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Be Aware!

Be Aware!

 

From time to time, the ATO may contact you by phone – but you should be wary of unsolicited phone calls claiming to be from the ATO and offering you a refund, or demanding payment.

 

Never give out your bank account details or your tax file number.

 

The calls - demanding payment - can be upsetting and threatening.

 

You should contact the ATO or your tax agent if you have any concerns.

 

Follow this link for some useful information:  www.scamwatch.gov.au and click here for information from the ATO.

 

If you would like to discuss this or any topic further, please email:  mail@watsonerskine.com.au

 

Read our newsletters at www.watsonerskine.com.au and find current and archived information under client tools, newsletter and report.

Claiming deductions for your holiday home?

Claiming deductions for your holiday home?

As a rental property owner, you probably know that you can claim deductions on expenses for your investment property when it's rented out. But what happens when your property isn't rented out? You can claim a deduction if your property is genuinely available for rent; ask yourself the following four questions to help you determine this:

 

How do you advertise your rental property?

You need to advertise in a way that maximises exposure to potential tenants such as an online site. Advertising in ways that limits exposure to potential tenants, such as by word of mouth, means your property may not be genuinely available for rent.

 

What location and condition is your rental property in?

It's important that your rental property is in a location and condition that tenants will want to rent it in. If your property is poorly cared for, or in a remote area, it is unlikely to be tenanted, and may not be classed as genuinely available for rent.

 

Do you have reasonable conditions for renting the property and charge market rate?

If you place unreasonable conditions that reduce the likelihood of your property being rented out, such as setting the rent above market rate, your property may not be considered genuinely available for rent. Likewise, if you, your family or your friends stay for free, your property will not meet the criteria during that time period. If the property is being tenanted at a discounted rate ('mates' rates') then the allowable deductions are limited to the amount of rent charged, not market rates.

 

Do you accept interested tenants, unless you have a good reason not to?

If you refuse to rent out your property to interested potential tenants without a good reason, this indicates that you may not have a genuine intention to make income from the property and could be reserving it for private use. In this case, your property wouldn't meet the criteria for being genuinely available for rent.

 

Different rules apply if you're renting out your private residence – check out the ATO information on the sharing economy and tax

 

If you would like to discuss this or any topic further, please email:  mail@watsonerskine.com.au

 

Read our newsletters at www.watsonerskine.com.au and find current and archived information under client tools, newsletter and report.



Single Touch Payroll - coming soon

 

    As an employer, what you need to know about Single Touch Payroll (STP)

Key Dates:

1 April 2018 – Employers will need to do a head count of their employees.  If there are more than 20 employees on this date, they will need to make sure the payroll software is STP enabled from 1 July 2018.

1 July 2018 – The official start date for STP

 

What is STP?

This is a new way that employers will report salary and wage payments to the ATO and will be in effect from 1 July 2018.

 It is a government initiative to simplify business reporting obligations.  Single Touch Payroll is a reporting change for employers with 20 or more employees.

Employers will need to report payments such as salaries, wages, PAYG withholding and super information electronically to the ATO directly from their payroll solutions at the same time they pay their employees.

This means that the payroll summaries for employees won't need to be completed at the end of the financial year as the payroll information is reported directly to the ATO in real time throughout the year.

 

Check out the ATO information on Single Touch Payroll

If you would like to discuss this or any topic further, please email:  mail@watsonerskine.com.au

Read our newsletters at www.watsonerskine.com.au and find current and archived information under client tools, newsletter and report.

 

The Sharing Economy

What is the sharing economy?

 The sharing economy connects buyers (users) and sellers (providers) through a facilitator who usually operates an app or a website.

Popular sharing economy services include:

·         renting out a room or a whole house or unit for a short-time basis, for example Airbnb and Stayz

·         providing 'ride-sourcing' services for a fare (considered to be taxi travel) such as Uber and GoCatch

·         providing personal services, including creative or professional services like graphic design, creating websites, or odd jobs like deliveries and furniture assembly, like Airtasker and Mad Paws

·         renting out a car parking space, for example Parkhound and Spacer.

 For information from the ATO on tax obligations from providing services through ride-sourcing, click here

 If you would like to discuss this or any topic further, please email: mail@watsonerskine.com.au

 

 

Taxation ruling on commercial website deductibility

Taxation ruling on commercial website deductibility

A new taxation ruling from the ATO sets out the tax deductibility of expenditure incurred in acquiring, developing, maintaining or modifying a commercial website for use in carrying on a business.

Broadly, the ruling explains that acquiring or developing a commercial website for a new or existing business is considered to be a capital expense, and is therefore not deductible. On the other hand, maintaining a website, including remedying software faults, is generally a revenue expense, so may be deductible.

Deductions you can claim

Deductions you can claim

 

When completing your tax return, you are entitled to claim deductions for some expenses, most of which are directly related to earning your income.

 

To claim a work related deduction: 

  •     You must have spent the money yourself and were not reimbursed
  •     Related to your job
  •     Provide a record to prove it (there are some limited exceptions)

If the expenses were for both work and private purposes, you can only claim a deduction for the work related portion.

