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7 Small Business Tax Tips For 2018

Small businesses may find that they qualify for a variety of tax benefits this year. The following are just some of the tax tips that can help small businesses.

1) Seek independent advice on investment products that are being promoted as tax effective
The end of the financial year often sees the promotion of numerous investment products that claim to be tax effective. If you are considering such an investment, seek independent advice from a financial planner or tax agent before making a decision. At best, some of these products may overestimate the tax and financial benefits. At worst, some of these products may be an illegal scheme.

2) Pay any outstanding superannuation entitlements
The Government has announced a 12-month amnesty from 24 May 2018 for employers to pay any outstanding Superannuation Guarantee (SG) contributions for periods prior to 1 April 2018. Employers who voluntarily disclose and pay previously undeclared SG shortfalls during the Amnesty and before an SG audit will not be liable for the administration penalties and will be able to claim a tax deduction for payments made during the 12-month period. This announcement is subject to approval by the Parliament.

3) Write-off bad debts
You can only obtain an income tax deduction for bad debts when certain conditions are met. A deduction will only be available if the debt still exists at the time it is written off. The debt must also be effectively unrecoverable and written off in the accounts as bad in the year the deduction is claimed and the bad debt must have been previously brought to account as assessable income. There are also additional requirements to be met where the creditor is either a company or trust.

4) Maximise depreciation deductions
Small businesses with an aggregated annual turnover of less than $10 million are eligible for an immediate tax deduction for individual assets purchased by 30 June 2018 that cost less than $20,000. Such assets must be used by the business for an income-producing purpose and they must be installed ready for use by 30 June 2018. For businesses registered for GST, the $20,000 threshold is calculated on a GST-exclusive basis, but for businesses not registered for GST, the threshold is calculated on a GST-inclusive basis. It has been proposed that this measure will be extended until 30 June 2019.

5) Consider if your legal structure is best for your business
Small businesses are able to change their legal structure without incurring any tax liability when active assets are transferred from one entity to another. This rollover applies to active assets that are CGT assets, trading stock, revenue assets and depreciating assets used, or held ready for use, in the course of carrying on a business. Business restructuring however can be complex, so you should seek advice from your accountant before proceeding.

6) Make sure you pay the correct company tax rate
Most companies with an aggregated annual turnover of less than $25 million will pay tax at 27.5 per cent in 2017-18. However, some companies with a turnover below $25 million will continue to pay tax at 30 per cent if they earn their income from passive investments such as rental or interest income. It should be noted that companies that pay tax at 27.5 per cent can only frank dividends up to that rate. As the law currently stands, to qualify for the lower tax rate in 2017-18, a company must have a turnover of less than $25 million and be “carrying on a business”. However, there is a proposal before Parliament to replace the ”carrying on a business” test with a test that will mean that companies below the $25 million threshold must earn no more than 80 per cent of that turnover from passive income such as rent, interest and net capital gains to qualify for the lower company tax rate company. This proposed change may lead to different tax outcomes from the current law for certain companies.

7) Make trust resolutions by 30 June
As always, trustees of discretionary trusts are required to document resolutions on how trust income should be distributed to beneficiaries by 30 June. If a valid resolution is not executed by 30 June, any default beneficiaries under the deed will become presently entitled to trust income and subject to tax (even where they do not receive any cash distribution), or the trustee will be assessed at the highest marginal tax rate on any taxable income derived but not distributed by the trust. A trustee must be able to show how an effective resolution was made through minutes, file notes or an exchange of correspondence documented before year end. However, the trust's accounts do not need to be prepared by 30 June.
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Super guarantee compliance: ATO fact sheet

A fact sheet has been released by the Australian Taxation Office (ATO) in relation to employer superannuation guarantee obligations explaining its compliance and penalty approach, which was set out in the Superannuation Guarantee (Administration) Act 1992 (SGA Act).

The ATO explained that this approach applies to employers who are unwilling or unable to meet their superannuation guarantee obligations, including non-payment, under-payment, or late payment of SG contributions to an eligible employee.

Employers are required to pay super to any eligible employee who earns $450 or more (before tax) in a calendar month. The super guarantee contribution, which must be paid to a complying super fund or retirement savings account, is currently 9.5% of an employee's ordinary time earnings and is the minimum amount of super that must be paid.

