Blue Orchid Accounting

Superannuation Changes From 1 July 2026: What Australian Employers And Members Need To Know

Fri, 10 Apr 2026 01:14:53 GMT

From 1 July 2026, three significant superannuation changes will reshape the Australian retirement landscape. These reforms will affect employers, employees, and individuals with large super balances. Here's your comprehensive guide to what's changing.

1. Payday Super: The End of Quarterly Payments

2. Contribution Caps Increase

3. Division 296 Tax: Additional Tax on Large Super Balances

Action Points for Different Stakeholders

For Employers:

Immediately: Review and upgrade payroll systems for payday super compliance
By May 2026: Transition away from SBSCH if currently using it
Before 1 July 2026: Test SuperStream connectivity and payment processing times
Ongoing: Model cash flow implications of more frequent super payments

For Employees:

Consider the increased contribution caps for additional voluntary contributions
Review salary sacrifice arrangements in light of payday super
Check your super is being paid correctly from first pay run after 1 July 2026

For High-Balance Super Members (>$3M):

Before 30 June 2027: Consider whether to reduce Total Super Balance below $3M threshold
For SMSF members: Assess whether to opt into capital gains relief by 30 June 2026
Seek advice: Model the impact of Division 296 on your specific circumstances
Estate planning: Consider implications for wealth transfer strategies

What's Changing?

From 1 July 2026 you must pay employees their super guarantee on payday, at the same time as their salary and wages.

This represents a fundamental shift from the current quarterly payment system that has been in place for decades.

The New Payment Timeline

From 1 July 2026, employers must ensure superannuation contributions are received by employees' funds within seven business days of each payday (Qualifying Earnings day).

This means:

Weekly payroll = Super must be paid weekly
Fortnightly payroll = Super must be paid fortnightly
Monthly payroll = Super must be paid monthl y

The seven business day requirement is strict — it's measured from when the contribution is received by the fund, not just when it's processed or sent.

What is "Qualifying Earnings"?

The super guarantee amount is calculated as 12% of qualifying earnings (QE). QE includes OTE, salary sacrifice contributions and other amounts that are currently included in an employee's salary or wages for super guarantee.

This is a broader definition than the previous "ordinary time earnings" (OTE) concept.

Critical: Small Business Superannuation Clearing House Closes

The SBSCH closed to new users on 1 October 2025. Existing users have access to the service until 30 June 2026. All users must transition to an alternative option to pay their employees' super.

Action Required: If your business currently uses the SBSCH, you must transition to a payroll-integrated solution or alternative clearing house before 1 July 2026.

ATO Compliance Approach for First Year

The ATO has released PCG 2026/1, setting out a risk-based compliance approach for the first year of the new regime (1 July 2026 – 30 June 2027).

The ATO will categorise employers into risk zones:

Low risk: Employers who attempt to pay SG on time and correct errors as soon as reasonably practicable
Medium risk: Employers where individual SG shortfalls are rectified within 28 days after the end of the relevant quarter
High risk: Employers with ongoing non-complianc e

Penalties Under Payday Super

The SGC applies when amounts aren't received by a super fund within 7 business days of payday (unless an extended timeframe applies, such as for new employees).

The new Super Guarantee Charge (SGC) framework applies per pay period, meaning late contributions could attract interest and penalties more frequently than under the quarterly system.

What Employers Should Do Now

✅ March–April 2026: Audit your current payroll setup and identify gaps

✅ April–May 2026: Test payroll system changes and SuperStream connectivity

✅ May–June 2026 : Verify employee fund details and model updated cash flow

✅ 1 July 2026: First compliant pay run with super paid on same day as wages

New Caps from 1 July 2026

From 1 July 2026, the concessional contributions cap rises from $30,000 to $32,500, the non-concessional cap rises from $120,000 to $130,000, and the bring-forward maximum increases from $360,000 to $390,000.These increases are driven by CPI indexation and represent a genuine opportunity to get more money into the superannuation environment at concessional tax rates.

What Remains Unchanged

The Transfer Balance Cap remains at $2 million and the Superannuation Guarantee rate remains at 12%.Note: The SG rate increased to 12% on 1 July 2025, completing the legislated increase schedule.

Maximum Super Contribution Base

For high-income earners, employers are not required to pay SG on earnings above the maximum super contribution base. For the 2025 – 2026 financial year, the maximum super guarantee contribution that an employer must pay is increased to 12% of $250,000 per year, or $30,000.

What is Division 296?

The new SMSF Division 296 Super Tax introduces an additional tax on superannuation balances above $3 million and will impact some SMSF members from 1 July 2026.Division 296, the additional earnings tax on super balances above $3 million, also commences on 1 July 2026.

Who Will Be Affected?

According to Treasury estimates, approximately 80,000 Australians (about 0.5% of the population) currently have superannuation balances exceeding the $3 million threshold and would be affected by Division 296 in its first year.This typically includes:

Long-term retirees with decades of compound growth
High-income professionals (doctors, lawyers, executives)
Business owners who have sold a business and contributed proceeds to super
Property investors holding high-value assets within SMSF s

Two-Tier Tax Structure

For individuals with a total superannuation balance (TSB) greater than $3 million, Division 296 tax will be assessed at 15 per cent of attributable Division 296 earnings (based on the proportion of earnings that are attributable to balances in excess of $3 million) For individuals with a TSB greater than $10 million, Division 296 tax will be assessed at an additional 10 per cent of attributable Division 296 earnings (based on the proportion of earnings that are attributable to balances in excess of $10 million).

In plain English:

Balances above $3 million: Additional 15% tax on proportional earnings
Balances above $10 million: Additional 25% tax (15% + 10%) on proportional earning s

When combined with existing super fund tax rates, this results in "headline" rates of 30% and 40% respectively.

What Counts as "Earnings"?

Major change from original proposal: The tax will only apply to future actual realised earnings, not unrealised gains as originally proposed.This means Division 296 tax applies to:

Interest and dividends
Rent (for SMSF property)
Realised capital gains
Less deductible expenses

Indexation of Thresholds

It is also confirmed that these TSB thresholds will be indexed in line with increases in the Consumer Price Index (CPI): The $3 million TSB threshold increases only in $150,000 increments, meaning indexation must exceed $3,150,000 before the threshold is increased to $3,150,000The $10 million threshold will be indexed in $500,000 increments.

Transitional Rules for 2026-27

For the first year of operation, a special transitional rule applies where the Total Super Balance is measured at 30 June 2027, allowing individuals time to adjust their super balances, if necessary, before the tax begins.Therefore, an individual's Total Super Balance at 30 June 2026 is not relevant.This gives affected individuals until 30 June 2027 to make strategic decisions about their retirement planning.

SMSF-Specific Opportunity: Capital Gains Relief

SMSFs have a uniqu e transitional opportunity:

A one-off, optional cost base reset will be available to self-managed super funds (SMSFs), allowing trustees to reset the cost base of all fund assets to their market value as at 30 June 2026.

How it works:

In other words, if an SMSF asset was bought years ago for $1 million, is worth $2 million on June 30, 2026, and is eventually sold for $ 2.5 million, a fund that "opts in" will be able to work out capital gains for Division 296 tax based on $ 500,000 ($2.5 million less $2 million) rather than $1.5 million ($2.5 million less $1 million).

Important conditions:

The election is all-or-nothing — applies to all CGT assets held at 30 June 2026
Assets cannot be selectively chosen
Once made, the election cannot be reversed
The election must be lodged by the due date of the 2026-27 SMSF annual return
This is only for Division 296 purposes — does not affect normal CGT calculati ons

Call Centre Operators – Maximise Your Tax Return This Year!

Tue, 13 Jan 2026 06:31:35 GMT

If you work in a call centre, whether in a busy office environment or from home, tax time can be a real opportunity to claim legitimate deductions and improve your refund. Many call centre operators overlook expenses they’re entitled to claim or are unsure what the Australian Taxation Office (ATO) actually allows. With the right guidance, it’s possible to maximise the tax return call centre employees are eligible for, while staying compliant and avoiding common mistakes.

This guide explains what call centre operators can usually claim, how to keep the right records, and why working with an accountant can make a meaningful difference at tax time.

Why Call Centre Operators Often Miss Out on Deductions

Call centre roles often involve a mix of technology, communication tools, ongoing training and sometimes home-based work. Because many expenses feel “small” or routine, they’re easy to overlook. Over a full financial year, however, these costs can add up. Common reasons deductions are missed include:

Uncertainty about what qualifies as work-related
Poor record-keeping
Confusion between personal and work use
Changes to work arrangements, such as working from home

Understanding what can and can’t be claimed is the first step to maximising your return.

Home Office Expenses for Call Centre Staff

Many call centre operators work from home either full-time or part-time. If you perform your duties from a dedicated workspace at home, you may be eligible to claim certain home office expenses. Commonly claimable items may include:

A portion of electricity and internet costs
Phone usage related to work calls
Office furniture and equipment depreciation
Stationery and consumables

The key requirement is that the expense must be directly related to earning your income. Accurate records and usage calculations are essential to meet ATO expectations.

Phone and Internet Expenses

Call centre operators rely heavily on phones and internet connections. If you use your personal phone or home internet for work purposes, a percentage of these costs may be claimable. To support your claim, you’ll usually need:

Itemised phone bills
A reasonable usage estimate or diary
Evidence separating work and personal use

This is an area where advice from a tax accountant on the Central Coast can help ensure claims are calculated correctly.

Uniforms, Clothing and Laundry

Some call centre roles require specific uniforms or branded clothing. If your employer provides or requires compulsory uniforms, these expenses may be deductible. Potential claims include:

Purchasing compulsory uniforms
Laundry and dry-cleaning costs
Protective clothing if required

Everyday clothing, even if worn to work, generally cannot be claimed, which is a common ATO pitfall.

Call centre operators often undertake training to improve performance, meet compliance requirements or progress into supervisory roles. If the course directly relates to your current role, it may be tax deductible. Examples include:

Customer service training
Sales or communication courses
Compliance or product knowledge training

Courses aimed at changing careers are generally not deductible, so it’s important to assess eligibility carefully.

Many call centre roles require headsets, keyboards, monitors or other equipment to perform duties efficiently. If you purchase these items yourself, you may be able to claim them. Common examples include:

Noise-cancelling headsets
Computer accessories
Ergonomic office equipment

Items under a certain value may be claimed outright, while higher-cost items are usually depreciated over time.

Training, Courses and Professional Development

Work-Related Equipment and Technology

Get Tax Support on the Central Coast

At Blue Orchid Accounting , tailored tax advice helps call centre operators navigate deductions with confidence. With experience in Central Coast taxation and a practical understanding of work-related claims, support is focused on helping clients maximise the tax returns call centre employees are entitled to — while remaining fully ATO compliant. Visit our taxation page to book a consultation and take the stress out of tax time this year.

Travel and Work-Related Expenses

Avoiding Common ATO Mistakes

Why Professional Tax Advice Matters

Record-Keeping Tips for Call Centre Employees

Making the Most of Tax Time

Most call centre roles don’t involve frequent travel, but some work-related travel expenses may still apply in certain circumstances. Possible claims include:

Travel between multiple work locations
Work-related conferences or training sessions

Travel between home and your regular workplace is generally not deductible, even if you work unusual hours.

The ATO closely monitors work-related expense claims, particularly for roles where deductions are common. Mistakes can lead to audits, adjustments or penalties. Common errors include:

Claiming personal expenses as work-related
Lacking receipts or records
Overestimating work-use percentages
Claiming deductions without substantiation

Working with an accountant familiar with Central Coast taxation helps ensure claims are accurate, reasonable and well-documented.

Tax rules change regularly, and what was deductible last year may not apply this year. A qualified accountant understands current ATO guidelines and can identify opportunities you may not be aware of. Benefits of working with accountants include:

Accurate assessment of eligible deductions
Tailored advice based on your role and work setup
Reduced risk of errors or audits
Confidence your return is compliant and optimised

This support is particularly valuable for call centre operators with mixed work arrangements.

Good record-keeping makes tax time simpler and less stressful. The ATO requires evidence for most claims, so organisation is key. Helpful habits include:

Keeping digital copies of receipts
Tracking work-related usage throughout the year
Maintaining a simple expense diary
Storing documents in one secure location

These steps make it easier to substantiate claims and maximise your return legitimately.

Tax time doesn’t have to be overwhelming. With the right preparation and guidance, call centre operators can confidently claim what they’re entitled to and avoid unnecessary stress. Whether you work onsite, remotely or in a hybrid role, understanding deductions and working with the right professionals ensures you don’t leave money on the table.

Blue Orchid Accounting

Since 2011, Blue Orchid Accounting has been providing clients throughout the Central Coast with a comprehensive range of taxation and accounting services . We strive to provide friendly, straightforward advice, helping ensure you’re enabled to make smarter financial decisions and further safeguard your wealth.

TRADIES! Don’t Miss Out On Tax-Time Deductions

Tue, 02 Dec 2025 06:14:08 GMT

Tax time can feel like another job on the list, especially when you’re juggling early starts, unpredictable schedules and long hours on-site. Many tradies buy tools, run work vehicles, keep up licences and pay for insurance throughout the year without realising how much of it may be deductible. When tax season comes around, it’s easy to miss opportunities simply because you didn’t track something, weren’t aware of a category or weren’t sure what the ATO considers claimable for your industry.

This guide walks through key deduction areas tradies commonly overlook, helping you understand what may apply to your situation so you can approach tax time with more clarity and confidence.

1. The Tools You Rely On Could Be Claimable

Whether you’re an electrician replacing a multimeter, a carpenter buying new blades or a plumber investing in power tools, equipment is a major cost of working in a trade. Many tradies purchase these items throughout the year and don’t think twice about how they fit into tax-time records. These day-to-day essentials may form part of your deductions when logged correctly and linked to work-related use.

A few examples include:

Hand tools, power tools and specialised equipment
Depreciation on larger items
Repairs or maintenance of work-related gear

Your accountants on the Central Coast can help you organise receipts, categorise different types of tools and understand which items may fall under immediate deductions or depreciation.

2. Workwear, Uniforms and PPE: Are You Claiming Everything You Can?

For many tradies, clothing expenses are more than just a pair of steel caps and a hi-vis shirt. Depending on your industry requirements, you may have to purchase protective gear, safety equipment or occupation-specific uniforms. These costs quickly add up, yet plenty of workers leave them out of their tax-time considerations because they’re unsure what qualifies.

Items like branded uniforms, occupation-specific clothing and protective gear may fall into claimable categories when used for work. Laundering costs might also be included when they relate to eligible clothing. This is an area where a tax accountant on the Central Coast may assist you in interpreting ATO requirements and understanding how different clothing types sit within the rules.

3. Vehicle Use Adds Up – Especially When You’re On the Road All Day

Many tradies spend more time in their ute than at a desk. Driving between sites, suppliers, storage units or client jobs is part of the daily routine, and these kilometres may contribute to your tax deductions when used for work purposes. Fuel, servicing and other running costs can quickly add up over the year.

Possible vehicle-related claims may include:

Travel between job sites
Work-related fuel, servicing and maintenance costs
Depreciation or financing amounts connected to business use

Tradies often wonder how to track these costs correctly. An accountant familiar with Central Coast taxation guidelines can assist you in choosing methods such as logbooks or cents-per-kilometre, depending on your records and work routine.

4. Licences, Tickets and Training Fees Deserve Attention Too

Trade work often requires more than hands-on skill — it involves staying up to date with licences, certifications and ongoing training. Many tradies pay for these renewals or courses themselves and overlook them when preparing their tax return.

Depending on the type of licence and whether it relates to maintaining or improving current skills, some fees may be claimable. Charges for renewals, industry training, short courses or accreditation updates may fall into relevant categories when they support your current trade.

This can form part of the bigger picture when you’re trying to maximise tax return deductions, and accounting support may help bring more clarity to how these education-related costs fit into ATO expectations.

The ongoing business expenses required to keep your trade running can be significant. From insurance to admin tools, some of these may fit into tax-deductible categories depending on your setup and the type of work you do.

Examples of commonly overlooked costs include:

Public liability or other business-related insurance
Accounting or bookkeeping tools
Digital subscriptions used to manage quotes, invoices or scheduling

These expenses are often set-and-forget payments, so they can be missed at tax time if not tracked. Accounting guidance can help you understand how these ongoing costs relate to your overall business operations.

Even though most tradies spend their days on-site, many still handle quoting, invoicing, client communication or ordering materials at home. If you use part of your home for these tasks, there may be running costs that relate to your work.

This doesn’t necessarily mean having a full office setup — sometimes a dedicated admin area or occasional work use may be enough to consider. Accounting support can help with understanding what portion of these costs may relate to your trade and how different calculation methods may apply.

5. Insurance, Registrations and Ongoing Business Costs Many Tradies Forget

6. Home Office or Admin Space? You Might Have Claimable Costs

7. Don’t Overlook Digital Tools, Software and Technology You Use Every Week

8. Avoid Common Mistakes by Getting Support Before Lodging

Modern trade work relies heavily on digital tools, whether it’s your phone, tablet, job-tracking software or communication apps. These play a big role in quoting, scheduling and staying organised on the job, which means some of these expenses may be connected to your work.

Potential claimable tech-related items include:

Mobile phones and work-related call usage
Tablets or laptops used for admin tasks
Job-management or invoicing apps and digital platforms

For many sole traders and subcontractors, separating personal and work use can be tricky. Accountants can help you consider how these costs may be divided based on work-related use and year-round habits.

With so many categories and rules to navigate, it’s easy to miss something at tax time. Rushing your return, losing receipts or guessing at what might apply can create confusion. Getting guidance before you lodge can help you feel more prepared and reduce the chance of overlooking deductions that relate to your work.

Support from an accounting firm can help you look at your expenses more clearly and understand how your yearly spending fits into the bigger picture, especially if you’re managing a mix of business and personal costs.

At Blue Orchid Accounting , we offer support for tradies who want more clarity around tax-time decisions and year-round financial organisation. If you’re running a trade business or working as a subcontractor on the Central Coast, you may already know how challenging it can be to keep track of receipts, vehicle costs, tools, repairs and daily expenses while juggling busy workloads.

If you’d like guidance tailored to your situation, visit us at https://www.blueorchidaccounting.com.au/ to get in touch . Let’s make tax time feel a little more manageable.

Blue Orchid Accounting

Cleaners – Don’t Miss These Tax Deductions!

Tue, 25 Nov 2025 07:19:15 GMT

Tax time can be overwhelming, especially for cleaners who juggle long hours, multiple jobs, or manage a small business. With the daily focus on meeting client needs, keeping up with supplies, and staying on top of schedules, tax deductions are often overlooked. Many in the cleaning industry miss out on valuable claims simply because they aren’t sure what expenses are eligible or how to record them properly.

Understanding what you can and cannot claim is an essential part of staying on top of your financial obligations. Deductions exist to recognise the costs that are genuinely tied to earning your income, and when used correctly, they can reduce your taxable income. This means more accurate reporting and a tax return that accurately reflects the actual cost of running your cleaning business.

In this guide, we’ll explore the most common deductions available to cleaners, including uniforms, protective clothing, cleaning supplies, travel between job sites, tools and equipment, and even the administrative costs associated with running your business. We’ll also examine why maintaining detailed records is so crucial and how accountants on the Central Coast can offer valuable support in navigating the complexities of Central Coast taxation.

By having the proper knowledge and approach, cleaners can head into tax season with greater clarity, confidence, and control over their returns.

Everyday Deductible Expenses For Cleaners

Cleaners often spend a considerable amount on work-related items. Knowing what qualifies as a deductible expense is the first step in ensuring your tax return accurately reflects your true business costs. Some of the most common expenses cleaners may be able to claim include:

Uniforms & protective clothing : When cleaners are required to wear branded uniforms or purchase protective gear such as gloves, masks, or non-slip shoes, these items may be considered deductible.
Cleaning products & consumables : Products like disinfectants, sprays, detergents, sponges, cloths, and mops are work-related purchases that may be eligible for claims.
Equipment & tools of trade : Larger purchases, such as vacuum cleaners, polishers, or steam cleaners, may be claimed outright or depreciated over several years, depending on the cost.
Repairs & replacements : When cleaning equipment breaks down or needs parts replaced, the costs of maintaining or repairing these tools may also be deductible.

By keeping records of these expenses, cleaners can maximise their tax return and avoid missing legitimate claims.

Travel & Vehicle Use

Travel is a regular part of work for many cleaners, particularly those who service multiple client sites in a single day. While trips to and from a primary workplace usually aren’t deductible, there are circumstances where travel expenses may be claimable.

Examples of travel-related deductions may include:

Using your car to drive between two or more cleaning jobs during a single day.
Fuel, servicing, insurance, and registration costs when using the logbook method to record business kilometres.
Parking fees or tolls are directly related to cleaning work assignments.

Because travel deductions can be complex, many cleaners turn to a tax accountant on the Central Coast for guidance on accurately calculating these claims.

Phone, Internet & Administrative Costs

Running a cleaning business or working independently often requires more than just the physical work. Administrative tasks, client communication, and scheduling all contribute to business expenses. These may provide opportunities for deductions, such as:

A percentage of mobile phone costs when calls or texts relate to work purposes.
Internet use for online bookings, managing business emails, or keeping digital records.
Office supplies, including diaries, planners, software subscriptions, and stationery, are purchased for record-keeping and client management purposes.

These expenses can add up over the year, which is why maintaining detailed records is so important when working with Central Coast taxation requirements.

Keeping Accurate Records

Claiming deductions is only possible when you have evidence to back them up. Without receipts or clear records, you may find that your claims are disallowed. Good record-keeping also makes preparing a return much smoother.

Some practical approaches to keeping accurate records include:

Use a digital app or folder to store receipts for items like uniforms, cleaning supplies, and equipment.
Keeping a detailed logbook of kilometres travelled for work, especially if driving between multiple sites.
Saving copies of phone and internet bills and highlighting work-related use.

By having clear, organised records, cleaners make tax time less stressful and more manageable, while also supporting their claims for deductions.

Many cleaners also have expenses that go beyond equipment and supplies. These can relate to compliance and ongoing work requirements. Depending on individual circumstances, the following costs may be relevant for deductions:

Training courses that are directly connected to your cleaning role or business.
Licence renewals or regulatory fees are necessary for operating legally in your area.
Business-related insurance premiums linked specifically to cleaning work.

Not every cost will qualify, so discussing these with accountants on the Central Coast can help you understand which ones may apply to your situation.

The rules around deductions can vary depending on whether you’re a contractor, a sole trader , or running a cleaning business with employees. A tax accountant on the Central Coast can help you navigate these differences by looking at your specific circumstances.

Some of the ways a local tax accountant may support cleaners include:

Reviewing your expenses to highlight which ones may be deductible under Central Coast taxation.
Explaining how to structure records so they meet the ATO’s requirements.
Offering advice on how to avoid errors that could affect your tax return.

Working with a local specialist helps cleaners approach tax time with confidence, knowing they are supported in understanding their entitlements.

Training, Licensing & Insurance Costs

Why Work With A Local Tax Accountant?

Claim The Deductions You’re Entitled To

At Blue Orchid Accounting , we work with cleaners and small business owners across the Central Coast to support them with the complexities of tax. From uniforms and cleaning products to travel, equipment, and administrative costs, we provide guidance that is tailored to your circumstances. This allows you to concentrate on your day-to-day work while we help with the important task of managing your tax obligations.

If you’re aiming to maximise tax return for cleaners, now is the time to act. Get in touch with us today to discuss your situation in more detail. Contact us to arrange a consultation and take the next step toward claiming the deductions to which you may be entitled.

Blue Orchid Accounting

NDIS Support Workers & Carers – What To Claim!

Tue, 28 Oct 2025 06:12:12 GMT

For those working in the community and disability support sectors, tax time can be confusing. Whether you're employed under the NDIS or offer in-home care, there’s often uncertainty about what can be claimed, what documentation is needed, and how to approach deductions specific to your role. While support work can be diverse and dynamic, the expenses you incur while helping others may have tax implications.

Some everyday costs, from travel between clients to laundering work uniforms, may be work-related. But missteps can delay your return or raise red flags. This blog explores common areas where NDIS carers and community support workers may have tax-deductible expenses and where careful record-keeping and clarity are essential.

Understanding Work-Related Travel Claims for NDIS Carers

Carers and support workers often travel between homes, service locations, and community activities. While driving from home to your first job of the day generally isn’t deductible, travel between workplaces or clients may be considered work-related.

Common examples of allowable work travel include:

Driving from one client’s home to another
Travelling to external training courses directly related to your current role
Visiting multiple job sites during a single shift

It’s important to keep accurate records. This includes:

A logbook recording kilometres travelled for work purposes
Dates, locations, and the purpose of the trip
Receipts for fuel, tolls, or car maintenance (if claiming car expenses)

Transport claims can differ depending on whether you’re using your car or being reimbursed. Claims should reflect expenses tied to work duties and exclude private or commuting use.

Uniforms & Laundry: What Qualifies for Tax Deductions?

Many support workers must wear specific attire on the job, which may include branded shirts or clothing that identifies their employer. Personal protective equipment (PPE) like gloves or closed shoes is also necessary in some roles.

What may be claimable:

Branded or occupation-specific uniforms
Protective items (as required by the role)
Laundry costs for cleaning these items

However, general clothing like plain black pants or shoes (even if worn to work) is not generally deductible. If eligible uniforms are being laundered at home, a standard rate per load may be used to calculate laundry costs, provided you keep reasonable records.

Claiming Self-Education to Support Your Career in Care

Support work often involves continued learning. If you're undertaking a course or attending workshops that directly relate to your current role, some of those costs may be deductible. However, education designed to help you enter a new profession (e.g. switching from care to nursing) generally isn't claimable.

Potentially deductible expenses may include:

Short courses improving skills used in your current job
First aid or CPR refresher courses (if required for your role)
Textbooks or stationery used for eligible training
Travel costs to attend related seminars or workshops

Keep documentation such as course enrolment details and receipts, and be ready to demonstrate how the study links to your current work.

Phone, Internet & Tech: When Are They Deductible?

If you regularly use your phone or home internet to coordinate shifts, update case notes, or check client schedules, part of those expenses may be connected to your work.

Examples of relevant tech-related expenses:

A portion of your monthly mobile bill (if used for work communication)
Internet usage if required to access work systems or email
Work-related apps or software subscriptions
Devices such as laptops or tablets (apportioned between work and private use)

The key is to apportion claims correctly. If you use your mobile phone 40% of the time for work and 60% for personal use, only the work-related portion should be calculated. A usage diary over a 4-week representative period may help support your claim.

Many support workers and carers make simple errors at tax time that can lead to delays or compliance issues. Being proactive and organised can help keep things on track.

Mistakes to avoid include:

Claiming travel from home to your workplace (not generally deductible)
Overestimating work-related phone or internet usage without evidence
Failing to keep records like receipts or logbooks
Claiming private expenses as work-related
Not apportioning shared expenses appropriately

Use a dedicated folder or digital app to store work-related receipts, and update your logbook or usage diary regularly rather than rushing at tax time.

Support work often involves industry memberships, registration fees or insurance related to public liability or professional indemnity—particularly if you’re a contractor or sole trader.

These may include:

Union fees (if relevant to your job)
Memberships with industry bodies
Work-related licences or registrations required to perform your duties
Public liability insurance (if self-employed)

Keep a copy of all invoices and ensure each cost directly relates to your employment or income-earning activities.

Common Mistakes That Could Delay Your Tax Refund

Union Fees, Registrations & Insurance You Might Be Missing

Home Office Claims for Community-Based Roles

Ready to Prepare for Tax Time? We’re Here to Help

Why Partnering with a Tax Accountant Could Benefit You Long-Term

While most care and support duties happen in the field, many workers spend time at home preparing reports, updating client records, or managing schedules. Some of your home office use may relate to work in these cases.

Common elements to consider:

Electricity or internet usage for work-related tasks at home
Depreciation on a desk, office chair, or work computer
Stationery or other home-based work supplies

Depending on the situation, you can use the fixed rate or actual cost methods. Keep a diary for 4 weeks to help justify your calculation.

Navigating tax rules as a community or NDIS support worker isn’t always straightforward. An accountant understanding the care sector may help identify deductions aligning with current ATO expectations. They may also assist in preparing accurate returns, reducing the risk of errors, and helping you maintain well-organised records.

When consulting accountants on the Central Coast, consider bringing:

Your work calendar or shift roster
Travel logbook and vehicle details
Receipts for uniforms, tech, education, and memberships
Usage breakdowns for phone or internet
Notes on home office time

Having a clear picture of your work habits and related costs makes these discussions more productive, especially when reviewing options for tax-time planning.

At Blue Orchid Accounting , we understand the unique needs of carers and NDIS support workers navigating the complex world of tax deductions. Whether you’re looking to stay compliant, keep your records in check, or simply want help identifying what may apply to your role, our tax accountants on the Central Coast are ready to assist.

Contact us via our contact page or give us a call to speak with a tax accountant on the Central Coast about your work-related expenses and the next steps.

Blue Orchid Accounting

Truckies – Maximise Your Tax Return This Year!

Wed, 01 Oct 2025 00:59:50 GMT

For many Australian truck drivers, tax season can feel like a long-haul journey without a clear route. Between record-keeping, knowing what’s claimable, and staying up to date with ever-changing rules, there’s a lot to keep track of — especially when you spend more time on the road than at a desk.

Fortunately, there are some practical approaches you can take that may help make tax time less complicated. From travel expenses and vehicle costs to the value of working with someone who understands your industry, this article unpacks ways that truck drivers, whether team member or owner-operators, can confidently approach their tax return .

Let’s look at a few valuable tips that may help you make the most of your Central Coast taxation situation this year.

Claim Work-Related Travel Expenses the Right Way

If you regularly travel long distances or sleep away from home for work, you may be able to claim certain travel-related costs. The Australian Tax Office (ATO) allows travel deductions directly linked to earning income, but they must be recorded accurately and backed by supporting evidence.

Some expenses that truckies might be eligible to claim when working away from home include:

Overnight accommodation is required when sleeping away from home due to your route.
Meal expenses during multi-day trips are either actual or calculated using ATO-determined reasonable allowances.
Incidental expenses such as parking, tolls, or small costs related to long-distance travel.

To make the most of these opportunities, it’s important to:

Keep detailed travel records, including dates, times, locations, and the purpose of each trip.
Retain receipts or bank records that show actual expenses paid.
If claiming an allowance, understand the ATO’s reasonable allowance guidelines and how they apply to your situation.

