Preparing for Tax Time

How can you keep the process as painless as possible?

Gather all your documents in one place, as the more organised you are, the less stressful the process will be.

Generally, preparing your tax documents is the time consuming part of the process. With accurate records and receipts you will be able to make the most out of your deductions.

Forming a cloud file storage for your tax documents will ensure your documents are centralised and easy to gather at tax time. You can use solutions such as Dropbox or Google Drive, which allow you to upload your documents on the go. 

Knowing the documents you need to put together can help streamline this process.

Below is a general guideline on what your accountant requires to prepare your income tax return. These documents do not uniformly apply to everyone.

Income

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

Work Related Expenses

• 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

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

 
If you require any further information on what tax documentation to prepare for your tax return, please contact the team at Networth Accounting.

Superannuation Tax Time Tips

With the end of the financial year almost upon us, we have prepared some helpful tips to ensure you get the most out of your super this tax time.

1. Don’t get caught above the cap

Now is a good time to check where you are at with your concessional contributions. You may want to avoid the consequences of going over the $25,000 contributions cap.

Subject to eligibility, from financial year 2020 new rules have come to effect where by unused concessional contributions from 1 July 2018 can be carried forward.

2. Personal Contributions

Personal super contributions are the amounts you contribute to your super fund from your after-tax income.

If you wish to make personal contributions into your fund ,these need to be payed no later than Wednesday 24 June to be certain they are received before the end of the financial year.

3. Share the love of super with your spouse

You can make after-tax payments into your spouse’s super fund. You may be eligible for a tax offset if you make contributions on behalf of your spouse who is earning a low income or not working.

3. Look at your insurance 

Now is a great time to review your insurances as your needs and circumstances change over time. It’s important to think about the level of cover you need and consider your insurance premiums.

You may have insurance through your super, so it’s a good idea to compare this against other policies you have outside of super to check whether you have any double ups.


The above does not constitute financial advice, we recommend you obtain professional financial advice specific to your circumstances. If you wish to do so, please contact our office to arrange a meeting with an adviser.

What you can and can’t claim when working from home during Covid (19)

With the increased number of employees working from home due to coronavirus, we wanted to ensure you understand how and what you can claim within your tax return. Media announcements regarding this topic have been ambiguous and confusing.

If you are an employee required to work from home, you may be able to claim a deduction for the expenses that are incurred while performing your work duties at home.

Generally, to claim a working from home deduction then all the following must apply:

• • You must have spent the money;
  • The expense must relate directly to earning your income;
  • You must have a record to prove the expense;
  • You have a dedicated work area (not applicable for “Shortcut method” see below).

There are three methods you can use to claim your deduction:

1. 1. Shortcut method;
   2. Fixed rate method;
   3. Actual costs method.

Shortcut Method

The ATO have made claiming working from home deductions during Covid(19) easy. They have introduced a new method which will allow people working from home during Covid(19) to claim 80 cents per hour for all their running expenses, provided you are not reimbursed by your employer.

This method covers all running costs (including depreciation, phone and internet costs) and there is no requirement to operate in a dedicated work area to claim the tax deduction during the eligible period.

To claim working from home you will need to record your actual hours worked from home, records can be kept on your computer or written in a diary. Records should include the date you worked from home, the time you spent working and the total hours worked on that day.

The shortcut method is only available due to the Covid(19) pandemic for work you do at home from 1 March until 30 June 2020.  

Fixed Rate Method

Working from home claims prior to 1 March and after 30 June will need to use the fixed rate or actual costs method.

A fixed rate of 52 cents per hour can be claimed for each hour worked from home. You will need to keep a record of actual hours worked at home or a diary showing your usual pattern of working from home over a four week period (applied across the remainder of the year).

This method covers heating, cooling, lighting, cleaning and the decline in value of furniture.

 If you are using the Fixed Rate method the following may be claimed in addition:

• • Phone and internet expenses;
  • Computer consumables and stationary;
  • Decline in value on computer or other equipment.

To claim the above expenses you must work out the percentage the item is used for work purposes and keep receipts and records to prove your claim.

Actual Costs Method

Under the actual running expenses method you are entitled to claim a proportion of the running expenses of your home office.  This method is more complex requiring more detailed records.

To use this method, you will need to work out the percentage of your household running expenses that are related to performing your work in your dedicated office. This percentage is applied to your actual running costs incurred during the period of working from home. Your records of hours working from home and receipts for expenses will need to be kept to prove your claim.

Expenses can include a portion of:

• • Heating, cooling and lighting bills;
  • Depreciation of home office furniture and fittings, office equipment and computers;
  • Costs of home office related repairs;
  • Computer consumables;
  • Phone and Internet expenses.

It can be tricky understanding the different requirements and methods to claim work related expenses. If you are uncertain about how or what to claim, please feel free to contact us for advice.