ATO stated that irrespective of the following, SG must still be paid:
• Employee is full time, part-time or casual
• Employee receives a super pension or annuity while still working, including those who qualify for the transition-to-retirement measure
• Employee is a temporary resident – they can claim the payments made through a departing Australia Superannuation payment once they leave Australia
• Employee is a company director
• Employee is a family member working in the employer’s business- provided they are eligible for superannuation guarantee

In addition, the ATO added that contractors that are paid mainly for their labour are employees for SG purposes, even if the contractor quotes an Australian Business Number (ABN). Super contributions for these contractors must be made by employers if they are paid:

• Under a written or verbal contract that is principally or wholly for their labour
• For their personal labour and skills, which may include physical labour and mental or artistic effort
• To do the contract work personally

If employers do not pay the minimum amount of SG by the due date for an employee, they would be liable for the super guarantee charge (SGC), which comprises of:

• SG shortfall amounts calculated on an employee’s salary or wages
• Interest on those amounts (currently 10%) and
• An administration fee ($20 per employee, per quarter).

SGC is not a deductible expense.

Additional penalties and charges may include the following:

• The Part 7 penalty which maybe up to 200% of the amount of the charge payable.
• General interest Charge (GIC) which is calculated on a daily compounding basis and is tax-deductible in the year it is incurred
• Administrative penalty with a base penalty that can be up to 75% of the shortfall and may vary according to employer’s circumstances
• Penalty units will be imposed in addition to an administrative penalty if the employer fails to keep adequate records, fails to pass on eligible employees TFN to their super/RSA, or enter into arrangements.
• A choice liability if employer does not give an eligible employee a choice of super funds.

Moreover, a company director who fails to meet SGC liability in full by the due date becomes personally liable for the penalty which is equivalent to the unpaid amount. The fact sheet provides compliance examples and the type of behaviour that will attract closer scrutiny from the ATO and mitigating factors that may be taken into consideration in determining the level and type of penalties that will be imposed.
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ATO to focus on SMSF's

During the conference held last February, Deputy Commissioner of Superannuation James O’Halloran discussed the changes and other plans that the ATO has set out for Self-Managed Superfunds (SMSFs).

The commissioner opened his statement by assuring that the ATO will continue to support SMSFs, not only by providing ongoing certainty and practical support but also by progressively and sensibly seeking to ensure that SMSFs comply with the law. He reminded SMSF holders that they can now view details of all their super accounts reported through the ATO via the online MyGov site. Included in the information that can be viewed are account balances and insurance indicators, total super balance and the status of bring-forward arrangements relating to non-concessional contributions.

ATO’s position on SMSF event- based reporting

Mr. O’Halloran confirmed that from 01 July 2018, SMSF event based-reporting (EBR) will be limited to those SMSFs that have members with total superannuation account balances of $1 million or more. This means that SMSF members whose total superannuation balance are less than $1 million can choose to report events which impact their members transfer balances at the same time that the SMSF lodges its annual return.

On 22 August 2017, Mr O’Halloran said they issued a public position about SMSF event-based reporting. The feedback contains highlighted concerns about the effort and cost that maybe associated with the proposed approach. He stated that the ATO has listened carefully to all the feedback and as a result they have decided to provide an annual reporting timeframe for SMSFs with members that have lower superannuation balances and to allow a quarterly reporting timeframe for other SMSFs. The ATO will continue to evaluate the benefits and risks arising from this change to SMSF event-based reporting.

ATO to monitor persistent non-lodgers

Mr O’Halloran reiterated the importance of SMSF lodgement and said it’s a cornerstone obligation for any trustee in a properly operating SMSF. Even if a SMSF trustee uses a tax agent, trustees themselves are responsible for their SMSF and there is still the requirement to lodge even if the SMSF is in pension phase.

One of the projects for this financial year is to target those SMSFs who have not lodged for some time. The ATO is seeking to reduce the level of long term outstanding lodgements. As identified, some 12,000 SMSFs (linked to 5,000 agents) have never lodged an SMSF annual return or had more than two years of overdue lodgements. Nearly 3,000 agents relating to over 8,600 funds have been contacted to gather reasons and information for the non- lodgement of returns, with a view to secure lodgements or to wind up the fund. The ATO will continue to work on this into the 2018-2019 financial year.

In relation to the 2016/17 lodgement of the SMSF annual return, the ATO has granted a deferral of all SMSF lodgements until 30 June 2018. This applies to the due date for payment of any relevant 2017 financial year income tax liability. As 30 June 2018 is a Saturday, trustees have until the next business day to lodge a return with an election for transitional GST relief as part of the super changes that came into effect 01 July 2017, or amend a lodged 2016/2017 return in order to include an election if one wasn’t made.

