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  • 06Jul2018

    5 Most Common Tax Mistakes, Straight From The ATO

    Are you ready for a call from the ATO?

    Contact will be made with taxpayers either directly or via their registered tax agent in the coming months. With tax time 2018 already having begun, the ATO has published the five most common tax mistakes identified in recent audits and reviews.

    Tax Mistakes Australian Taxation Office

    More than 1 million taxpayers will soon be contacted by the ATO as part of an education campaign focusing on common tax mistakes.

    ATO data revealed the top five mistakes include:

    • taxpayers who leave out some of their income;
    • those who claim deductions for personal expenses;
    • those who fail to keep receipts or records;
    • those who claim for something they never paid for;
    • those who claim personal expenses for rental properties.

    ATO assistant commissioner Kath Anderson said the tax office would be taking a more proactive approach this year in a bid to clamp down on agents and taxpayers who push the boundaries. “We are increasing our investment in education and assistance, as well as reviews and audits. This year we are expecting to make contact with more than 1 million taxpayers either directly or through their agents,” Ms Anderson said.

    “This tax time we will be paying close attention to claims for private expenses like home to work travel, plain clothes, and private phone calls. We will also be paying attention to people who are claiming standard deductions for expenses they never paid for. Around half of the adjustments we make are because the taxpayer had no records, or they were poor quality.

    Further, Ms Anderson said the ATO would be taking a close look at income issues, such as temp jobs, cash jobs and capital gains on cryptocurrency.

    ATO data matching technology also will target income from the sharing economy (eg. ride sharing or AirBnB-style renting), work related clothing/laundry claims, and work related car expenses.  

    More than ever, it’s important to gather your receipts and discuss your record keeping as part of your annual tax appointment. Contact Affinitas Accounting on 07 3359 5244 or  for anything you need this tax season.

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  • 29Jun2018

    Suffering a Bad Case of EOFY BAS?

    The end of financial year (EOFY) business activity statement (BAS) is an important document due at a very busy time.

    Don’t suffer from a bad case of EOFY BAS

    It looms as businesses finalise their results for the year, collect debtors, pay creditors, round off the year’s payroll, search for extra deductions and plan the year ahead.  All this needs to be incorporated in the final quarter BAS numbers.

    And you can add to this the mid-year school holidays, when families like to have time off together.

    If you are struggling to get all this done by the end of July, then you need to reach out for help.

    This can be in the form of improved software and/or apps, or extra internal or external accounting support.

    Trying to do everything yourself can be false economy.

    Consider spending a few extra dollars on getting the right support in place, so you can free your time to focus on family or boosting the sales side of your business.

    To discuss, phone Affinitas Accounting on 07 3359 5244 or service @affinitasaccounting.com.au.

    Don't suffer from a bad case of EOFY BAS
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  • 22Jun2018

    Cashflow Control – Making Sure You Don’t Run Out of Money

    Cashflow is king when it comes to running a small business.

    In business, you can make any number of profits (or losses) for tax purposes – but you can only run out of money once. As the name suggests, cashflow management is all about managing the movement of dollars in and out of your bank account, by understanding how a business works, having access to adequate working capitalm, and adopting a planned and proactive approach.

    Running out of cash is stressful, embarrassing, and not good for your wellbeing. Then there are the additional costs and finance charges that generally follow. The following tips will help you come to grip with your cashflow needs and work with your accountant and finance team to put the right cashflow strategies in place.

    Cashflow is king.

    Cashflow is king.

    1. The first step in understanding and accepting the amount of working capital your
    business needs to operate.

    How much inventory do you hold? How far behind in invoicing are you, or how much cash is tied up in work in progress? What do your customers owe you? How long does it take from paying your suppliers for the materials to extracting cash from your customers? All these will soak up your cash like rain in a desert.

    2. Next, ensure your business has enough cash to fund your working capital needs.

    The Rule of Thumb is often keeping three months worth of outgoings in the bank for a rainy day. If you find it difficult to accumulate this cash in the business, then make sure you have a buffer of some sort, either personal funds available or an overdraft or revolving credit facility. Or maybe cut your drawings, as retained profits are by far the best and cheapest source of working capital.

    3. Plan ahead.

    No good finding out in your quiet season that you cannot survive until things pick up AFTER you’ve already reviewed and agreed your borrowing facilities with your bankers at your annual review some months ago. Prepare BOTH budgets and cashflow forecasts for the coming year. If you find it difficult to predict your sales, complete all the outgoings first, and then see what sales you need to cover your outgoings. At least then you have a target.