Working with a tax accountant with experience with transport clients can help you clarify which of your regular costs may be considered deductible.

Know What Vehicle Costs Are Deductible

Whether you drive your own truck or operate one provided by an employer, vehicle-related expenses can make up a significant portion of your work costs. Some of these may be deductible depending on how the vehicle is owned and used.

If you’re an owner-operator, many direct costs of running your truck for business may be relevant to your return. This includes:

Fuel costs and top-ups throughout your route.
Maintenance and repairs, such as servicing, tyre replacements or mechanical work.
Registration and insurance premiums are required where the vehicle is used for work.
Depreciation occurs when the truck is classified as a business asset and used primarily for income generation.

For employed drivers, only out-of-pocket vehicle costs that your employer doesn’t reimburse may be relevant. To handle this properly:

Keep a vehicle logbook that records distances travelled for work.
Note down fuel usage and servicing intervals, especially for longer trips.
Distinguish clearly between personal and work use of your vehicle.

A taxation expert can help you decide whether to use actual cost or cents-per-kilometre methods, depending on your situation and the documentation you’ve kept.

Don’t Overlook Small But Frequent Expenses

There are several smaller, regular costs that truck drivers may not immediately think to include, but over the course of a financial year, they can add up significantly. These include items purchased to help you do your job more comfortably and safely.

Truck drivers might be able to claim costs such as:

Protective clothing, like high-visibility vests or steel-capped boots, is worn while loading or unloading freight.
Sunglasses and sunscreen are especially for daytime drivers exposed to sunlight through the windshield for extended periods.
Tools and equipment, including straps, ropes or tarps used to secure loads.
Stationery and logbooks, especially if you’re required to maintain written records of your trips or driving hours.

If these items are directly related to your work duties and not reimbursed by your employer, they may be considered when preparing your return.

Make a habit of:

Saving receipts for small purchases.
Recording why each item was bought and how it relates to your work.
Storing documents in a digital format while on the road to reduce the risk of losing them.

Small items may be easy to overlook, but they can be part of your overall picture when reviewing work-related costs with accountants on the Central Coast.

Keep Clear & Consistent Records All Year Round

One of the most helpful things you can do throughout the year is maintain organised and complete records. This can support your claims and help reduce tax time stress.

Accurate records can include:

Trip logs showing work-related travel distances and dates.
Receipts or invoices for meals, fuel, equipment or supplies.
Bank statements that match your expenses to the payments made.
Digital photos of paper receipts stored in secure cloud-based folders or apps.

Record-keeping apps and spreadsheets can be helpful when you’re on the road. But the most important thing is consistency. If you’re working with a tax accountant on the Central Coast, they’ll need these records to understand your deductions and avoid any issues during review.

Regular habits like logging fuel stops or scanning receipts weekly can go a long way towards simplifying the process when the end of the financial year rolls around.

There’s a lot to consider when it comes to central coast taxation, and while general tax advice is useful, having guidance from someone who understands how the transport and logistics industry operates can be especially valuable.

Some benefits of working with an accountant familiar with truck driving include:

Understanding allowance thresholds for long-distance drivers.
Knowledge of logbook vs. actual expense methods.
Familiarity with ATO expectations around meal deductions and what counts as ‘reasonable’.
Advice on quarterly BAS reporting, if you’re registered for GST as an owner-operator.
Guidance around business structure, if you’re considering moving from sole trader to company setup.

Getting personalised support can help you feel more confident that your return reflects your work and the costs you’ve incurred

At Blue Orchid Accounting , we work with truck drivers across the Central Coast to support them through every stage of tax time — from keeping records to navigating industry-specific deductions. Whether you’re on the road solo or part of a larger transport team, we understand that your schedule doesn’t always allow time for paperwork.

We’re here to help simplify your Central Coast taxation obligations and provide guidance tailored to the transport industry. Contact us today .

Work With Someone Who Understands Your Industry

Let’s Make Tax Time Easier

Blue Orchid Accounting

What To Do If You Haven’t Lodged A Tax Return In Years

Wed, 27 Aug 2025 04:23:49 GMT

Are you feeling stressed because you haven’t lodged a tax return in years? You’re not alone. Life can sometimes move quickly, and it’s easy to let tax obligations slip by. Whether you’re one year behind or over a decade, the good news is that there’s always a way to start resolving the situation.

In this blog, we’ll explore why lodging overdue returns matters, what potential consequences exist, and practical steps you can take to get back on track. If you’re searching for an accountant near me or a tax accountant on the Central Coast, professional guidance can help you navigate the process with less stress.

Why People Fall Behind on Lodging Tax Returns

It’s more common than you might think for people to fall behind on tax lodgements. Some common reasons include:

Illness or family challenges.
Loss of records or paperwork.
Fear of owing money to the ATO.
Confusion about income reporting obligations.
Believing there’s no need to lodge if no tax is payable.

Regardless of the reason, the Australian Taxation Office (ATO) prefers that individuals make contact rather than avoid the issue. Taking the first step, even after years, often helps reduce stress and uncertainty.

Consequences of Not Lodging Tax Returns

Avoiding tax lodgements can have consequences that grow over time. Some potential outcomes include:

Penalties & Interest : The ATO may apply penalties for late lodgement and charge interest on unpaid tax debts.
Loss of Refunds : If you’re due a tax refund, you may not be able to claim it after certain time limits.
Impact on Government Benefits : Some benefits rely on current tax records to determine eligibility.
Difficulty Obtaining Finance : Banks and lenders often require up-to-date tax returns when assessing loans or mortgages.
ATO Action : In some cases, the ATO may issue default assessments, estimating your income and taxes owed, which may not accurately reflect your circumstances.

While these consequences can sound intimidating, resolving overdue tax matters is often more straightforward than people expect, particularly with support from a tax accountant on the Central Coast.

The Benefits of Lodging Overdue Returns

Despite the stress that overdue tax returns might cause, there are benefits to catching up:

Peace of Mind : Removing uncertainty helps reduce anxiety and allows you to move forward confidently.
Avoiding Further Penalties : Lodging sooner can help minimise further charges.
Access to Refunds : You might discover you’re entitled to refunds for past years.
Updated Financial Records : Staying current can help with loan applications or government benefit claims.
Improved Relationship with the ATO : Taking steps to resolve overdue returns demonstrates a willingness to cooperate.

Many individuals find that once they begin the process, it’s far less daunting than anticipated.

Steps to Take If You Haven’t Lodged in Years

If you’ve fallen behind, here’s how to start moving forward:

Gather Your Information

Begin collecting any records you have, including:

Payment summaries or income statements.
Bank statements.
Centrelink payment details (if applicable).
Private health insurance statements.
Details of any investment income.
Work-related deductions or expenses.

If you’re missing documents, a tax accountant on the Central Coast may help obtain information from the ATO or other sources.

Check Your MyGov Account

If you have a MyGov account linked to the ATO, you might find:

Income reports lodged by employers.
Details of government payments.
Notices of assessments.
Superannuation information.

Even if you’re missing paperwork, these records can help piece together past tax years.

Contact the ATO

It’s better to reach out to the ATO voluntarily rather than wait for them to contact you. The ATO is often willing to discuss:

Reasonable timelines for lodging overdue returns.
Potential remission of penalties in some cases.
Payment arrangements if a debt is owed.

Speaking with the ATO can feel intimidating, but professionals like accountants on the Central Coast can assist in these conversations or handle communication on your behalf.

Prioritise Your Lodgements

If you’re several years behind, you may wonder where to start. The ATO typically requires the most recent returns first, then works backwards. A tax accountant can help determine:

Which years to lodge first?
What information is required?
How to address gaps in records.

The sooner you lodge recent returns, the sooner you’ll reduce the risk of further penalties or interest.

Consider Professional Help

Working with a tax accountant on the Central Coast can be valuable if you:

Feel overwhelmed about catching up.
Are unsure how to access your financial records.
Need to discuss payment plans with the ATO.
Want confidence that lodgements are accurate.

Accountants are familiar with ATO systems and can help simplify the process, saving you time and reducing worry.

Common Concerns About Lodging Late

Many people delay lodging because they’re worried about the outcome. Some common concerns include:

“Will I Owe a Lot of Money?”

It’s possible you may owe tax, particularly if you’ve had multiple jobs, investment income, or changes in income. However, lodging is the first step to knowing exactly where you stand. You may even discover you’re entitled to refunds for some years.

“Will I Get in Trouble with the ATO?”

The ATO generally prefers individuals to come forward voluntarily rather than wait for enforcement action. If you show you’re making genuine efforts to resolve overdue lodgements, the ATO may be more willing to discuss remission of some penalties.

“I’ve Lost All My Records. What Do I Do?”

While missing paperwork can make the process harder, it’s not impossible. A tax accountant can help retrieve data from the ATO or estimate income and deductions where appropriate. The ATO often has records from employers, banks, and other third parties.

“Is It Too Late to Lodge?”

There’s usually no time limit for lodging returns if you owe tax. However, if you’re entitled to refunds, the ATO may limit claims to within four years in some circumstances. Lodging sooner can help preserve any entitlements.

Speak with Our Tax Accountant on the Central Coast Today

Falling behind on tax lodgements is something many Australians face at some point in their lives. While it can feel stressful, there’s always a pathway forward. Taking action—no matter how long it’s been—helps reduce anxiety and sets you back on track.

At Blue Orchid Accounting , we help individuals across the Central Coast with overdue tax returns, offering practical support and guidance. If you’ve been wondering how to resolve your tax situation, we’re here to help you move forward calmly and confidently.

Blue Orchid Accounting

Company Record Keeping & Audit Requirements

Tue, 26 Aug 2025 02:48:24 GMT

An Essential Guide for Clients

Effective record keeping and understanding audit obligations are crucial for every company. Beyond being a legal requirement, robust systems for documenting and retaining records are fundamental to compliance, sound financial management and risk reduction.

Why is Record Keeping Important?

Legal compliance: The Corporations Act 2001, tax laws and Fair Work Act mandate specific records and retention periods.
Financial clarity: Accurate records allow businesses to track performance, manage cash flow and prepare reliable financial statements.
Audit readiness: Good record keeping ensures you can provide documentation if audited by regulators or during internal/independent audits.
Dispute protection: Documentary evidence is crucial for resolving legal, tax or employee disputes.

What Types of Records Must a Company Keep?

Companies must retain a broad range of records. The specific requirements depend on your company's structure, activities and employee count, but generally you need to keep:

Financial Records:

Invoices, receipts and cheques
General and subsidiary ledgers, journals
Bank statements, loan agreements
Profit and loss statements, balance sheets, depreciation schedules
Tax returns and BAS statements
Asset and share registers
Documentation of inter-company transactions

Legal Records:

Incorporation and registration documents
Contracts with staff, suppliers and clients
Lease and insurance agreements
Copies of the company constitution and minutes of meetings

Employee Records:

Payroll and PAYG withholding documentation
Superannuation details
Staff rosters and timesheets
Employment contracts and performance records

Other Essential Records:

Policy and procedure manuals
Records of complaints, disputes and resolutions
Marketing campaign documentation
All correspondence (emails, letters) relating to company business

How Long Must Records Be Kept?

Statutory minimum: Most company records must be kept for at least 7 years (for company and employee records), though some business and tax records must be retained for 5 years or longer.
Records must be stored securely—either physically or electronically—and be accessible for inspection or to produce hard copies if requested by authorities.

What Are the Audit Requirements?

Who Must Be Audited?

Not all companies are required to have annual audits. Generally, requirements are as follows:

Large proprietary companies: Must prepare and have their financial statements audited. A proprietary company is "large" if it meets at least two of the following: $50million+ in revenue, $25million+ in assets or 100+ employees.
Public companies and disclosing entities: Must have full audits and lodge financial reports with ASIC annually.
Small proprietary companies: Generally exempt unless directed by ASIC, shareholders or subject to foreign control/funding requirements.
Charities and not for profits: Medium to large organisations (by revenue) face audit or review obligations under ACNC rules.
Specific industries or grants: Some regulated industries or government grants require audited financials regardless of company size.

Audit Process & Obligations

Record provision: Directors are responsible for ensuring auditors have timely access to all requested records, even if held by an external accountant or third party.
Regular internal checks: Conducting internal audits and maintaining robust backup procedures are best practice for compliance and early error or fraud detection.
Qualified auditors: Only auditors qualified and registered with ASIC or a professional accounting body can perform statutory audits.

Best Practices for Clients

Embrace digital systems: Cloud based accounting and payroll software can simplify compliance and improve security.
Back up data: Regularly back up both physical and electronic records.
Assign responsibility: Appoint a compliance officer or accountant to oversee adherence to record keeping and audit requirements.
Train staff: Ensure employees understand what must be documented and for how long records should be retained.
Periodic review: Schedule regular checks to verify records are complete, up to date and readily accessible.

Staying compliant with record keeping and audit requirements reduces regulatory risk, strengthens your company’s governance and ensures readiness for opportunities and challenges alike. Consult your accountant or legal adviser for guidance tailored to your business’s unique obligations.

Sole Trading: Tracking Business Expenses

Mon, 10 Feb 2025 23:31:31 GMT

Running a sole trading business means you wear many hats—manager, marketer, and bookkeeper, among others. One important aspect of keeping your venture afloat is accurate expense tracking. By understanding how to record and categorise expenses, you can understand your cash flow, make more informed decisions, and better prepare for tax time. In this blog, we’ll explore practical ways to streamline the expense tracking process and maintain reliable financial records.

Understand What Qualifies as a Business Expense

Before diving into methods and tools, it’s important to know which items count as business expenses for a sole trader. Generally, any cost you incur to operate or grow your business could be considered. This includes office supplies, advertising expenses, internet fees, travel related to work, and even a portion of your home utilities if you work from a dedicated home office. Having a clear definition of business-related costs helps keep your records consistent and makes tax reporting smoother.

Separate Personal & Business Finances

One of the simplest ways to improve your record-keeping is to maintain a separate bank account for your business. This prevents mixing personal and business transactions, making it easier to identify and track relevant expenses. When you pay for a work-related purchase using your business account, the transaction record is automatically separated from personal spending. This small step can save you significant effort when preparing financial statements or lodging tax returns.

Choose a Reliable Record-Keeping System

A well-organised system is key to managing expenses effectively. Some sole traders prefer simple spreadsheets, while others adopt dedicated accounting software. These tools allow you to categorise expenses, create reports, and track trends over time. Consistency is key regardless of your chosen method—update your records regularly and keep digital or physical copies of receipts, invoices, and statements organised.

Adopt Digital Solutions for Efficiency

Various apps and cloud-based platforms help simplify tracking by automatically importing bank transactions and classifying expenses based on your preferences. Many also offer real-time dashboards so you can see your business’s financial health at a glance. Digital record-keeping may reduce the risk of losing receipts and make it easier to collaborate with a sole trader accountant or an accounting firm. By having updated data at your fingertips, you’re better positioned to spot irregularities or identify opportunities for cost savings.

Regularly Review & Reconcile

Reconciling your accounts should be a routine part of your business practice. Going through your bank and credit card statements to match each transaction with a corresponding invoice or receipt helps ensure you catch any errors or unaccounted-for purchases. By reviewing your records monthly or quarterly, you can address issues quickly and maintain a higher level of financial awareness.

Plan Ahead for Tax Obligations

Sole traders often need to pay periodic tax instalments. Staying on top of these obligations can help avoid surprises at the end of the financial year. A well-managed expense tracking system gives you a more accurate estimate of your taxable income, making it simpler to set aside the appropriate amount of money. Some accounting software also provides tax estimates based on your ongoing records, which can significantly help maintain your cash flow.

Seek Professional Guidance

Although many tools and strategies are available to manage your finances independently, there can be times when professional advice is beneficial. Having input from a professional could offer a fresh perspective on your business, provide guidance on allowable deductions, and pinpoint areas where you could refine your record-keeping. A professional can review your setup, suggest improvements, and help you navigate any complexities in tax law or regulatory obligations.

Ready to Simplify Your Expense Tracking? Contact us today!

Managing your finances is important for any sole trader looking to grow and succeed. At Blue Orchid Accounting , we’re dedicated to simplifying your bookkeeping, from recommending reliable expense-tracking methods to setting up user-friendly systems. By pairing modern software solutions with our professional insights, we make it easier to stay organised so you can devote more time to your core business activities. If you’re looking for accountants on the Central Coast, contact us today !

Blue Orchid Accounting

Trust Accounting: 5 Key Responsibilities Of A Trustee

Tue, 14 Jan 2025 03:06:49 GMT

Being a trustee comes with significant responsibilities that require careful attention to detail and a strong understanding of trust accounting principles. As the individual entrusted with managing the assets and obligations of a trust , your role is crucial. It supports the financial well-being of beneficiaries while meeting legal requirements. Here’s a breakdown of five key responsibilities every trustee should know.

1. Managing & Protecting Trust Assets

A trustee’s primary responsibility is to manage and safeguard the trust’s assets. This includes maintaining proper records of all trust property, investments, and income and taking steps to preserve their value. Trustees are expected to act thoughtfully, making decisions that align with the terms of the trust and support the best interests of the beneficiaries.

Key Tasks:

Keeping an accurate inventory of trust assets.
Avoiding risky investments that could compromise the trust’s value.
Ensuring assets are used solely for purposes outlined in the trust document.

Tip: Regular reviews of asset performance can help maintain the trust’s financial health.

2. Maintaining Accurate Financial Records

Accurate financial record-keeping is a cornerstone of trust accounting. Trustees must document all transactions, including income received, expenses paid, and any distributions to beneficiaries. Maintaining clear and organised records fulfils legal obligations and provides transparency for beneficiaries and auditors.

Key Tasks:

Preparing and updating financial statements regularly.
Recording receipts, disbursements, and investment details.
Retaining documentation to support all financial activities.

Tip: Using accounting software tailored for trust management can simplify record-keeping and reduce errors.

3. Ensuring Compliance with Legal and Tax Requirements

Trustees are responsible for complying with all legal and tax obligations associated with the trust. This includes understanding the relevant regulations, meeting filing deadlines, and operating the trust within its legal framework. Engaging with a trust accountant can provide clarity and support in navigating these complex requirements.

Key Tasks:

Lodging tax returns and paying any applicable taxes on time.
Adhering to the trust deed and relevant state and federal laws.
Keeping beneficiaries informed of their rights and the trust’s activities.

Tip: Regularly reviewing changes in tax or legal regulations helps maintain compliance.

4. Distributing Income & Principal to Beneficiaries

One of the most visible roles of a trustee is distributing trust income or principal to beneficiaries as outlined in the trust document. These distributions must be made fairly and transparently, considering the needs of all beneficiaries and the terms of the trust.

Key Tasks:

Following the trust’s guidelines for distributions.
Communicating clearly with beneficiaries about the timing and amount of distributions.
Documenting all distributions for accountability.

Tip: Open communication with beneficiaries helps manage expectations and avoids potential misunderstandings.

5. Communicating & Reporting to Beneficiaries

Regular communication and reporting are essential to building trust and transparency with beneficiaries. Trustees must provide updates on the trust’s financial position, activities, and decisions to help ensure beneficiaries remain informed. Clear and timely communication fosters confidence in the trustee’s management of the trust.

Key Tasks:

Preparing periodic financial reports for beneficiaries.
Addressing questions or concerns from beneficiaries promptly.
Providing access to trust documents when required.

Tip: Establishing a regular reporting schedule can help manage beneficiary expectations and reduce stress.

Why Professional Support Matters in Trust Accounting

Trust accounting involves a range of responsibilities that require diligence and understanding. Engaging a small business accountant or trust accountant can help trustees manage the financial, legal, and administrative aspects of their role effectively. Professional support can provide clarity, reduce risks, and offer peace of mind as you navigate the complexities of trust management.

Tailored Accounting Solutions for Trustees—Get in Touch

At Blue Orchid Accounting , we assist trustees with trust accounting, providing tailored solutions that align with their unique needs. From record-keeping to compliance and reporting, we help trustees fulfil their responsibilities with care and professionalism. Visit our website to learn more about how we can help you manage your trust .

Blue Orchid Accounting

How to Handle Crypto Gifts & Donations in Your Tax Return

Sun, 22 Sep 2024 05:51:10 GMT

Have you ever received cryptocurrency as a gift or considered donating some of your digital assets? While crypto may be seen as a modern way to give, its tax implications can leave many scratching their heads. Whether you’re a crypto investor or have dabbled in the digital currency world, knowing how to report these gifts and donations can make a big difference in your tax return. Here’s what you need to know to handle crypto gifts and donations smoothly.

Understand the Difference Between Traditional & Crypto Assets

When it comes to gifting or donating cryptocurrency, it’s important to understand that digital currencies are treated differently from traditional assets. Unlike cash gifts or donations, cryptocurrency is considered a form of property for tax purposes. This means when you give or receive crypto, you could trigger capital gains or losses, just like selling a stock. For donations, it’s essential to determine whether the recipient is eligible to accept crypto donations and if the donation meets the conditions for tax deductibility.

Track the Value of Your Crypto Gift or Donation

Unlike cash, the value of cryptocurrency fluctuates constantly. When gifting or donating crypto, you need to determine the value at the time of the transfer. This value will dictate any capital gains you might need to report and how much can be claimed as a deduction if you donate it to a charity. Keeping accurate records of the date, value and any relevant transactions can save you headaches later on. This step also helps calculate the cost base, which can affect how much tax you may owe.

Check for Capital Gains Tax (CGT) Implications

In Australia, the ATO treats cryptocurrency as property, which means capital gains tax (CGT) applies. If you’re the giver of crypto and the value has increased since you originally acquired it, you might owe tax on the capital gains. On the other hand, if you’re the recipient, you will need to keep track of the value for your future CGT calculations when you eventually sell or dispose of it. Always double-check how the gain or loss impacts your tax situation to avoid unexpected surprises.

Donating Crypto to Charity

Donating cryptocurrency can be a great way to support a cause, but make sure the charity is registered and can accept digital assets. In Australia, donating crypto may be eligible for tax deductions only if the recipient organisation is an endorsed Deductible Gift Recipient (DGR). If you’re considering a charitable crypto donation, it’s worth checking how the ATO views this form of donation and keeping detailed records of the transaction.

Consult a Crypto Tax Accountant

Due to the complexity of crypto tax rules, consulting a crypto tax accountant can help you navigate the process. Taxation laws around cryptocurrency can be nuanced and having professional guidance can help you avoid pitfalls such as over-reporting or under-reporting. An accountant with knowledge of crypto tax regulations can walk you through the specifics and help ensure you understand how to manage any tax liabilities, including gifts and donations.

Simplify Your Crypto Tax Return: Book a Consultation Now

When it comes to handling crypto gifts and donations, understanding the tax rules is essential. At Blue Orchid Accounting , our team is here to help you navigate the intricacies of reporting cryptocurrency on your tax return. With a focus on tailored crypto tax solutions, including for those living on the Central Coast, we offer services that can make understanding your tax obligations simpler.

Blue Orchid Accounting

Top 5 Accounting Mistakes To Avoid In Real Estate Investment

Tue, 20 Aug 2024 03:31:13 GMT

Have you ever wondered if you’re making the most of your real estate investment? Whether you’re new to property investing or have been doing it for some time, accounting can often feel challenging. Mistakes can lead to unnecessary costs and understanding the complexities of tax regulations and financial statements isn’t always easy. In this blog, we’ll explore some common accounting mistakes to avoid, along with some helpful suggestions to help you stay on course with your investment management.

1. Overlooking Capital Gains Tax (CGT)

One of the most common mistakes property investors make is not fully understanding the implications of Capital Gains Tax (CGT). When you sell an investment property, the profits (or capital gains) are taxable and the tax rate can significantly impact your return on investment. Some investors mistakenly assume that CGT won’t apply or fail to calculate it correctly, which can lead to an unexpected tax bill.

How to Avoid It: Keep detailed records of your property’s purchase price, improvement costs and any expenses related to the property over time. This documentation can help reduce your taxable capital gain, as it helps calculate your property’s cost base more accurately. Consulting an investment property accountant can help you optimise your tax strategy.

2. Improperly Claiming Deductions

Property investors often miss out on deductions that they are entitled to claim, such as depreciation or interest on loans. On the other hand, some may claim deductions incorrectly, like personal expenses that are not related to the investment property. Both under-claiming and over-claiming can cause financial issues, leading to tax audits or lost savings.

How to Avoid It: Keep thorough and organised records of all expenses related to your investment property. For instance, costs associated with repairs, maintenance and property management may be deductible, but improvements may not be. It’s also advisable to have a professional prepare or review your tax returns to help verify that all allowable deductions are properly claimed.

3. Misunderstanding Depreciation

Depreciation is an often-overlooked benefit in real estate accounting. Many investors fail to claim depreciation on assets like buildings, fixtures and fittings, which can reduce their taxable income. Without understanding depreciation schedules, you might miss out on significant tax savings.

How to Avoid It: Consider hiring a quantity surveyor to prepare a depreciation schedule for your property, which can help outline potential claims each year. An investment property accountant may assist with documenting and applying these claims.

4. Failing To Separate Personal & Investment Finances

Mixing personal and investment-related finances is a common mistake that complicates accounting and may lead to inaccurate tax reporting. If you’re using the same bank account for personal expenses and property-related costs, it can become difficult to track what’s deductible and what’s not.

How to Avoid It: Consider opening a separate bank account for your real estate investments to simplify tracking income, expenses and other financial activities related to your property. This separation can also help make tax reporting easier and offer clearer insights into your investment’s financial performance.

5. Neglecting To Plan For Cash Flow

Cash flow management is important for real estate investors, but many overlook the need for a detailed plan. Ongoing expenses like property maintenance, management fees and vacancy periods are often underestimated. Without proper planning, unexpected costs can lead to financial strain.

How to Avoid It: Consider creating a cash flow forecast that includes all potential expenses and sets aside funds for emergencies. Budgeting for regular and unexpected costs can help maintain liquidity to manage your property. Revisiting your cash flow plan annually or when circumstances change can support financial management.

Contact Us For Property Investment Accounting Guidance

At Blue Orchid Accounting , we understand the unique challenges faced by property investors. Our tailored services include tax planning, cash flow management and maximising deductions. Whether you’re seeking an investment property accountant or need assistance with Central Coast taxation, reach out to us today .

Blue Orchid Accounting

When Should You Hire A Tax Accountant For Your Small Business?

Tue, 09 Jul 2024 07:15:04 GMT

Have you ever found yourself staring at a pile of receipts, tax forms and financial records, wondering if there’s an easier way to manage your small business finances? Handling taxes can be daunting, especially when you’re busy running and growing your business. This is where a tax accountant might be helpful. But when should you consider hiring one? Let’s explore some key moments in your business journey where getting professional help might be beneficial

Starting Up: Laying The Foundation

Setting up a small business can be exciting, but it involves various financial and legal considerations. During the startup phase, a tax accountant might be able to assist you in several ways:

Choosing a business structure ( sole trader , partnership , company , etc.) that seems to fit your tax and liability needs.
Understanding your initial tax obligations and deadlines.
Setting up a bookkeeping system that could meet your business needs and tax requirements.

Seeking early advice might help you lay a solid foundation for your business and avoid some common pitfalls new entrepreneurs face.

Navigating Rapid Growth

Growth can be exciting, but it often brings added complexities. When your small business starts expanding quickly, managing finances and taxes might become more challenging. Hiring a tax accountant during these times could be beneficial in several ways:

Offering advice on tax strategies to manage increased revenue and expenses.
Assisting with payroll taxes as you bring on more employees.
Helping maintain accurate financial records to support future business decisions and financing needs.

A tax accountant might provide the guidance needed to navigate these changes, allowing you to focus on growing your business.

Tackling Tax Season

Tax season might be stressful for many small business owners. The details of tax law and the pressure to file accurately and on time can feel overwhelming. Here’s how a tax accountant might support you during tax season:

Assist in claiming deductions and credits accurately, which might reduce your tax liability.
Help prepare and file your tax returns, possibly lowering the risk of errors and late submissions.
Keep you informed about any changes in tax laws that may affect your business.

Having a tax accountant by your side might make tax season less daunting and help you stay compliant with Australian Taxation Office (ATO) regulations.

Facing Financial Audits Or Complexities

Financial audits and complex financial situations might be intimidating for any small business owner. Whether it’s an ATO audit or a complicated financial scenario, a tax accountant might offer assistance in various ways:

Representing your business during an audit and communicating with the ATO on your behalf.
Helping to clarify and address any discrepancies in your financial records.
Offering advice on complex financial issues such as mergers, acquisitions or significant asset purchases.

Professional guidance during these times might ease stress and help keep your financial records organised.

Planning For The Future

Strategic planning can be important for the long-term success of your small business. A tax accountant might assist in your future planning by:

Providing advice on the tax implications of business decisions, such as expansion or restructuring.
Assisting with planning for retirement, succession or business sale.
Offering insights into tax-efficient investment opportunities and financial growth strategies.

A tax accountant can help you make decisions that align with your business goals and financial well-being.

Schedule Your Consultation With Our Tax Accountant Today

The decision to hire a tax accountant might depend on your specific business needs, the complexity of your finances and your ability to manage taxes alongside other responsibilities. At Blue Orchid Accounting, we recognise the unique challenges faced by small business owners and entrepreneurs. Our accountants on the Central Coast offer personalised services tailored to your needs. Whether you need help with tax compliance, financial planning or navigating complex financial situations, our team is here to assist. Reach out to see how a tax accountant on the Central Coast can support your business goals.

Blue Orchid Accounting

Tax Accountant Vs Auditor: What You Need To Know

Wed, 03 Jul 2024 00:09:05 GMT

Are you unsure whether you need a tax accountant or an auditor to manage your finances? Navigating the complex world of financial management can be daunting, especially when it comes to providing compliance and optimising your financial health. Understanding each professional’s distinct roles can significantly assist you in making the best decision for your financial needs. Let’s explore each professional’s unique benefits to ensure you make the right choice for your circumstances.

Understanding The Role Of A Tax Accountant In Your Financial Health

A tax accountant primarily focuses on helping you manage your tax obligations effectively. Their expertise is crucial in ensuring that you comply with the law and take advantage of any opportunities to minimise your tax liabilities.

What Does a Tax Accountant Do?

Tax accountants specialise in preparing and filing tax returns. They stay updated on the latest tax laws and regulations to provide accurate and strategic tax planning advice. They aim to facilitate that individuals and businesses achieve the best possible outcomes in their tax returns, adhering strictly to legal requirements while optimising financial benefits.