CS Accountants & Bookkeeping
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Changes in Australia’s Bankruptcy Law

Australia is proposing to reduce the insolvency discharge period from three years to one year. The proposal was endorsed by the Senate’s Legal and Constitutional Affairs Legislation Committee in March under the Bankruptcy Amended (Enterprise Incentives) Bill 2017. One of the critics of these changes, CPA Australia, says that proposed changes could result in more harm than good
Major changes include the following:

1. The discharged bankrupt may apply for credit without the need to disclose the bankruptcy upon completion of a one-year bankruptcy period.

2. All bankruptcies will be discharged if they are more than one year upon commencement of these reforms.

3. For discharged bankrupts, compulsory income contributions will continue for a minimum of two years following the discharge.

Changes in the bankruptcy discharge period have happened before under the Bankruptcy Act 1996, where it previously allowed for an early discharge after 12 months at the bankruptcy trustee’s discretion. However, in 2013 it was changed back to a three-year period as it was seen that the 12 month period only discouraged debtors from trying to enter into a payment arrangement with their creditors.

The government claims that by reducing the bankruptcy period, directors are more likely to give up their business and assets sooner resulting to a less damage to creditors and the community. However, willingly giving up a business or assets rarely happens in practice. In reality, directors will continue to hold on to what they see as theirs as long as they can because of the difficulty in replacing any lost assets. In fact, it is argued that reducing the insolvency period may have the reverse affect, as the reduced penalty may serve as an incentive to hold onto their business and assets even longer because a 12 months period is perceived as short and worth the risk.

John Winter, CEO of the Australian Restructuring Insolvency and Turnaround Association, urges all accountants who are dealing with clients in financial distress, to ensure that they get independent expert advice as to what the best personal and corporate insolvency options are. Doing a Google search and choosing the first people who come up on the list is not an effective approach, as these people are likely to be either an unregulated advisor or are trying to sell a product to convince people to spend more for their service but will do nothing to help them.

The Australian Financial Security Authority (AFSA) which regulates the personal insolvency system has provided a list of options as to how to deal with unmanageable debt. To ensure that the right decision if being made to resolve the situation, a person should know about the following:

1. Who can help and advise
A financial counsellor can help though this process. They will talk to you about your options and may talk to your creditors on your behalf. In addition, they can help you with budgeting and may refer you to other sources to get more assistance.

2. Formal options under Bankruptcy Act 1966
There are four available formal options and each has serious consequences. You should research the following thoroughly and seek your own independent advice before making a decision:

a. Declaration of intention to present a debtor's petition (DOI)
This option provides temporary relief from being pursued by creditors while seeking help and deciding how to proceed.

b. Bankruptcy
Currently, lasts for 3 years and 1 day. At the end of this period you are released from most of your debts. But once the new law has passed, it will shorten to 1 year.

c. Debt agreements
A binding agreement between you and your creditors to pay a sum you can afford.
d. Personal insolvency agreements
An agreement between you and your creditor to pay an agreed amount in instalments or lump sum

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The top 100 risk categorisation approach by the ATO

According to Australian Taxation Office (ATO), the top 100 population consists of entities that have substantial economic activity related to Australia and form the largest contributors to corporate income tax, GST, excise and other tax revenue sources. Consisting predominantly of public and multinational businesses and superfunds, they have a significant impact on the health of the tax system and the ATO will engage with them one-to one to assure their tax performance and help manage their compliance.

The ATO’s purpose and vision for this risk management model is for Australians to value their tax and superannuation systems as community assets, where willing participation is recognised as good citizenship. The ATO is excepting the outcome to build confidence in the aspects of Australia’s tax system through helping people understand their rights and obligations, managing non-compliance and improving ease of compliance and access to benefits.

How ATO identify and categorise the Top 100

The ATO risk assesses each large public and multinational business at an economic group level. It includes all Australian based entities under a direct or indirect Australian or foreign majority controlling interest and they are initially identified based on the size of their Australian operations. Additional factors the ATO consider in identifying the top 100 is the amount of income tax, GST or excise paid and the influence the client may have on their market segment.

