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Friday 30 October 2015

Streamlined GST reporting option for quarterly lodgers

  1. Taxpayers who pay GST quarterly are now given three options:
      • Option 1: Calculate and report GST quarterly;
      • Option 2: Calculate GST quarterly and report annually; or
      • Option 3: Pay GST instalment quarterly and report annually.
  2. Option 2 was introduced to streamline the GST reporting obligations for taxpayers.
  3. Taxpayers electing option 2 are required to report the following amounts on their quarterly Business Activity Statements (BAS):
      • Total sales at label G1;
      • GST on sales at label 1A;
      • GST on purchases at label 1B; and
      • Wine Equalisation Tax and Luxury Car Tax at labels 1C, 1D, 1E or 1F if applicable.
  4. Taxpayers are then required to lodge an ‘Annual GST information report’, which will be mailed to them, to report the annual amounts for the following items:
      • Export sales at label G2;
      • Other GST-free sales at label G3;
      • Capital purchases at label G10; and
      • Non-capital purchases G11.
  5. Taxpayers need to lodge the annual report by the due date of their tax returns or 28 February of the following financial year if they are not required to lodge an income tax return.
  6. For more information, click here.

Tuesday 27 October 2015

$20,000 instant asset write-off for small businesses has become law

  1. New and second hand assets acquired between 7.30pm on May 12, 2015 and June 30, 2017 can now be immediately written off by small business entities.
  2. Assets costing $20,000 or more will continue to be deducted over time using a small business pool.
  3. The low pool value threshold will also increase to $20,000 to allow for an immediate deduction if the pool balance is less than $20,000 at the end of an income year.
  4. The 'lock-out' rule has been suspended until the end of June 30, 2017. This means small business entities that have previously elected out of the simplified depreciation regime can now re-enter the scheme without having to wait for the 5-year lock-out period to lapse.
  5. A small number of assets may not be eligible for the accelerated depreciation, including:
      • Horticultural plants;
      • Capital works;
      • Assets allocated to a low-value pool or software development pool;
      • Primary production assets that have been elected to be depreciated under the normal depreciation rules rather than the simplified depreciation rules; and
      • Assets leased to another party on a depreciating asset lease.
  6. For more information on the new law, click here.

Friday 23 October 2015

Tips for service-based businesses

  1. A service business serves its customers by selling their time, skills and knowledge to achieve a result. Examples include accountants, lawyers and financial advisers.
  2. Business owners can attract more customers to the business by:
      • Knowing the services they provide well, so they can attend to all customer queries;
      • Having success stories, testimonials and examples ready to share with the potential customers; and
      • Knowing their point of difference or unique selling point that sets them apart from their competitors and using this knowledge advantageously when marketing the business.
  3. To have an effective pricing strategy, it is important that a business:
      • Research its competitors and similar businesses;
      • Review all business costs; and
      • Consider how its own pricing may influence who its potential customers are.
  4. For more information, click here.

Tuesday 20 October 2015

Claiming home office expenses

The type of home office expenses taxpayers are eligible to claim as a tax deduction will depend on the primary use of the home office.

Where the home office is the sole location for conducting a business, taxpayers can claim occupancy costs, such as rates, mortgage interest, rent and insurance together with running costs, apportioned depending on business use.

Where a home office is used for work-related purposes and the taxpayer has a main office elsewhere but chooses to work from home, taxpayers can only claim running costs.

When claiming running costs, taxpayers can choose to claim on the basis of apportioning actual expenditure or use the Tax Office fixed rate of 45 cents per hour.

The Tax Office rate covers costs including decline in value of computers and other assets, electricity, internet and phone rental costs.

Taxpayers need to keep a diary over a 4 week period demonstrating the average time spent using the home office for business purposes.

The 45 cents rate for home office expenses applies from July 1, 2014, which is up from 34 cents.

For more information, click here.