    4. Monitor month by month.

    Know what your monthly spend is and review your actual cashflows every month against the budget and cashflow forecasts. This provides you with early warning signs for upcoming shortfalls, when payment arrangements might need to be arranged with, for example, the ATO. Problem sorted, and no last minute panic and stress!

    5. Review critical cashflow systems.

    Do you forget to invoice customers? Do you invoice as you go or just at the month end? How quickly do you collect your accounts receivables? Many do not even know how much is owed to them by their customers or how much they owe to suppliers. Do you capture all time, costs or disbursements to invoice? When was the last time you checked suppliers costs to ensure you haven’t been overcharged or been billed for items you haven’t received?

    6. Speed up your cash conversion cycle.

    This measures the time span between a business disbursing and collecting cash. 180 days or more is very common, especially in manufacturing or businesses with inventory. Ask for a deposit, put customers on retainers or get them to pay monthly. Cut your inventory levels, maybe by arranging for your suppliers to deliver the same or next day, or negotiate longer payment terms. Many businesses who focus on this get the cycle way below the 180 days cycle.

    7. Make it as easy as possible for customers to pay you.

    Always quote your bank account number on your invoices, and ask for direct credits or automated payments. Accept EFTPOS and credit cards, and set up a PayPal account on your website. Why wait for a cheque to be posted in this day and age?

    8. Always be on the lookout for ways to cut costs or improve revenue.

    If something or someone does not save money or produce income, question its value. Review your suppliers, phase out products or service lines that do not fully contribute, fire your ten worst customers and bite the bullet with difficult or unproductive team members.

    To discuss how to implement strategies to improve your business cashflow, contact Affinitas Accounting on 07 3359 5244 or email . Alternatively, you can reach us on Messenger below.

    Message Affinitas on Messenger todaySource: Roberts, Nick. 8 Tips for managing your cash flow. MYOB, 4 Oct 2012.

    Cashflow is king
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  • 19Jun2018

    Top Tax Tips For First Time Property Investors

    First time property investor?

    If you’ve taken the plunge this year and are first time property investor, your rental portfolio does mean changes to your tax return this year. 

    The following tips will help you prepare for this year’s all-important meeting with your accountant.

    A new rental property changes your tax reporting requirements.

    Cost Base Details

    In this first year you should bring all the details in relation to the purchase of the property – the contract, stamp duty, legal fees, loan application fees, inspections etc. These will all form part of the property’s cost base – which needs to be recorded for capital gains tax purposes. It’s much easier to record these details on your file now then to try to find the documents when you sell the property in, say, 10 years’ time.

    Depreciation Schedules

    Depreciation claims against your property can add a lot of value to the annual tax outcome. To claim depreciation you need to pay a quantity surveyor to prepare a Depreciation Schedule. These normally cost between $500 and $1000 (tax deductible) but can add many thousands of extra dollars to your refunds.

    Rental Records

    If you are not sure what records you should keep and expenses you can claim, contact your accountant BEFORE your appointment for a list of what you need. It will make your appointment much more efficient.

    Refunds – Lump Sum or via Your Pay? 

    Everyone’s family budget is different. Some people like their rental property refund in one lump sum at tax time, while others may prefer just to pay less tax during the year. If you think this latter option might suit you, discuss a PAYG Variation with your accountant.

    Not sure what these terms are? Intimidated by the paperwork involved in your new rental property at tax time? To get more information on these or any other rental property topics, contact us on 07 3359 5244, email  or reach us on Messenger below.

    Find out how you can get ahead of 80% of property owners and claim your tax deductions.

    Message Affinitas on Messenger today
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  • 12Jun2018

    5 Fun Facts About The $20k Instant Tax Write-Off

    In May, the Federal Government renewed its commitment to allowing small businesses to receive an instant tax write-off for capital assets costing up to $20,000.

    The following five facts might help you decide whether you want to take advantage of the asset write-off before 30 June.

    1. It’s a great opportunity for small business owners to purchase capital business items worth up to $20,000 and claim an immediate tax deduction. Cars, laptops, and even coffee machines count. 
    2. The deduction threshold is per item. This means you can buy multiple items as long as each item is less than $20,000, net of (minus) GST. 
    3. Be careful if you buy a number of items less than $20,000. When combined, they might make up one item worth more than $20,000. These purchases may, all together, not qualify for the immediate write-off.
    4. Buying a $20,000 item will not ensure you receive $20,000 back in tax. Most people can expect to receive 30c tax benefit for every $1 they spend.
    5. The asset can be new or second hand. You can pay for it in cash by or using credit to pay off later – as long as it is available for use in your business by 30 June, 2019.

    Do you want to discuss a capital purchase leading up to 30 June? Call us on 07 3359 5244 or email 

    Find out more if you’re a tradie looking to get the most out of your tax return.