The top 100 clients are then provided a risk categorisation on income, goods and services, excise and petroleum resource rent taxes. They will receive an annual letter from the Commissioner to advise them of their risk categorisation. The letter clearly outlines the basis and categorisation for each applicable tax and how the ATO intends to engage with them over the next 12 months and what this will mean for them.

What are the risk categories?

The ATO use three risk categories as follows:
• Key taxpayer

This taxpayer is rated at a lower risk level compared to other clients in the top 100 population, with this taxpayer having no significant history of adjustments from the ATO. However, this does not mean that they have no risks and that the ATO would not have any disputes or differences of opinion on the tax outcomes intended by law.

A key taxpayer would be proactive in advising the ATO about their issues, looking to work on possible resolutions compare to higher-risk clients. They would provide full and true disclosure of potential and significant controversial tax positions and would not seek to conceal issues. The ATO is expecting this taxpayer to engage cooperatively in seeking a resolution and keeping them informed with their actions and decisions. The ATO would work with them to resolve any issues and evaluate their compliance with tax law should a potential contestable mater arise.

• Key taxpayer with significant concerns
This taxpayer may have multiple identified risks and/or have economic outcomes that may not be reflected in their tax outcomes. They will have more complex risks, with larger amounts of tax at risk compare to clients with the key taxpayer category. The ATO will work closely with these clients to improve their risk categorisation and would meet to discuss a treatment plan to lower their risk rating. The ATO would expect the relationship with this taxpayer to be positive.

• Higher risk taxpayer
This taxpayer may have structural and multiple complex risks over different parts of the tax law. They would exhibit behaviours that include poor and inconsistent engagement with the ATO, failure to meet deadlines on information requests and are occasionally late with meeting their tax obligations.
This higher risk taxpayer would not tend to seek the ATO’s advice on major transactions with significant tax obligations. More often their governance of tax risk is poor and would use tax outcomes as a dominant factor in making business decisions.

The ATO would conduct comprehensive audits and other intensive risk assessment approaches and would continuously review this type of higher risk taxpayer. Also, the ATO would communicate their concerns as early as possible in an aim to identify and understand the risk. This approach allows the clients to make informed choices about their compliance approach. Should they fail to be open and transparent, the ATO would use their formal powers in gathering information.
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ATO Annual Report

The Commissioner of Taxation has released the 2016-17 annual report, detailing the Australian Taxation Office (ATO) performance results. The report highlights the ATO's accomplishments, but also acknowledges that trust and confidence needs to be restored in the ATO’s services, performance and integrity, which were tested by serious system outages in December and February resulting in related service interruptions, and the revelations of Operation Elbrus which highlighted ATO staff in breach of the agency’s code of conduct.

The Commissioner highlighted some of the ATO’s more successful results during 2016–17 including:

- The Tax Avoidance Taskforce which raised $4 billion of additional liabilities against a handful of large businesses and multinationals. The ATO also engaged with companies potentially within the scope of the Multinational Anti-Avoidance Law, with a number of them restructuring to recognise profits in Australia for the first time.

- The ATO’s early engagement and alternative dispute resolution has resulted in a 61% reduction in the number of appeals to the Administrative Appeals Tribunal since 2013–14. The ATO also introduced Dispute Assist and Fast Intensive Triage initiatives to streamline and support the resolution of objections, which resulted in faster resolution of disputes.

- The ATO’s litigation results showed success in more than 80% of cases, highlighting that the ATO are selecting the right cases to pursue through the courts. The Full Federal Court’s decision on the pricing of related-party debt and subsequent assessments in the Chevron case has yielded revenue in excess of $1 billion, and is considered one of the most important decisions in corporate tax in Australia and will have a direct impact across a range of sectors.

- The ATO implemented automated SMS reminders rather than formal letters for habitual late payers, which reaped an additional $800 million in payments in 2016–17 at a cost of just $0.09 per SMS compared with $1 for a formal letter. This method of communication focuses on prevention, and is proving much cheaper than chasing these payments after they are due with phone calls and more letters.

The ATO intends to continue reforming administration of the tax and super systems under the reinvention program, and remains committed to improving the client experience and reinforcing a service culture in the ATO. The ATO will continue working with clients, and intends to direct particular efforts into the following areas:
- earlier engagement, greater transparency and cooperation with clients
and partners
- prevention and early warning, rather than correction
- more sophisticated use of data for both service and compliance
- increased digital service offerings and streamlined interactions
- greater appreciation of, and empathy for, taxpayers; and
- sensible risk management.