Why You Might Need a Tax Accountant

Whether dealing with complex tax situations, managing business accounts or simply trying to maximise your tax return, a tax accountant can provide the necessary guidance and support. They are particularly valuable for those who have multiple income streams and investments or who own businesses.

Key Responsibilities And Expertise Of Auditors

Auditors can play a significant role in enhancing the accuracy and transparency of financial statements and operations. Their efforts are important in verifying the financial health of an organisation. This factor might be important for sustaining trust among investors, stakeholders and regulatory bodies.

In contrast to tax accountants, who are typically engaged to monitor compliance with tax laws and to potentially maximise benefits, auditors are thought to primarily focus on compliance, risk management and the integrity of financial reporting. They are likely to conduct comprehensive reviews and assessments with the aim of certifying that an organisation’s financial statements are fair and accurate, which could provide stakeholders with some reassurance that financial practices adhere to standard regulations and uphold ethical standards.

Comparative Analysis: Tax Accountant And Auditor

Understanding the differences between tax accountants and auditors can help you decide who to consult for your financial needs. Here’s the difference:
Focus Areas: Tax accountants focus on tax-related issues, whereas auditors concentrate on the overall accuracy of financial statements.
Objectives: The main goal of a tax accountant is to help clients achieve optimal tax efficiency and compliance; auditors aim to assure stakeholders of the accuracy of financial reports.
Services: Tax accountants offer tax return filing, tax planning and advisory services. In contrast, auditors provide services like financial audits, compliance reviews and risk assessments.

Choosing The Right Professional For Your Tax Needs

Choosing between a tax accountant and an auditor could depend significantly on your financial needs. If your main focus is on managing and planning your taxes, a tax accountant may likely be the most suitable professional for you.

On the other hand, considering an auditor could be advisable if you are looking for a detailed review of your financial statements or need to ensure compliance.

For businesses, it might often be advantageous to engage both professionals to ensure a thorough coverage of all aspects of financial management.

Take the Next Step Towards Financial Clarity

Navigating the complexities of finance can feel overwhelming without the right guidance. At Blue Orchid Accounting , we understand the importance of choosing the right professional to achieve compliance and financial optimisation for your future. We offer a wide range of accounting services tailored to meet the diverse needs of our clients. Whether you’re looking for strategic tax planning , comprehensive auditing services or a tax accountant on the Central Coast, our team is here to help. Don’t let the stress of tax and financial management dampen your spirit. Let us help you achieve your financial goals with ease and confidence. Reach out to us today .

Blue Orchid Accounting

How to Choose a Sole Trader Accountant

Tue, 30 Apr 2024 00:31:20 GMT

Venturing into the entrepreneurial landscape as a sole trader brings about crucial decisions, which might involve selecting a suitable accountant. This decision often represents more than just dealing with numbers; it could influence the direction and financial well-being of your business. Navigating the process of choosing a sole trader accountant could appear challenging, given the wide range of options and services potentially available. However, by carefully considering your needs and what distinguishes an accountant, you might find it possible to make a choice that could align well with your business objectives. In this blog post, we aim to explore how to choose a sole trader accountant.

Identifying Your Needs: The First Step in Choosing a Sole Trader Accountant

Before exploring the range of available accountants, it’s important to anchor yourself by identifying what you need from them. Do you require comprehensive tax advice, regular bookkeeping or strategic financial planning? Understanding these needs can be helpful in selecting an accountant who can offer the ideal services. Here’s how to pinpoint your specific requirements:

Reflect on your daily operations and long-term business goals.
Consider the areas where you lack expertise or time, such as tax obligations or financial forecasting.
Determine whether you need guidance on legal structure changes or financial growth strategies.

Identifying your needs early on ensures you engage with an accountant whose services are tailored to your business’s unique challenges and aspirations.

Understanding the Importance of Experience: Considering a Sole Trader Accountant's History

The experience of an accountant, particularly with sole traders and within your industry, can significantly influence the success of your financial management. Here’s how to assess an accountant’s track record:

Credentials and Specialisations: Look for qualifications and memberships with reputable accounting bodies. Specialisations in areas relevant to your business can be particularly beneficial.
Testimonials from Other Sole Traders: Positive feedback from other sole traders can offer insights into the accountant’s reliability and expertise.

Questions to Ask:

– How long have you been working with sole traders?

– Can you share any instances of how you’ve supported businesses similar to mine in their growth?

– What approach do you take towards financial planning and tax advice for sole traders?

Gathering this information can help you gauge whether an accountant has the depth of experience necessary to navigate the unique challenges and opportunities your business may face.

Exploring the Fee Structure: Towards Transparent and Considerate Partnerships

Accountants can employ various fee structures, each with implications for your business finances. Understanding these can help you budget effectively and avoid unexpected costs:

Hourly Rate: Can be ideal for businesses that require sporadic assistance rather than ongoing services.
Fixed Fee: Might offer predictability, covering a predefined set of services over a specific period.
Value-Based Pricing: These charges are typically based on the value or outcomes provided rather than the time spent.

Aiming for transparency in fee structures may cultivate trust and help ensure that you are prepared for financial commitments, fostering a partnership with your accountant that is both sustainable and based on mutual understanding.

Seeking an Accountant Who Understands Your Needs

Effective and consistent communication is considered a key element in fostering a successful partnership between a sole trader and their accountant. Here are some reasons why this could be important:

Prevents Misunderstandings: Regular updates and easy-to-understand explanations can help prevent costly mistakes.
Fosters Productivity: Having efficient channels for communication might lead to faster responses to financial questions, which could assist in making informed decisions.

Selecting an accountant who values open communication and is responsive to your needs can be beneficial for a productive partnership.

Discover How Our Accounting Services Can Support Your Business

At Blue Orchid Accounting, we recognise the distinct challenges sole traders encounter in Australia. Our accounting solutions are crafted to align with the needs of your business through its various phases. Offering services ranging from tax guidance to financial planning, our team is prepared with the knowledge and tools that could assist in supporting your business’s activities. Contact us today!

Blue Orchid Accounting

What Tax Implications Should I Be Aware Of As A Property Investor?

Wed, 13 Mar 2024 05:39:23 GMT

Entering the world of property investment can bring exciting prospects, but it also raises questions, particularly regarding tax implications. With the right moves, you can build a robust portfolio that grows in value and provides you with a steady income stream. In this blog, we’ll help you understand the key tax considerations every property investor should know, from the basics of rental income to the nuances of capital gains tax.

Understanding Rental Income Taxation For Property Investors

Rental income is taxable and as a property investor, you’re required to declare all the income you earn from your properties. However, you can also deduct certain expenses to minimise your taxable income.

What Expenses Can Be Deducted?

Interest on Loans: The interest paid on a mortgage for your investment property can be deducted.

Property Management Fees: Fees paid for property management services can be deductible.

Maintenance and Repair Costs: Costs incurred in maintaining or repairing your property can reduce your taxable income.

Insurance: Premiums paid for insuring your property can be deductible.

Council Rates: Rates paid to your local council can be deducted.

Capital Gains Tax Explained: Implications For Selling Your Investment Property

Capital Gains Tax (CGT) is a tax on the profit made from selling your investment property. Understanding how CGT affects your tax obligations is important for you. The amount of CGT you may owe depends on several factors, including how long you’ve owned the property and your marginal tax rate. Comparing scenarios with and without CGT implications can highlight the significant impact this tax can have on your financial outcomes when selling an investment property.

Unlocking The Benefits Of Depreciation Deductions

Claiming depreciation on your property and fixtures can lead to significant tax savings over the life of your investment. Here’s how:

Immediate Write-offs: Certain costs can be immediately written off in the year they are incurred.
Depreciation Schedules: Creating a depreciation schedule for your property can help you claim the diminishing value of your property and fixtures over time.

Navigating Negative Gearing: A Strategy For Reducing Taxable Income

Negative gearing occurs when the costs of owning a property exceed the income it generates. This loss can be offset against other income, reducing your overall tax liability.

How Does Negative Gearing Work?

Offsetting Losses: The net loss generated by your property can be deducted from your other taxable income.
Reducing Taxable Income: This strategy can lower your overall taxable income, potentially placing you in a lower tax bracket.

Maximising Your Return: Strategic Tax Planning For Property Investors

Strategic tax planning is important for property investors aiming to maximise their returns. It involves a comprehensive approach, including the timing of sales, undertaking renovations and utilising tax-efficient strategies such as negative gearing and depreciation deductions. By carefully planning these activities, investors can significantly enhance their investment’s profitability.

Navigate Your Property Tax with Confidence

Navigating the complexities of property investment and its tax implications requires nuanced understanding and strategic planning. At Blue Orchid Accounting, our investment property accountant provides comprehensive tax and accounting services designed to maximise your investment returns, minimise your tax liabilities and help you make informed decisions that align with your financial goals. Contact us today for your investment property accounting needs.

Blue Orchid Accounting

Top 6 Accounting Tips For Small Business Owners

Mon, 05 Feb 2024 03:37:03 GMT

Have you ever felt overwhelmed managing the finances of your small business? You’re not alone. Many small business owners struggle to keep their accounts in order and knowing where to start can be challenging. Proper accounting is important for the success of your business. It can help you make informed decisions and stay compliant with regulations. To help you out, we’ve compiled a list of the top six accounting tips for small business owners. These tips will guide you in managing your finances effectively and setting your business on the path to success.

1. Separate Personal And Business Finances

Separating your personal and business accounts might be one of the first steps in managing your business finances. Mixing the two could lead to confusion and complications, especially during tax time. Consider opening a dedicated business bank account and using it exclusively for business transactions. This separation may make tracking your business expenses and revenue easier, potentially providing a clearer picture of your business’s financial health.

2. Keep Detailed Records

Accurate and detailed record-keeping is essential for any small business. It’s advisable to keep all receipts, invoices and financial documents organised and easily accessible. Consider utilising accounting software to track your income and expenses and update it regularly. Detailed records can help manage daily operations and are particularly important during tax season and in the event of an audit. They may provide a clear trail of your business’s financial activities, which could be indispensable for making informed decisions.

3. Understand Your Tax Obligations

Taxes can be a complex and daunting aspect of running a small business. Understanding your tax obligations is important to avoid penalties and maintain compliance. Familiarise yourself with the types of taxes you may need to pay, such as GST, PAYG withholding and company tax. Consider working with a small business accountant who could help you navigate the tax landscape and meet your obligations. Staying informed about tax deadlines and requirements might save you time and reduce stress in the long run.

4. Monitor Cash Flow

[P] Cash flow management is important for the sustainability of your business. Keeping a close eye on your cash flow might help you cover your expenses and invest in growth opportunities. Regularly reviewing your cash flow statements and identifying any patterns or issues that need addressing can be beneficial. If you notice a consistent shortfall, consider looking for ways to improve your cash flow, such as adjusting your pricing, reducing expenses or speeding up invoice payments. Effective cash flow management could keep your business running smoothly and help you avoid financial difficulties.

5. Plan For The Future

Having a solid financial plan is key to the long-term success of your business. Setting clear financial goals and developing a budget that aligns with those goals is important. Regularly reviewing and adjusting your budget to reflect changes in your business environment can be beneficial. Planning for the future also involves preparing for unexpected expenses and setting aside funds for emergencies. By staying proactive and planning ahead, you may navigate financial challenges more effectively and keep your business on track.

6. Seek Professional Advice

Running a small business involves many financial responsibilities and at times, seeking professional advice can be very helpful. A small business accountant can provide valuable insights and guidance, helping you make informed decisions and avoid costly mistakes. They can also assist with tax planning, forecasting and overall financial management. Investing in professional advice can save you time, reduce stress and contribute to your business’s success.

Contact Us for Accounting Services

Effective financial management is important for the success and growth of your small business. At Blue Orchid Accounting , we offer personalised accounting services tailored to support small businesses. Whether you need assistance with tax planning or cash flow management or are searching for a tax accountant on the Central Coast, our team is here to help . Contact us today to discover how we can help you.

Blue Orchid Accounting

Tips For Small Business On Selecting The Right Accountant

Mon, 05 Feb 2024 03:22:41 GMT

Navigating the financial aspects of running a small business can often feel like a complex puzzle. Each piece, from tax compliance to effective financial planning, plays a crucial role in the overall health and success of your enterprise. What’s the key to solving this puzzle? Finding the right accountant. In this blog post, we will guide you through essential considerations and strategies to help you choose an accountant who not only understands the numbers but also grasps the unique nature of your business. Whether you’re just starting out or looking to enhance your current financial strategies, the insights shared here are tailored to assist small business owners in making informed decisions in their quest for accounting partnership.

Assessing the Accountant's Understanding of Your Business Niche

When selecting an accountant, it’s important to evaluate their understanding of your specific business sector. An accountant who is familiar with the nuances of your industry may offer tailored advice and insights that a generalist might miss. You can consider a scenario where a business owner meets with various accountants. The one who asks detailed questions about their business operations, challenges and industry trends stands out. This accountant demonstrates not just general financial acumen but a keen interest in the specific needs of the business.

Balancing Cost and Quality in Accountant Selection

Moving from balancing cost and quality, our next focus is on the important role of tax efficiency and compliance in choosing the right accountant, a key element for the success of any small business:

Check Qualifications and Experience: Ensure the accountant has relevant qualifications and experience, which is a key indicator of quality.
Seek Recommendations: Ask other small business owners for referrals. They can provide real-world insights.
Evaluate the Scope of Services: Some accountants offer comprehensive services, including bookkeeping, tax planning and business advice.

Ensuring Tax Efficiency and Compliance

Understanding Tax Laws

It’s generally expected that a proficient accountant would have a comprehensive grasp of tax laws and their application to your business. Ideally, they should be capable of managing the intricacies of these laws, aiming to ensure that your business adheres to compliance while potentially benefiting from any accessible tax efficiencies.

Strategic Tax Planning

An ideal accountant is likely to take a proactive approach to your tax obligations, which could be instrumental in mitigating unexpected challenges at the financial year’s end. They might be able to provide advice on tax-effective structures and transactions, potentially aiding your business in optimising its financial capacity.

Additionally, such accountants may offer insights into future financial trends and provide guidance on long-term strategic planning, which can be crucial for sustained growth and stability. They might also assist in identifying areas where costs can be reduced without compromising the quality of services or products, further enhancing the financial health of your business.

Looking for a Proactive Approach to Financial Planning

Opting for an accountant who leans towards a proactive approach might be beneficial for the overall success of your business. A proactive accountant often focuses on regularly reviewing financial performance, suggesting possible improvements and staying ahead of future challenges. This approach could help a business adapt more effectively to market changes, potentially capture new opportunities and aim to avoid common financial pitfalls.

Discuss Your Business's Financial Needs with Our Team

At Blue Orchid Accounting , we recognise the diverse challenges and opportunities that small businesses on the Central Coast encounter. Our team of accountants focuses on delivering personalised, comprehensive financial services tailored to meet your specific requirements. We value client relationships, striving to provide strategic advice and support. If you’re in search of an accounting partner who aims to understand your business and is dedicated to working alongside you, consider reaching out to us .

Blue Orchid Accounting

Investment Property Accounting Advice For Year-End Taxes

Fri, 29 Dec 2023 06:16:28 GMT

As the end of the financial year approaches, property investors often find themselves navigating the complexities of taxes and deductions. This is where effective accounting strategies become invaluable. They can help maximise returns and minimise liabilities on your investment properties. This blog offers advice and insights into investment property accounting to help you prepare for the year-end tax season.

A Guide to Reducing Taxable Income on Property Investments

Investment properties can offer a range of tax deductions that, when utilised effectively, can reduce your taxable income. Understanding what you can claim is the first step in maximising your returns.

Interest on Loans

Interest accrued on loans for your investment property is often the largest deduction. Ensuring you’re claiming this correctly is important for your tax savings.

Property Management Fees

Fees paid for property management services are fully deductible. This includes any cost incurred for the administration of your property.

Maintenance and Repair Costs

Expenses for maintaining and repairing your property can be claimed. It’s important to differentiate between repairs (immediately deductible) and improvements (depreciable over time).

Insurance and Council Rates

These ongoing costs are often overlooked but are deductible expenses for your investment property.

Depreciation

Claiming depreciation on your property and its fixtures can provide significant tax benefits over the life of your investment.

Benefits of Capital Works Deductions and Depreciation Schedules

Capital works deductions and depreciation schedules are key elements in property investment accounting. They allow you to claim a deduction for the wear and tear on the structural elements and fixtures of your property over time. By accurately calculating these deductions, you can lower your taxable income each year, thereby enhancing the overall profitability of your investment.

Step-by-Step Process to Efficiently Manage Your Capital Gains Tax

Capital Gains Tax (CGT) is a tax on the profit made from selling an asset, such as an investment property and it forms a significant part of property investment accounting. It’s important to understand CGT because it can have a substantial impact on your investment’s net returns. Effectively managing CGT is important for maximising the profitability of your property investment , especially when preparing for year-end taxes. Here’s a simplified approach to handle CGT:

Understand Your CGT Obligations: Know when and how CGT is applied to your property investment.
Keep Accurate Records: Document purchase and sale dates, costs and any capital improvements.
Seek Professional Advice: Consult with a professional to navigate CGT concessions and exemptions.

Essential Records Every Property Investor Should Maintain for Tax Purposes

Maintaining thorough and accurate records is important for effective property investment accounting.

Purchase and Sale Documents

These documents are important for calculating capital gains or losses.

Loan Documents

Keep records of all loan agreements and interest payments.

Rental Income and Expense Receipts

Document all income received and expenses incurred from your property.

Capital Improvement Records

Track any improvements made to the property, as these can affect your CGT.

Depreciation Reports

A professional depreciation schedule can maximise your tax deductions.

Navigating Common Tax Challenges in Property Investment

Property investment can present various tax challenges, from understanding complex legislation to effectively claiming all your entitlements. These challenges can range from navigating changing tax laws to identifying often-overlooked deductions that can impact your financial outcomes. Seeking professional guidance ensures you’re not only compliant but also maximising your investment returns.

Insights from Blue Orchid Accounting

At Blue Orchid Accounting , we provide clear and tailored guidance to help you manage your investment. Remember, effective tax management is more than just a year-end obligation; it’s a strategic approach to make your investment more efficient. If you’re looking for insights and support specific to your property investment needs, we’re here to assist. Contact us for more information.

Blue Orchid Accounting

Accountant Vs Bookkeeper: What’s The Difference?

Fri, 17 Nov 2023 00:46:35 GMT

Imagine you’ve just started a small business on the Central Coast. You’re juggling everything from sourcing products to handling customer enquiries. But when it comes to the financial side of the business, you’re a bit lost. Tax deadlines are approaching, budgeting is a challenge and you’re unsure about future financial planning. You know you need help, but who do you turn to? An accountant or a bookkeeper? It’s a common question many business owners and individuals face. In this blog, we’ll discuss the differences between these two professions to help you decide which one is right for your needs.

Defining The Roles Of Accountants And Bookkeepers

At their core, both accountants and bookkeepers play important roles in the financial health of a business or individual. An accountant analyses, interprets and reports financial data. They often handle tasks like tax planning and financial forecasting. On the other hand, a bookkeeper is responsible for recording daily financial transactions. They ensure records are accurate, up-to-date and properly categorised.

Determining Whether You Need an Accountant or a Bookkeeper

Choosing between an accountant and a bookkeeper is an important decision that can impact your financial health. Before making your choice, take into account these key factors:

Assess Your Needs: Begin by understanding what you’re looking for. Do you need someone to manage your daily financial transactions or are you seeking advice on tax strategies and financial growth?
Growth Stage: Consider the stage of your business. Startups or smaller ventures might initially benefit more from a bookkeeper’s meticulous record-keeping. However, as your business expands and financial matters become more complex, an accountant might be more fitting.
Financial Complexity: Delve into the intricacies of your financial situation. If you’re juggling multiple revenue streams, investments or are involved in intricate financial scenarios, an accountant can provide the depth of insight you require.
Future Goals: If you’re aiming for significant growth, having an accountant on board early can help pave the way for a smoother journey.

By methodically evaluating each of these steps, you’ll be better positioned to decide whether an accountant or a bookkeeper is the right fit for your unique needs.

Common Misconceptions About Accountants And Bookkeepers

When it comes to the role of accountants and bookkeepers, there are many misconceptions. Here are some of these myths:

Myth: Accountants and bookkeepers do the same job.

Reality: While their roles intersect, accountants typically handle more complex tasks like analysis and bookkeepers manage daily transactions.

Myth: Only big businesses need accountants.

Reality: Businesses of all sizes, even individual entrepreneurs, can benefit from an accountant’s services, especially during tax season.

Exploring The Skillset: Accountant Vs Bookkeeper

Facing Financial Challenges On The Central Coast?

Navigating the financial intricacies of your business or personal finances can be challenging. But remember, you don’t have to do it alone. At Blue Orchid Accounting , our team is here to guide and support you every step of the way. If you’re ever in doubt or need clarity on any financial matter, don’t hesitate to contact us to book a consultation.

Blue Orchid Accounting

Questions To Ask Your Accountant

Wed, 06 Sep 2023 06:38:10 GMT

Selecting an accountant to manage your financial affairs is a decision that shouldn’t be taken lightly. With countless facets to your finances, understanding what questions to ask can make all the difference in ensuring you make informed choices. Let’s explore the key questions you should be considering, and how they tie into the array of services provided by accounting professionals.

1. What Kind Of Services Do You Offer?

General accounting to keep your finances streamlined & organised
Taxation solutions to ensure you’re compliant with ATO guidelines
Assistance with property investments , ensuring your assets are managed optimally
Specialised services for diverse business structures such as companies , partnerships , & sole traders

2. How Can You Assist With Business Structures?

Every business structure, whether it’s a company, sole trader or partnership, has unique accounting requirements. A proficient accountant should be adept at tailoring their services to each. It’s essential to understand:

Tax implications for different structures
Reporting & regulatory compliance specific to your business structure

3. What's Your Approach To Property Investments?

Property investments in Australia can be intricate, given the various tax considerations and financial structures in play. It’s crucial to know how an accountant can assist with:

Property investment strategies
Capital gains tax implications
Tax deductions specific to property investments

4. Are You Affiliated With Any Professional Bodies?

Being an APOD member , for instance, is an indicator of dedication to ongoing professional development in the accounting domain. It adds an extra layer of trust to know your accountant is connected with industry bodies, ensuring they stay abreast of changes and best practices.

5. How Do You Handle Taxation And Trusts?

Taxation is inevitable, but with the right guidance, you can navigate the maze with ease. Ask questions related to:

Individual tax returns
Business tax returns
Setting up & managing trusts
Navigating complex tax situations

6. How Do You Identify And Capitalise On Financial Opportunities?

The right accountant doesn’t just crunch numbers; they proactively seek avenues to enhance your financial position. They should be familiar with:

Uncovering tax minimisation strategies
Offering guidance on investment opportunities
Providing insights on cash flow improvements

7. How Do You Approach Technological Advancements In Accounting?

With the ever-evolving landscape of technology, it’s vital to have an accountant who stays updated with the latest tools and platforms. Key points to explore include:

Their familiarity with modern accounting software & applications
How they leverage technology for more efficient & accurate financial management
If they offer any digital solutions to simplify client interactions & data sharing

8. Do You Handle Crypto Tax Accounting?

In the ever-evolving world of finance, cryptocurrency has emerged as a significant player, presenting both opportunities and challenges for individuals and businesses. As this form of digital asset becomes more integrated into our financial systems, understanding its tax implications is crucial.

9. How Do You Ensure Data Privacy And Security?

In this age of digital transactions and online interactions, data security is paramount. You’d want to ensure your financial and personal information is in safe hands. Discuss:

The measures they take to protect sensitive client data
Their policies on data storage, access & sharing
Any certifications or accreditations they might hold related to cybersecurity

10. What's Your Strategy For Continuous Professional Development?

The financial and accounting industry is dynamic, with regulations and best practices constantly changing. It’s essential to ascertain:

How they stay updated with the latest industry standards & regulations
If they attend regular training sessions or industry seminars
How they incorporate new learnings into their service offerings

Remember, the goal is not just to find an accountant, but a financial partner who can guide, advise and grow with you. Asking these comprehensive questions can aid you in making an informed choice.

Take The Next Step

Your accountant plays a pivotal role in your financial journey. By asking the right questions, you can ensure you’re partnering with a professional who understands your needs, is up to date with industry practices and can proactively guide you towards financial success.

Ready to take the next step? Find out how Blue Orchid Accounting can assist with your specific needs. Contact us today.

Blue Orchid Accounting

Strategies To Minimise Tax For Top Earners

Fri, 04 Aug 2023 23:46:30 GMT

In a progressive taxation environment, understanding how to maximise financial efficiency can be a significant asset. For those positioned in higher income brackets, finding legitimate avenues to minimise tax obligations is not only prudent but can also lead to considerable financial benefits. This article outlines a range of strategies and services that high-income earners can consider reducing their tax burdens.

Understanding the Progressive Tax System

A progressive tax system is designed with various income thresholds, each subject to a specific tax rate. As a taxpayer’s income increases, they are moved to a higher tax bracket, which commands a larger tax percentage. This means those with greater incomes tend to shoulder a heftier tax obligation.

Making the Most of Superannuation Contributions

Salary Sacrificing: By choosing to allocate a portion of one’s salary into a superannuation fund before tax is deducted, it’s possible to lower overall taxable income.
Yearly Contribution Caps: Stay informed about the annual limits on contributions to ensure compliance and avoid potential penalties.
Concessional Tax Rate: Money within the superannuation environment benefits from a concessional tax rate, which can be considerably lower than personal income tax rates.
Catch-Up Contributions: If you haven’t reached your contribution caps in previous years, you might be eligible to make higher contributions without extra penalties.
Government Co-contributions: Depending on your income, you might be eligible for co-contributions from the government to boost your super savings.
Tax-Free Withdrawals: Once reaching a certain age and under specific conditions, withdrawals from your super can be tax-free.

Utilising Investment Property Deductions

Interest on Loans

For property owners, the interest accrued on loans taken out to purchase or renovate a property can be claimed as a tax deduction.

Property Management Costs

Costs associated with maintaining and managing a property, such as repairs or agent fees, are also deductible.

Depreciation

Assets within a property, such as appliances or fixtures, lose value over time. This depreciation can be claimed as a deduction.

Travel Expenses

Some expenses related to traveling to inspect, maintain or collect rent for a property can be claimed as deductions. However, it’s essential to keep accurate records and ensure the travels are genuinely for the said purposes.

Insurance and Council Rates

Owners can deduct the costs of insurances such as landlord insurance, as well as local council rates paid on the property.

Dividend Imputation and Franking Credits: What You Should Know

Dividend imputation is a system where corporations can pass on tax credits (known as franking credits) to shareholders for the tax the company has already paid on its profits. This mechanism ensures shareholders don’t endure double taxation on dividends. High-income earners who receive dividends with franking credits can use these credits to reduce their own tax obligations on the dividend income.

Trusts and Companies: Structuring for Tax Efficiency

Asset Protection: Utilising trusts or companies can offer a protective structure for assets, safeguarding them from potential claims or liabilities.
Income Distribution: Within a trust, income can be distributed to beneficiaries in ways that may lead to tax efficiencies, often by allocating income to those in lower tax brackets.

Advice: Engaging a Tax Professional

The intricacies of tax laws can be complex. To ensure compliance and make the most of the available strategies, it’s highly recommended to engage professionals who specialise in this area. Tailored advice can ensure individuals capitalise on the best avenues available to them.

Looking to Navigate Financial Complexity? Reach Out to Blue Orchid Accounting

The fiscal landscape can present both challenges and opportunities. With the right guidance, it’s possible to chart a course towards financial efficiency and tax minimisation. At Blue Orchid Accounting , we’re here to help you understand the myriad of options available and tailor a strategy suited to your unique financial position. Dive deep into the realm of taxation and see how we can be your compass. Reach out to us today!

Blue Orchid Accounting

Choosing The Right Accountant For Your Small Business

Mon, 29 May 2023 06:02:39 GMT

Running a small business comes with a multitude of decisions and responsibilities – one of which is finding a savvy accountant to help you manage your finances. Seeking the advice of an accountant can be beneficial at any stage of your business journey, whether you are starting, buying or selling a business; expanding your business; or simply wanting to better manage your finances.

It’s important to find an accountant who you can develop a good working relationship with and who suits the needs of your business. So, to help you on your quest to find the right accountant here are some considerations.

Understanding Your Business Needs

First, it’s vital to comprehend your specific business needs. Each business is unique, and so are its accounting requirements. Are you in the early stages of your venture, needing assistance with business structure and tax registrations? Perhaps you’ve been operating for a while and now require more sophisticated services like financial reporting or cash flow forecasting? Having a clear understanding of your needs can guide you towards the right accounting services.

Professional Credentials Matter

Only registered tax agents can lodge returns with the Australian Taxation Office (ATO on behalf of your business. Check if your accountant is registered on the Taxation Practitioners Board. Likewise, only Australian financial services (AFS) licence holders can provide financial planning advice, so make sure your check to if they’re a licence holder on the Australian Securities and Investments Commission (ASIC) website.

Small Business Experience Is Essential

Your accountant must have previous experience working with small businesses for them to truly understand your requirements. Small businesses often require more individualised approaches, which is why you should choose an accounting firm that can offer personalised and tailored solutions.

While many small businesses hire an accountant for no other reason than assisting them in preparing for and lodging their taxes, it is good to find an accountant who can do more. You never know how your business will grow and you may eventually need assistance with management of cash flow, marketing, the employment of more personnel and the establishment of other sites.

Communication is Key

The right accountant is one who communicates effectively and in a timely manner. This ensures that you are always in the loop about your business’s financial health. You want to find an accountant who is happy to answer your questions and provide ongoing guidance. Ask for recommendations from family, friends and other small business owners and check online reviews to gauge their professionalism and commitment.

Look Locally

Having an accountant who understands your local business landscape can be a significant advantage. If you’re on the Central Coast, consider an accountant from the same region so they can better understand your business’ unique challenges and goals.

Cloud Accounting

Ensure the accountant you choose is familiar with cloud-based accounting software. These tools can simplify your financial processes and provide real-time access to your financial data, which can aid in decision making. These days Xero and MYOB are the two most prolific cloud-based accounting software and offer a great number of benefits.

Looking For an Accountant on The Central Coast?

