Leenane Templeton – Newcastle Business Accountants, Business Advisors & Financial Planners

Category: Tax Accountant

  • Changes For Nominating Your Tax Agent

    Changes For Nominating Your Tax Agent

    With more security and fraud-related scams targeting vulnerabilities and attempting to commit identity theft and fraud, the ATO has changed the process for how tax agents can access your information.

    From 13 November 2023, there’s a new process to nominate your tax agent, which anyone with an ABN will need to go through.

    A new requirement for those with ABNs, the agent nomination process has been implemented to ensure that only your authorised tax agent, BAS agent or payroll service will be able to access your accounts and act on your behalf for tax and super-related matters.

    This process only applies when you change an agent or change the authorisations you give your existing agent.

    Only when you’ve done this will your registered agent be able to connect to you as their client and access your information.

    Importantly, you can have confidence that only your nominated agent will:

    • have access to your information
    • perform tasks on your behalf, such as lodging your tax return.

    By completing the agent nomination process through online services:

    • your registered agent can be confident it’s truly you
    • The ATO can be confident that the actions your registered agent takes are truly on your behalf.

    The agent nomination process will apply to all types of entities with an ABN excluding sole traders. This includes entity types such as:

    • companies including strata title bodies
    • partnerships
    • trusts
    • not-for-profits
    • joint ventures
    • cooperatives
    • self-managed super funds (SMSFs)
    • APRA-regulated superannuation funds.

    The ATO had already rolled out the agent nomination process to the following:

    • Public and multinational businesses who are part of the Top 100 and Top 1,000 – effective from 19 June 2022.
    • Most public and multinational businesses – effective from 13 December 2022.
    • Businesses in our Top 500 privately-owned wealthy groups, where that group has a significant level of ownership – effective from 13 December 2022.
    • Government entities – effective from 24 February 2023.

    The new requirement does not currently apply to individual taxpayers or sole traders.

    What Do You Have To Do?

    You need to nominate your registered agent via the ATO’s Online services for business before they can access your account and act on your behalf.

    If you need support, you can contact the ATO or your Leenane Templeton registered tax agent. Please note, however that your registered agent can’t do the agent nomination process on your behalf in online services. However, they can help you understand what to do.

    Contact LT today.

    Disclaimer:

    The information contained in this publication is for general information purposes only, professional advice should be obtained before acting on any information contained herein. Neither the publishers nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication.

  • Claiming Motor Vehicle Expenses On Your Tax Return

    Claiming Motor Vehicle Expenses On Your Tax Return

    As a business owner, one of the perks is the ability to claim tax deductions for expenses related to motor vehicles used in your business operations. This includes cars and certain other vehicles that play a role in running your business smoothly.

    The good news is that claiming motor vehicle expenses can help reduce your tax liability. Here at Leenane Templeton Chartered Accountants we help you to maximise your tax deductions. Let’s explore how you can make the most of this opportunity, particularly if you’re a sole trader or part of a partnership.

    • The Logbook Method: A Simple Way to Claim Tax Deductions

    Sole traders and those operating in partnerships can claim tax deductions for vehicles used in their businesses using the logbook method. It’s a relatively straightforward approach, but it does require diligent record-keeping of your vehicle-related expenses. The expenses you can claim when using your vehicle for business purposes typically include:
    • Fuel and oil
    • Repairs and servicing
    • Interest on a motor vehicle loan
    • Lease payments
    • Insurance cover premiums
    • Registration
    • Depreciation (decline in value)
    • Calculating Your Claim with the Logbook Method

    To make the most of the logbook method and ensure you’re accurately recording your expenses, consider enlisting the help of a registered tax agent. To work out the amount you can claim using this method, follow these steps:
    • Keep a logbook.
    • Calculate your business-use percentage by dividing the distance traveled for business purposes by the total distance traveled and then multiplying by 100.
    • Sum up your total car expenses for the income year.
    • Multiply your total car expenses by your business-use percentage.

    It’s vital to provide the Australian Tax Office (ATO) with evidence of the expenses you’re claiming. This means keeping records of:
    • An electronic or pre-printed logbook.
    • Evidence of actual fuel and oil costs or odometer readings used to estimate fuel and oil expenses.
    • Evidence of all other car-related costs.

    • The Crucial Logbook

    The logbook is a critical component of this claims method, and it should contain specific information, such as:
    • The start and end dates of the logbook period.
    • Odometer readings at the beginning and end of the logbook period.
    • The total number of kilometres travelled during the logbook period.
    • The number of kilometres for each journey, which can be recorded as a single journey if you make two or more trips in a row on the same day.
    • Odometer readings at the start and end of each subsequent income year for which your logbook is valid.
    • The business-use percentage for the logbook period.
    • Make, model, engine capacity, and registration number of the car.