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Government targets phoenix activity

The government has announced a range of reforms to crack down on illegal phoenix activity. The Phoenix Taskforce will comprise over 20 Federal, State and Territory government agencies, including the Australian Taxation Office (ATO), Australian Securities & Investments Commission (ASIC), Department of Employment and the Fair Work Ombudsman. Sophisticated data matching tools have been developed to identify, manage and monitor suspected illegal phoenix operators.

Illegal phoenix activity is when a new company is created to continue the business of a company that has been deliberately liquidated to avoid paying its debts. Illegal phoenix activity poses substantial risks to revenue, employee entitlements and the integrity of the corporate system. It imposes an unfair burden on honest Australians and businesses and is estimated to cost the Australian economy more than $3 billion a year.

The reforms include the proposed introduction of a Director Identification Number (DIN) and a range of other measures to deter and penalise phoenix activity. It is proposed that the DIN will allow authorities to track the activities of individual directors through various government databases and map their relationships with other directors and companies.

As well as the DINs, the Government will consult on a range of other possible measures to combat phoenix operators, including:

- introducing specific phoenixing offences
- preventing directors from backdating resignation to avoid personal liability or from resigning and leaving a company with no directors
- making directors personally liable for GST liabilities as part of extended director penalty provisions
- extending the penalties that apply to tax avoidance scheme promoters to advisers assisting phoenix operators
- increasing the powers of the ATO to recover a security deposit from suspected phoenix operators

The government will also look at how to identify high-risk individuals, who in turn will be subject to new preventative measures and early intervention tools.

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ATO confusion on what it is meant by 'carrying on a business'

In the 2016–17 Budget, the Government announced that it intended to progressively reduce the corporate tax rate from 30 per cent to 25 per cent. These changes to the corporate tax rate for small business entities have resulted in the necessity to re-consider whether your company is in fact carrying on a business. The Australian Taxation Office (ATO) interpretation of whether a company is carrying on a business or a not came into the limelight recently, with confusion over whether the corporate tax rate cuts will apply to passive investment companies, as generally in the past the receipt of passive investment income has not been regarded as enough for an individual taxpayer to be able to demonstrate that they are carrying on a business.

In regards to this issue, the ATO has stated on its website that is not possible to definitively state whether a particular company is carrying on a business, rather it is always a question of fact. This is based on the overall impression of the activities of a company and the relevant indication of whether a business is being carried on. The ATO went on to state that where a company is established and maintained to make profit for its shareholders and invests its assets in gainful activities that have a prospect of profit, then it is likely to be carrying on business. This is so even if the company’s activities are relatively passive and its activities consist of receiving rents or returns on its investments and distributing them to shareholders. Consequently it is likely that the reduced corporate tax rate will apply to a much broader range of private companies than had been expected.

While most companies will carry on a business in a general sense, this does not mean that every gain made by a company will be ordinary income. It is still necessary to determine the scope and nature of that business, in order to determine whether a gain will be an ordinary incident of that business and therefore assessable as ordinary income rather than a capital gain.

The ATO is currently consulting through the Tax Practitioner Stewardship Group on this issue and is expecting to provide guidance on this matter in the future. The form in which this guidance will be provided has not yet been determined.

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Simpler BAS is now here

From 1 July 2017, the Australian Taxation Office (ATO) is reducing the amount of information required for the business activity statement (BAS) to simplify GST reporting. Simpler BAS will be the default GST reporting method for Small Businesses Entities (SBE’s) with a GST turnover of less than $10 million. From 1 July 2017, SBE’s will only need to report:

- Total sales
- GST on sales
- GST on purchases.

The following GST information is no longer required:

- Export sales
- GST-free sales
- Capital purchases
- Non-capital purchases.

This however, will not change their reporting cycle, record keeping requirements, or how they report other taxes on their BAS.

The ATO’s goal for Simpler BAS is to make it easier to classify transactions, make it easier to lodge your BAS and to reduce the time spent on form-filling and making changes that don't impact the final GST amount. Simpler BAS will reduce the complexity of GST bookkeeping and reporting, and in doing so will reduce compliance costs and make GST account set-up, ongoing bookkeeping, and BAS preparation and lodgment simpler.