COVID(19) – Government Superannuation Packages

The government has released many economic packages to help the economy withstand and recover from Covid(19). Two of these packages are in relation to superannuation.

Reduction in minimum pension requirements

For many retires, the significant losses in financial markets as a result of Covid(19) are having a negative effect on the account balance of their superannuation.

As a result of this, the Government has reduced the minimum annual payment requirements for pensions by 50% in the 2019-2020 and 2020-2021 financial years.

Early release of superannuation

Individuals financially affected by Covid(19) can access their superannuation savings of up to $10,000 before 1 July 2020 and a further $10,000 from 1 July 2020 until 24 September 2020.

To apply for release, you must satisfy any one or more of the following:

• You are unemployed
• You are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment, special benefit or household allowance.
• On or after 1 January 2020 you were made redundant
• On or after 1 January 2020 your working hours were reduced by 20% or more
• If you are a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more

If you are eligible, you will be able to apply online through the MyGov website.

If you wish to discuss your specific circumstances in more detail please contact us on 02 9281 4067.

Understanding your SMSF’s Investment Strategy

Your investment strategy for your self-managed super fund (SMSF) is your plan for making, holding and releasing assets which should be consistent with your investment and retirement goals.  It should set out why and how you’ve chosen to invest in order to meet these goals.

The superannuation laws require that you must prepare and implement an investment strategy for your SMSF which you must then give effect to and review yearly.

Your investment strategy should be tailored and specific to the relevant circumstances of your fund. Under superannuation laws, your strategy must consider the following specific factors:

• The diversification of funds investments
• Risks involved in making, holding and releasing, and the likely return from your fund’s investments regarding its objectives and cash flow requirements
• The risks of inadequate diversification within the context of the SMSF’s investment portfolio
• Liquidity of the fund’s assets
• Fund’s ability to pay benefits
• Whether to hold insurance cover

When preparing your investment strategy, it is not a valid approach to merely specify investment ranges of 0 to 100% for each class of investment. You also need to articulate how you plan to invest your super or why you require broad ranges to achieve your investment goals to satisfy the investment strategy requirements.

Your investment strategy should not be a ‘set and forget’ document. You should review your strategy regularly to ensure it continues to meet the current and future needs of your members depending on their personal circumstances.

Investment strategies must be reviewed at least annually. It must be documented that you have undertaken this review and any decisions that have become apparent from the review.

NSW Govenment Small Business Grant

The NSW Government is offering a grant of up to $10,000 for small businesses that have been highly affected by the Covid(19) restrictions as a part of the NSW  Government Small Business Support Fund.

Grants are provided to support highly affected eligible businesses that have been impacted by the shutdown restrictions enacted by the Government due to Covid(19).

Highly Impacted Industries

The NSW Government has published a list of highly impacted industries as a result of Covid(19) restrictions.

Some of the businesses that the Government has classed as highly impacted are:

• Accommodation and food Services such as cafes, pubs and restaurants;
• Hairdressing and beauty services;
• Retail (excluding food retailing);
• Travel agency and tour arrangement services.

Small businesses that are not on the highly impacted industries list can still apply, however they will require a letter from their accountant confirming they meet the eligibility criteria.

Eligibility Criteria

Small business owners and non-profit organisations are eligible for the grant if they:

• Have between 1-19 employees and an annual turnover of more than $75,000;
• Have total Australian wages below the NSW Government 2019-20 payroll tax threshold of $900,000;
• Have an Australian Business Number as at 1 March 2020, are based in NSW and employ staff as at 1 March 2020;
• Are highly impacted by the NSW Government Covid-19 restrictions on Gathering and Movement Order 2020 issued on 30 March 2020;
• Defined as a decline in turnover of 75 per cent compared to the equivalent period (of at least two weeks) in 2019; and
• Have unavoidable business costs.

How the funding may be used

This grant must only be spent on unavoidable business expenses for which no other government support is available. Grant funds could be used on the following:

• Meeting business costs, including utilities, salaries, rent;
• Meeting financial, legal or other advice to support business continuity planning;
• Developing the business through marketing and communications activities;
• Other supporting activities related to the operation of the business.

If you require any further information on this grant or the application process please contact us on 02 9281 4067.

Government JobKeeper Subsidy for Businesses and Sole Traders

On Monday 30^th of March, the Government announced its intention to pass an additional legislation for businesses, sole traders and the self-employed who are significantly affected by COVID(19).

The JobKeeper payment is intended to provide wage subsidies to eligible businesses that have employees.

Under the JobKeeper payment, eligible businesses will be able to access a subsidy from the government to continue paying their employees. Affected eligible employers will be able to claim a fortnightly payment of $1,500 per eligible employee back payed from 30 March 2020, for a maximum period of 6 months.