Contact the team at Blue Orchid Accounting . Our team works with both individuals and business clients throughout the Central Coast and Lower Hunter, providing a comprehensive range of tax advice and accounting services. Whether you’re a sole trader or business owner, we can help you tackle all financial matters. From finding ways to minimise tax to registering ABNs and ASIC renewals, our team is here to help. Connect with us today and see how we can guide your business’s financial journey.

Blue Orchid Accounting

Maximising Your Tax Savings: Tips From Accounting Experts

Wed, 24 May 2023 23:37:09 GMT

When it comes to managing your finances, tax savings are an essential aspect that should never be overlooked. With good advice and a little planning, you can significantly reduce your tax liability and increase your savings. In this article, we’ll explore tips on tax savings and tax accounting to help you get the most out of your hard-earned money.

Understanding Tax Deductions

One of the most crucial aspects of maximising your tax savings is understanding the deductions available to you. Deductions reduce your taxable income, resulting in a lower tax bill. Some common deductions include:

Work-related expenses
Investment property expenses
Self-education expenses
Donations to registered charities

To claim these deductions, it’s essential to keep accurate records and receipts. Remember, the more organised you are, the easier it will be to maximise your tax savings.

Utilise Tax Offsets

Tax offsets are another valuable tool for reducing your tax bill. Unlike deductions, offsets directly reduce the amount of tax you owe. Some popular tax offsets include:

Low-income earners offset
Senior Australians and pensioners offset

To claim these offsets, ensure you meet the eligibility criteria and have the necessary documentation to support your claim.

Consider Salary Sacrificing

Salary sacrificing is an arrangement where you voluntarily give up part of your salary in exchange for benefits, such as superannuation contributions or a company car. This strategy can lower your taxable income and potentially place you in a lower tax bracket. Talk to your employer about salary sacrificing options to determine if this strategy is right for you.

Maximise Superannuation Contributions

Superannuation contributions are an excellent way to save for your retirement while reducing your taxable income. By making additional contributions to your super fund, you can enjoy tax benefits and grow your retirement savings.

Consider making concessional contributions, such as salary sacrifice or personal contributions for which you claim a tax deduction. Be mindful of the annual contribution limits to avoid paying extra tax.

Invest in Income-Producing Assets

Investing in income-producing assets, such as property or shares, can provide tax benefits. For example, negative gearing allows you to claim a tax deduction for the expenses incurred on an investment property when they exceed the rental income.

Similarly, investing in shares that pay franked dividends can provide tax advantages through dividend imputation credits. Consult a financial adviser to determine the best investment strategy for your financial goals and risk appetite.

Plan Ahead and Seek Professional Advice

Proactive tax planning is essential to maximise your tax savings. Review your financial situation regularly and adjust as needed. Consider seeking professional advice from a tax accountant who can help you identify tax-saving opportunities and develop a tailored strategy to meet your financial goals.

The Final Word

[P] Maximising your tax savings is an ongoing process that requires a combination of knowledge, planning, and professional guidance. By understanding tax deductions, utilising tax offsets, considering salary sacrificing, maximising superannuation contributions, investing in income-producing assets and seeking professional advice, you can significantly reduce your tax bill and increase your savings.

Do You Need Help with Your Tax?

Ready to take control of your finances and maximise your tax savings? At Blue Orchid Accounting , we’re here to help you navigate the complexities of tax accounting and develop a personalised strategy to achieve your financial goals. Get in touch with us today to get started on your journey to financial success.

Blue Orchid Accounting

Tax Benefits & Tax Obligation Of Testamentary Trust

Wed, 15 Mar 2023 01:38:23 GMT

Testamentary trusts are an important tool for estate planning. In NSW, they can provide significant tax benefits to individuals and families. However, testamentary trusts also bring with them a number of tax obligations that must be met in order to enjoy the full range of benefits. This article explains some of the key tax considerations associated with testamentary trusts.

Understanding Testamentary Trust Income

The first thing to understand is that testamentary trust income is taxed differently than other types of income such as salary or investment returns. Generally speaking, this type of income (including capital gains) is taxed at a lower rate than regular income or capital gains. This means that testamentary trusts can provide significant tax savings for individuals and families.

In addition to the lower rate of income tax, testamentary trusts also benefit from a range of other concessions and deductions. For example, there is no stamp duty payable on assets transferred into a testamentary trust from the estate of a deceased person. If the trust is used to care for family members who are financially dependent on the deceased, they may be able to access certain special tax concessions such as exemptions from capital gains tax or reduced rates of income tax.

However, it’s important to remember that testamentary trusts are not completely exempt from taxation ; they do have some obligations that must be met in order to enjoy these benefits. In NSW, trusts are required to lodge a tax return each year and pay income tax on any income that has been generated by the trust during the year. If the trust pays any distributions to beneficiaries, it must also pay withholding tax at a rate of 46.5% (including Medicare levy).

Testamentary Trusts & Tax Obligations

Testamentary trusts are also subject to capital gains tax when assets are sold or transferred from one trust to another. This applies regardless of whether the transfer was for profit or not. In addition, if an asset is held for more than 12 months before being sold, there may be certain exemptions and concessions available depending on the circumstances–such as those relating to primary production businesses or collectables and personal use assets.

There are various other obligations that must be met in order to ensure the smooth running of a testamentary trust. These include filing annual returns, keeping records and accounts up-to-date, paying taxes on time, distributing assets in accordance with the terms of the trust and ensuring that beneficiaries are aware of their rights.

Testamentary trusts can provide many advantages for individuals and families in NSW – but they also come with a number of tax obligations. It’s important to understand these obligations before setting up a testamentary trust so that you can make an informed decision about how best to manage your estate.

Overview of Tax Benefits of Testamentary Trusts

CGT Discount: Testamentary trusts are eligible to receive the 50% CGT discount. This can be a significant tax benefit as it reduces the amount of capital gains tax paid on any investment asset sales by half.
Taxpayer Eligibility: A testamentary trust may qualify for a lower marginal tax rate than an individual or company, depending on the circumstances, making it a desirable option for many taxpayers.
Changes to Income Splitting: Testamentary trusts allow income-splitting between family members to minimise their overall tax burden over time. For instance, adult children may be able to access lower marginal tax rates by receiving their share of income via a Testamentary Trust rather than as direct beneficiaries.
Estate Planning: Testamentary Trusts can be used to provide financial security for future generations and allow flexibility in estate planning. It is also possible to use a testamentary trust as an alternative or in addition to an existing will, helping ensure that assets are distributed according to the wishes of the deceased person.
Tax Exemptions: Testamentary trusts may qualify for tax exemptions on certain capital gains, income and other taxes, depending on the individual circumstances of each case.

Your Local Trust Accountants

At Blue Orchid Accounting , we provide invaluable assistance for all trust accounts – including discretionary, family, decreased estate trusts, as well as (of course) testamentary trusts. We will tailor our taxation services for your unique needs, demystifying your obligations and helping you enjoy peace of mind. You can call us on 1800 008 664 .

Blue Orchid Accounting

How To Cut Your Crypto Taxes Down

Sun, 19 Feb 2023 00:28:38 GMT

Cryptocurrency has become a popular investment option for many people, but with its popularity comes the responsibility of paying taxes on your investments. The tax laws surrounding cryptocurrency can be complex and failing to comply with them can result in hefty fines and penalties.

In this blog, we will explore how to cut your crypto taxes down, while ensuring you stay compliant with tax laws and regulations. For further information, please don’t hesitate to reach out to us .

Understanding Cryptocurrency Taxes

Cryptocurrency is taxed as property in Australia, which means that every time you sell, trade, or exchange your cryptocurrency, you may be subject to capital gains tax. The amount of tax you owe will depend on several factors, including the type of cryptocurrency you hold, the length of time you held it and the price at which you bought and sold it.

It’s important to understand the tax implications of your cryptocurrency investments so that you can make informed decisions and avoid any potential tax liabilities.

Strategies for Reducing Cryptocurrency Taxes

Tax-loss harvesting: Tax-loss harvesting is a strategy that involves selling your losing investments to offset your capital gains. This can help you reduce your tax bill by lowering your overall taxable income.

Using a tax-advantaged account: Consider utilising a tax-advantaged account, such as a Self-Managed Super Fund (SMSF) or a tax-free savings account (TFSA), to hold your cryptocurrency investments. These types of accounts offer tax benefits, including tax-deferred growth and the potential for tax-free withdrawals.

Taking advantage of tax-free exchanges: Some exchanges, such as Coinbase, offer tax-free exchanges of one cryptocurrency for another. This can help you reduce your tax bill by avoiding capital gains tax on your trades.

Donating to charity: Donating your cryptocurrency to a qualified charity can help you reduce your tax bill and provide a valuable tax deduction.

Keeping Records & Staying Compliant

Maintaining accurate records of all your cryptocurrency transactions is crucial to ensure compliance with tax laws and regulations in Australia. This includes keeping track of the following information for each transaction:

Date of the transaction
Type of cryptocurrency involved
Purchase price or acquisition cost
Sale price or disposal proceeds
Any other relevant information, such as fees and charges

By keeping accurate records, you’ll be able to easily calculate your capital gains or losses when it comes time to file your tax return.

Seek Professional Advice

Staying up to date with any changes in tax laws and regulations surrounding cryptocurrency is equally important as keeping accurate records. The tax laws and regulations surrounding cryptocurrency can change frequently, so it’s important you stay aware of any changes that may impact your investments.

One way to stay informed is by regularly checking the Australian Taxation Office (ATO) website for updates and guidance on cryptocurrency taxation. Additionally, you may consider seeking the advice of a financial advisor or tax professional who specialises in cryptocurrency taxation. These professionals can provide you with the most up-to-date information and guidance on how to stay compliant with all relevant laws and regulations.

Contact Us

At Blue Orchid Accounting , we provide comprehensive tax and accounting services to individuals and businesses throughout the Central Coast & Lower Hunter. If you’re looking for guidance and support in managing your finances and ensuring compliance with all relevant tax laws and regulations, we’re here to help.

Reach out to us via our contact page or give us a call on 1800 008 664 to schedule a consultation with our friendly team of experts. We will work with you to find ways to minimise your crypto tax liabilities, ensure your accounts are in good order and help you tackle all matters related to crypto tax and finances.

Blue Orchid Accounting

The Difference Between Pre-Tax And Post-Tax Deductions

Mon, 26 Sep 2022 23:27:21 GMT

If you’re offering benefits to your employees, you’re likely wondering how you can withhold wages for the proper benefits, and whether you do so before or after taxes. Understanding the difference between pre-tax and post-tax deductions is crucial – and that’s why we’re here to help. We’ve put together this helpful guide to clear up the distinction between these deductions and how to navigate them properly.

Pre-Tax Deductions

Pre-tax deductions are withheld from your employee’s wages before tax, and they reduce the income that your employee will need to pay tax on.

Common pre-tax deductions include:

Retirement plans and superannuation
Salary sacrifice items, such as laptops and cars
Life and health insurance
Transportation programs and parking expenses
Medical expenses

Let’s look at some particular common deductions in more detail.

Work Place Giving Deductions

If your employee regularly donates to charitable organisations, they can claim these donations as a pre-tax or post-tax deduction. If they plan to donate before tax, the amount they donate reduces the total pay which attracts withholding tax. If they give their donation post-tax, their taxable income won’t be reduced and they might opt for claiming their donation as a tax deduction when compiling and submitting their tax return.

Salary Sacrifice Superannuation Deductions

Within these deductions, your employee sacrifices a determined amount or a percentage of your wages pre-tax, which is paid into their superannuation fund. The sacrificed amount doesn’t reduce the employer’s superannuation payments.

Results Of Pre-tax Deductions

Once these items are deducted from an employee’s pay, the government then calculates the total tax payable.

Pre-tax deductions result in lower tax obligations for you and your employee, though your employee may end up owing tax when they use these benefits. Not all benefits are exempt from federal, state and local taxes, so it’s important you check relevant legislation to ensure you’re aware of what’s involved.

Post-Tax Deductions

Post-tax deductions are withheld after you withhold taxes from your employee’s wages, and they’ll have no impact on your employee’s taxable income.

Common post-tax deductions include:

Retirement plans
Life and disability insurance
Union wages

Let’s consider some of these deductions in more detail.

Union Or Professional Association Fees

These are deductions in which employees contribute towards their membership of a professional organisation or union body.

Child Support

Child support payment deductions are drawn from wages and paid through Services Australia. Child support payment deductions consider a portion of an employee’s wages as a Protected Earnings Amount (PEA), which remains free from withholding.

Results Of Post-Tax Deductions

Post-tax deductions are subtracted following payroll tax deductions. Both you and your employee will end up owing more payroll tax, but your employee won’t incur tax on the benefits when using them down the line. As you withhold taxes before benefit contributions, all taxes at federal, state and local levels are already paid.

Applying These Deductions

There are clear distinctions between pre-tax and post-tax deductions.

With pre-tax deductions, as your employee will need to pay tax on a lower income, they’ll attract a greater net pay. This can be especially helpful if a person has significant upfront expenses, such as rent, groceries, and medical bills.

Post-tax deductions result in a person paying more in tax down the line and receiving a lesser net pay. They will, however, not need to owe taxes in the future as they’ve already contributed these deductions.

Contact Us

For quality taxation advice when you need it most, contact Blue Orchid Accounting . Established in 2011, we’ve provided our Central Coast clients with comprehensive tax and accounting services tailored to their individual needs. With our friendly, honest advice you’ll be equipped to make the most educated financial decisions and ensure your wealth is protected. Get in touch with us today on 1800 008 664 .

Blue Orchid Accounting

Accounting Basics For Small Businesses

Fri, 22 Jul 2022 06:59:44 GMT

Getting your financial processes in order is a vital starting point for small businesses. Whether you’re just starting out or rapidly outgrowing the classic drawer of receipts, managing your accounting effectively is key to saving you time and stress. Understanding the accounting basics for small businesses provides you with the foundation you need to create workflows and standardise processes, ensuring that you’re never playing catch-up when tax season rolls around.

Accounting covers many business activities, from payroll to inventory to reporting. Here are some of the basics to consider when managing your accounts as a small business:

1. Open A Business Bank Account

Step one to handling accounting for a small business is having the proper accounts to manage. Opening a business bank account separate from your personal finances is vital for creating a separation between you and your company. Business accounts are available from many different banks, allowing you to select an option that best suits your needs and plans for growth.

2. Make Tracking Incomings And Outgoings A Daily Routine

Keeping track of what’s going in and out of your business is the foundation of good small business accounting . A good overview of the income you’re getting and the outgoings leaving your accounts is vital for understanding your current financial health. The more aware you are of your finances, the easier it is to make important business decisions.

3. Invest In A Bookkeeping System

A bookkeeping system does half the work for you by automating specific parts of the accounting process. Instead of manually entering information into a spreadsheet and calculating finances, bookkeeping software takes your financial data and provides all the necessary information. With many systems offering automation through bank account connections, a proper system can save you stress and labour.

4. Formalise Your Payroll Process

If you hire employees, ensuring they are paid correctly according to regulations, and legal requirements is a must. Formalising your payroll process is an effective method to ensure everyone is paid on time. Using payroll software or a template can ensure you account for all taxes and costs involved in payroll, ensuring you have all the information to be ready for the next tax year.

5. Put Preparations In Place For Taxes

A prepared business is a stress-free business. If you want to leave tax season anxiety behind, preparing ahead of time for your taxes is the golden rule. Bookkeeping software can provide clear insight into the business taxes you may owe if you ensure it is kept up to date. Ensuring all your information is reported, stored and easily accessible is key to making taxes plain sailing year after year.

6. Decide On Your Method Of Payment

As a small business, you can take payment from clients and customers in numerous ways. If you run an ecommerce store, you may use an online platform that processes payments for you. Some examples of payment methods include:

Digital invoices
Cash
Online payment gateways
Letter invoices
Digital wallets

7. Review Your Accountancy Practices Yearly

Regular reviews ensure your accountancy methods are still working for your business. As you grow, change and evolve, adapting your financial processes is vital to ensure you remain in control of your accounts. Regular reports and annual check-ins are valuable to determine if your current methods still work for you.

Getting started in accountancy can be a hurdle for any small business. Ensuring you have the basics down provides the ideal groundwork for long-term financial success. If you require a helping hand, Blue Orchid can provide the support you need. Get in touch with us today to learn how we could help you.

Blue Orchid Accounting

How Do Sole Trader and Company Taxes Differ?

Wed, 20 Jul 2022 01:19:45 GMT

When it comes to tax, sole traders and companies have similarities in their tax and reporting requirements. At the same time, there are key differences you need to be aware of. Read on as we unpack the differences between the two.

Tax-Free Threshold

Sole traders are subject to business tax as part of their personal income. They will need to pay tax on any income above the threshold of $18,200. In contrast, companies pay tax on every dollar they earn.

Tax Rates

Sole traders are required to pay tax at the individual income rate. Companies are taxed at a rate of 30%, but different rates might apply if a company is a base rate entity.

Lodging Tax Returns

If you are a sole trader, you must lodge an individual tax return each year. If you operate as a company, you’ll need to lodge a company tax return. These returns need to show your company income, any deductions and the sum of income tax your company is required to pay. Your company is liable to lodge its own tax return and pay tax on any income. As a director or company employee, you’ll still need to lodge an individual tax return.

Capital Gains Tax (CGT)

If you are a sole trader and you made a capital gain – such as a profit from a sale – on an asset you owned for at least a year, you may be able to reduce your capital gain through the discount method, the indexation method or at least one of the four CGT concessions offered to small businesses. For companies, the discount method usually does not apply – though it can factor into a small number of capital gains made by life insurance providers. You must use the indexation method for your company if it is not a listed investment company and if it fulfils the particular conditions.

Small Business Entity Concessions

You’ll be pleased to know that small business tax concessions are available, regardless of business structure. You classify as a small business entity if your business operates for all or part of the income year and makes an aggregated turnover of less than $10 million. If you qualify, you may be entitled to concessions on your income tax, GST, pay-as-you-go (PAYG) instalments and fringe benefits tax.

Taxes And Superannuation

The taxes and superannuation you’re entitled to pay and report will be determined by your business activities. If your GST turnover reaches $75,000 or more, if your business involves the provision of taxi or limousine travel for passengers, or if you want to claim tax credits on fuel, you will need to register for goods and services tax (GST).

You may need to pay income tax through PAYG instalments. If you have employees, you will be required to collect PAYG withholding amounts, which you will need to give and report to the ATO. You’ll also need to pay contributions to superannuation for any eligible employees, as well as fringe benefits tax if required.

Payroll Tax

If you have employees either as a sole trader or company, you may need to pay payroll tax. This tax is determined by your particular state or territory and functions as a tax on the wages you pay your staff.

Get In Touch Today

Blue Orchid Accounting is committed to providing our valued Central Coast clients with outstanding taxation and accounting services. We proudly offer honest, friendly advice designed to help you make the best decisions for your finances and your future. Contact us today on 1800 008 664 .

Blue Orchid Accounting

Don’t Miss Out On These Investment Property Tax Deductions

Mon, 20 Jun 2022 00:47:22 GMT

We all want to save money on tax, especially when we’ve invested in property. At Blue Orchid Accounting , our professional and friendly team is on hand to help you make the most of your investments. Here are some of the top tax deductions you won’t want to miss out on as the owner of an investment property .

Council Rates

While rates can be deducted in the same year they’re paid, you can only claim them for periods in which your house was rented.

Building Depreciation

If your property was built after 16 September 1987, you may be able to claim depreciation on the original construction costs of your property. Depreciation rates are calculated at 2.5% a year for 40 years.

You can also claim deductions if your property was renovated after 27 February 1992, at the same rate of 2.5% for 40 years. Deductions can only be claimed during the periods in which your property was available for lease or was rented.

Appliance Depreciation

You may be able to claim deductions on brand-new and second-hand appliances, such as dishwashers, washing machines or stoves, if your property was bought before 7:30 pm on 9 May 2017 and if the appliance was installed before 1 July of the same year. If you do not meet these criteria, you can only claim deductions if the appliance was brand new, or if no one has previously claimed depreciation on the same asset.

Repairs And Maintenance

Repairs classify as immediate deductions if they factor in as wear and tear. If you’re conducting a repair after bad weather or servicing an appliance, the costs of labour can be claimed as a deduction. Replacing an appliance, however, counts as a depreciation deduction.

Any replacements or maintenance intended to increase property value must be claimed as capital works deductions, at a rate of 2.5% a year for 40 years.

Pest Control

You can claim hiring a pest control service as an immediate deduction by a property’s tenant or landlord.

Garden and Maintenance

The maintenance or replacement of plants and garden structures can be claimed by property owners as an immediate deduction. If a new plant or garden addition increases property value, this is regarded as an “improvement” and must be depreciated rather than immediately claimed.

Insurance

Property owners can claim the costs of insuring a rental property. The amount can be identified by referring to quarterly statements or through obtaining information from your insurer.

Stationery and Phone Costs

Any stationery, phone contracts, internet or electricity usage occurring in the course of running your investment property can be claimed as a deduction. It is important to note that the ATO may query your claim if it is higher than the average for property investors.

Rental Advertising

Any expenses you incur while marketing your rental property online or through print media, brochures or signage can be claimed as advertising expenses. These can be claimed against the income you earned in the year that you paid for the advertising in question.

Land Tax

You are able to claim land tax if you have a rented dwelling on your property. As the levy and timing when you can claim vary across states, it is important you consult a taxation expert or the appropriate government channels.

Ensure Financial Security with Blue Orchid Accounting

Many individuals and businesses throughout the Central Coast region have benefited from the quality financial advice and comprehensive taxation and accounting services offered by our expert and friendly team. Put yourself, your finances and your investments in great hands. Contact us today on 1800 008 664 .

Blue Orchid Accounting

Work Uniform Expenses

Tue, 17 May 2022 23:58:03 GMT

There are so many different types of jobs that require you to wear a uniform and/or protective clothing. But unfortunately, many organisations don’t provide these, or offer them at a discounted price to their employees.

But what can you do about it?

Well, there is good news! You may be able get a good proportion of that cash back at tax time. But you need to know what work uniform expenses you can and can’t claim on your tax return. So here goes:

Do your circumstances fit with any of the following categories?

1. Is your uniform compulsory?

If you have a compulsory uniform that is strictly enforced in your workplace, then you may claim for the cost of purchasing it. It must have a company logo and identify you with your place of work. You can’t make a claim for normal business wear that does not have a logo, regardless of whether your employer requires you to wear it to work.

2. Do you have single items of compulsory clothing?

You can also claim for a single item of compulsory clothing, such as a shirt or a tie. However, it too must also be distinctive to your employer. For example, a business shirt with the company logo permanently attached to it and not available to the general public can be claimed.

3. Non-compulsory Uniforms

If your employer encourages you to wear a corporate wardrobe but does not enforce it, you can only claim if the uniform is registered with Ausindustry. You cannot claim for stockings, socks or shoes because these cannot be part of a registered uniform. Unsure? Ask your employer if your uniform is registered or not.

4. Occupation Specific Clothing

This type of clothing is a uniform that identifies you to your employer or profession. For example, the checker pants of a chef are occupation-specific, whereas the black and white waiter’s uniform does not identify you to a specific employer or profession.

5. Protective Clothing

Anything you may wear while working to help protect yourself from injury or risk of injury can be classified as protective clothing. Examples include aprons, steel-capped boots, safety vests and wet weather gear.

6. Costumes

As a performing artist you can claim the cost of purchasing costumes you buy or hire for a role. You must however already have the role to make the claim – you can’t claim if you are just auditioning.

Blue Orchid Accounting

Laundry Expenses: Claiming of The Work Uniform Laundry Costs

Tue, 17 May 2022 23:43:22 GMT

Do you wear a uniform to work?

If it falls into any of the categories that we discussed in the uniform expenses post , you can also make a claim on your tax return for the cost of laundering those uniforms.

The way you calculate your laundry expenses will depend on your means of cleaning. We have created the following table which lists some of the possible methods for laundering your work clothes as well as how to calculate your deduction.

Means of cleaning

At home – washing eligible work clothes only $1 per load
At home – washing eligible work clothes and other laundry items 50 cents per load
Laundromat – washing eligible work clothes only $1 per load or total of actual expenses incurred
Laundromat – washing eligible work clothes and other laundry items 50 cents per load or share of actual expenses incurred
Dry Cleaning Total of actual expenses incurred

The amounts that are listed above include the cost of washing, drying and ironing of your clothes not just, simply the washing of them.

Some important details to remember about laundry expenses

If you choose to use the “per load” method for your claim, we recommend you keep details of:

The number of times you washed your clothes during the year and,
The types of clothes you included per load.

[P] You must have written evidence (e.g., diary entries or receipts) if your claim for laundry is greater than $150 and your total claim for all work expenses (items D1 to D5 on the tax return) is more than $300.

Blue Orchid Accounting

Claiming Personal Super Contributions on Your Tax Return

Tue, 17 May 2022 07:06:11 GMT

Most Australians know that super is money for retirement. What is less well known is that you don’t solely have to rely on your bosses’ contributions to grow your super savings. What is better still, the money you add to your or your spouse’s super from your own pocket (post-tax) can be tax deductible.

What is a Personal Super Contribution?

A personal super contribution is a contribution that you make to your super fund ‘after-tax’. This should not be confused with pre-tax contributions your employer makes or that your salary sacrifices into your fund. We are only talking about after-tax super contributions here.

Not so long ago, you needed to be self-employed to claim personal super contributions on your tax. But that all changed from 1 July 2017. These days you may be able to claim a tax deduction for personal contributions even if you are a salary employee. But there are a few points to note.

What is a Spouses Contribution?

Under current taxation rules, you may be able to claim an eighteen percent tax offset on super contributions up to $3,000 that you make on behalf of your non-working or low-income-earning partner (married or de facto). Your spouse must not have exceeded their non-concessional contribution cap for that financial year and the contribution is not deductible to you.

How to make a personal or spouses’ super contribution

Making a tax-deductible contribution into your fund is easy. You can do it as a bill payment from your everyday bank account. Check you have the right BPAY details for your fund and allow a few days before 30 June for the money to reach your super account.

Another option is to speak with your employer and ask them to do it for you. Similar to a salary sacrifice arrangement (where an employer pays an extra amount of your pre-tax income to your super), many will do the same with post-tax income.

The most important thing to remember is that the contributions must be post-tax if you want to claim them as a deduction on your return.

How does tax deductible super work on my return?

There are two important steps to claim a personal super contribution on your tax return.

Get in touch with your super fund and tell them you want to claim a deduction for your personal superannuation contributions, AND
Make sure you get a reply from them BEFORE you lodge your tax return.

Once you hear back from the fund, you can lodge your return. At item D12, Personal Superannuation Contributions you enter the amount you wish to claim as a deduction on your return.

In regard to your spouse’s contribution, if your spouse receives $37,000 or less in the total of assessable income, fringe benefits and employer super contributions, then you can then access the maximum tax offset of $540, provided an after-tax contribution of at least $3,000 is made. The tax offset is then progressively reduced until the tax offset reaches zero for your spouses who earn $40,000 or more in the total of assessable income, fringe benefits and employer super contributions in that year.

Important Note: There are limits to how much super you can claim.

In the ATO’s eyes, the above process effectively converts an ‘after-tax’ super contribution to a ‘before tax’ super contribution. This is important to note.

Up to $25,000 can be added to your super each year in ‘before-tax’ or concessional contributions before a higher tax rate applies. They usually consist of:

Your employers’ mandatory contributions (minimum 9.5% of your salary), and
Your pre-tax or salary sacrifice contributions.

Plus, they also include any after-tax contributions you intend to claim a deduction on.

As an example: If your boss has already paid $20,000 into your super, you can claim up to $5,000 in personal contributions in the current financial year.

Under the new single touch payroll system, you can see how much has been added to your super at any stage through your MyGov account.

You will also need to meet a work test if you are aged 65 to 74 years old. That means working for at least 40 hours in a consecutive 30-day period each financial year.

Putting it all together

We will say Sue works as a shop manager. She earns a salary of $45,000, and so far, this financial year her boss has paid $4,275 into her super fund. Sue has also salary sacrificed $50 per week pre-tax into her fund. ($50 x 52 weeks = $2,600). That’s a total of $6,875 for the year.

(This is well below the $25,000 annual limit so Sue has plenty of room to add to her fund.)

Sue has some extra savings and decides to add $3,000 into her super account before 30 June. She’s already paid tax on that money, so it’s considered a personal superannuation contribution.

Prior to lodging her return Sue lets her fund know that she plans to claim the $3,000 personal contribution on her tax return. She receives a letter back from her super fund to acknowledge her intention to claim the deduction.

At item D12, Personal Superannuation Contributions on her tax return, Sue claims a $3,000 tax deduction. It’s an easy way to save on tax and help build money for her future.

Now Sue has also paid $3,000 into her spouses Nell’s superannuation fund. Because Nell’s assessable income below $38,000, Sue can claim the $540 tax offset at item T3 Superannuation contribution on behalf of spouse.

Blue Orchid Accounting

Live-In Landlords: What You Should Know…

Tue, 17 May 2022 06:10:47 GMT

Live-in landlords are becoming more common these days, as more and more people choose to lease out rooms in a house that they own and live in. It can help pay the mortgage, help cover running expenses and fill up space that are otherwise unused. If you lease out part of your home, the rent received is treated as “assessable income” by the ATO.

That is why it is important to learn the basics about your live-in landlord tax obligations, come this tax time…

What changes at tax time?

When you rent or lease out your room(s), you will receive a payment in the form of rent from your tenant. The rent money, you receive is classified as income and it must be claimed on your tax return. Specifically, at Item 21 (Rental Schedule) on your tax return.

Next, you are able to claim deductions against this income received to help your refund.

As a landlord, you need to keep good records

You will want to stay on the ATO’s good books. The absolute number-one habit that makes those things possible is a steady habit for keeping receipts and records. It doesn’t need to be hard or complicated! Just keep receipts and a short note about any expenses or costs relating to the renting of the space — plus a record of any rental income you have receive.

Remember, no receipts mean no tax deductions. So, keep them all. If you are in doubt about whether a receipt might be claimable, keep it anyway. Your tax agent can advise whether you can use it, later, to help boost your tax refund.

Claiming your live-in landlord tax deductions: The Apportion Method

There are lots of tax deductions you can claim as a live-in landlord by using the “apportion method” Sounds scary? Don’t worry, it is simple.

The apportion method is a common way of separating tax-deductible expenses between the rental and personal use. As a general approach of determining this, the apportionment should be made on a floor basis (the space in which your tenant takes sole occupancy) with a reasonable figure for access to other general living areas including the garage and outdoor areas. This means you are including the tenants living area along with an appropriate estimation of other living areas that you share together, of which if someone is sharing with one other person, the apportionment would typically be 50% of the shared spaces.