From 1 July 2017 you will no longer elect your GST reporting method, including GST instalments, on your BAS. Your GST turnover will determine your GST reporting method:
- If your GST turnover is $10 million or more, you report GST using the Full reporting method.
- If your GST turnover is less than $10 million, you report GST using the Simpler BAS reporting method.
- If your GST turnover is less than $10 million and you currently use the GST instalment method, you will generally continue to use it. If the instalment method is available to you, a GST instalment amount will show on your BAS.

The GST turnover figure used to determine your GST reporting method will be obtained from your ATO records and will be rolled over at the end of each financial year based on your current year’s reported GST turnover.

The ATO will automatically transition eligible SBE’s GST reporting methods to Simpler BAS from 1 July 2017. You don’t need to do anything to access Simpler BAS reporting. If you lodge online and are eligible for Simpler BAS, the ATO will automatically send you a BAS requiring less GST information. To access the full GST bookkeeping benefits of Simpler BAS, SBE’s may be able to also look at changing their GST bookkeeping software settings to reduce the number of GST tax classification codes.

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High work related deductions on the ATO radar

The Australian Taxation Office (ATO) has issued a warning that it will be paying extra attention to people claiming higher than expected deductions during tax time this year. The ATO’s ability to evaluate work-related expense claims has become more sophisticated due to enhancements in technology and the extensive use of data analysis. To assist taxpayers making claims for work-related expenses, the ATO has a series of occupation guides and other general advice available on its website to help people in specific industries understand and correctly claim the expenses they may be entitled to.

The ATO has stated that there are three golden rules you must consider before making a work-related expense claim:
1) you must have spent the money yourself and not been reimbursed
2) it must be directly related to earning your income
3) you must have a record to prove it.

If taxpayers are using myTax to lodge their tax returns, they will receive a real-time warning if their claims for work-related deductions are unusually high compared to other taxpayers in similar occupations.

The ATO has highlighted the following real life case studies and lessons to be learnt from taxpayers making incorrect work related expense claims:

1) make sure your claims are justified

A dairy farm employee claimed deductions totalling almost $19,000. When the ATO spoke to his employer, they said that the employee was provided with all the tools and work gear he needed to undertake his duties. The employee’s deductions were disallowed in full.

2) make sure you weren’t reimbursed already

A business analyst who travelled between Shanghai and Australia for work, claimed over $46,000 in travel expenses. When the ATO contacted the employer, they were advised that this employee was reimbursed for the cost of all his meals, accommodation and travel within Australia and internationally. Consequently the claims were disallowed.

3) make sure you are getting good advice

A tiler lodged his tax return using a registered tax agent and claimed over $4,000 in deductions relating to his car, based on transporting bulky equipment to and from work. The ATO contacted his employer who confirmed that he was not required to transport any equipment to work that would be considered bulky and also advised that secure lockers were provided at the work site to store tools. His claim was disallowed and tax agent was reminded to undertake proper enquiries to determine his clients’ eligibility to deductions.

4) make sure you have evidence to support your claims

A sales consultant claimed over $38,000 for car and other work-related expenses. When asked to provide evidence to support her deductions it became apparent that she had overstated her expenses as she could not provide receipts to substantiate her claims. After discussions with the ATO, she agreed to substantially reduce her expense claims and she was asked to pay a tax shortfall of over $8,000 plus penalties.

5) make sure your claims are related to your work

A computer network engineer claimed over $4,000 in deductions relating to car, travel, clothing and other work-related expenses, as well as the cost of managing his tax affairs. When queried, the engineer told the ATO he travelled interstate for both work and private purposes, his clothing expenses were for the purchase of general business attire and his claims for managing tax affairs related to managing the family trust. The engineer’s claims were disallowed by the ATO because they appeared to be of a personal nature and he was unable to substantiate his claims with written evidence.

6) make sure you know what is and isn’t deductible

A factory meat processing worker claimed $12,800 for various deductions. When the ATO requested evidence of his claims, the taxpayer was unable to produce receipts with the exception of the donations which were automatically deducted from his pay. Also, when ATO contacted his employer, they were advised that the worker was not required to travel for work purposes and that all protective gear and tools required to perform his duties were supplied by the company. The worker’s deduction claims were disallowed except for the gifts and donations which he was able to verify.

7) make sure you back up your data

A soldier from Canberra claimed $1,500 for self-education expenses and $5,000 for gifts and donations. When the ATO requested evidence to substantiate these claims, the soldier said all his receipts were stored as images on his tablet, which had fallen into his child’s bathtub and no longer worked. The claims were disallowed.

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