    If this year marks the first time you’re using a logbook, remember that it should cover at least 12 continuous weeks during the income year and be representative of your travel patterns throughout the year.

    If you plan to use the logbook method for multiple vehicles, make sure that the logbook for each vehicle covers the same timeframe. The 12-week period you choose should be indicative of the business use for all vehicles. This ensures that you maintain consistency and don’t alter your driving patterns to fit the logbooks.

    Keep in mind that distinguishing between business and personal use is crucial for accurate claims. Generally, travel between your home and your place of business is considered private use unless you operate a home-based business, and the trip was for business purposes.

    In summary, claiming motor vehicle expenses for your business can be a valuable tax-saving strategy, but it requires careful documentation and adherence to ATO guidelines. With the logbook method, you can maximize your deductions while maintaining the integrity of your business and personal expenses. So, get started on keeping that logbook and consult a tax professional for expert guidance on your journey to tax savings.

    Speak with your LT Accountant today.

    Disclaimer:

    The information contained in this publication is for general information purposes only, professional advice should be obtained before acting on any information contained herein. Neither the publishers nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication.

  • Doing A Final Tax Return For A Deceased Loved One

    Doing A Final Tax Return For A Deceased Loved One

    At the worst time of your life, the last thing you want to think about is tax. When a loved one dies, however, their affairs must be dealt with at some stage. This includes their tax obligations.

    You must lodge a date of death tax return if any of the following applied to the deceased person in the income year in which they died:
    • they had tax withheld from their income, including from interest or dividends
    • their taxable income was above the tax-free threshold
    • they lodged tax returns in the income years before their death, or had outstanding tax returns.

    To deal with a deceased loved one’s affairs, the help of a solicitor is highly recommended. Someone will be granted the role of executor or administrator of the estate of the deceased person (this is usually stipulated in a will).

    From a tax perspective, there are a few things that the executor or administrator has to do.
    The Australian Taxation Office (ATO) must be contacted and informed that your loved one has died. When you notify them of the death, they can tell you if the person had any outstanding tax returns for prior income years.

    All their financial documents must be compiled, and you must lodge a date of death (or final) tax return. This will only need to be lodged if your loved one had tax withheld from their income or had earned more than the tax-free threshold.

    This final tax return differs from a standard tax return as it doesn’t cover the full financial year – it only covers up to the day that the person died. The date of death tax return covers the period from 1 July of the income year in which the person died up to the date of death. All income and tax deductions until that day are inputted into the final tax return. This is different from a trust tax return for the deceased estate, which is for the period after the person dies.

    There are still tax obligations that can occur after that day, such as income earned from investments or the sale of assets that may or may not be subject to capital gains tax.

    In these circumstances, the executor or administrator of the estate will need to apply for a separate and new tax file number for the estate. The estate is treated as a separate taxpayer and will pay tax as if it was an adult individual resident taxpayer.

    This special treatment of the estate is received for up to three tax returns after the date of death (in fact, it is for two years from the date of death).

    We know that this time is very stressful, even without these additional obligations. The support of a tax professional during this process can ease the burden, as this is a role we are accustomed to taking. Contact us to find out how we can aid you, even if we weren’t the accountant for your loved one. We’re here to help.

    Disclaimer:

    The information contained in this publication is for general information purposes only, professional advice should be obtained before acting on any information contained herein. Neither the publishers nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication.

  • Maximising Your Tax Deductions As A Home-Based Business

    Maximising Your Tax Deductions As A Home-Based Business

    Small business owners may be able to claim deductions for the costs of using their home as a principal place of business when filing their income tax return.

    A home-based business is one where an area of your home is set aside and used exclusively as a place of business. If you do not have an area set aside and used exclusively as a place of business but you do some work from home, you may still be able to claim a deduction for some of your expenses relating to the area you use.

    Tax deductions may be claimed for the business portion of household expenses, however, it can be difficult to ensure you are claiming expenses you are entitled to. How you operate the business out of your home will determine the types of expenses that may be claimed. Your business structure will also affect your entitlements and obligations when claiming deductions on home-based business expenses.

    There are generally three types of expenses that can be claimed, running expenses and occupancy expenses, and in some cases, the cost of motor vehicle trips between your home and other locations (if the travel is for business purposes). You can claim both occupancy expenses and running expenses if you have an area of your home set aside as a ‘place of business’.