If the tenant is also paying for part of your running costs (electricity, internet, heating etc) as either a fixed weekly/monthly amount or as a percentage of the bills, you’ll need to treat this the same as rental income. Ensure you claim both the income and the deduction for these expenses.

One live-in landlord’s taxes: An example

John owns a two-bedroom house. He rents out one bedroom for $150 per week to a person for the financial year. The floor area of the rented bedroom is ten square metres – and which is twenty per cent of the total floor area of John’s house.

John’s expenses include his mortgage, building insurance, rates and taxes, totalling $25,000 for the year.

So, what should he enter on his tax return?

Income: John enters $7,800 of rental income under item 21 in the income section of his tax return. ($150 rent x 52 weeks)
Deductions: Then he should enter $5,000 (20% of his $25,000 expenses) as tax deductible expenses.

What kind of tax deductions can a live-in landlords claim?

When it comes to claiming deductions, remember to keep all your receipts. Set aside the time to work out what percentage of your expenses are claimable throughout the year so when tax time comes around, it’ll be easy to lodge your return.

Some common deductions include:

Internet and phone costs
Water, power and council rates
Upkeep and repairs of the property
Depreciation on the cost of furnishings and equipment
Interest on your mortgage
Body corporate fees (when applicable)

What if you are renting out a room to family or friends?

Renting to friends or family at a discounted or less than market rate might seem like the right thing to do sometimes. However, from the ATO’s perspective, that may limit the deductions you are able to claim.

When you claim property-related tax deductions, the ATO assumes you should be making the most of your property’s investment potential. If you intentionally receive less than market rent, the ATO requires that your expenses are adjusted downward by the same proportion that your rent sits below market rates.

For example, if you rent a room to a cousin at half of the market rent, you must divide your deduction claims in half as well.

Or, if you rent a room to your mate for 25 per cent less than the market rent, then all your rent-related deductions need to be adjusted down by 25 per cent as well.

How do I find the market rate for renting a room?

First, look on realestate.com.au. Check out comparable properties in your area and be fair and honest with yourself about it. (Remember, the ATO can look it up just as easily, and compare the information to your house. The internet keeps you honest, so be honest and avoid any future trouble! Another approach is to ask your real estate to recommend your market rent in a short letter. You can then provide this to your tax agent, and you should be set for whatever the ATO throws at you about market rents.

Working out your live-in landlord tax deductions when renting to family or friends can be tricky. Make sure you ask your tax agent for help if you’re not sure. It’s always better to get this section right in the first place, rather than face any ATO issues further down the track.

Am I liable for capital gains tax?

When you are selling the house, that was your own main residence, you are not usually liable for capital gains tax (CGT) deducted from the selling price. But as soon as you start renting space, it can get a little bit more complicated.

Unfortunately, if you decide to earn a bit of income by renting out a room or two, you are no longer entitled to the full “main residence exemption.” This means when you sell the house you may need to pay some CGT, at a rate that is adjusted based on how much of your house was rented and for how long.

To work out how much CGT you might be liable for, you will need to take into account a number of factors:

Determine the area of the total floor area that is set aside to produce income (i.e., 10%)
The duration in which you’ve used this floor area (days per year)

You will then be able to work out the total number of days your property was rented out, out of the total number of days you owned your property.

As for our example above:

John’s rental space is twenty per cent of his home. He owned the property for five years and rented out the room for four years total (1,460 days out of the 1,825 he owned it).

When he sells after five yours, he will be liable to pay twenty per cent of the full CGT for the property – only for the 1,460 days when he rented the property.

Please note this only applies to properties that have been rented after 20 August 1996.

Before you rent out a room, weigh up all the costs and benefits

Being a live-in landlord can offset some of your household costs with the rent income while creating tax deductions for some of your expenses. But as we outlined above, there are down-sides including the future cost of CGT. Enter “with eyes open” and decide what’s best for you in the long run. In particular, be careful about renting a room to a friend on the cheap; this has all the tax costs, but fewer tax benefits for you.

Blue Orchid Accounting

Tax Deductions for Cleaners

Tue, 17 May 2022 04:36:16 GMT

If you are in the cleaning business and you are not making the most of these tax deductions for cleaners, then you are losing out on a heap of cash every year.

Whatever type of cleaner you are, we understand your job can be tough! After a hard day, the last thing you want to do is think about tax. However, if you do think about it every now and then and remember to take note of your work expenses throughout the year, you could well earn yourself back a nice little award at tax time.

Equipment costs = the bulk of tax deductions for cleaners

Equipment and tools are essential to do your job. You can generally claim the cost of purchase for vacuums, sprayers, polishers and more – they can all be listed as tax deductions for cleaners, as long as you paid for it yourself and it’s directly needed for your cleaning work.

The tools of your trade take a real beating so it’s good to know you can also claim the cost of maintaining and repairing equipment related to your cleaning work.

The costs of more disposable or fast turnover items like cloths, mops, buckets and dusters can all be added to your tax return as cleaner tax deductions in the tools and equipment section. And don’t forget carriers, boot dividers and other bits and pieces you use to make transporting your materials easier.

Examples of tax-deductible equipment under $300

Cleaning chemicals
Wash/bathroom products
Small cleaning machines
Parts and accessories
Garbage bags
Cloths and wipes
Sponges and scourers
Dusters
Scrapers and blades
Applicators
Dust and cleaning mops
Buckets and wringers
Brooms and brushes
Trolleys and carriers
Batteries
Carpet cleaning accessories

NOTE: You will need to claim depreciation on items costing more than $300, unless you are running your own cleaning business. With the current $30,000 instant write off still available, small businesses can claim items costing up to $30,000 as a tax deduction.

Examples of tax-deductible equipment over $300

Vacuum cleaners
Floor polishing machines
Pressure washers
Blowers
Floor scrubbers
Carpet cleaners

Uniforms and protective items

If you are required to wear a cleaning company uniform and use protective clothes or equipment, and you paid for the items, then you can include them as deductions on your tax return. You can also claim the cost of cleaning or repair to your protective clothes and uniform.

These can include:

Compulsory uniforms
Laundering and repair of uniforms
Hats
Hair nets
Aprons/smocks

NOTE: You cannot claim for clothing that can be worn outside of work, such as plain black trousers or shirts.

Car expense tax deductions

Cleaners are the few people who may be able to claim their car journey to and from work. Generally, this journey is not claimable. However, the exception is if you are required to transport heavy items to and from your place of work. If you need to do this and are unable to leave your equipment at work, you can include this journey on your car expenses at tax time.

You can also claim travel between sites or to meetings or to pick up supplies. But be careful which method you choose to record your own car expenses. The simplest way may not always be the most profitable.

There are two methods available for when claiming the car expenses:

1. The Logbook method

Claim the actual business-use percentage of your car expenses
You need to keep a logbook of all your work related journeys including your odometer readings for a minimum of 12 consecutive weeks.
Claim fuel and oil costs using your actual receipts or estimate these expenses using the odometer readings as a basis.
You need proof of purchase for all other expenses for the car.

2. The Cents per kilometre method

The rate for the 2018-19 tax year is 68 cents per kilometre
You can claim a maximum of 5000 kilometres in a single tax year
You don’t need written evidence/receipts but you should be able to show how you reached that amount through a diary or schedule.

Travel expenses

Aside from the personal car use, cleaner tax deductions can also include travel expenses for journeys between workplaces, to meetings, job related training, workshops or conferences.

Travel expenses can include

Flights
Bus and train fares
Taxi fares
Hire car costs
Tolls
Parking

If you are required to stay away from home overnight you can also claim accommodation, food and incidental expenses. Remember you cannot claim travel expenses if you:

Did not pay the expense out of your own pocket
You were reimbursed by your employer
The travel was not related to your current job

Also as an employee, it’s common for travel costs to be accommodated in the form of an allowance, which appears on your payment summary. You should still keep records of all your expenses not just expenses that take you above that allowance.

Self-education

Personal development in any form is good for your self-esteem, your mind and your career. If you undertake training that is directly related to your current job, and you pay for all or part of the course or workshop – you may be able to claim those expenses.

Self-education expenses can include:

accommodation and meals (where staying overnight)
computer accessories
course fees
purchase costs of equipment or instruments costing $300 or less
the decline in value for items purchased costing more than $300
equipment repairs
travel expenses
home office running costs
internet usage
parking fees
phone calls
stationery/postage
student union fees
student services and amenities fees
textbooks
trade, professional, or academic publications

Home office expenses

You may be able to claim home office running costs if you required to do some of your work at home, like answering emails, creating quotes, paying bills or organising timetables. Or if you do an online course (directly related to your current job).

You can claim the running costs for your office as long as you have a designated office space and you are not simply using an area of a room that other people use.

Home office running expenses include:

the cost of power heating, cooling and lighting
phone cost are tax deductible
the work-related percentage of your internet costs
decline in value of equipment (computer, printer, scanner etc.)
decline in value of furniture and furnishings (desk, chair, filing cabinet)
the cost of repairs to furniture and furnishing used for your work
cleaning costs

You can claim this running expense in one of two ways:

Claim the amount of actual expense incurred through an established pattern of use.
Or claim 45 cents per hour of use.

Phone expenses

You can include phone expenses if you use your phone for work, keep a record of how much you use it for work and for private and include the work percentage of calls and expenses in your tax return.

Cleaners’ tax deductions – General

Other expenses that you may be able to claim include:

Work-related subscriptions
Memberships
Union fees
Gifts and Charity donations
Tax agent fees
Investment property interest/expenses
Dividend and share income expenses
Personal super contributions
Income support insurance (outside of Super)
Stationery
Work bags

localsearch

Tax Deductions for Midwives & Nurses

Tue, 17 May 2022 02:09:29 GMT

As a nurse, midwife or a health professional, it is common to purchase work-related items and pay for them yourself. And these out-of-pocket expenses are often valid tax deductions for the profession and are claimable on your next tax return.

Common tax deductions for midwives & nurses

While each individual is different, the items below are usually classified as tax deductions for nurses. Remember, you’ll need to keep your receipts and documentation for any expenses you claim.

Memberships and union fees: If you pay a membership fee to a nursing industry body or if you pay dues to a union, you can claim these costs.
Work Uniform: Health professionals often have specific clothing required for their job and often incur work uniform expenses. This clothing includes protective equipment, uniforms with a logo and laundering expenses for those items.
Stationery: This includes diaries, planners, logbooks, workbooks etc.
Computer/Laptop: If you have to use your personal computer or laptop for work, you can claim depreciation costs for these items (based on a percentage of legitimate work-related use).
Mobile phone: You can claim a percentage of your mobile phone bill if you use your mobile for work related phone calls.
Subscriptions: Subscriptions to nursing magazines, books and journals used to keep your knowledge current are claimable.
Home office expenses: You can claim a percentage of costs such as internet and landline if you have to work from home.
Fob watch: Required for those bedside observations.
Agency commission or fee: If working for an agency, the commission or fees that are paid to the agency are claimable.

Midwives & nurses, may be able to claim car expenses

In many cases, nurses are required to:

Transport patients
Travel between hospitals/medical practices during their shift
[Travel from a hospital to a second job (or vice versa)

Therefore, these trips will generally qualify as a tax deduction. You will need to keep a logbook to ensure your claim is correct and remember that travel between home and work is not claimable.

Nurses’ self-education expenses can be claimable.

Self-education expenses are common, especially when you’re studying further for your role. This includes short courses (i.e., first aid courses, OH&S etc.) and qualifications such as a related degree. However, if you’re studying to get a new job or a first job as a midwife or nurse, education costs are not claimable.

Blue Orchid Accounting

Advantages And Disadvantages Of Sole Trader Business Structure

Tue, 17 May 2022 01:05:44 GMT

Sole Proprietorship – Advantages and Disadvantages

Consider operating as a sole trader if your business is small and capital investment is minimal.

As a sole trader, you:

use your individual tax file number when lodging your income tax return
report all your income in your individual tax return, using the section for business items to show your business income and expenses (there is no separate business tax return for sole traders)
apply for an ABN and use your ABN for all your business dealings
register for Goods and Services Tax (GST) if your annual GST turnover is $75,000 or more
pay tax at the same income tax rates as individual taxpayers and you may be eligible for the small business tax offset
put aside money to pay your income tax at the end of the financial year – usually, you will do this by paying quarterly Pay As You Go (PAYG) installments
claim a deduction for any personal super contributions you make after notifying your fund.

As a sole trader you can’t claim deductions for money ‘drawn’ from the business. Amounts taken from the business are not wages for tax purposes, even if you think of them as wages.

Hiring people as a sole trader

You can employ people to help run your business under the sole trader business structure.

If you do decide to take on any employees there are obligations you must comply with such as workers’ compensation insurance and superannuation contributions.

Advantages of sole trading include:

you’re the boss
you keep all the profits
start-up costs are low
you have maximum privacy
establishing and operating your business is simple
it’s easy to change your legal structure later if circumstances change
you can easily wind up your business.

Disadvantages of sole trading include:

you have unlimited liability for debts as there’s no legal distinction between private and business assets
your capacity to raise capital is limited
all the responsibility for making day-to-day business decisions is yours
retaining high-calibre employees can be difficult
it can be hard to take holidays
you’re taxed as a single person
the life of the business is limited.

TO Superannuation Legislation changes- effective as of 1 January 2020

If you’re across the recent Australian Taxation Office’s (ATO) announcements, you’ll know that the way Superannuation Guarantee Contributions (SGC) are calculated is changing. From 1 January 2020, salary sacrifice amounts can no longer be used to reduce your SGC obligations. Please take a look at the ATO website for more information .

What do I need to do?

The next time you do a pay run with a payment date on or after 1 January 2020, Xero will help you process this correctly by flagging employees where SGC has been nominated to be reduced. We will highlight the employee name and whether they triggered the validation through salary sacrificed super, and/or a deduction. The alert will remind you how to update these settings to comply with the ATO change, and you can find information about how to do this here .

If you’ve already posted a pay run with a payment date on or after 1 January 2020, you may need to review this to make sure the calculations are correct. An easy way to do this is to revert to make any amendments.

Where do I find more information?

Here is the link again to a step-by-step guide to the simple steps you need to take to adjust Xero Payroll to make sure you are all set up.

localsearch

Holiday Rentals Tax Deductions:

Tue, 17 May 2022 00:55:55 GMT

Do you own a holiday rental property? You could be eligible for valuable tax deductions.

Holiday properties are a common type of investment property here in Australia.

Holiday rentals are usually managed by an agent or real estate company, for a fee. Although the operating costs may be higher than other types of rentals, the combination of high rents, hands-free operation, property value growth and tax deductions, make the holiday rental property an attractive investment for some people.

Completing your tax return is important to ensure, that you receive every tax advantage you deserve. You can claim a lot of your expenses, but the ATO watches carefully, and they are remarkably good at detecting false or “unsubstantiated” claims. So, let’s cover some of the basics to help you manage the tax deductions of your holiday property, and your claim within the tax return….

The first thing to know, is that keeping records about your expenses is not optional. If you don’t keep records and save the receipts, you could lose out in tax deductions every year – and you’ll be vulnerable to serious ATO matters if your claims are reviewed or audited.

Is my family holiday home eligible for tax deductions?

You are only eligible for holiday rental tax deductions for the period when a home is advertised and available for rent (or is rented out).

Note: Don’t lump all of your expenses together and don’t include expenses for your personal use of the property. The ATO monitors for this type of thing. If the ATO queries your claims, and you can’t provide the time-specific evidence for your expenses – plus show how you calculated the claimed portion – then you could face heavy tax penalties or fines plus the repayment of taxes from previous years.

If you rent out your holiday property, there are numerous deductions you can claim.

What holiday property expenses can I claim as a tax deduction?

Expenses you can claim as tax deductions for your holiday property include:

Maintenance & repair costs
Yard maintenance
Advertising costs
Pest control
Insurance
Cleaning
Body corporate fees
Council rates
Property insurance
Interest (on the funds borrowed to purchase the home)
Depreciating assets
Capital works deductions
…and more.

Remember, you can’t claim holiday rental tax deductions for periods when the property is used for personal purposes (which includes staying there yourself, letting it to family & friends, or time when it’s not advertised and available for rent).

Can I claim travel expenses when I inspect or repair a holiday rental property?

From 1 July 2017, travel expenses have been made non-deductible to the extent that the travel has been incurred in gaining or producing assessable income from the use of residential rental premises. Nor are such costs included in the cost base of the rental property for capital gains tax purposes. In this context, travel expenses include the costs of all travel to inspect, maintain or collect rent from a residential rental property and will include motor vehicle expenses, taxi or hire car costs, airfares, public transport costs and any related meals or accommodation costs incurred for the above purpose.

However, the above change will not apply to an entity if they incurred such travel costs in the course of carrying on a business (including a rental property business), or if the taxpayer is either a corporate tax entity, a superannuation fund other than an SMSF, a public unit trust, a managed investment trust, or a partnership or a unit trust where each member of the partnership or unit trust is one of the aforementioned excluded entities. Nor will the change apply where the premises are commercial premises as opposed to residential premises used for residential accommodation.

The examples below will help you determine what holiday rental tax deductions you can claim.

1. My holiday rental property is leased out frequently.

There are similar rules and regulations between a general rental property and a holiday home, such as claiming expenses for the property for the duration of the lease.

However, with a holiday rental you will need to divide your claimable expenses if your holiday home is not genuinely available or is ever used for personal purposes such as:

When you rent it out free of charge privately to friends, family or colleagues.
When you discount the rent to family or friends and charge them less than usual.
When you use the property yourself.
When you choose to leave it vacant and don’t advertise it for rent (or don’t accept rental offers).

2. Is my holiday property “genuinely available”

The ATO are crack down on holiday homeowners who don’t genuinely try to rent out their property. A few indicators of this include;

Unreasonably limited advertising, such as advertising only at work, to friends or outside common holiday periods.
Unreasonable conditions for renting, such as requiring references for short stays or restricting children and pets, which significantly limits the pool of potential renters for a property.
Rejecting rental enquiries or offers for inadequate reasons.

The ATO could review the above issues (and more) to determine if the property is a genuine holiday property (or a private holiday home).

3. My holiday property is not advertised or available right now

If you don’t rent out the property at all, you cannot claim any expenses relating to the property. Hold on to your receipts anyway – when it comes time for you to sell that property, you will need to have those records to help determine your capital loss or gain.

4. How to divide the holiday rental tax deductions between rental and private usages.

Holiday property deductions only apply to the periods of time when the property is rented or available for rent. You can’t claim tax deductions for a holiday rental property if it is being kept vacant or used for non-rental or private purposes.

For example, John and Natalie own a holiday rental property on the Gold Coast.

The expenses for operating and maintaining the holiday home were $25,000 for the tax year, including interest, maintenance, cleaning, repairs and rental agents.

The property is available to rent for $550.00 per week. It was occupied for 32 weeks in the year, earning $17,600 in rental income. It was available for rent, but vacant, for 20 weeks. Over Christmas John and Natalie stayed in the property themselves for 6 weeks. Therefore, the property was either available for rent or was occupied by renters for 46 weeks out of 52 weeks.

Remember, John and Natalie can only claim expenses for weeks when the property was genuinely available for rent on the market and/or was rented out.

46 weeks divided by 52 weeks X $25,000 total expenses = $22,115.38 claimable expenses

John and Natalie can claim $22,115.38 in rental property tax deductions between the two of them ($11,057.69 each.) in their tax returns.

5. How to divide the holiday property tax deductions between two owners

If you share your property with another person, you will need to claim the deductions correctly. The ATO watches out for couples who split income and deductions unequally for tax advantages, and even hands out penalties. If two partners own equal shares of a property, then each can each claim equal shares of the expenses. If one partner owns 20% of the property, that person can only claim 20% of the expenses.

These tips are of general nature only. Speak to a qualified tax agent to get advice on the tax breaks that are relevant to your situation.

Blue Orchid Accounting

Child Care Workers Tax Deductions

Tue, 17 May 2022 00:39:15 GMT

Do you spend your days caring for or supervising our future generations? Whether you’re a childcare worker, childcare assistant, nanny, kindergarten assistant or pre-school aide, you are entitled to some attractive tax deductions that you may have been unaware of. Use our childcare workers tax deductions guide below to make sure you are getting the most out of your tax return this year!

What Are the Common Tax Deductions for Child Care Workers?

Uniform and Clothing Expenses for Child Care Workers

Firstly, if you are required to wear any branded clothing for work, this is tax deductible. This could include shirts, hats, pants or skirts. The general rule is if it’s company specific and not available to the general public, then it is tax deductible.

On the other hand, items that are available to the general public like plain black pants or a black skirt cannot be claimed, even if they’re required as part of your uniform by your employer.

You can also claim the laundry and cleaning costs of these clothes. Just keep track of how many washes you do per week. Then, when we complete the tax return, we will do the maths for you to ensure you get the maximum claim.

Protective Items

If you are doing art activities, cooking or running around outside with little (or big) ones, the below deductions could apply to you:

Aprons
Smocks
Gloves
Sun protection (hats, sunscreen, sunglasses)
Protective footwear

Important note: You can only claim items that you’ve paid for yourself. If your employer provides any of the above items or reimburses you for purchases you make, you can’t include these on your return.

Child Care Workers Training and Self-Education

Training is a common tax deduction for childcare workers. It’s a job which often requires further up-skilling and training to ensure you meet all necessary industry requirements.

As long as the course relates directly to your current job, the fees and related expenses are usually tax deductible. Take a look at the list of common deductions below:

Certificates
Diplomas
In-service / professional development courses
Textbooks or manuals required for training
Stationery
Equipment and materials required
Blue card renewals (not the initial application)
Travel expenses including flights, transport, meals and accommodation (if required to stay overnight).

To find out more, read our self-education expenses deduction guide.

Car Expenses

If you are ever required to pick up supplies, attend meetings, excursions, sporting events or training courses, the cost of using your car is usually tax deductible. (Just keep in mind that travel from home to work is not claimable).

For most childcare workers travel is incidental, so the cents per kilometre rate of 68c per km works best. Just be sure to keep track of the kilometres you travel as you can claim up to 5,000km per year. However, if you’re someone who drives a lot more as part of your job, the logbook method may be more beneficial to you.

Have a look at our car expenses deductions guide for the different ways you can claim and decide which method works best for you.

Example #1

Bec attends sporting activities every Tuesday and Thursday afternoons with her group of children. She drives her own car from the childcare centre to and from the venue, which comes to a total of 10.5 km each day.

Using the cents per work-related kilometre method, Ellie calculates the following:

10.5 km x 2 days = 21 km per week
21 km x 48 weeks (Not 52 as Bec has 4 weeks holiday per year) = 1,008 km
1008 x $0.68 = $685.44

Therefore, Bec can claim a total of $685.44 on her tax return for car expenses this year!

Equipment and Work Materials

Childcare workers are often out of pocket supplying various items for the children they care for or supervise. Below are some examples of the tax deductions you can claim often claim back:

Teaching aids
Art and craft materials
Musical instruments
Prizes
Toys
Stationery
Food and toiletries

If you are purchasing any of the above items for work purposes, these can be claimed back on tax. Just make sure you are keeping track of your receipts as you go and that you haven’t been reimbursed for those purchases.

Mobile Phone Expenses

It’s not unusual for childcare workers to use their personal phone to contact other staff members or parents.

If you make (or receive) calls for work on your personal phone it’s likely you can claim a portion of your monthly bill as a tax deduction. Just go through one of your monthly bills and work out what percentage of your calls are work related. You can claim that portion of your bill as a deduction on your return.

Example #2

Jules is a kindergarten supervisor and often uses his personal mobile phone to call staff to cover shifts as well as call suppliers. As a result, these costs are tax deductible. He chose a monthly phone bill that was an accurate representation of a ‘typical’ month.

He made 24 calls in total and 12 were work related. That equals 50% of Jules’s total phone bill. Therefore, as Jules pays $59 per month, he can now claim half of that back on his tax return.

Half of $59 = $29.50

$29.50 x 12 months = $354.00 that Jules can claim on his yearly tax return!

Other tax deductions for childcare workers:

Association or union membership fees
Police and working with children check
Work related books or library additions
Work related internet (you can claim the percentage of your bill that applies to work related use)
Organising and attending excursions, day trips or events
Donations to registered charities (does not apply if you received something in return e.g., Raffle tickets)
Previous year’s tax agent fees – therefore, whatever you spent on your tax return last year is tax deductible

We are here to make the process as smooth and easy as possible. Should you have any questions regarding your tax deductions or entitlements, please don’t hesitate to contact us at toni@accountant.com . If you prefer, you can head to our main page and send us a message.

Blue Orchid Accounting

Superannuation Co-Contribution: Get More Money For Your Super

Tue, 17 May 2022 00:03:31 GMT

Ever wonder about how you can better prepare yourself for retirement? If you earn less than $46,920, you may be able to give your super a nice boost – with very little sacrifice! Read on to find out how you can take advantage of the Federal Government’s superannuation co-contribution scheme.

What is it?

The superannuation co-contribution scheme means that on top of your employer putting a percentage of your income into your super fund, you can also add a little extra.

Here’s the magical part: The government will pay you $0.50 for every dollar you contribute up to a maximum of $500 per year!

To be eligible you must make your contribution from your after-tax income to your super fund before the 30th June each year to be eligible.

How?

There are a couple of ways you can go.

The most popular way our clients take advantage of superannuation co-contribution: Ask your employer to take an extra $40-$80 per month out of your after-tax salary and deposit it into your super fund. This is only $10 or $20 per week and it’s hardly noticeable once you get started.
Or if you prefer, you can add a lump sum deposit to your super fund in one go.

No matter which method you choose, these small contributions can make a massive difference to your wealth later in life, because the government adds up to $500 per year on top of your own contributions

What if I’m self-employed?

If you are self-employed, you may also be able to make a claim for personal superannuation contributions you make to your super fund up to a certain amount. This varies depending on your individual circumstances and your contribution must be made by June 30 of each year.

My income is greater than $46,920: Am I eligible for Superannuation Co-Contribution?

If you earn more than $46,920 then ask your employer about how you can salary sacrifice some of your pre-tax income into your super fund instead. This will reduce your taxable income on your PAYG certificate meaning you pay less tax. This is because the amount sacrificed does not appear as income and therefore the amount of tax you pay decreases.

Want more information?

If you would like help working out how you can benefit from the super co-contribution scheme or more information about salary sacrificing, please contact us by phone or email.

*The Government co-contribution is up to $500 for incomes up to $31,920. For every dollar earned over $31,920 and up to $46,920 you should subtract 3.33 cents from the amount the Government will match.

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Advantages and Disadvantages of a Partnership Business Structure

Tue, 17 May 2022 00:00:44 GMT

Consider a partnership if the number of people involved is small (up to about 20) and limited liability is not necessary.

There are 3 main types of partnerships:

General partnership (GP) – is where all partners are equally responsible for the management of the business, and each has unlimited liability for the debts and obligations it may incur.
Limited partnership (LP) – is made up of general partners whose liability is limited to the amount of money they have contributed to the partnership. Limited partners are usually passive investors who don’t play any role in the day-to-day management of the business.
Incorporated Limited Partnership (ILP) – is where partners in an ILP can have limited liability for the debts of the business. However, under an ILP there must be at least one general partner with unlimited liability. If the business cannot meet its obligations, the general partner (or partners) become personally liable for the shortfall.

In a partnership business structure:

income, losses and control of the business are shared among the partners
the partnership has its own TFN and must lodge an annual partnership return showing all income and deductions of the business
the partnership doesn’t pay income tax on the profit it earns – each partner reports their share of the partnership income in their own tax return
each partner pays tax on their share of the partnership profit at the individual tax rate and may be eligible for the small business tax offset
the partnership must apply for an ABN and use it for all business dealings
the partnership must be registered for GST if its annual GST turnover is $75,000 or more.

As a partner you can’t claim deductions for money drawn from the business. Amounts you take from a partnership are not wages for tax purposes.

Advantages of a partnership include:

two heads (or more) are better than one
your business is easy to establish, and start-up costs are low
more capital is available for the business
you’ll have greater borrowing capacity
high-calibre employees can be made partners
there is opportunity for income splitting, an advantage of importance due to resultant tax savings
partners’ business affairs are private
there is limited external regulation
it’s easy to change your legal structure later if circumstances change.

Disadvantages of a partnership include:

the liability of the partners for the debts of the business is unlimited
each partner is ‘jointly and severally’ liable for the partnership’s debts; that is, each partner is liable for their share of the partnership debts as well as being liable for all the debts
there is a risk of disagreements and friction among partners and management
each partner is an agent of the partnership and is liable for actions by other partners
if partners join or leave, you will probably have to value all the partnership assets, and this can be costly.

Individual states and territories govern partnership laws. Read about the partnership laws in your state or territory.

ACT – Partnership Act 1963

NSW – Partnership Act 1892

NT – Partnership Act 1997

QLD – Partnership Act 1891

SA – Partnership Act 1891

TAS – Partnership Act 1891

VIC – Partnership Act 1958

WA – Partnership Act 1895

Blue Orchid Accounting

Advantages and Disadvantages of a Company Business Structure

Tue, 10 May 2022 07:34:21 GMT

A company is a distinct legal entity separate from its shareholders or officers. Consider this structure if you want limited liability but be aware of the strict legal obligations and set up costs.

In this business structure, the company:

must apply for a tax file number (TFN) and use it when lodging its annual tax return
is entitled to an Australian business number (ABN) if it is registered under the Corporations Act 2001. A company not registered under the Corporations law may register for an ABN if it is carrying on an enterprise in Australia
must be registered for GST if its annual GST turnover is $75,000 or more
owns the money that the business earns – the individuals who control the business cannot take money out of the business, except as a formal distribution of the profits or wages
must lodge an annual company tax return
usually pays its income tax by instalments through the pay as you go (PAYG) instalments system
pays tax at the company tax rate or lower company tax rate (if a base rate entity)
may be eligible for small business concessions
must pay super guarantee contributions (SGC) for any eligible workers. This includes you, if you are a director of the company, and any other company directors.

So in Australia, the most common types of companies are:

‘Proprietary Limited’ companies (cannot raise money from the general public through share issues)
‘Public’ companies (usually formed to raise or borrow public money by listing the company’s shares for trading on a stock exchange).