Eligibility

If the employers business has a turnover of less than $1 billion and have a downturn in revenue of more than 30% relative to a comparable period a year ago, they will be eligible for the subsidy.

Sole traders and self-employed are also included in the group of eligible employers.

Eligible employees are those who are currently employed by the eligible employer (including those stood down or re-hired) or were employed by the employer at 1 March 2020 and are either full time, part time or long term casuals.

These employees must be at least 16 years of age, be Australian citizens or holding a visa that would allow them to access government payments and are not in receipt of a JobKeeper payment from another employer.

Payment

Employers must ensure that each eligible employee receives at least $1,500 per fortnight (before tax). For employees that have been receiving less than this amount, the employer will need to top up the payment to the employee up to $1,500, before tax. And for those employees earning more than this amount, the employer is able to provide them with a top-up.

The first payment will be received by the employers from the ATO in the first week of May.

How to Apply

Businesses with employees, sole traders and self-employed can register their interest in applying the JobKeeper payment via ato.gov.au.

Businesses without employees such as the self-employed will need to provide a monthly update to the ATO to declare their continued eligibility for the payments. Payment will be made monthly to the individual’s bank account.

An Update on the Coronavirus Cash Flow Assistance for Businesses

On the 23rd of March, the Federal Government’s Stimulus Packages to help the Australian economy withstand and recover from the economic impacts of COVID(19) was legislated through parliament. This includes the Cash Flow Assistance’s for Businesses package.

Boost Cash Flow

Eligible SMEs will receive a Boost Cash Flow for employers of up to $50,000 (with a minimum payment of $10,000). The payment will provide cash flow support to businesses with a turnover of less than $50 million that employ staff between 1 January 2020 and 30 June 2020. The payment will be delivered by the ATO as an automatic credit upon lodgment and will be tax free.

Eligible businesses that withhold tax on their employees’ salary and wages will receive a payment equal to 100% of the amount withheld from the Australian Tax Office upon lodgment of their activity statements, up to a maximum of $50,000 in total.

For Businesses who lodge quarterly, they will receive assistance for their March 2020 and June 2020 Business Activity Statements (BAS).  For businesses who lodge monthly Installment Activity Statements (IAS) this period will include the months of March, April, May and June.

If your Wages Tax Withheld for the March quarter BAS was less than $10,000 you will receive a $10,000 credit in your March 2020 BAS or IAS.  If your wages tax withheld in the March quarter was between $10,000 & $50,000 you will receive a credit for the amount of your wages tax withheld.

The payment for monthly lodgers will be calculated at three times the rate (300 per cent) in the March 2020 activity statement.

Additional Payment

Businesses that continue to be active will also receive an additional payment following the lodgment of your June 2020 & September 2020 BAS or your June, July, August, and September 2020 IAS.

The additional payment will be delivered as an automatic credit in the activity statement.  For monthly lodgers this will equal to a quarter of your initial Boost Cash Flow payment. For Quarterly lodgers this will equal to half of your Boost Cash Flow payment (up to a total of $50,000).

This means that eligible businesses will receive at least $20,000 up to a total of $100,000 under both payments.

Notice of our current operation during COVID (19)

We would like to take this opportunity to let you know that we are here to support you through these uncertain times resulting from COVID(19).

Ensuring the health and safety of yourself and your loved ones is the utmost importance to us, as is ensuring that we continue to provide our clients with the ongoing service and support they require.

Our office is running business as usual for the time being, we continue to monitor directives from the various levels of Government and relevant health authorities to ensure we are keeping up with changes as they occur. If we are required to work remotely, we will only be a phone call or email away and we will remain ready to be able to assist you as and when required.

We want to ensure that you are financially, mentally and physically looked after during this time and in the near future. If you or your loved ones require any assistance please reach out.

Which documents should my Australian Company Number (ACN) appear on?

Every company in Australia is issued with a unique nine-digit number by Australian Securities and Investment Commission (ASIC) when incorporated. This is an Australian Company Number (ACN) which is used to identify your company.

Your ACN is an important identifier for your company. It is important to know which documents require your ACN to ensure you comply with the Corporations Act. You must include your ACN wherever necessary so that other businesses and the public know who they are dealing with.

Section 153 of the Corporations Act provides that your company’s name and ACN must appear next to each other on the first page on all ‘public documents’ and ‘negotiable instruments’.

These documents include;

• Statement of accounts, including invoices
• Receipts (which is no machine-produces)
• Business letterheads
• Orders for goods and services
• Official company notices
• Contracts and dealing where the company intends to be contractually bound
• Written advertisements making special offer
• All company documents that are required to be lodged with ASIC

If your company has an Australian Business number (ABN) which includes your ACN, you may use the ABN in place of the ACN on documents.

If you need help in meeting the requirements of Section 153 of the Corporations Act please feel free to contact us on 02 9281 4067.