    Running expenses refer to the increased costs of using your home’s facilities for the running of your business, including;
    • Repairs to your business equipment.
    • Heating, cooling and lighting a room.
    • Cleaning.
    • Phone and internet.
    • Depreciation of business furniture and equipment.

    To calculate the running expenses of your home-based business, you must ensure that you exclude your private living costs and that you have records to show how you calculated the expense.

    Occupancy expenses are those that you pay to own or rent your home, including:
    • Mortgage interest or rent.
    • Land taxes.
    • Council rates.
    • Insurance premiums.

    Occupancy expenses are calculated based on the floor area of your home that is used for the business and the portion of the year that it was used.

    Small business owners should note that capital gains tax (CGT) payments may be required for periods when your home was used for business. However, CGT won’t apply if you operate your business from a rented home, didn’t have an area specifically set aside for your business activities or the business was run through a company or trust.

    Records that need to be kept include written evidence, tax invoices and receipts, and should substantiate your claims for all home-based business expenses. This needs to be kept for at least 5 years to substantiate your claims.

    Your business structure can affect the method you can use and the expenses you can claim, especially if your business is a company or trust. If you are a sole trader, a partnership or a company or trust, there are specific rules that may apply to you. Speaking with a trusted tax adviser is the best way to make sure you’re in compliance with those guidelines – why not start a chat with Leenane Templeton today?

    Disclaimer:

    The information contained in this publication is for general information purposes only, professional advice should be obtained before acting on any information contained herein. Neither the publishers nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication.

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  • Don’t Forget To Declare All Investment Income In Your Return!

    Don’t Forget To Declare All Investment Income In Your Return!

    If you’ve made a major investment in the last financial year, any income made from it will need to be included on your tax return.

    Any income earned from investments and asses must be declared in your tax return. This may include amounts from interest, dividends, rental income, managed investment trust credits, crypto assets and capital gains. This income needs to be declared whether you receive it directly or via distributions for a partnership or a trust.

    If you, for example, hold the assets that earn the investment income jointly (with another person), it is assumed that the asset’s income is divided equally between you, unless it can be proven that the asset is held in unequal proportions.

    Six items must be declared in your tax return as income this financial year, including the following:

    Interest Income

    Interest income includes:
    • the interest you earn from financial institution accounts and term deposits
    • the interest you earn from any other source, including penalty interest you receive on an investment
    • the interest you earn from children’s savings accounts if you
    • open or operate an account for a child and the funds in the account belong to you
    • spent or use the funds in the account
    • the interest we pay or credit to you – for example, interest on early payments, interest on overpayments and delayed refunds
    • life insurance bonuses (you may be entitled to a tax offset equal to 30% of any bonus amounts you include in your income)
    • interest from foreign sources (you can claim a foreign income tax offset for any tax paid on this income).

    Dividends

    Dividend income may come from a:
    • a listed investment company,
    • public trading trust,
    • corporate unit trust, or a
    • corporate limited partnership (in the form of a distribution).

    Some dividends may have imputations or franking credits attached. The franked amount and the franking credit must be declared if you receive franking credits on your dividends. If a company pays or credits you with dividends that have been franked, you’ll generally claim a franking tax offset.

    Rental Property Income

    You must declare the full (gross) amount of any rent and rent-related payments you receive. This includes amounts you receive from overseas properties. If you receive goods and services instead of rent, you must work out and declare the monetary value.

    To avoid making mistakes involving rental property, it’s best to consult with a tax adviser. This is usually a major red flag area for the ATO, so don’t hesitate to ask for help to avoid compliance issues or declaring for things you shouldn’t.

    Managed Investment Trusts

    You must show any income or credits you receive from any trust investment product in your tax return. This includes income or credits from a:
    • cash management trust
    • money market trust
    • mortgage trust
    • unit trust
    • managed fund – such as a property trust, share trust, equity trust, growth trust, imputation trust or balanced trust.

    Crypto Asset Income

    You must declare rewards received for staking crypto assets (which is often in the form of additional tokens from holding the original tokens. The money value of the additional tokens needs to be calculated and then converted into Australian dollars at the time they were received. These are reported in ‘other income’ in the tax return.

    If you receive crypto via air drop, this is income when you received them based on the money value of the already established tokens. Occasionally, some crypto projects ‘airdrop’ new tokens to existing holders to increase the supply. Whatever amount is received needs to be converted into Australian dollars and declared as other income.

    Capital Gains

    Any capital gains made when you sell or dispose of capital assets must be declared. This may include investment property, shares or crypto assets. The capital gain is the difference between:
    • Your asset’s cost base (what you paid for it)
    • Your capital proceeds (the amount you receive for it)

    Report capital gains and capital losses in your tax return. You can offset any allowable capital losses against your capital gains to work out your net capital gain or loss. You pay tax on a net capital gain. If you have a net capital loss, you can retain the loss to offset capital gains in future years.