All companies are governed by the Australian Securities and Investments Commission ( ASIC ), which administers the, which administers the Corporations Act 2001 ( Commonwealth ) and other legislation. Public companies must also comply with the rules of the Australian Stock Exchange.

NOTE: Companies and directors have key legal and reporting obligations they must comply with. Some of the more common obligations include:

update ASIC within 28 days of key changes to company details
keep financial records
understand and comply with all your obligations as a director

Advantages of a company include:

liability for shareholders is limited
it’s easy to transfer ownership by selling shares to another party
shareholders (often family members) can be employed by the company
the company can trade anywhere in Australia
taxation rates can be more favourable
you’ll have access to a wider capital and skills base.

Disadvantages of a company include:

the company can be expensive to establish, maintain and wind up
the reporting requirements can be complex
your financial affairs are public
if directors fail to meet their legal obligations, they may be held personally liable for the company’s debts
profits distributed to shareholders are taxable.

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Advantages and Disadvantages of a Trust Business Structure

Tue, 10 May 2022 06:54:57 GMT

A Trust is formed when a trustee holds the assets and runs the business, distributes incomes to beneficiaries, and follows the provisions in the trust deed. Consider a Trust if more than one family is involved in running the business.

If you use a trust for your business structure, the trust:
must have its own tax file number (TFN) for lodging its annual tax return
must apply for an ABN and use it for all business dealings
must be registered for GST if annual GST turnover is $75,000 or more
may be liable to pay tax depending on the wording of its deed and whether any income the trust earns is distributed to its beneficiaries
may be able to access small business tax concessions
must pay super for any of its employees (this may include the trustee if they are also employed by the trust).

Who pays income tax?

While a trust must lodge an annual tax return, whether the trust pays tax (or not) is determined by how the trust income is distributed:

if all trust income is distributed to adult resident beneficiaries, the trust is not liable to pay tax – each beneficiary reports the income in their own tax return
if all or part of the net trust income is distributed to non-residents or minors, the trustee is assessed on that share on behalf of the beneficiary – these beneficiaries may need to declare their share of the trust’s net income in their own income tax returns, and can claim a credit for the tax paid on their behalf by the trustee
where the trust accumulates net trust income (does not distribute it), the trustee is assessed on that accumulated income at the highest individual tax rate.

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Taxable Payments Reporting for Couriers and Cleaners

Tue, 10 May 2022 06:01:14 GMT

From 1 July 2018, if you are a business that provides courier or cleaning services you will need to report payments you make to contractors if:

the payments are for courier or cleaning services
you have an Australian business number (ABN).

Contractors can be sole traders (individuals), companies, partnerships or trusts.

Payments must be reported to the ATO each year using the Taxable payments annual report.

Businesses that are required to report will need to collect the relevant information from 1 July 2018. The first annual report will be for the 2018-19 financial year and is due by 28 August 2019.

Couriers:

If you’re a business that provides courier services, you need to report payments you make to contractors that are wholly or partly for courier services.

Courier services include activities where items or goods are collected from, and/or delivered to, any place in Australia using a variety of methods including by truck, car, station wagon, van, ute, motorcycle, motorised scooter, bicycle or other non-powered means of transport, or on foot.

Courier services do not include:

passenger transport services e.g. buses and taxis, transporting of blood, blood products, organs or tissue
freight transport.

Cleaners:

If you’re a business that provides cleaning services, you need to report payments you make to contractors that are wholly or partly for cleaning services.

Cleaning services include any of the following activities undertaken on a building, residence, structure, place, surface, transport/vehicle, industrial machinery or equipment and for events:

Interior cleaning
Exterior cleaning (except sand blasting or steam cleaning)
Carpet cleaning
Chimney cleaning
Gutter cleaning
Road sweeping and street cleaning
Swimming pool cleaning
Park and park facilities cleaning.

‘Events’ include staging of sporting, cultural, scientific, technological, agricultural or entertainment events and exhibitions.

‘Transport/vehicles’ includes trains, trams, buses, ferries, airplanes, ships, trucks, cars and other motor vehicles.

Payments you need to report:

If your business provides cleaning services, you only need to report payments you make to contractors for cleaning activities. Similarly, if your business provides courier services, you only need to report payments you make to contractors for courier activities.

If an invoice you receive from a contractor includes both labour and materials, whether itemised or combined, you are required to report the total amount of the payment.

Details you need to report:

The details you need to report for each contractor include:

ABN (where known)
name
address
gross amount you paid for the financial year (this is the total amount paid including GST)
total GST included in the gross amount you paid.

Payments you don’t need to report:

There are specific payments you don’t report on the Taxable payments annual report:

Payments for materials only
Unpaid invoices as at 30 June each year
Pay as you go (PAYG) withholding payments, such as those you make to employees, as these amounts are reported in your PAYG withholding payment summary annual report
Payments within consolidated groups – if you’re in a consolidated or multiple entry consolidated group for income tax purposes, you don’t need to report payments you make to another member of that same group. This is because members of a consolidated or multiple entry consolidated group are effectively taxed as a single entity. However, each entity in the group will need to consider if they are a business that provides courier or cleaning services, and report payments they make to contractors outside the consolidated group, for courier or cleaning services respectively. If so, they will need to lodge a report.

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To Do Before Starting The First Pay Run In The New Financial Year

Fri, 20 Aug 2021 05:34:50 GMT

The start of a new financial year at tax time always looks promising, but also a bit daunting. But before you embark on a new year, your friendly central coast tax accountant wants to advise there’s still a couple of pages to close from the last financial year.

Payment summaries need to be completed and given to your staff by the 14 July, and most importantly the new tax tables need to be updated in your software so your staff are paid correctly for the first pay run of the new financial year.

We’ve put together a list of the end of payroll year, which takes you through the eight steps you need to complete before you do the first pay run of the new financial year.

Step-By-Step:

Process the last pays for the 2017/2018 financial year
Print the key payroll reports
Reconcile PAYG withholdings
Identify workers under labour hire arrangements
Print Payment Summaries
Back up the company file
Close the payroll year
Load new payroll tax tables

Firstly, you need to complete the final pays for the 2017/2018 financial year, and then print these key payroll year reports:

Employees Activity Summary
Employee’s Register Summary
Entitlements Balance Details
Superannuation reports

These reports have all the information you will need to reconcile your year-to-date PAYG withholding figures, and this process will help to check that you have remitted the full amount of PAYG withholdings that you’ve collected during the payroll year (the ATO is interested in this part!).

Next, ensure your employees’ payment summaries are correct, printed and available. This includes identifying any staff under labour hire arrangements.

And now comes the fun stuff – backing up your company file, install the 2019 compliance updates if you accounting program requires it, closing your payroll year, and load the new tax tables (if your accounting program requires it).

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20 Tips To Start A Business (Part 2)

Fri, 20 Aug 2021 05:25:21 GMT

May 2, 2018/in General Information /

Tip #11: Business Plans

Get that rough draft you had done and now start fine-tuning it. This section will help the question of cash flow, type of customers you are after, the type of marketing you will require, etc, etc.

Investing the time into this section of the business can also help you obtain finance if required.

Download a free Business and Marketing Plan template from the hyperlinks.

Tip #12: Workshops

When in the start-up phase of your business, you will sometimes feel lonely—working late nights, early mornings and even weekends, which means you get to spend less time to talk to people face-to-face. This is why is it important to get out and connect with like-minded business owners. Workshops are a good place to start. If looking for start-up events in your area, the Event Finder search tool is a great place to start.

Tip #13: Insurances

You might think it is too early to be considering insurance but now is the time to start doing your research on the option you have.

Insurance is important if you employ staff, operate a motor vehicle or run a service based business.

Before taking up the insurance make sure you ask a lot of questions to understand what you are covered for.

Tip #14: Buy or Lease a Premise

At some stage if you are starting a brick and mortar business, you will have to make the decision of whether to buy or lease a commercial premise.

Like most decisions, each has its advantages and disadvantages, so it is good practice to talk to your business adviser about this issue early in the piece.

Tip #15: Business On-line

Logo design= $560. Website= $2,500, Available for booking, sales and leads 24/7= Priceless

Whether you are selling goods or services on-line or through a physical brick and mortar business, it is likely that some of your potential customers are searching on-line for business similar to yours. That is why having an on-line presence such as a website is invaluable to your business.

Tip #16: Finance

Depending on the size of the start-up of your business, you might need some finance to help you to move forward.

Researched and well-planned business and marketing plans are a must. This is where your business plan is vital in helping you gain that much need finance with lenders and investors.

Some of the things you need to know when applying for finance:

Be prepared for tricky questions, have your homework done and prepared as though you are attending a job interview
Know what your financial limits are for repaying the loan
As for your business, do your research and shop around for something that you are comfortable with
Dress to impress, as first impressions count and know your business and the plan you have for it

Tip #17: Social Media

Social Media describes the on-line networks and tools which you can use to help promote your business presence.

If you haven’t already done so, go and start creating your accounts to save your business name on the sites that interest you such as Facebook, Google+, LinkedIn to name a few. Even if you are not quite ready to start, it is a good idea to have your account name “saved” to avoid disappointment in the future.

Tip #18: Pricing

So what do you charge for your product or service? It can be tricky trying to find the balance turning a profit and being competitive and stay true to your business plan.

Depending on the type of business, there are a number of pricing strategies that can help when setting your prices.

If feeling overwhelmed by numbers the Pricing business topic from Business.gov.au has useful information that can help with the topic of what price to charge.

Tip #19: Customers

Doesn’t matter if you have a professional looking website, million dollar logo or best tasting product- your customers are the most important item to your business.

Understanding your customers wants and needs are the critical issue when you are working through your sale pitch for moving the customer ” I might need it” to “I must have this”.

The customer business topic has some useful information for start-up business including how to:

find customers
provide good services
handling of customer complaints
seek and use customer feedback

Tip #20: Payment and Invoicing

This might seem like an easy decision but making sure your customers pay you will depend on the payment method. After all, you can’t run a profitable business if you can’t get paid.

Food for thought:

Will you use credit card facilities?
Can your customers pay over the phone?
Has the business got an on-line payment system?
Or are you strictly cash?
No matter what kind of payment system you offer, you will need to provide a receipt for the goods or the service you have provided.

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20 Tips To Start A Business (Part 1)

Fri, 20 Aug 2021 05:19:38 GMT

Before we start with logos, branding or stock—it is very important to prepare yourself that your idea is going to be a viable business. The following 20 tips will help you get your business up and running from that idea to a possible business.

Tip #1:

It’s important to consider whether you really understand what’s involved and whether you’re suited to business and self-employment. Start by asking yourself these questions:

How do I choose a business name?
What skills do I need to start a business?
What are my business goals, objectives and skills?
How much income will my business need to generate?
Is this a business or a hobby?
What are the advantages and disadvantages of starting my own business?
Have you written your business plan and marketing plan?

Tip #2: Business Plans

Sit down and do a business plan for the business you have in mind. It doesn’t have to be perfect the first time round but writing down your thoughts on paper can be beneficial in this early stage of setting up of the business.

A business plan can help
set out your business goals
decide who your customers are going to be
set the direction of your business

Tip #3: Right qualifications

To become a successful business, it takes more than just luck—there are a number of main ingredients you will need.

Ask yourself:

Do I have the skills to undertake this type of work?
Do I have the support I need to help run this business?
Do I need to train myself for the skills required for the business?
These are just some of the things you should be asking yourself before you start your business.

Tip #4 Advice and Support

We all need help with our personal lives, so why not also for your business?

Whether you are wanting to be a brickie, health and safety adviser, or running a market stall—if you are starting up a business, it is important to receive the advice and support you require.

There are plenty of options out there to help with you start up your business, including webinars, start-up events, and networking groups to name a few.

Tip #5: Naming your business

This can be somewhat difficult to do—what do you call your business?

You will also need to make sure that your dream name is available before you start hiring or design your webpage, business cards, etc

Tip #6: Business Structure

Deciding on the type of business structure is an important part of the start-up process. The type of business structure you have for your business can affect the type of reporting requirement you have, the type of licences you need and the amount of taxes you pay.

The 4 major types of business structures available are

Sole Trader
Partnership
Company
Trust

Tip #7: Licences, Permits and Registrations

Dealing with the Government is time-consuming but you don’t have to make it harder than what it has to be on yourself.

To find out what licences, permits or registrations you require to run your business legally, the first step would be the ABLIS (Australian Business Licence and Information Services) webpage.

Tip #8: Register for an ABN

Q. What is an ABN (Australian Business Number)?

A. It is an 11 digit number required to operate a business here in Australia.

If running your business in a company structure, the ABN is different to the ACN (Australian Company Number). To apply for an ABN, you must be carrying on a business with a view of making a profit to qualify for an ABN.

Tip #9: Taxes

That dreadful word we all hate but it is important that you get this correct from the start-up date of your business to avoid a bill or fine in the future.

Not all business are required to register for all taxes—this will depend on your annual turnover and whether or not you are employing staff.

Some of the taxes that a business might need to register for include:

Tax File Number (TFN)—Required
Australian Business Number (ABN)—Recommended. If you do not register for an ABN, other businesses must withhold 49% from payments they make to you for tax purposes
Australian Company Number (ACN)—Required for Companies
Goods and Services Tax (GST)—Required for most business and is compulsory if you have a gross turnover of $75,000 of more
Pay As You Go (PAYG) withholding. You must register for PAYG withholding if you withhold an amount from a payment for tax purposes
Payroll Tax—Required in certain circumstances
Fringe Benefits Tax (FBT)—Required in certain circumstances
Fuel Tax Credits

Tip #10: Record Keeping

Start your record keeping from day one and this will help save you time and money further down the road. Keeping records doesn’t have to be hard but it does need to be accurate. Whether you choose the manual or electronic version, it is a good idea to get some general advice before you start.

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21 Fun Facts To Lighten Up Tax Time

Fri, 20 Aug 2021 04:55:24 GMT

Here Are Some Fun Facts To Lighten Up Tax Time

1. The word “tax” came from the Latin word “taxo” which means “I estimate.”

2. Governments have been imposing taxes for thousands of years. There are recordings of tax payments made in ancient Mesopotamia circa 2500 B.C. At the time, people who didn’t have money to pay taxes often had to pay with livestock, food, or labor.

3. Even Albert Einstein found taxes inscrutable. He once said, “The hardest thing in the world to understand is the income tax” (that is, according Leo Mattersdorf, the math genius’ tax preparer).

4. Aside from the nation of Eritrea in Africa, the United States is the only country that requires citizens to pay taxes on their income if they work and live outside the country. Some wealthy individuals have renounced their citizenship and have moved to another country to avoid paying taxes.

5. Violent Chicago mobster Al Capone famously got caught on tax evasion charges. Other mobsters, including Al’s brother Ralph “Bottles” Capone, Frank Nitti, and Jake “Greasy Thumb” Guzik, were also charged. Among his debts to society, Al Capone had to pay $215,000 plus interest in back taxes.

6. Fortunetellers, astrologers, and witches were added to Romania’s labor code in 2011, meaning they have to pay income tax and contribute to the country’s social programs. Some witches cast curses on the government in response — although others felt it legitimized their work.

7. Ireland exempts up to 50,000 euros in profits from the sale of qualified artistic work from income taxes. Grants, awards, and prizes may also be tax exempt if they are related to the artist’s work.

8. Beards are back in vogue, but there were times when having a beard was costly. During the 16th century, King Henry VIII imposed a tax on beards that increased with the wearer’s social status. Eventually the tax was dropped, but his daughter, Queen Elizabeth I, reintroduced a beard tax on anyone with more than two weeks’ worth of growth. In Russia, Peter the Great wanted to Westernize the country and required every man, except peasants and clergy, to buy a “beard token” to prove they had paid up. The tax lasted from 1698 to 1772.

9. Talk about taxes’ ability to darken a day — in 1696, a window tax was introduced in England and Wales. It was assessed as a flat property tax plus a tax based on the number of windows a home had. As a result, some people bricked up their windows and new buildings sometimes were designed with fewer windows. Scotland and France imposed similar taxes in the 1700s.

10. In Roman times, urine and the ammonia within it were collected for uses such as tanning and laundering. Emperor Vespasian imposed a tax on the buyers of urine from public urinals. Today words for “urinal” in French, Italian, and Romanian are derived from the emperor’s name.

11. From 1784 to 1811, the British government taxed hats based on price. A stamp was pasted inside the hat, and anyone caught with a stamp-less hat had to pay a fine. At least one stamp forger was sentenced to the harshest penalty: death.

12. As Benjamin Franklin said, “In this world nothing can be said to be certain, except death and taxes.” Although he’s often credited with the idea, that line comes from a 1789 letter, and similar quotes date to 1716 and 1724.

13. Excise taxes are known as “sin taxes.” These are the taxes placed on tobacco, alcohol, and gambling.

14. Did you know, Maine has been taxing blueberries since 1882, and any Maine resident who grows, sells, handles, processes or buys blueberries pays a tax of three-quarters of a cent on every pound of blueberries grown, sold, handled, processed or bought! Since Maine produces 25% of all the blueberries in the US, the state make a pretty penny at tax time! Think about that the next time you enjoy a slice of blueberry pie.

15. It will cost you four leu to spend the night with your sweetheart at Alexandru Ioan Coza University in Rumania, even if you’re only burning the midnight oil and not burning with passion. With 1,800 students living on campus, the university is raking in a tidy sum of about 28,000 annually, which is roughly $8,745 US, 6,651 Euro or 5,985 British pounds. The money paid in tax goes toward repairs in the dorm buildings. Evidently, the sex tax receipts have become trophy items with the young men.

16. The Monagesques* pay no income tax at all – zip, zilch, nada! The world’s second smallest country (actually, it’s a city state), it has become something of a tax haven for the international high rollers. In Bulgaria, you’ll pay a flat income tax rate of 10%, regardless of how much you make, and Russia imposes a 13% flat tax, the Ukraine and the Czech Republic will take 15%, while Rumania assesses a 16% flat income tax rate and Iceland does too, for 23% of your income.

17. Taxes can be either direct or indirect. A direct tax is a tax paid directly to the government, such as income, Social Security, sales, property, and excise. An indirect tax is one that is passed on to another person or group. For example, the cost of fuel includes a tax that consumers pay. In other words, instead of oil companies paying that tax, they pass it on to consumers.

18. The most famous protest of taxation by the American colonies was the Boston Tea Party. On December 16, 1773, colonists dumped 342 chests of tea into the Boston Harbor to protest the Tea Act and other oppressive tax measures. They argued there should be no “taxation without representation.”

19. The first computers used by the ATO were used primarily for issuing the five million refund cheques sent out each year in the mid 1960s.

20. The Australian Federal Budget is prepared by the Treasurer and presented to parliament. After the Budget has been debated and approved by both Houses of Parliament, taxes are collected in

line with the Budget. The Parliament decides on the levels of tax – not the Australian Taxation Office (ATO).

21. In 2009, the following countries paid the highest taxes-the Danish income tax rate is 38-59% of total income. Ouch! Swedes pay 0-57%, followed by the Norwegians (28-49%), the Dutch (0-52%), Austrians (21-50%), Belgians (15-50%), Australians (17-45%), Germans (15-45%), Italians (23-43%), Spaniards (24-43%), the French (5-40%), and the Brits (0-40%). If you’re an American or a Canadian, you should feel better about income tax rates of 10-35% and 15-29% respectively!

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5 Forgotten Tax Deductions

Fri, 20 Aug 2021 04:48:51 GMT

Many People Overlook Some Sizable Deductions That Could Be Worth Hundreds Or Even Thousands Of Dollars

Deductions are items that you can claim but are often forgotten, or sometimes, you simply don’t know about them.

Let’s take a look at the top 5 most forgotten tax deductions.

Tax Agent Fees

Tax agent fees are also a tax deduction. If you use the service of a tax agent to prepare and lodge your tax return for last year, you could claim the amount that you paid on your current year’s return.

Union or Membership Fees

If you are part of a union or you pay membership fees as part of your profession, you can claim for a tax deduction on those, too.

Mobile Phone

Are you using your phone to make work calls? If your company is requiring you to call clients or other members of your company using your personal mobile phone, you can claim a mobile tax deduction on your tax return.

You can claim the costs of the work-related calls on your phone bill. Keep a logbook or a record of all work-related calls you are making.

Home Office Expenses

If you are working from home or checking and responding to emails during the evening or weekends, you can claim the costs of using your computer as a tax deduction.

The Australian Taxation Office allows employees who are working from home occasionally to claim a part of their home office expenses. This can include the software, furniture, equipment or a percentage of your electricity and internet bill.

Work-Related Car Expenses

If you use your personal car for work-related purposes, you may be able to claim the cost of those expenses. Other than driving to and from work, you can also claim the maintenance and fuel costs as part of your tax deduction.

To be eligible for the car expenses tax deductions, you must be the owner of the car and your travel must be part of your working day. It can be driving between offices or work sites of your company or making special trips to the bank or to a business meeting.

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Payroll Software- Can It Save You Money?

Fri, 20 Aug 2021 04:45:44 GMT

The big question now is- How can it help your business save money in the long run with all the new changes coming into play.

Payroll is important for your business.

If you have employees, you need to pay them. In order to manage your employee’s payments, you need to have some kind of payroll system in place.

Some small businesses choose to do their payroll manually by keeping the payment notes in a spreadsheet or on paper. Other businesses outsource their payroll to bookkeepers or their accountant while others may have a dedicated company to do their payroll for them.

Although these are all a valid choice, there is another option. Using a payroll accounting software to handle your payroll is also an option available to you .

Payroll Considerations

Payroll is not as simple as it sounds. Other than paying your employees regularly, there are still other things to do. These includes:

Payments to your staff. The dates when to pay and how much to pay should be recorded.
Payment types. Depending on your employees’ ranks and responsibilities, there may be differences between their salaries, bonuses, allowances, and commissions.
Tax. You need to collect taxes from your employees.
Leaves. Track all the holidays taken by your employees, including their sick days.
Maternity and Paternity Payments. There are regulations mandated by the government that needs careful reading and understanding.
Expenses Payments. What, how, and when did these expenses are incurred?

There is a lot to think about in regards to payroll and that is why small businesses in Australia needs to carefully consider how and who will handle their payroll.

An online payroll software can do everything conveniently, anytime and anywhere, with the added advantages of the Cloud. It is not only easy to use and is reliable, it also frees you from headaches of understanding and worrying about the Australian Taxation Office’s rules and regulations.

To know more about the various accounting packages out there and how to set it up, contact the office to discuss how to start, what the advantages are, and how your business can save money from it.

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Law Changes And How It Can Affect Your Business

Fri, 20 Aug 2021 04:19:28 GMT

In the 2018 year, there are some changes happening to the laws that affect businesses- are you ready and do they affect you?

Single Touch Payroll

On the 1 April 2018- a head count had to be completed to determine if you where affected and needed to be complaint for the new Single Touch Payroll (STP) coming into affect on the 1 July 2018. If your head count on the 1 April 2018 was 20 or more employees, you will need to report to the Australian Taxation Office (ATO) each time you pay your employees. The information that is sent through to the ATO will include your employee’s salaries or wages, allowances, deductions such as union fees and other payments, pay as you go (PAYG) withholding and superannuation.

If your head count was 19 employees or less, the STP will be 1 July 2019, subject to legislation passing in Parliament. You can choose to report before this date if your software is ready.

Head over to the ATO’s website to get ready for the Single Touch Payroll .

Changes to casual and part-time entitlements

On the 12 December 2017, the Fair Work Commission applied some changes to awards rates and minimum shift entitlements for casual and part-time employees which came into effect from the 1 January 2018. This means that business owners that are affected need to be paying their staff affected the updated award from the first full pay period after 1 January 2018.

Learn more about the changes to casual and part-time entitlements award rates .

Update to National Privacy Act- Data Breaches

From 22 February 2018, business with an annual turnover of more than $3 million are required to comply with the Notifiable Data Breaches Scheme under the Privacy Act 1988 . A data breach occurs when unauthorised personal information has been accessed or released. If the breach is likely to cause serious harm to an individual, the business is obligated to notify both the individual/s involved and the Office of Australian Information Commissioner (OAIC)

Country of Origin- food labelling

From 1 July 2018, if your business grows, produces, manufactures, distributes, imports or sells food in retail stores in Australia, you will need to comply with the new Country of Origin Labelling laws. This means food products sold in Australian supermarkets or retail outlets must display the new food labels

Gift card expiry dates and fees for NSW

From 31 March 2018, gift cards and gift vouchers purchased in NSW will have a three year expiry date. NSW businesses that issue gift cards or gift vouchers will need to honour the purchase if it’s within that period. Businesses issuing gift cards or gift vouchers prior to this date are not affected by the changes.

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Deductions And Their Advantages

Fri, 20 Aug 2021 04:11:49 GMT

Deductions claims can be an advantage to you and one of the easiest ways to boost your tax return.

When completing your tax return, you are entitled to claim deductions of some of the expenses you incurred, but must be directly related to the earnings of your income.

To claim a work-related deduction, you need to:

Spent the money from your pocket and were not reimbursed.
Directly related to earning your income.
Have a record to prove the expenses.

Car and travel costs deductions, are expenses that a lot of people claim in their tax returns. However, taking a guess at the amount of the expenses can land you in trouble, as it can be under an illegitimate claim like travel to and from work.

That is why it is important to ensure that you are only claiming a deduction that can be considered as travel expense in the eyes of the Australian Taxation Office. Proper claiming of these expenses can save you a lot of money so it is worth getting it correct.

If you do use your car for work, claimable travel and vehicle expenses can include the following:

Depreciation
Registration costs
Insurance costs
Costs of running like fuel, oil, and servicing

If the expense was from both your work and for your private use, you can only claim a deduction made for the work-related section.

If the expense was related to voluntary work, you cannot file a claim for that deduction.

There are a lot of complex deductions that you can claim to help to reduce your taxable income. One way to ensure that you are claiming all the deductions that you can, is by getting professional help. We know the ins and outs of the tax system and we can help you maximize your tax returns.

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Is Your Business Protected

Fri, 20 Aug 2021 04:07:50 GMT

As a business owner of a business, it is your responsibility to do everything within your means to limit the risks and liabilities to your business. But, what can you do to protect your business if it is suddenly subjected to a lawsuit?

Let’s take a look at some of the actions you can do today to protect your business from problems in the future.

Watch Yourself and your staff

When it comes to maintaining your image as well as your business’ image, the owner and its employees should always watch what they say and do. This includes any public announcements or conduct of the business itself. Avoid making libelous, slanderous or insulting remarks and statements. You know your company’s ethics above anyone else. If your behavior caused a problem to others, it could also affect your company’s name which in turn can lead to it to be subjected to a lawsuit.

Separate Yourself from Your Business

A lot of business owners operate as a sole proprietorship type business. Although this type of business can be easily managed as there is only one person in the leadership role, the problem with a sole proprietorship is that if the business is sued, the owner’s assets which include can their car, house, and properties are at risk. To limit the possibility of your assets being targeted by a lawsuit, separate the business operations into entity like a company or trust. If the business is owned by a separate entity and the business is sued, only the business assets of the entity can be attacked in a court of law.

Insure Your Business

You need to obtain liability insurance not only to protect yourself but also your business. Insurance can give you a peace of mind and protection against lawsuits or problems with your customers.

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Common Accountant Definitions And Standards Explained

Fri, 20 Aug 2021 04:04:53 GMT

Accountancy has been performed since the earliest period of civilisation. Archaeological records dates back to ancient Mesopotamia, and is closely related to developments in writing, counting and money. There is also evidence for early forms of bookkeeping in ancient Iran, and early auditing systems by the ancient Egyptians and Babylonians.By the time of the Emperor Augustus, the Roman government had access to detailed financial information.

In 1984 the Australian Government established the Australian Accounting Standards Board to improve the quality and consistency of accounting reports and to cater for businesses trading both locally and internationally.

Accounting information is used by management for planning and control purposes and to comply with government requirements. Common accounting terms include:

The Australian Financial Year

The financial year in Australia begins on 1 July and finishes on 30 June in the following year. Individual tax returns are due for submission by 31 October and most business tax returns by 15 May.

Types Of Industries

Primary – includes mining, farming, fishing and forestry
Secondary – also referred as the Manufacturing Industry, e.g. motor vehicles, engineering, shipbuilding
Tertiary – also referred to as the Service Industry e.g. accounting, banking, architecture, wholesale and retail traders
Quaternary -Involve the use of high technology industries and mainly includes Research and Development type Companies.

All of the companies are linked in one way or another. For example:

The raw material cotton is extracted by primary industries
The cotton may then be turned into an item of clothing in the secondary industry.
Tertiary industries may advertise the goods in magazines and newspapers.
The quaternary industry may involve the product being advertised or researched to check that the item of clothing meets the standards that it claims too.

Types Of Business Ownership

Sole Trader – managed and owned by a single person. The owner is entitled to all profits but bears all losses
Partnership – managed and owned by two or more persons. Profits are shared between partners, as are losses. If one partner resigns, the partnership must be dissolved.
Corporation – a company is a separate legal entity. Shareholders have limited liability for the debts of the company, and may sell or pass on their interest in the company to a third party
Trust – a trust is separate legal entity. Whether or not a trust is liable to pay tax depends on what type of trust it is, the wording of its trust deed and whether any of the income the trust earns is distributed to its beneficiaries.

The Goods And Services Tax

The Goods and Services Tax (GST) is a broad-based consumption tax of 10% that is charged on the supply of goods and services in Australia and on goods imported into Australia. Once a business achieves sales of $75,000 per year, it is legally required to register for GST. It is then obliged to charge 10% tax on all sales, and to show this figure in a Tax Invoice. When goods and services are acquired for use in earning income, the amount of GST paid can be used as a rebate against the tax collected. Thus, if GST collected exceeds GST paid, the difference is remitted to the Australian Taxation Office (ATO) with the completed Business Activity Statement (BAS). If GST paid exceeds GST collected, a refund may be issued by the ATO.

Financial Statements

Income Statement or Profit and Loss Report details the financial performance of a business by offsetting expenses against income to arrive at a net profit or loss for that year ending the 30 June.
Balance Sheet – is a statement of financial position at a specific point in time, e.g. at 30 June, listing the assets, liabilities and owner’s equity of a business.
Asset – a thing of value belonging to the business that will provide a future benefit, e.g. premises, motor vehicle, machinery, furniture, office equipment, stock, cash at bank, accounts receivable.
Liability – amounts owed by the business which will need to be paid in the future, e.g. funds borrowed or loans, goods bought on credit for which payment has yet to be made.
Current Liability – is a short-term debt which is normally repaid within the year. It may include items bought on credit (accounts payable), bank overdrafts, credit card balances.
Non-Current Liability – include debts which are not expected to be repaid within one year, e.g. leases, mortgages, long-term loans.
Owner’s Equity – also known as capital, being the value of the owner’s interest in the business, i.e. the amount invested in the business by the owner plus retained profit, less drawings.

