The “Tax Gap” of $8.7 billion. You may have heard it being talked about on the news, or read about it as part of the ATO’s big push to educate taxpayers with tax time upon us.
But what is this “tax gap”?
It is the ATO’s estimate of the amount paid to individual taxpayers for incorrect claims for deductions that the ATO believes they are not entitled to. These claims include claiming the standard $150 for laundry, $300 for work related expenses, and 5,000kms for work related motor vehicle travel, even though the costs haven’t been incurred.
Is this something you need to be concerned about? The tax laws haven’t changed, but the ATO’s focus on the work related expenses claims of individuals has. Instead of targeting specific industries, the ATO are using statistical analysis of tax return data to identify claims that are higher than the average for that job description as a way to target individuals they believe are over-claiming on their deductions.
The key is to follow the basic rules when it comes to claiming deductions:
- Did you spend the money? You must have receipts, invoices or other documentation to back up that you actually spent money on the items being claimed
- Was the expense work related? Did it relate to you earning your income? Simple examples of work related expenses include stationery used at work, union fees, work related registrations, mobile phone, and work related travel. Expenses that are not deductible include entertainment, gym memberships and other private expenses
- Have you apportioned the expense between work related and private purposes? If you use your mobile phone for work and for personal calls, then you need to apportion it between the two purposes. This can be done by reviewing one or two bills to itemise the calls and work out the percentage of work related versus personal calls.
- Were you reimbursed by your employer? If your employer reimbursed you, then you cannot claim the expense.
And if you are still unsure about what to claim? Email us for our checklist and deduction worksheet to help you collate your 2018 tax information.
Harsher Penalties For Unpaid Employee Super Entitlements
Legislation has been introduced to Parliament that the Government says is aimed at protecting workers’ super entitlements, while modernising the way super guarantee is enforced. In conjunction with strengthened director penalty notices, where employers defy directions to pay their superannuation guarantee liabilities the ATO will be able to apply for court ordered penalties, including up to 12 months imprisonment.
These increased penalties will be combined with the extension of Single Touch Payroll to all employers from 1 July 2019, as well as the introduction of a Director Identification Number to help identify those directors who are robbing their employees of their superannuation. The bottom line – if you are a company director, pay your employees’ superannuation to prevent being personally liable for the payment or harsher penalties.
Why Registrations Matter
Are you starting a new business, or currently run a business? When was the last time you checked that all of your registrations are up to date? There are a number of key registrations that can be critical when running business. These include:
- company registration
- business name registration
- trademark registration
- website domain name registration
These registrations are not only vital to maintaining all legal rights to run your business and own your business name, but it is essential that ownership can be proved if you are trying to sell your business.
How do I know whether my registrations are up to date?
You can check company registrations and business names on the Australian and Securities Commission (ASIC) website at www.asic.gov.au. This will tell you whether the name is current, and some limited details such as registration dates.
The other important thing to do is to keep your details up to date with ASIC, so that you receive important notices such as renewal notices and annual company statements. If you don’t receive these and pay the necessary fees, then your registration can lapse and cause significant issues.
Trademark registrations can be viewed at www.ipaustralia.gov.au, by searching for the trademark details. Again, keeping your contact details up to date is vital to ensuring that you don’t miss important renewal notices.
Domain names can usually be set up to automatically renew when the renewal date comes around. These details can be checked with your Internet Service Provider (ISP), or your IT provider. Again – make sure your contact details are up to date!
Buying A New Car This Year? Will You Keep A Logbook?
If you have bought a new car after 1 July 2017 and you are looking to use the logbook method for claiming the car in the 2018 financial year, you’ll need a logbook started before the end of the year to claim the car in the 2018 financial year.
If it is started less than 12 weeks before the year end i.e. started after 7 April and before 30 June, then you can continue the logbook into the 2019 financial year so it covers the 12 week period needed for a valid logbook. If you haven’t started a logbook prior to 30 June, then you will need to keep a logbook in the current financial year to make a claim using the logbook method in the 2019 financial year. Once you have a completed logbook, you then calculate the business travel as a percentage of the total travel, and apply that percentage to all of the expenses relating to the car, including depreciation. What do I need to record in my logbook? The logbook you keep must contain the following:
- when the logbook period begins and ends
- the car’s odometer readings at the start and end of the logbook period
- the total number of kilometres the car travelled during the logbook period
- the business-use percentage for the logbook period
- the number of kilometres travelled for each journey recorded in the logbook (if you made two or more journeys in a row on the same day, you can record them as a single journey).
- You will need to record:
- start and finishing dates of the journey
- odometer readings at the start and end of the journey
- kilometres travelled
- reason for the journey
- the odometer readings at the start and end of each income year you use the logbook method
What other records do I need to keep?
To claim the logbook percentage of your expenses, you must keep records of costs such as fuel, repairs, registration, insurance, interest on finance used to purchase the car. These records include receipts and invoices relating to those costs. Check out our Tax Guide To Motor Vehicles on our website!
14 August 2018
Lodgement of PAYG Withholding Payment Summary Annual Report for large withholders and payers who do not have a tax agent involved in preparing the report
21 August 2018
Lodgement and payment of monthly July 2018 Activity Statements
25 August 2018
Lodgement and payment of quarterly June 2018 Activity Statements if lodged electronically
21 September 2018
Lodgement and payment of monthly August 2018 Activity Statements
30 September 2018
Lodgement of PAYG Withholding Payment Summary Annual Report if prepared by a tax agent