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  • 31May2018

    Tax Planning season now in full swing

    tax planning

    All Australian taxpayers are legally allowed to arrange their affairs in a manner which minimises their tax liabilities.

    The end of the financial year (30 June) end is rapidly approaching, which means now is the time to review your finances and discuss any recommended strategies that could be implemented to provide you with the best results.

    Tax Planning can be useful if your profit or circumstances have changed and allows us to implement new strategies if needed before 30 June 2018.

    Tax planning can be as simple as an individual taxpayer checking that enough HECS has been withheld from their salaries. Or it can involve a more complex assessment for businesses.

    If you are a regular tax planning client, your consultant may have already been in touch. Otherwise, they will soon to arrange a suitable time for you to attend a meeting to go through your accounts.

    If this is something that you have not had done in the past and feel you need a review before year end, we encourage you to contact our office on (07) 3359 5244 or email to see if tax planning can help you or your business.

    Read more for further information on potential tax saving strategies and our tax planning checklist. 

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  • 15May2018

    Cryptocurrency tax tracking upped with new register

    cryptocurrency

    So you think your Cryptocurrency transactions can’t be tracked?

    New rules now require cryptocurrency exchanges to sign up to a new Digital Currency Register. All transactions exceeding $10,000 will need to be reported to AUSTRAC in line with existing rules for bank transfers and cash transactions. Taxpayers will need to show where the money came from and also that they have followed the ATO’s rules. Ignorance of the rules is not considered an adequate defence for failing to pay the appropriate tax. There are currently strong warnings from the ATO for taxpayers to review cryptocurrency guidance ahead of tax time 2018. So, if you’re unsure of what your cryptocurrency transactions mean tax-wise make sure you give us a call.
    An ATO spokesperson told Accountants Daily earlier this year, “Where people attempt to deliberately avoid these obligations we will take strong action, in particular using a range of existing powers that are designed to address unexplained wealth and conspicuous consumption that may arise through profits derived from cryptocurrency investment,”

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  • 20Apr2018

    ATO Alert – ATO data matching – motor vehicles

     

    ATO-Alert-motor-vehicles

    The ATO will acquire information for the 2016-17, 2017-18 and 2018-19 financial years on vehicles that have been transferred or newly registered where the purchase price or market value is equal to or greater than $10,000. Data will be acquired from the eight state and territory motor vehicle registry authorities.

    It is estimated that records of 1.5 million individuals in each year will be electronically matched with ATO data holdings to identify non-compliance with obligations under tax and superannuation laws.

    The Gazette notice for the data matching program (Gazette C2018G00277, 13 April 2018) notes the objectives include:

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  • 13Apr2018

    Business Payroll Reporting: Beware Being Fooled by New Single Touch System

    April 1, 2018, was the key date to analyse whether your business needs to comply with the new single touch business payroll reporting (STP) requirements.

    single touch business payroll reporting

    Single Touch Payroll is a reporting change for employers with 20 or more employees which began from 1 July 2018.

    It involves reporting to the ATO salaries and wages, pay as you go (PAYG) withholding, and superannuation information from your payroll solution each time you pay your employees. Most employers report this information either quarterly or monthly. Businesses need to count the employees on your payroll as of 1 April 2018 to see if you need to get ready for Single Touch Payroll.

    Single Touch Payroll will be expanded to include employers with 19 or fewer employees from 1 July 2019. This is subject to legislation being passed in parliament.

    Need Help With Your Business Payroll Reporting?

    Email UsCall us on (07) 3359 5244

    Are You ‘Substantial’?

    Single touch business payroll reporting (STP) is mandatory for ‘substantial employers‘ (those with 20 or more employees) from 1 July 2018. To find out if you are a substantial employer, count the employees on your payroll on 1 April 2018. You do not need to send us your headcount information. However, you may want to keep a copy for your records.

    If you are part of a company group, you must include the total number of employees employed by all member companies of the wholly-owned group.

    Business Payroll Reporting: Making The Count

    To work out if you have to report through Single Touch Payroll from 1 July 2018, all you need to do is count the number of employees on your payroll on 1 April. If you have 20 or more employees, you’ll need to get ready for STP this year.

    You can do the headcount after 1 April, but the count must reflect the number of employees who were on your payroll on 1 April. You do not need to send the headcount to the ATO, but you should keep a copy of the count for your records.

    Busy times, like long weekends, seasonal work or special events often mean employers need to hire additional workers to keep up with the workload and temporarily increase their headcount to 20 or more employees on 1 April. In respect of this, you will be exempt from reporting under STP for the 2018 financial year if you:

    – had fewer than 20 employees for at least 10 out of the preceding 12 months
    – reasonably expect to have fewer than 20 employees for at least 10 out of the immediately following 12 months.