It is possible to be a business owner without completely understanding the above terms, your accountant will be able to explain the implications of the financial position on the business.

Blue Orchid Accounting

Are You A Hobby Or Business

Fri, 20 Aug 2021 03:26:18 GMT

Quick checklist for on-line sales:

There are some questions you can ask yourself to work out if you are undertaking a hobby, or carrying on a business and therefore should be declaring as an income:

Did you set up your on-line sales with the intention of being a business?
Do you pay for your on-line-selling presence?
Is your main intention to make a profit?
Do you make repeated or regular sales?
Do you sell your on-line items for more than cost price?
Do you manage your on-line selling as if it were a business?
Is what you are selling on-line similar or the same as what might be sold in a ‘bricks and mortar’ business?

Each time you answer ‘yes’ to a question the likelihood that you are carrying on a business increases. However, all of the questions need to be considered together to get an accurate picture of your personal situation.

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Difference Between Book Keepers And Registered Tax Or BAS Agents

Fri, 20 Aug 2021 03:21:53 GMT

Bookkeepers

Bookkeepers provide a range of accounting services for employers or clients and may be responsible for tasks and functions such as:

payroll
data entry
petty cash
record keeping
reconciling bank accounts
accounts payable and receivable.

Bookkeepers cannot charge you to prepare and lodge activity statements or tax returns unless they are also registered as BAS agents or tax agents with the Tax Practitioner Board (TPB). However, if your bookkeeper is your paid employee they may do this work for you and do not need to be registered.

Registered tax or BAS agents

Tax agents give advice and services on all tax and super issues, including lodging your tax returns. BAS agents provide advice and services on the following tax and super issues:

GST
fuel tax
luxury car tax
wine equalisation tax
fringe benefits tax (collection and recovery only)
pay as you go (PAYG) withholding
PAYG instalments.

Agents must follow strict regulations that ensure they act in a professional manner.

Important Notice:

Only registered tax agents are entitled to charge you a fee for preparing tax returns. They may also prepare notices or statements and provide you with taxation advice.

Only registered tax agents and BAS agents are entitled to charge you a fee for preparing activity statements.

Remember, regardless of who records and reports information, you are still legally responsible for the accuracy of the information.

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Single Touch Payroll

Fri, 20 Aug 2021 03:06:35 GMT

So you have heard the talk around the sector about something called Single Touch Payroll and you are asking what is all about….

The Government announced on 28 December 2014, that it would cut the red tape for employers by simplifying the tax and superannuation reporting obligations through Single Touch Payroll.

Single Touch Payroll will mean that employers will no longer be required to report employee Pay-as-you-go (PAYG) withholding amounts in activity statements or end of year payment summaries ie PAYG payment summaries. Instead employers will electronically report their payroll and super information to the Australian Taxation Office (ATO) when employees are paid, using Standard Business Reporting-enabled software.

In addition, Single Touch Payroll should streamline Tax File Number (TFN) declarations and Super Choice forms by providing a digital channel to simplify the process of bringing on new employees. It could also cut red tape by notifying super funds and government agencies, such as the Department of Human Services, when an employee ceases employment.

The Government is looking to schedule the change over to Single Touch Payroll from July 2016. For employers to meet their obligations under the new Single Touch Payroll system; employers would be required to use, and if necessary acquire, appropriate payroll software. The ATO has noted that the Government has yet to make final decisions on its implementation.

Based on these broad changes being proposed by the Government, employers should be able to streamline the process to report and pay their tax and superannuation obligation through the new system, but there may also be adverse cash flow implications arising from this. Currently, PAYG information and withholding amounts need to be submitted within 5 days of payroll and superannuation payments need to be made within 28 days of the end of the quarter. Under the Single Touch Payroll, the idea is that payments are to be made instantly to the ATO and employees’ super funds at the same time as payroll.

The ATO is currently inviting small business and those who will be effected to provide feedback and comments in relation to the Single Touch Payroll Discussion Paper which is available on their website:

https://www.ato.gov.au/General/Consultation/What-we-are-consulting-about/Papers-for-comment/Single-Touch-Payroll-discussion-paper/

Blue Orchid Accounting

Top 5 Things To Look For When Engaging An Accountant

Fri, 20 Aug 2021 03:01:47 GMT

Having a good relationship with your accountant and feeling confident that they understands your financial situation and goals can alleviate much stress and this allows you to concentrate on what you do best, i.e. running your business.

What should you look for when engaging the services of an accountant, either before starting up a business or if you are not happy with your present accountant?

Here are 5 tips to help you choose that accountant:

Interview Them

[P] Request a free consultation with at least three accountants and talk openly about your business’ history (if it is an established business) and your future financial goals. Take along previous tax returns and financial statements and give each other a chance to decide if you can work together. You need to feel confident about sharing confidential information with them, and they needs to ascertain whether they can help you achieve your goals. Be open about the fact that you are “shopping around” for the best “fit” accountant for your business. Be open about your personal financial situation as well – it is logical to have your accountant handle both your business and personal taxation returns.

Check Their Qualifications

Check your accountant’s qualifications and memberships. Most accountants are proud to display their qualifications on their office wall or lobby, as they are the result of years of intensive study. Check if they are a member of one of the major professional bodies, the Certified Practicing Accountants (they will have the initials CPA on their stationery) or the Institute of Chartered Accountants in Australia (they will have the initials CA on their stationery) or National tax & Accountants’ Association (they will have the initials NTAA on their stationery). If you are not sure about their qualifications, it is not considered rude to ask them this question.

Check Their Fees

Ask your accountant for details about their fee structure – do they charge per hour or per service, or is there a fixed monthly or annual fee? Do your homework and find out what other accountants in the area charge. Can you save money by having a more junior accountant in the practice handle your affairs, with the principal checking their work? This is common practice in many accountancy practices.

Business Compatibility

Check that your accountant works with small business clients (or whatever your business model is). Smaller accountancy practices often understand the needs of small business better than larger practices, and this is often reflected in their fee structure. Ask to speak to some of their existing clients – they should be happy for you to do this.

Financial Advice Available

You may require more from your accountant than just tax return submission, e.g. financial advice about future business growth, investments, asset management or employee issues. In this case, check that they wish to be more than a “year end” accountant of simply submitting your tax return. Ask whether it is acceptable to ring them as needed. If, as your relationship progresses, you feel that your needs are not being met, that your accountant is not available to take your calls or return them within twenty-four hours (don’t forget, they will be servicing the needs of other clients), or that they do not submit your returns on time, it is perfectly acceptable to engage another accounting service. Your new accountant will contact your old accountant and request transfer of your files, which should happen promptly.

So start today by checking the local business directory, chamber of commerce, classified or on-line advertisements for a list of accountants and start calling.

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Seven Point Checklist Before Submitting Your BAS

Fri, 20 Aug 2021 02:59:40 GMT

It’s that time of the quarter again and I am encouraging all my clients to get their BAS completed early this quarter. Whilst your accounting software will prepare the figures for you – it is important that you do a certain amount of checking before you submit the figures to the ATO to ensure that the data is correct and complete.

The following seven steps that are a minimum, although my own checklist has about 20 points.

Check that all sale and purchase transactions have a tax code
For purchases of a capital nature, check that the tax code for Capital purchases has been used.
Check that transactions that are not reportable for GST purposes – eg Payroll, Owners Drawings, Transfer of funds etc are not included in the tax reports
Check that the figures on the BAS itself are the same as on the tax reports from your software
Check that the sales and purchases reported on the BAS reconcile to sales and expenses in the P&L for the corresponding period (after adjusting for non reportable items, Cost of Goods sold etc)
Reconcile GST account in the Balance Sheet to the amount being reported on the BAS
Check that all boxes on the BAS have been correctly completed and then take a copy of it and file in case it is needed in the future.

And lastly but really importantly – once you have completed the BAS – Lock the period to prevent inadvertent changes to reconciled transactions.

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4 Reasons Why You Require A Qualified Tax Professional

Fri, 20 Aug 2021 02:56:35 GMT

You may think that it is unnecessary to use a tax professional because you can do it yourself and save money as well, however there are benefits in using a tax professional.

Here are 4 reason why you should use a qualified tax professional.

1. Save Time

If you lodge your tax return by yourself, you may end up wasting too much time. According to some researches, an average person spends about 25 hours on their tax returns. If we consider that an average person’s time is worth about $25, you may end up losing $625, besides losing the time. So, if you hire a tax professional, you can save both your time and money. In addition, a tax professional works faster, thus saving both your nerves and time and their fee is also tax deductible.

2. Avoid Mistakes

Surely, you don’t know all the things that a tax professional knows, so you may end up having some mistakes. For example you can count your taxable income in the wrong way, place your pay in the wrong lines or have just simple errors. Because of some of these errors, you could pay some penalties. Thus, another great reason for having a tax professional is avoiding probable mistakes.

3. Advice From Professional

The taxation world is can be complicated and very difficult in regards to the rules for deductions. There are some tax deductions and credits, that you cannot use if you don’t know the exact rules. So, tax professionals can supply you information and explain the rules of certain deductions. For example the use of the motor vehicle for work purposes. There are three methods but you can use only one of these methods and your tax professional will give you advice on which one is better to choose.

4. Avoid Unfavourable Results

In the end, you will need to sign your tax return, in order to prove that the information that you provide is correct and accurate. However, if the ATO audits, and finds some mistakes, there can be some unfavourable consequences. So, by using a tax professional, you can breath easier, because besides checking everything by yourself, he/she will check it as well.

So, here are the main reasons why you need to hire a tax professional for your lodgement of your tax return. Are there any other reasons not mentioned here? Please share them with us in the comments below.

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10 ESSENTIAL- End Of Financial Year Strategies

Fri, 20 Aug 2021 02:56:05 GMT

1) Maximising Superannuation Contributions

Review your contribution types and amounts, to ensure, contributions have been optimised for the current financial year and that caps have not been exceeded. Contribution caps for the 2014/2015 financial year are:

Non-concessional: $180,000 or $540,000 for individuals under age 65 on 1 July 2014 using the bring forward provisions;
Concessional: $30,000 or $35,000 for members who were aged 49 or over on 30 June 2014.

Before making any additional superannuation contributions, it is important to check the amount of contributions made to superannuation in the current financial year and the previous 2 financial years to ensure that the contribution caps are not breached.

2) Making a Non-concessional contribution to superannuation to qualify for the Government Co-contribution of up to $500

Making a Non-concessional contribution to superannuation may entitle a you to a Government Co-contribution of up to $500. The Government Co-contribution is paid where an eligible member’s Total Income for the 2014/15 financial year does NOT exceed $49,488, the contributing member was less than 71 years of age at 30 June 2014 and at least 10% of their income is generated from eligible employment activities or carrying on a business.

Given that an annual cap applies to the amount that can be contributed to superannuation, it is important to note that the amount you contribute will count towards your Non- concessional contribution cap. However the amount of the Government Co-contribution does NOT.

3) Contributing to a spouse’s superannuation account to qualify for a Tax Rebate of up to $540

Contributing money into a spouse’s superannuation account can help reduce the gap between a couple’s retirement savings and can also provide a Tax Rebate of up to 18%, to the contributing spouse (18% of first $3,000 contributed, maximum offset of $540).

The Tax Rebate applies where the receiving spouse has a total income of under $13,800. This also includes non-working spouses. Any amount contributed counts towards the receiving spouse’s Non-concessional contribution cap. Therefore it is important to assess the amount of Non-concessional contributions made in the past for the receiving spouse to ensure the contribution will not result in them exceeding the cap.

4) Contribution Splitting

Contribution splitting is an effective strategy to re-distribute superannuation monies to a spouse who has a lower superannuation balance. You can split up to 85% of their last year’s concessional contributions (up to the concessional cap) with you spouse. Non- concessional contributions CANNOT be split.

The transfer from your superannuation to spouse’s superannuation can generally only be done in the year following the one a contribution was made. In addition, any amount split does NOT count towards the receiving spouse’s concessional or non-concessional contribution caps.

5) Commencing an Income Stream in June

Where superannuation money is used to purchase an income stream in June, no pension payment is required to be drawn in that financial year. In addition, where a person is turning age 60 in the next financial year, starting an income stream in June will enable them to defer their first pension payment until they turn age 60, when the pension payments and any lump sum draw downs will be tax-free

6) Re-starting your Transition To Retirement (TTR) Pension before 30 June

Where salary sacrificing has been recommended as part of your TTR strategy, combining the amount salary sacrificed during the year with your pension account and re-starting the TTR pension will help to maximise the amount that can be invested in the tax-free investment earnings environment.

7) Tax File Number (TFN) status

Where a superannuation fund does not have your TFN before the end of the financial year, employer contributions made on their behalf will be subject to tax at an additional 31.5%. Therefore, it is important to ensure the member’s TFN is provided to the Trustee of the superannuation fund before the end of the financial year.

8) Pre-paying tax deductible expenses

Pre-paying tax deductible expenses before the end of the financial year may allow you to include these expenses in their 2014/2015 tax return.

Examples of tax deductible expenses include:

Premiums for Income Protection Insurance held outside of superannuation environment
Interest payments on Investment Loans
The cost of maintenance and repairs to investment properties.

9) Tax Deduction for Superannuation Guarantee

Employers must ensure the Superannuation Guarantee and Salary Sacrificed amounts are paid before 30 June to enable deductibility in this financial year. Although employers can pay the Superannuation Guarantee by 28 July 2015 and avoid the surcharge, the deduction will NOT be available until the tax year in which it is actually paid.

10) Managing Capital Gains Tax (CGT)

There are a few ways of managing the CGT. If an asset was sold during the 2014/15 financial year and triggered a capital gain. This includes:

Selling assets that trigger a capital loss before 30 June 2015 so the loss can be offset against capital gains realised in the financial year
Personal Taxation Issues.

Please note this is a general advise. Before you act on this advise you need to seek professional advise to confirm whether it is for you.

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Work Related Travel

Fri, 20 Aug 2021 02:51:33 GMT

I was asked the other day what type of travel can I claim-is travel to and from work claimable

Work-related daily travel expenses you can claim

Generally, the cost of normal trips between your home and work is a private expense in which you cannot claim an income tax deduction for. However, as an employee/teacher, there are certain situations where you may be able to claim deductions for travel between your home and workplace.

Transporting students or bulky equipment

You can claim the cost of using your car to travel between your home and work if you had to transport either of the following:

students – for example, to a sporting venue
bulky equipment you needed to use at work and for which there was no secure storage area at your workplace

Example 1 – Using your car to transport students

On Saturday afternoon, the school rugby union team plays a competition match at the sporting field on the school’s grounds. As part of his coaching duties, Jeremy collects several students and transports them from their homes to the sporting field. After the match, he then returns the players and continues his journey home.

Jeremy can claim a deduction for the expenses he incurs to transport the students.

Example 2 – Using your car to transport bulky equipment

Rick is employed as a drama teacher. Rick transports heavy props and costumes from his home to his regular place of work the day before a school theatre production. In these circumstances, he can claim a deduction for his travelling costs on that day.

Travelling between separate workplaces

Work-related car and travel expenses also include the cost of travel:

directly between two separate workplaces – for example, when you have a second job.

Example 3 – Travelling between two jobs

April travels directly from the school where she is employed as a teacher, to the TAFE college where she gives night lectures. Because she travels directly from one workplace to the other, she can claim a deduction for the travel expenses she incurs to do so.

Travel to an alternative workplace

Work-related car and travel expenses also include the cost of travel:

from your normal workplace to an alternative workplace while you are still on duty and back to your normal workplace or directly home – see example 4
from your home to an alternative workplace and then to your normal workplace or directly home – see example 5.

Example 4 – Travelling from work to an alternative workplace then home

Wayne, an employee teacher, travels from his normal school to a regional administrative centre for a meeting. After the meeting, he travels directly home. Wayne can claim a deduction for the expenses he incurs to travel between these workplaces and then home.

Example 5 – Travelling from home to an alternative workplace then to work

Zoe, an employee teacher, travels from home to a marking centre to mark exams. She then travels to her normal school. Zoe can claim a deduction for the expenses she incurs to travel from home to the marking centre and then to her normal school. However, she cannot claim a deduction for the expenses she incurs to travel directly from her normal place of employment to her home.

Work-related daily travel expenses you cannot claim

Generally, the cost of normal trips between your home and work is a private expense you cannot claim a deduction for, even if:

you do minor tasks such as picking up the mail on the way to work or home
you have to travel between your home and work more than once a day – for example, you drive home at the end of the school day and then return to work to attend a school speech night in the evening – see example 1
you are on call – for example, you are on stand-by relief teaching and your employer contacts you at home to come into work – see example 2
you work outside normal business hours – for example, you are:
conducting parent teacher interviews after work hours
at school during the school holidays preparing for the next term – see example 3.
conducting parent teacher interviews after work hours
at school during the school holidays preparing for the next term – see example 3.

Example 1 – Travel between home and work more than once a day

Amanda finishes work at Black Stump Primary School and returns home by car at the end of the school day. At 6.00pm, she returns to school to hold parent-teacher meetings until 9.00pm. Amanda’s after-hours travel between her home and the school is a private expense she cannot claim a deduction for.

Example 2 – On call or relief teaching

Michael is a stand-by relief teacher who works at various schools. Michael is usually contacted at short notice and advised which school he must work at. The schools are located at varying distances from his home. Each day, Michael travels to a single school and returns home each night.

Even though Michael travels from home to the particular school in response to a phone call, his travel is still a private expense which he cannot claim a deduction for.

Example 3 – Working outside normal business hours

Robyn goes to work the week before the school term starts to prepare for her year 12 Geography class. Although Robyn has travelled to work during her holidays, the travel expense she incurs is a private expense she cannot claim a deduction for.

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Types Of Business Ownership

Fri, 20 Aug 2021 02:48:57 GMT

There Are Four Main Business Structures Commonly Used By Businesses In Australia:

Sole Trader

Is the simplest business structure.
Is inexpensive to set up because there are few legal and tax formalities.
You use your individual tax file number (TFN) when you lodge your income tax return.
You can apply for an Australian Business Number (ABN) for your business and use this number for all your business dealings
Legally responsible for all aspects of the business – debts and losses cannot be shared.
Business income is treated as your individual income and you are solely responsible for any tax the business must pay.
You must be registered for Goods and Services Tax (GST) if your annual GST turnover is $75,000 or more.

Partnership

A partnership is an association of people who carry on a business as partners or receive income jointly.
It needs its own TFN that you use when lodging its annual business income tax return.
You can apply for an ABN for the partnership and use it for all the partnership’s business dealings.
Managed and owned by two or more persons. Profits are shared between partners, as are losses.
Each partner is responsible for the debts of the partnership, even if you did not directly incur or cause the debt.
A partnership must be registered for GST if its annual GST turnover is $75,000 or more.
If one partner resigns, the partnership must be dissolved.

Corporation

An incorporated company is a distinct legal entity, regulated by the Australian Securities & Investments Commission (ASIC).
Is a complex business structure, with higher set-up costs and administrative costs because of additional reporting requirements.
Operations are controlled by its directors and the company is owned by its shareholders. A company provides some asset protection but directors can be legally liable for their actions and, in some cases, the debts of a company.
It needs its own TFN that you use when lodging its annual business income tax return.
A company registered under the Corporations Act 2001 is entitled to an ABN. A company that is not registered under the Corporations Act may register for an ABN if it is carrying on an enterprise in Australia.
The money the business earns belongs to the company and pays income tax on its assessable income (profits) at the company tax rate, which is currently 30%.
A company must be registered for GST if its annual GST turnover is $75,000 or more. The registration threshold for non-profit organisations is $150,000.

Trust

Is an obligation imposed on a person – a trustee – to hold property or assets (such as business assets) for the benefit of others. These others are known as beneficiaries.
Setting up a trust can be expensive, as a formal deed is required and there are formal yearly administrative tasks for the trustee to undertake. A trust deed outlines how the trust is to operate.
If operating a business as a trust, the trustee is legally responsible for its operations. A trustee of a trust can be a company, providing some asset protection.
It needs its own TFN that you use when lodging its annual business income tax return.
If the trust is carrying on an enterprise in Australia, as the trustee you must register for an ABN for the trust.
A trust must be registered for GST if its annual GST turnover is $75,000 or more. The registration threshold for non-profit organisations is $150,000.
Whether or not a trust is liable to pay tax depends on what type of trust it is, the wording of its trust deed and whether any of the income the trust earns is distributed to its beneficiaries.

Blue Orchid Accounting

Fly-In/ Fly-Out Expenses

Fri, 20 Aug 2021 02:42:12 GMT

Fly-in/Fly-out (FIFO) and tax time – everything you need to know!

Fine print first

As a mining industry professional, you may be eligible for a range of deductions over and above the usual. But first, some fine print. The advice below is of a general nature only and doesn’t take into consideration your personal circumstances or objectives. When preparing your tax return, make sure to follow Australian Taxation Office (ATO) guidelines or seek professional advice.

Travel

You can’t claim travel expenses between your home and the departure spot nominated by your employer under FIFO arrangements. Nor can you claim relocation expenses for moving closer to a new employment site.

Working offshore

Australian residents are taxed on their worldwide income, so if you fly into a foreign site your income is subject to Australian tax law. You’ll also need to consider the tax laws of the foreign country. Everyone’s situation is different so, in these cases, it’s good to seek advice from a professional tax adviser.

Working remotely

You may be eligible for a ‘zone tax offset’ if you live or work in a remote or isolated area of Australia (but not an offshore oil or gas rig) for at least half the tax year. What’s more, if you lived in a remote area for less than half the current year but also in previous years, you may still be eligible. See the ATO for more information on zone tax offsets.

On call and online

You can claim work-related phone calls plus line and handset rental if you can show that you were on call or required to phone your employer while away from your workplace. Line and handset rental costs will be split between work and private use. You may be able to claim a split of your Internet fees if you need to be available via email or you do some online training from home.

Clothes

A good rule to remember is that expenses are usually deductible if they relate solely or primarily to the work you do or the environment you work in.

You can’t claim for the cost of normal clothes like jeans and shirts, but you can claim on compulsory uniforms and protective gear if you have to provide it yourself (e.g. overalls, steel-capped boots). You can also claim on laundering uniforms and protective clothes.

Don’t forget sun protection (sunscreen, hats, sunglasses and sun-protection shirts) and other equipment that your employer might not provide (e.g. gloves, goggles, masks, rubber boots, winter jackets).

Tools and equipment

You can claim an immediate deduction for tools or equipment if their cost is less than $300. If they cost more than $300, you can only claim on their gradual decline in value. Check the ATO’s guide to depreciating assets.

When it comes to tools, don’t forget diaries, logbooks, organisers, laptops, tablets, mobile phones and GPS units, and the various cases you use to carry them around. Work-related books, magazines and journals may also be deductible.

Licences and tickets

You can’t claim a deduction on your normal licence, but you can claim on further tickets and renewal fees if such licenses are necessary in your current role.

Self-education

You can’t claim on pre-vocational courses (e.g. a Certificate II in Coal Mining). But you can claim self-education expenses for short courses or university and TAFE courses if they relate to your current work and the expenses aren’t otherwise reimbursed.

If you’re required to go to seminars or courses away from your usual place of work, the cost of travel, meals and accommodation may be deductible.

Generally speaking

Don’t forget that, like the rest of us, you can claim on a range of general items like medical expenses (above a certain threshold), donations to charities, investment account bank fees, income protection, sickness and accident insurance, tax agent fees and even the cost of going to see your tax agent. Remember that tax rules change from year to year, so be sure to follow Australian Taxation Office (ATO) guidelines or seek professional advice.

Keep good records

You must keep good records of work-related activities and expenses. See the ATO’s guide to keeping tax records. One easy strategy is to keep everything, and let a tax adviser decide if the expense is deductible.

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Keeping Your Business In Shape

Fri, 20 Aug 2021 02:37:20 GMT

The beginning of the year is a good time to reflect on the past 12 months and prepare for the next. Here are some useful accounting tips to help get your business finances up to date and ready for the new financial year.

Keep your business in shape
Most people make New Year resolutions to have a better life- they want to exercise more, eat healthier or stop smoking or cut down on alcohol.

You can make the same type of resolutions for your business as well- to help keep it in top shape for the next financial year. Because your business thrives on the use of money, it makes good sense to look after its financial health and to to check on where improvements can be made.

Here are 10 tips to help you understand what you have achieved in the past year and what you might want to achieve in the next financial year. Some of these tips can be put into action right now. The others couple of hints can become resolutions to help your business grow in the new year.

1. Reconcile your accounts

The tax year doesn’t end in December, of course, and the new business financial year has just started.

It doesn’t hurt to go through the sale receipts and invoice and check the bank account to make sure the figures add up.

The use of a quality accounting software should make it easier for you and in fact should do most of the work automatically for you. If you don’t have an accounting software package, now might be the time to start that new year resolution.

2. Talk to your accountant

One good reason to reconcile your accounts is so you can pass them over to your accountant for checking.

Some accountants might not want to look at the detail figures until nearer to completing your tax obligation for the financial year, but if you can persuade them to have a look they might be able to give you a rough idea of your tax bill.

If you can see your accountant before the end of the financial year, they might also be able to give advice as to how to help minimise your tax obligation for the ending financial year.

3. Review your business year

Take some time to reflect on the past year and ask yourself these questions

Did my business grow?
How did my revenues and profits compare with year before?
If using an accounting software package, plot the sales into graphs and see if the trend is going up.
Look into the expenditures for the past 12 months- are there any concerns with these?
If you made a list of goals for last year, did you achieve them?

If your business hasn’t grown in the past financial year, ask yourself why and dig into the figures a little more to find out why. Now might be a good time to get professional advice from an accountant or business advisor. This will help you get back on track for the coming year.

4. Stay up to date with the tax law

Tax laws and codes change on a regular base. Talk to your accountant to insure that you are up to date and understand how any of the new tax changes might effect your business.

Be sure to update your internal systems such as payroll with the new tax rate. With the right information and software , this should be an easy task.

5. Confirm important filing deadlines

Talk to your accountant and make sure you know when to file and pay your obligations for tax, super, Goods and services tax, For example, if you pay quarterly, set up your calendar with reminders and appropriate alerts for these obligations for the new financial year

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5 Budget Mistakes Your Business Can’t Afford To Make

Fri, 20 Aug 2021 02:37:06 GMT

Take a look at your current year to date actual figures and answer these questions:

How have you done so far compared to your goal? How well did I budget or was I way off track?
What expenses sprung up? Could they have been avoided or should I have planned for them?
How can I better plan for next year?

These are just a few of the questions you need to be asking yourself as you start planning your budget for next year. This will help you prevent the mistakes that you have been making all year.

Here are 5 of those mistakes to help you get started.

1. Not having a budget.

Having a budget is very necessary when you own and operate a business. It’s not enough to have a goal; you have to have a formal plan on how you are going to reach that goal. See a budget is designed to give you a clear cut plan to follow to reach an intended target. Without it you are operating your business blindly. Trying to hit a target that you can’t even see. Have you ever tried to shoot a dart at a bulls eye? Very hard to do right. Well operating a business without a budget is like trying to hit that same bulls eye in the dark. Impossible to hit that target…unless you can see in the dark.

2. Not tracking against your actuals.

Once you have a budget you must compare how you are performing to that budget regularly. Minimally once per quarter. If you don’t do this critical step then you have no idea how good or bad you are doing as compared to that plan. Comparing your budget to your actuals helps you understand what is really going on in your business. It also helps you see how your business is trending year over year as well as compared to your industry competitors.

3. Not following your budget.

Once you create your budget you MUST FOLLOW IT. Say it with me I WILL FOLLOW MY BUDGET. There is nothing worse than creating a budget and not following it. Why create a plan and then place it in a drawer and never look it again? That is the equivalent of not having a budget at all. Would you climb a mountain without a guide? No. Would you buy a house without determining a budget around how much house you can afford and the taxes and the insurance and the utilities. No. So why would you operate your business without a plan? Following your budget allows you to see how you’re doing in your business and it helps you better manage your cash flow. You will be able to see where money is not coming from and where it is going so that you can make any changes as necessary.

4. Not budgeting seasonally.

The key to a good budget is to budget accurately. Realistically. When you create a budget for your business you need to start with a baseline equivalent to how your business did in the previous year. These are hard value numbers that represent the profitability of your business. Without over-budgeting. You also need to factor in seasonality. Placing revenue and costs in the appropriate months you expect them to occur. And I am not talking about seasonality just around holidays, unless that applies to your business. Seasonality based on your industry. For example, tax preparers have to budget higher in July through to October for tax season as well as in May and June for extensions. Landscapers have to budget more from September through to November than during the winter months. Moving companies budgets are higher during the summer that during the rest of the year. Factor in seasonality of your business to ensure that your expenses are covered during the off months.

5. Not budgeting enough.

Lastly, be sure not to under-budget. Don’t underestimate costs that can change the entire trajectory of your business. You have to be certain to factor in the unexpected. Factor in cost inflations and how you can still manage your expenses without any strain. Create a savings plan within your budget. Yes a savings plan. Businesses have savings accounts too.

Check out our free budget checklist to help you get started

STEP PROCEDURE

Set your goal
List ALL of your expenses by month.
Multiply each category by 12 to determine total spend for the year.
Determine your monthly income.
Multiply it by 12 to determine the total sales for the year.
Compare it to the total expenses by month.
Track it. Analyze and make course corrections.

Note: These steps should be implemented on a minimum of a quarterly basis depending on how large or small your business is. Remember the key to financial organization and ultimately financial success is to gain and maintain control over your financial affairs.

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Horses, Cars, Boats And Planes- DATA MATCHING TO UNCOVER UNDECLARED INCOME

Fri, 20 Aug 2021 02:32:27 GMT

In the past, tax officials could be seen driving around checking and looking for signs that showed your lifestyle didn’t match your income. Yet today with everything being available through digitally, today’s data matching can uncover income that isn’t matching the lifestyle in a more effective manner.

The ATO is now working with the insurance companies to help identify people with policies that are covering an expanded range of luxury items.

If you have insured any of these type of assets- marine >$100,000, motor vehicles >$50,000, fine art >$100,000, thoroughbred horses >$65,000 or aviation >$150,000- for damage or loss, you are now in the radar of the ATO.