    To avoid any issues with your tax return this financial year, especially involving investment-related income, start your tax journey with us today. We can help uncomplicate the process for you. Contact LT tax advisors today.

    Disclaimer:

    The information contained in this publication is for general information purposes only, professional advice should be obtained before acting on any information contained herein. Neither the publishers nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication.

  • The Instant Asset Write-Off Returns

    The Instant Asset Write-Off Returns

    The Federal Budget has reintroduced the $20,000 Instant Asset Write-Off to benefit small businesses, amidst the myriad of measures announced by the government.

    The instant asset write-off will return for the 2023-24 financial year (between 1 July 2023 to 30 June 2024). If you buy an asset to use for business purposes and it costs less than $20,000, you can immediately deduct the business portion of the cost in your tax return. This deduction is available for each asset that costs less than $20,000.

    How Does It Work?

    Eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used or installed ready for use.

    Instant asset write-off can be used for:
    • multiple assets if the cost of each individual asset is less than the relevant threshold
    • new and second-hand assets.

    If you are a small business, you need to apply the simplified depreciation rules to claim the instant asset write-off. It cannot be used for assets that are excluded from those rules.

    The instant asset write-off eligibility criteria and threshold have changed over time. You need to check your business’s eligibility and apply the correct threshold amount depending on when the asset was purchased, first used or installed ready for use.

    Eligibility to use instant asset write-off on an asset generally depends on:
    • your aggregated turnover (the total ordinary income of your business and that of any associated businesses)
    • the date you purchased the asset
    • when it was first used or installed ready for use
    • the cost of the asset being less than the threshold.

    You are not eligible to use instant asset write-off on an asset if your aggregated turnover is $500 million or more.

    The instant asset write-off does not apply for assets you start to hold and first use (or have installed ready for use) for a taxable purpose from 7:30 pm (AEDT) on 6 October 2020 to 30 June 2023. You must immediately deduct the business portion of the asset’s cost under temporary full expensing. If temporary full expensing applies to the asset, you do not apply instant asset write-off.

    The Temporary Full Expensing Measure Ceases 30 June 2023

    Temporary full expensing was introduced to support businesses and encourage investment, as eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year it is first used or installed ready for use for a taxable purpose.

    The deadline for the expanded Temporary Full-Expensing measure has not been extended by the Federal Budget 2023-24, meaning that it will cease on 1 July 2023, and the write-off will revert to $1,000 from that date.

    If you attempt to use the Temporary Full-Expensing measure after 1 July 2023 for an asset over $20,000, you will not be able to claim anything in the 2023-24 tax return using it.
    Businesses will likely feel a cashflow impact, as they will now need to spread depreciation deductions for assets more than $20,000 out over a number of years rather than claim them back upfront.

    Looking towards the future and want to make sure you’re doing the right thing when it comes to your tax? Come start a conversation with us so we can assist you with your tax planning needs.

    Disclaimer for External Distribution Purposes:

    The information contained in this publication is for general information purposes only, professional advice should be obtained before acting on any information contained herein. Neither the publishers nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication.

  • No More Shortcuts For WFH Deductions

    No More Shortcuts For WFH Deductions

    There are no more shortcuts when it comes to claiming your work-related expenses this financial year! The popular ‘shortcut’ method is no longer available to be used for the 2022-23 tax returns.

    Through this method, individuals could claim a fixed rate of $0.80 per hour worked from home, with the aforementioned shortcut method covering expenses such as phone, internet, and depreciation on furniture & equipment. If this shortcut method was employed, no other costs could be claimed for working from home. Remember that for the 2022-23 financial year, you must claim any work expenses through the revised fixed rate or actual cost methods, not the shortcut method.

    THE REVISED FIXED RATE METHOD

    You can claim 67 cents per hour you work from home during the relevant income year. The rate includes the additional running expenses you incur for:

    • home and mobile internet or data expenses
    • mobile and home phone usage expenses
    • electricity and gas (energy expenses) for heating, cooling and lighting
    • stationery and computer consumables, such as printer ink and paper.

    The rate per work hour (67 cents) includes the total deductible expenses for the above additional running expenses. You can’t claim an additional separate deduction for these expenses using this method.

    What Records Do I Need?
    You no longer need a dedicated workspace at home, but you must have a representative four-week diary of the hours worked from home between 1 July 2022 to 28 February 2023.

    Many taxpayers will already have kept records, but if you haven’t, one way to do this would be to look back over your diaries for the past four weeks.