 

For more information from the ATO on deductions you can claim such as vehicle and travel expenses, clothing, laundry, gifts and donations, tools and equipment, click here and follow the links.

 

If you would like to discuss this or any topic further, please email:  mail@watsonerskine.com.au

 

Read our newsletters at www.watsonerskine.com.au and find current and archived information under client tools, newsletter and report.

 

Hobby or Business?

Hobby or Business?

 A hobby is a spare time activity or pastime pursued for pleasure or recreation.  Unlike a hobby, a business is run with the intention of making a profit and has basic reporting requirements such as declaring income and claiming expenses. 

 If you determine your activities are a hobby, you don't have any additional tax or reporting obligations. You should check regularly to make sure your activities still qualify as a hobby.

If your activities are a hobby but you supply goods or services to businesses, they may request your ABN when they pay you. As you don't need an ABN, you can use the Statement by a supplier form to avoid the business withholding an amount from their payment to you for not having an ABN.

See the ATO information on this topic here

If you would like to discuss this or any topic further please email:  mail@watsonerskine.com.au

 

ATO sounds warning on illegal tax schemes

ATO sounds warning on illegal tax schemes

SMSF practitioners have been cautioned by the ATO on the dangers of promoting illegal tax schemes, after some advisers putting themselves at risk of prosecution by inadvertently recommending these schemes to clients.

 

The ATO announced yesterday there has been a recent increase in the number of illegal tax schemes, particularly those targeting individuals approaching retirement. It said it has launched an initiative aimed at identifying promoters of these schemes.  

The ATO has advised that some of these arrangements may appear to comply with the law at an initial glance when they are in fact illegal.

 

"We recognise that the vast majority of advisers provide excellent service to protect their clients' interests and we don't want to see them inadvertently advising their clients to enter into these schemes and putting their [client's] retirement nest eggs at risks," the spokesperson said.

"We want to ensure that SMSF advisers and accountants are aware of the dangers of these schemes and are in the best position to prevent their clients from making ill-informed decisions that will adversely impact their future."

 

According to the ATO, dividend stripping arrangements are one of the main schemes being operated.

 

This involves shareholders in a private company transferring ownership of their shares to an SMSF, so that the company pays dividends to the SMSF, with the purpose of stripping profits from the company in a tax-free form.

 

The ATO said it is also concerned about non-arm's length limited recourse borrowing arrangements where an SMSF trustee undertakes a borrowing arrangement with terms that are not consistent with an arm's length dealing.

 

Personal services income schemes are another worrying example, where individuals divert income earned from personal services to an SMSF where it is concessionally taxed or treated as exempt from tax.

 

ATO deputy commissioner Michael Cranston reminded practitioners on the consequences of recommending any of these schemes to SMSF clients.

 

"Promoters of retirement planning schemes may incur significant punishment including prosecution, and where intermediaries are found to have been encouraging clients to adopt these arrangements, the ATO will consider the application of the promoter penalty laws. The ATO may also consider referring the matter to the Tax Practitioners Board," Mr Cranston said.

 

What is a Novated Lease?

What is a Novated Lease?

A novated lease is a type of motor vehicle lease that allows a business to lease a motor vehicle on behalf of an employee, with the responsibility for the lease lying with the employee and the lease payments being made from the employee's re-tax income.

 

It is a three-way agreement between the employer, employee and the finance company.

 

There are two main types of novation arrangement:

 

     A full or split full novation

     A partial novation

 

Follow the link below for more information and find out about:

 

Vehicles purchased under novated leases

 

Or please email us if you need any further information:  mail@watsonerskine.com.au

 

Data Matching

Data Matching to uncover wealth

Matching external data with the ATO data helps the ATO to ensure that people and businesses comply with their tax and super tax obligations. It also helps the ATO to detect fraud against the Commonwealth.  The ATO is now working with insurance provers to identify Australians with policies covering an expanded range of luxury assets.

 

Starting from the beginning of 2016, the ATO has commenced issuing formal notices to insurers to provide policy details, based on specific criteria, it expects to receive 100,000 records that may require further examination.

 

Please check your policies to make sure that you are insured via the correct entity, especially if you are a small business.

 

The ATO is required to comply with strict laws to protect your privacy when they collect data from other agencies and organisations for the data matching programs. These laws include the Privacy Act 1988, the secrecy provisions of the Income Tax Assessment Act 1936, the Taxation Administration Act 1953 and other tax laws.

 

The ATO also adheres to the Privacy Commissioner's Guidelines on Data Matching in Australian Government Administration by preparing and publishing a protocol for each of the data matching programs. In broad terms, each protocol explains the purpose of the program, what data is collected, which agencies or organisations will be providing the data and how the data will be used.

 

Current data matching protocols

 

The ATO prepares and publishes a protocol for each of the data matching programs to explain the program's purpose, what data is collected and how the data will be used.

Please email us if you need any further information:  mail@watsonerskine.com.au