The ATO is now matching the value of these kinds of policies to identify the wealthy among us and is stating that information will be used to receive a more accurate estimate of the income of the individual taxpayer.

From the being of the year, the ATO has been issuing notices to the insurance companies to provide policy details which meet specific criteria of which it expects to receive 100,000 records that may require future action.

Please check your policies to make sure that you are insured correctly in regards to entity type, especially if you are a small business entity. In regards to the “please explains” actions from the ATO, most have been administration errors and not from anything mischievous.

If you have any questions, please contact us in regards to any luxury assets.

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Are You A Hobby Or Business

Fri, 20 Aug 2021 02:30:07 GMT

Quick checklist for on-line sales:

There are some questions you can ask yourself to work out if you are undertaking a hobby, or carrying on a business and therefore should be declaring as an income:

Did you set up your on-line sales with the intention of being a business?
Do you pay for your on-line-selling presence?
Is your main intention to make a profit?
Do you make repeated or regular sales?
Do you sell your on-line items for more than cost price?
Do you manage your on-line selling as if it were a business?
Is what you are selling on-line similar or the same as what might be sold in a ‘bricks and mortar’ business?

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Xero Tips- You Need To Know

Fri, 20 Aug 2021 02:27:48 GMT

If you want to get the most out of your Xero, here are some tips that will surely help you and your business.

INVENTORY ITEMS:

Get the most out of Inventory Items. This can help you in in creating a sales invoices and entering purchase invoices. You can also run a report and check the margins, prices, and stock levels here.

BANK RULES;

Before entering any information in Xero, make sure that you have the Bank Rules set-up before hand to help save time.

RECURRING INVOICES;

Set invoices automatically create.

TAILORED REPORTS;

Create your own reports to manage your business more effectively.

XERO APP;

use the Xero app, to maximize downtime and to issue invoice OR reconcile bank items, .

BUDGET MANAGER;

This can enable you to report against your gain valuable insights and targets into your business.

SMART LISTS;

Create a targeted customer lists from your client data. This can help you with sales, marketing, and customer service.

FIXED ASSET REGISTER;

Create accurate reports by setting up and using the Fixed Asset Register.

TRACKING;

The tracking feature can be used if your business finances are reported separately on different aspects of your business IE two businesses under the one ABN.

FILES;

You can organize your business and store documentsas you would if wold a file cabinet, Xero can allow you to safeguard any important information and allow you to store all files in one place.

If you want to know more on how you can integrate Xero into your business, give Blue Orchid Accounting a call so we can discuss what the benefits are for you. Xero is useful for any business, even for start-up ones.

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Payroll Software—Can It Save You Money?

Fri, 20 Aug 2021 02:26:35 GMT

April 23, 2018/in Accounting Programs /

The big question now is—How can it help your business save money in the long-run with all the new changes coming into play?

Payroll is important for your business.

If you have employees, you need to pay them. In order to manage your employee’s payments, you need to have some kind of payroll system in place.

Although these are all a valid choice, there is another option. Using a payroll accounting software to handle your payroll is also an option available to you .

Payroll Considerations

Payroll is not as simple as it sounds. Other than paying your employees regularly, there are still other things to do. This includes:

Payments to your staff. The dates when to pay and how much to pay should be recorded.

Payment types. Depending on your employees’ ranks and responsibilities, there may be differences between their salaries, bonuses, allowances, and commissions.

Tax. You need to collect taxes from your employees.

Leaves. Track all the holidays taken by your employees, including their sick days.

Maternity and Paternity Payments. There are regulations mandated by the government that needs careful reading and understanding.

Expenses Payments. What, how, and when did these expenses are incurred?

There is a lot to think about in regard to payroll and that is why small businesses in Australia need to carefully consider how and who will handle their payroll.

An online payroll software can do everything conveniently, anytime and anywhere, with the added advantages of the Cloud. It is not only easy to use and reliable, but it also frees you from headaches of understanding and worrying about the Australian Taxation Office’s rules and regulations.

To know more about the various accounting packages out there and how to set it up, contact the office to discuss how to start, what the advantages are, and how your business can save money from it.

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Changes To Rental Property Deductions

Fri, 20 Aug 2021 02:24:25 GMT

The 2017 Budget, that was delivered on 9 May 2017, has brought about two major changes that will impact all current and future rental property owners.

The first change, which will impact existing owners of rental properties, is the removal of the deductibility of the travel expenses effective from the 1 July 2017. This means, if you travel to inspect or maintain your property you will no longer be able to claim this expense on your tax return. The 2017 tax return, will be the last time you will be able to claim this expense.

The second and more substantial change, will only impact the purchase of a new rental properties that is purchased from 9 May 2017 and onwards, this is the removal of the ability to depreciate plant and equipment (such as dishwashers, ovens, air conditioners, etc) that come with the property. Prior to the 2017 Budget, when you purchased a property you could obtain a tax depreciation report for the depreciation you could claim on that property. These changes apply to second-hand plant and equipment you acquired at or after 7.30 pm (AEST) on 9 May 2017 unless you acquired them under a contract entered into before this time, which means, you can only claim depreciation on plant and equipment you purchase once you own the property.

Depreciating Assets In A Rental Property Purchased Before 9 May 2017

If you owned a rental property, or entered into a contract to purchase your rental property before 7.30pm on 9 May 2017, you can continue to claim deductions for decline in value of the depreciating assets that were in the rental property before that date.

It doesn’t matter whether the depreciating asset installed in the property was new or used, or whether the property was new or not.

If you would like to know how this will affect your individual circumstances, please contact our office .

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Working Overseas Can Lead To Tricky Tax Pitfalls, But Seeking Expert Advice Can Keep You From Paying Up Twice.

Fri, 20 Aug 2021 02:21:06 GMT

For many young professionals working overseas is a great experience. It offers the opportunity to experience a different culture, expand your work experience and enhance future career opportunities.

But the way income earned is taxed while working overseas is a complex area; especially if you’re working for a smaller businesses that may not have much experience in how to structure salary packages for staff working abroad. It’s worth understanding how the tax regimes in the major markets treat your income if you’re considering an overseas secondment.

Australian Resident Or Not?

The Australian Taxation Office’s (ATO) main consideration when assessing income is whether the individual is considered to be an Australian resident for tax purposes.

“If they are, then their employment income is taxable in Australia. Their income would be classed as foreign employment income and any taxes paid in the jurisdiction where they are working would be included in their return as a foreign income tax offset,” explains Jane Wood, senior manager taxation services, RSM Bird Cameron.

“If there is a shortfall between the host country’s and the Australian tax rates, the person would need to pay the difference in Australia. For example, if they are working in the US and the tax rate is 39 per cent and their tax rate in Australia is 49 per cent, they would pay the 10 per cent difference when they lodge a tax return,” she says.

However, if an individual is not considered to be an Australian resident for tax purposes, they are only subject to local tax on Australian-sourced earnings, for example if they derive interest income in Australia.

So how does the ATO determine whether an individual is a resident for tax purposes? There are four tests, and failure to meet any one of these tests means that the ATO considers the person to be an Australian resident for tax purposes.

The first and most important is the reside test: if you live in Australia you are considered to be a resident for tax purposes.

The second is the domicile test: if your domicile is in Australia you are considered to be an Australian tax resident, unless the ATO is satisfied that you have a permanent home elsewhere.

The third test is the 183-day test: if you live in Australia for more than half the income year – whether this time is broken up or not – you are considered to be an Australian resident for tax purposes.

Superannuation Test For Working Overseas

The final test is the superannuation test, which is set up to ensure that government staff working overseas are considered to be local tax residents, to enable them to participate in Australia’s superannuation system.

Denise Honey, international tax partner with Pitcher Partners, says that in most cases an individual needs to be planning to leave Australia indefinitely, or intend to be gone for at least two years, and to have established a home elsewhere, to be considered to be a non-resident for tax purposes.

“The issue we often see relates to the way fringe benefits tax (FBT) works,” says Honey.

“In an [Australian] employment contract you receive salary and wages and various benefits. The employer will pay FBT to the extent to which they are not exempt if you are an employee for Australian tax purposes. This is different to most countries, which tax the benefits in the hand of the employee. This can be a trap,” she says, advising employees and employers to pay close attention to the way salary packages are structured given this issue.

Overseas Tax Regimes

Each country has its own rules. For instance, if someone works for an employer in Singapore or Hong Kong, rather than simply working for an Australian company on assignment, there is no obligation for these foreign governments to withhold taxes on the employee’s income on an ongoing basis. “Employees pay tax at the end of the year. Also, a person is only taxed on the physical work days in that jurisdiction,” Wood says.

[“In China, taxes are higher [than Singapore and Hong Kong] and there are very different tax rules, which can be difficult to navigate,” says Honey. “The US is also a higher tax jurisdiction but the top marginal tax rate doesn’t kick in until income reaches approximately US$400,000,” she adds.

In general, explains Wood, there may be tax conventions available to Australians under Double Tax Agreements (DTAs) if someone remains an employee of an Australian entity and works for an affiliate in another country.

Australia has DTAs with, among others, Singapore, China, the US and UK, which take into account which country has taxing rights on that income, and assists in determining an individual’s resident status for tax purposes. “There may also be ongoing employer tax obligations in Australia,” she adds.

As Mark Morris, CPA Australia’s senior tax counsel, explains: “Every country has a different set of tax rules and the rates can vary significantly between jurisdictions. For example, here in Australia, currently we have effective highest marginal tax rates of up to 49 per cent, excluding additional levies, whereas in Hong Kong the highest personal marginal tax rate is only 17 per cent.”

Want to learn more? Employment tax essentials workshops are held in Brisbane, Sydney, Melbourne and Perth.

One of the risks with working between various countries is the potential that you may be taxed twice on your income, both at home and in the country where you are working. In many cases this is avoided, as Australia has a double tax treaty with many countries, but it also shows that you need to be aware of these rules when you are looking to live and work internationally.

“For example, Australia currently has tax treaties with the US, the UK and Singapore, but not with Hong Kong. These are the complexities that you need to be aware of,” Morris advises.

Liam Branagan, international tax and remuneration adviser at KPMG, says it can be more difficult to prove you’re a non-resident for tax purposes working in Asia-Pacific countries, where assignments tend to be for shorter periods and people go back and forth between Australia and countries in the region.

“China has a concessional tax regime for foreigners, but once you have worked there for more than five years more income is brought into the tax net. In the US, [in addition to federal tax] you may need to file a state tax return as well as a municipal [local government] tax return; so potentially you need to file three returns,” he says.

Seeking Help

Given this complexity, it’s important both employers and employees seek help when staff are working overseas for any length of time.

“Some firms will provide many relocation benefits including help with housing, schooling and utilities costs. But often employees will be tax equalised, which means you end up paying the same amount of tax as if you never left Australia. In that situation, a professional accounting firm will take care of your taxes, which reduces the stress of going on assignment,” says Branagan.

“A lot of companies will pay relocation expenses and plane tickets and treat you like a local employee for tax purposes once you get there, so there’s a full spectrum of potential scenarios.”

Smaller businesses without experience in this area are advised to seek help from tax specialists who understand how to interpret the tax rules in various jurisdictions. This is important because forgetting, say, to include health insurance in a staff member’s remuneration package when relocating to the US could turn out to be an expensive problem for the employee if they were to fall ill overseas without having health insurance in place.

“In China, taxes are higher [than Singapore and Hong Kong] and there are very different tax rules, which can be difficult to navigate.” Denise Honey, Pitcher Partners

“Often employees will be tax equalised, which means you end up paying the same amount of tax as if you never left Australia.” Liam Branagan, KPMG

Retirement Savings And Expatriates

One of the most potential downsides of working overseas is that sometimes it puts employees in a situation where they are no longer contributing to a local contributing to a local superannuation fund. People in this position can end up with a lower superannuation balance at the end of their working lives. Where in the world you work will determine how your super is affected.

“For example, in Australia if you have a self-managed superannuation fund, you must ensure that your fund continues to satisfy the requirements of being an Australian superannuation fund, which can become an issue if you are away for more than two years.”

“If you are working overseas you need to make sure you know what is happening with your superannuation contributions, both at home and in the country where you are working, as well as what restrictions there are on bringing your overseas superannuation back with you when you return,” says Mark Morris, CPA Australia’s senior tax counsel.

This article is from the March 2015 issue of INTHEBLACK.

Working Overseas, Working Overseas Advantages, Working Overseas Ato, Working Overseas Challenges, Working Overseas Checklist, Working Overseas Experience, Working Overseas In Australia, Working Overseas Tax, Working Overseas Tax Advice, Working Overseas Tax Free, Working Overseas Tax Implications

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Home Office Expenses- What Can You Claim?

Fri, 20 Aug 2021 02:20:26 GMT

Do you operate a business either in full or in part from your home and you are required to use your own computer, phone or other electronic devices for work purposes, then you may be able to claim a deduction for these costs. There are however some rules you need to observe and records you must keep.

The deductions you may be able to claim are

occupancy expenses such as rent, mortgage interest, rates, land taxes and house insurance premiums
running expenses which can include:
home office equipment such as computers, printers and telephones, the cost (for items costing up to $1.000) or decline in value (for items costing $1,000 or more)
work-related phone calls (including mobiles) and phone rental (a portion reflecting the share of work-related use of the line) if you can show you are on call, or have to phone your employer or clients regularly while you are away from your workplace
heating, cooling and lighting
the costs of repairs to your home office furniture and fittings, and
cleaning expenses.

Being able to claim these expenses depends on whether your home is your place of business and if you have an area set aside exclusively for business activities.

If your home is indeed your place of business and you have an area set aside exclusively for business activities, then you may be able to claim both occupancy and running expenses. If you carry on your business elsewhere however and also do some work at home, you cannot claim occupancy expenses – even if you have a work area set aside in your home.

You can claim for the three options that exist for a taxpayer to “work from home”.

Once you determine the costs that you can deduct, you are required to keep the relevant records. These are:

receipts or other written evidence of your expenses – including receipts for depreciating assets you have purchased
diary entries you make to record your small expenses ($10 or less) totalling no more than $200, or expenses you cannot get any kind of evidence for, regardless of the amount
itemised phone accounts from which you can identify work-related calls, or other records, such as diary entries (if you do not get an itemised account from your phone company)
a diary you have created for work to estimate how much you used your equipment, home office and phone for business purposes over a representative period of four-weeks .

Consult this office for more information, but here is also a home office expenses calculator from the Tax Office that will help you calculate the amount you can claim as a tax deduction for home office expenses for the 2013-14 financial year.

One important point to remember, should you use any portion of your home as your place of business, the main residence exemption to capital gains tax (because it is your principal place of residence) is generally relinquished for that portion. Consult this office for the implications this may have on your tax situation.

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The Brand-New App From Blue Orchid Accounting – Available For Free!

Fri, 20 Aug 2021 02:12:51 GMT

This free App has been carefully designed in response to the growing use of smartphones and mobile devices used by our clients and prospects. It’s available for both iPhone and Android users and you can download it free from the App Stores

We wanted to develop a way to keep you up to date with the very latest news, views and tips, as well as providing you with key accounting and tax data, in real time, at your fingertips.

The App will enable you to figure out your Super Contributions cap or check the amount of tax you might be paying. It will give you the power to check Stamp Duty costs or see how you might increase your profits as a business.

You can also browse the library of tax tables, giving you the very latest tax rates 24/7 whenever you need them. From Income Tax to Company Tax and PAYG withholding – it’s there for you.

Why did Blue Orchid Accounting develop its own App?

We like to think that we are a proactive and refreshingly different firm of accountants. Helping companies across the Central Coast to become more successful, more profitable and ultimately more enjoyable to run. The App gives you fantastic content, plus it makes it really easy to keep in touch. It has a simple ‘arrange to meet’ page along with all our contact information, details of all our team members and ways we have recently helped our clients, as well as links to our social media pages.

We hope you enjoy the Blue Orchid App:

Latest financial news and offers
Currency Converter
Up to date tax tables
Range of tax and profit calculators
Video channels
Client forms
Logbook
Receipt Management – Never lose a Receipt again!
Arrange a meeting
Links with our Blog, providing you with the very latest news.

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Budget 2015- Zone Tax Offset

Fri, 20 Aug 2021 01:47:01 GMT

Zone Tax Offset to exclude “fly-in fly-out” and “drive-in drive-out” workers

The ZTO is a concessional tax offset that is available to individuals for living in areas of isolation, uncongenial climate and high cost of living which is associated with living in these identified locations.Eligibility is based on the defined geographic zones.

Currently to be eligible for the ZTO, a taxpayer must reside or work in a specified remote area for more than 183 days in an income year. According to the government, approx 20% of all claimants do not actually live full-time in these zones. Many of the claimants are “fly-in fly-out” workers who do not face the same challenges of remote living that the ZTO was designed to address.

Where “fly-in fly-out” workers normal residence is one zone, but working a different zone, will retain the ZTO entitlement associated with their normal place of residence.

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What Is Personal Services Income (PSI)?

Fri, 20 Aug 2021 01:44:25 GMT

Personal Services Income (PSI) is the income you earn primarily through the use of your skills and efforts as an individual. The PSI rules have been put into practice to stop people who earn PSI from paying wages to their spouses or family members to reduce their overall tax bill.

For example – Mary earns $120,000 running a special occasion bear business through a company. As the money is derived mainly from Mary’s individual skills, the income is classified as PSI. This means Mary cannot pay her spouse a salary for bookkeeping and other duties and the income is declared on Mary’s personal tax return. The PSI rules can be avoided however if one of the following tests are passed.

Result Test

The main test is called the Results Test and if you pass this test, the PSI rules does not apply. To pass this test you must meet the following criteria:

You are paid to produce a specific result
You are required to provide the equipment and tools to do the job, and
You are required to rectify mistakes at your own expense

To pass the results test, you need to meet all three conditions for at least 75% of the PSI being tested

80% Test

If you do not pass the results test, you may still be able to exclude your income from the PSI rules if you don’t receive more than 80% of your income from the one client (including their associates) and you pass one of the following three tests.

Unrelated Client Test

You pass this test if you work for two or more unrelated clients, and you offer your services to the public.

Employment Test

You pass this test if your business employs other people as subcontractors or employees.

Business Premises Test

To meet this condition, you must use the business premises mainly (that is, more than 50%) for work that generates your PSI. It is not enough to own or lease the premises and conduct activities that are unrelated to your personal services work at the premises.

If you do not pass the above tests and you have unusual circumstances, you can apply for a Personal Services Business determination.

Please contact our office if you are concerned that you may be receiving PSI and would like us to review your circumstances.

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Changes To Tax For The Small To Medium Enterprises And The People Behind Them

Fri, 20 Aug 2021 01:43:16 GMT

Outlined below are key topics you need to be aware of for the remainder of the 2015 financial year.

Individual Tax Rates

While there was no change to the individual income tax rates for the 2014/15 year, the effective top marginal tax rate has increased from 46.5% to 49% with an increase to the Medicare levy and the introduction of the temporary budget repair levy. The individual income tax rates (excluding these levies) will remain as follows:

Medicare Levy

The Medicare levy has increased from 1.5% to 2% for the 2014/15 year to fund the National Disability Insurance Scheme. This levy is payable by most individuals regardless of whether they hold private hospital cover or not.

Temporary Budget Repair Levy

The temporary budget repair levy came into effect from the 1 July 2014. This mean individuals earning over $180,000 will pay an additional 2% tax on the amount of their taxable income that exceeds $180,000. For example- a person with a taxable income of $190,000, they will pay a levy of $200 representing 2% of $10,000 ($190,000 minus $180,000).

Private Health Care Rebate

[P] The thresholds for the private health insurance rebate and Medicare levy surcharge changed as from 1 July 2014. The thresholds for the 2014/15 year are as follows:

Superannuation Contribution Caps

As from the 1 July 2014, the superannuation contribution caps have changed. This will allow you to get more money into superannuation. The new contribution caps for the 2014/2015 financial year are as follows:

Compulsory Superannuation for Employees

As part of the government’s ongoing plan to increase the compulsory superannuation rates for employees the superannuation guarantee rate has increased from 9.25% to 9.5% as from the 1 July 2014.

Changes to Rules for Deprecation on Assets

For small businesses with a turnover less than $2 million, in the 2012–13 income year, are able to write-off depreciating assets that costed less than $6,500 in that income year if they started to use the asset, or had it installed ready for use, for a taxable purpose. They could also depreciate most other assets in the general small business pool at a rate of 15% in the first year and 30% thereafter.

As from the 1 January 2014, the threshold has change and only assets costing less than $1,000 (that the entity starts to use or have installed ready for use, after 31 December 2013) will be eligible for immediate write-off. Assets that costed $1,000 or more are to be depreciated in the general small business pool.

Assets costing less than $6,500, between 1 July 2013 and 31 December 2013, will still be eligible to be immediately written-off for the small to medium enterprises.

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“Excepted Income” Of Minors

Fri, 20 Aug 2021 01:31:01 GMT

“Excepted income” of minors is taxed at ordinary rates and is excluded from the high marginal tax rates which would otherwise apply. A minor is an individual who is under the age of 18 at the end of the financial year.

Income which is not excepted income is subject to the reduced tax-free threshold, therefore mostly being taxed at the highest marginal tax rate, and from 2011-12 this income does not benefit from the low income tax offset.

Excepted Persons

Minors may be shielded from the application of the higher-taxing rules in a tax year if they were an “excepted person”. An excepted person pays tax at ordinary rates on all of their income.

A minor is an “ excepted person ” for the financial year if they were:

working full-time, or had worked full-time for three months or more in the income year (ignoring full-time work that was followed by full-time study), and for most or all of the following year intending to work full-time and not intending to study full-time
entitled to a disability support pension or rehabilitation allowance, or someone was entitled to a carer allowance to care for them
permanently blind
disabled and likely to suffer from that disability permanently or for an extended period
entitled to a double orphan pension and received little or no financial support from relatives, or
unable to work full-time because of a permanent mental or physical disability and received little or no financial support from relatives.

Excepted Income

A minor who is not an excepted person will nevertheless only pay tax at the lower ordinary tax rates on that part of their income which is “excepted income” ( s102AE(2) ).Their other income (which is termed “eligible income”) is taxed at the higher minors’ tax rates.

Excepted income includes income from personal exertion – for example wages a?yola-link-is-coming=true?yola-link-is-coming=truend salary – as well as a number of other specifically included income categories. To be “excepted” the wages or business income must be paid at an “arms length” rate – i.e. the rate which would be paid by someone not related to or associated with the minor.

Excepted Income of Minors includes income and investment proceeds of the following:

reasonable wages or income from services, including business and partnership income
taxable pensions or other income such as AUSTUDY paid by Centrelink or the Department of Veterans Affairs which is subject to the PAYG tax withholding requirements
income from a deceased estate
income from testamentary trusts
investment income from investments (including via a trust) from:
a public poverty relief fund
winnings from an authorised lottery
compensation proceeds, including an out-of-court settlement
superannuation and life assurance proceeds
child support proceeds following a family breakdown
a public poverty relief fund
winnings from an authorised lottery
compensation proceeds, including an out-of-court settlement
superannuation and life assurance proceeds
child support proceeds following a family breakdown
investment income from assets equivalent to an intestate value transferred from a deceased estate beneficiary within 3 years of death
investment income from assets acquired through a family breakdown property settlement( s102AGA )
income from investment of any of the above

This is generalised information which should not form the basis of a course of action without professional advice which is specific to your circumstances.

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8 Steps To Getting Started In Property

Fri, 20 Aug 2021 01:22:02 GMT

Admit it , you have been thinking about investing in property

Admit you have read the books, magazines and reports. You have been religiously checking the Real state webpages or Investment Groups for properties.

Yet when push comes to shove, you have stopped for one reason or another.

You are not alone. In fact less than 6% of Australians, or roughly 1.3 million people, own an investment property, even though property is a national past-time.

This is not surprising. A lot of people get overwhelmed by the process and quit before they even begin. But it doesn’t have to be confounding. Reality is, property investing is relatively straightforward.

To help you begin your journey, here are eight steps to starting a property portfolio on a solid ground, without losing your mind.

1. Check Your Finances

his can be as simple as listing all your assets, including all your incomes and then working out your expenses.

This will give you an idea how much money you have available for investing. Don’t immediately assume that you can’t afford to invest. As long as you have a stable and reasonably good paying job with solid employment history, you should not have a problem getting a loan.

Here to get you started is a budget planner .

2. Get A Pre-Approval

You can get pre-approval loans through your lender directly or through a mortgage broker. Going through a broker before applying for a pre-approval can be beneficial if you’re not sure you’re financially ready to invest.

Applying for multiple pre-approvals loan is not a good idea. Each time you apply, the lender will check your credit record. If there are multiple inquiries, this sends a red flag to the lender and the lender may refuse your application.

Top tips

Find out if you qualify for a loan
Check your credit rating
Consider reducing your debt or credit card limit

3. Set Your Goals

What are you looking to achieve in investing?

What does success look like to you?

Property investors generally invest in property to secure their financial future or to be free to do what they want, when they want.

In order for you to achieve your goals, you must first articulate what your goals are. More importantly, you need to set a deadline as to when you want to achieve these and then you can work backwards.

For example, if you’re looking to replace your income and retire on your investments within 10 years, you can start by creating a 10-year plan, broking it down further to a 5-yearly, yearly to bi-annual to all the way down to a weekly timeline. This way you don’t get overwhelmed by the enormity of the task.

4. Understand Risk Issues

Your attitude to risk will dictate your risk strategy. What sort of risk level can you accept ?

Getting an understanding of your attitude to risk will help you create a strategy to reflects this.

5. Start A Budget

Budgeting is neither interesting or sexy, but it the only way to ensure that you are able to balance your income and expenses. It allows you to see what and where you have been spending you money and this will help you to plan for bigger expenses further down the line,

There’s good budgeting software available, such as this budget planner and this spreadsheet tool .

6. Create A Purchase Plan

The plan should facilitate your goals of growing your portfolio to a point where it’s producing the growth or income you’re aiming for. The plan should serve as a structure for you to stay in the game of investing.

Here’s an example of a purchase plan you can follow:
Define your strategy
Set up your criteria
Do your research
Cull your list
Get appraisal
Do your due diligence
Make and offer and negotiate

7. Be Informed

Use the tools that are available to you to make an informed decision. Knowing the market can be key to making the right investment choice.

Being informed also means being wary of get rick quick schemes and property paddlers. If someone is promising you guaranteed returns and overnight riches, walk away; the only person getting rich is them.

There’s no such thing as a property psychic and while there are tried and true methods to research, no one can make guarantees. Understanding your tolerance for risk will help you shape how much you’re willing to take on over the short and longer term period.

8. Stay Focused

Make sure you stay focused. Investing in property is a business decision, not an emotional reaction.

Be clear about what you want to achieve
Set a date as to when you want to achieve this goal
Identify milestones you need to do, to achieve these goals

It’s easy to get overwhelmed when you’re starting something new and as massive as property investing.

[P] But don’t give up. Just imagine in a couple of years time, if you buy the right properties this year, you could be sitting back, feeling happy, secure and even proud that you bought properties that more than doubled their values while your peers and everyone else wishes they’d bought back in the day.

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Common BAS Errors And How To Avoid Them

Fri, 20 Aug 2021 01:08:52 GMT

Business Activity Statements (“BAS”) can be lodged with errors to Australian Taxation Office (“ATO”) which can overstate or understate the business’ GST liability. This can increase ongoing business costs and increase the ATO penalties, which can be avoided by knowing how to avoid these errors. Below are some common errors and how to avoid them.

1. Bank Interest received or paid recorded as GST inclusive.

Bank interest is a financial supply and therefore input taxed. Accordingly there is no GST received or entitlement to any input tax credit.

2. Merchant fees being recorded as input taxed.

Sometimes these fees include GST. PayPal fees are generally GST free, however eWay fees generally include GST. It is normally dependent on the payee.

3. Insurance payments being recorded as GST inclusive.

Some components of insurance payments contain stamp duty, this portion is GST free.

4. Similarly, car registration being recorded as GST inclusive.

Car registration includes TAC charges, this component is the only component that is subject to GST and claimable for GST purposes.

5. International postage being recorded as GST inclusive.

These expenses do not contain any input tax credits and are GST free.

6. Reporting wages and superannuation expenses at G11.

Wages are an employee expenses and should be reported at W1 and superannuation expenses should not be recorded on the BAS.

7. Claiming input tax credits on government charges.

These include ASIC fees, water rates and council rates. They are usually GST free and therefore no input tax credits should be claimed on these expenses.

8. Dividends being recorded as income and expenditure on the BAS.

They are paid out of retained profits of a business and accordingly are classified as a reduction in owner’s equity (capital). Dividends paid are not expenses and therefore should not be recorded on the BAS. Further, dividends received are not to be recorded on the BAS at G1.

9. Sole traders recording drawings and capital introduced into the business as GST inclusive.

These items are not to be recorded on the BAS.

10. Recharges being recorded as GST inclusive in the first instance.

When using pre-paid vouchers, usually for mobile phones, GST is not recorded until the voucher is redeemed. Generally, once it is redeemed it is linked to a taxable supply and therefore becomes GST inclusive.

11. Sale of business assets being incorrectly reported as GST free.

In most instances when a business asset is sold, the seller must charge GST and the buyer will be entitled to claim this component on their BAS, providing both parties are registered for GST.

12. Sale of a business as a going concern not being included in G1 and only G3.

If the sale of business meets the criteria for a sale of business as a going concern, the sale amount must be included at G1 and accordingly at G3 to reduce overall GST received for the period.

13. GST being recorded on residential rent.

Residential rent is input taxed and accordingly has no input tax credits.

14. Reporting GST only when it is received and not when it is earned when your business is on an accruals reporting cycle.

In order to claim input tax credits, your business must have a copy of the source document, being an invoice or receipt in case of an ATO audit. According to Tax Ruling 2005/9, the ATO accepts electronic copies providing they are fully legible. Where these records are scanned and stored electronically, the requirements of section 262A of the ITAA 1936 are satisfied to maintain records where the documents are:

not altered or manipulated once stored;
retained for the statutory period of five years; and
capable of being retrieved and read at all times by ATO staff

Using a cloud accounting system, you can store these necessary documents with their corresponding transaction. Therefore the use of this software can assist your businesses by providing further productivity. We always recommend that businesses regularly backup this information as the ATO can request these documents at any time within the statutory period, or for an indefinite period where there is suspected fraud.

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