    You may also be able to use similar records as evidence as long as they represent the hours they worked from home during those eight months.

    From 1st March 2023, the record-keeping requirement has changed again, and you will be required to record all your hours worked from home in a diary or some other format as they occur. This can be in the form of timesheets, diaries, time recording apps, or any other similar document, provided it is kept as they occur.

    How Does The Fixed Rate Method Work?

    To use the revised fixed rate method, you must:

    • incur additional running expenses as a result of working from home
    • have a record of the total number of hours you work from home and the expenses you incur while working at home
    • have records for expenses the fixed rate per work hour doesn’t cover and that show the work-related portion of those expenses.

    THE ACTUAL COST METHOD

    Using the actual costs method, you work out your deduction by calculating the actual additional expenses you incur when working from home. This includes expenses you incur for:

    • the decline in value of depreciating assets – for example, home office furniture (desk, chair) and furnishings, phones and computers, laptops or similar devices.
    • electricity and gas (energy expenses) for heating, cooling and lighting
    • home and mobile phone, data and internet expenses
    • stationery and computer consumables, such as printer ink and paper
    • cleaning your dedicated home office.

    What Records Do I Need?
    To claim your work from home expenses using actual costs, you must keep:

    • either a record showing
    • the number of actual hours you work from home during the entire income year – for example, a timesheet or spreadsheet
    • a continuous 4-week period that represents your usual pattern of working at home – for example, a diary.
    • You must also keep records that show:
    • the additional running expenses you incurred while working from home, such as receipts, bills and other documents
    • how you worked out the amount of your deduction.

    How Does The Actual Cost Method Work?
    To use the actual cost method to claim actual expenses, you must:

    • incur additional running expenses as a result of working from home
    • keep records or other written evidence, which shows the amount:
    • you spend on expenses
    • you spend on depreciating assets you buy and use while working from home
    • of work-related use for your expenses and depreciating assets.

    Where you incur running expenses for both private and work purposes, you need to apportion your deduction. You can only claim the work-related portion as a deduction.

    Australians must know their entitlements and tax deductions when working from home/remotely.

    Make sure to consult with your tax adviser regarding concessions, deductions and offsets for your tax return, as they may be able to advise you on what you may be eligible for this year.

  • Newcastle Accounting Firm: Top-Notch Financial Services

    Newcastle Accounting Firm: Top-Notch Financial Services

    At our accounting firm in Newcastle, Australia, we take pride in providing exceptional financial services to individuals and businesses in the area. Our team of expert accountants offers a wide range of services, including tax preparation, business consulting, financial planning and self-managed super funds. Our goal is to help our clients achieve their financial objectives by providing them with the tools and resources they need to succeed.

    Tax Preparation Services

    Our experienced tax accountants are well-versed in Australian tax laws and regulations, and they can help you navigate the complex tax system with ease. Whether you are an individual, sole trader, or corporation, we can assist you in preparing your tax returns accurately and efficiently. We also offer tax planning services to help you minimize your tax liability and maximize your tax savings.

    Business Consulting Services

    Our business consultants can assist you in a variety of areas, including strategic planning, financial management, risk management, and operational efficiency. We can help you identify areas of your business that need improvement and provide you with practical solutions to optimize your operations.

    Financial Planning Services

    Our financial planners can help you create a customized financial plan that aligns with your goals and objectives. Whether you are saving for retirement, planning to purchase a home, or investing in the stock market, we can help you develop a sound financial strategy to achieve your goals.

    Self Managed Super Fund Services

    Managing an SMSF can be complex and time-consuming, which is why it is crucial to seek the assistance of a qualified self-managed super funds accountant.

    At Leenane Templeton, we are a team of dedicated SMSF accountants who can help you achieve your retirement goals. We understand that every individual has unique circumstances and goals, which is why we provide tailored solutions that fit your specific needs. Our team of experts will work closely with you to ensure that your SMSF is compliant with the Australian Taxation Office (ATO) regulations and that you maximize your retirement savings.

    Why Choose Our Firm?

    At our Newcastle accounting firm Leenane Templeton, we are committed to providing our clients with the highest level of service and expertise. Our team of accountants and financial experts are dedicated to helping our clients achieve their financial objectives, and we take pride in our ability to deliver exceptional results. We have a proven track record of success, and we are confident that we can help you achieve your financial goals.

    Conclusion

    If you are looking for a reliable and professional accounting firm in Newcastle, Australia, look no further than our team of experts. With years of experience and a dedication to excellence, we are confident that we can provide you with the financial services you need to succeed. Contact us today to schedule a consultation and discover how we can help you achieve your financial objectives.