    You do not need to inform the ATO if you use this exemption.

    How to count your employees?

    Include in headcount:

    • full-time employees
    • part-time employees
    • casual employees and seasonal workers who are on your payroll on 1 April and worked any time during March. There are exemptions to counting seasonal workers who were employed for a short time only, as per the exception above
    • employees based overseas
    • any employee absent or on leave (paid or unpaid).

    Do not include in headcount:

    • any employees who ceased work before 1 April
    • casual employees who did not work in March
    • independent contractors
    • staff provided by a third-party labour-hire organisation
    • company directors
    • officeholders
    • religious practitioners.

    Directors, officeholders and religious practitioners are not included in the headcount. They are not considered employees within the common law meaning of the term.

    However, when you start reporting through STP you will need to report the payment information of these groups of people. This is because the payments are subject to withholding and are currently reported in the Individual non-business payment summary.

    Get ready for STP – A Checklist

    • Speak to your accountant and payroll software provider
    • Find out how your payroll software provider will offer Single Touch Payroll (STP) reporting – this may be through an update to your existing software, or an additional service.
    • check if they have a deferred start date for your product
    • Find out what support they will offer to their clients to transition to STP
    • Subscribe to STP communications – this may be email, newsletter or web updates from your accountant, software provider or the ATO

    The following is a checklist which may help as a resource:

    Single Touch Payroll get ready checklist (PDF 194KB)

    Opportunity to review your business processes

    The introduction of Single Touch Payroll is a good time to make sure everyone in your business is up-to-date with reporting requirements. If you have payroll staff, make sure they know about Single Touch Payroll. 

    This is also a good chance to make sure you’re paying your employees correctly, to check if you’re calculating super entitlements properly, and catch up on addressing overpayments. While you’re at it, why not make sure your employee information is accurate, including names, addresses, date-of-birth records?

    Apply for more time if you need it

    If your software will be ready, but you won’t, you will need to apply to the ATO for a deferred start date. If your payroll software provider has a deferred start date, and you still need more time, you will need to apply for your deferral. Make sure you contact your accountant and ensure you follow the ATO guidelines and provide all the evidence required. The ATO only provide deferrals for extenuating circumstances.

    These circumstances may include situations such as:

    • having entered administration or liquidation
    • having been impacted by a natural disaster
    • being unable to get ready by your software provider’s deferred start date
    • you are transitioning to a new STP-enabled solution
    • you are using a customised payroll solution and you need time to configure and test your updated product
    • having complex payroll arrangements and need additional time to transition to STP
    • are affected by other circumstances which are out of your control.

    Business Payroll Reporting: Software Provider Deferrals

    Some payroll software providers have told us they will not have their payroll solution ready to offer STP to their clients by 1 July 2018. They are applying for additional time to commence STP reporting for some or all of their products. If granted, the deferral will apply to exist customers of the specific software version. These customers will need to start reporting through STP on or before the deferred date.

    Your payroll software provider will let you know if and when deferral is granted for your software product. If you are unable to get ready by then, you will need to apply for your deferral in addition to this.

    Exemptions

    The ATO will consider granting an exemption for reporting a particular employee or group of employees through Single Touch Payroll (STP). This includes an employee of a department, agency or entity of a foreign government not resident in Australia, such as a diplomat.  You can also seek an exemption for reporting an employee who is not recorded in an Australian payroll system.

    If you are granted an exemption for an employee or group of employees, you may still need to report your other employees’ information through STP. You or your registered agent can submit a request using the Business Portal, Tax Agent Portal or BAS Agent Portal:

     

    Need Help With Business Payroll Reporting?

    Contact Us

    Business Payroll Reporting: First Year Support

    The ATO has stated that it will help and support businesses through the first year of STP reporting. If mistakes are made, you will be able to make corrections and penalties will generally not apply.

    If you wish to discuss whether STP will apply to your business, contact us at or 07 3359 5244 or through Messenger below.

    Message Affinitas on Messenger today
    single-touch-payroll
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  • 13Apr2018

    Procrastinating About Overdue Tax Returns?

    Let Us Help Get You Up To Date

    Overdue-tax-returns

    When you have been involved in a business that completes thousands of tax returns each year, for more than 25 years, you’ve heard just about every excuse why people delay or avoid lodging their returns.

    Regardless of the excuse you fall back on, the obligation to lodge a return does not go away via avoidance. Delaying returns may end up getting you in even more trouble with the ATO.

    But for every excuse, there is an answer. Consider the following list of commonly used delay justifications and the help that can be provided:

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