of a job well done. You know that feeling of relief when something is completely taken off your plate? This feeling is strengthened with long-term relationships that we look to build with each of our valued clients.

At HBG, we are here to make our clients’ lives easier and we really enjoy the relationships we have with our clients, staff and local community. We work with our clients to solve any problem they may have, from dealing with the ATO to managing cash flow to marketing and human resource management issues. We pride ourselves on being able to meet our clients’ needs and to be seen as a true and trusted advisor.

If you are thinking about seeking advice, don’t hesitate to contact us. We aren’t your average backroom accountants and we would love the opportunity to get to know you and your business.

Should you have any questions about the how we might be able to help you, please don’t hesitate to contact our trusted tax accountants and business advisors.

 

P: 08 9594 1963

E: admin@hbgtax.com.au