StewartBrown Chartered Accounting Firm

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ATO Targeting Work-From-Home Expenses this Tax Time

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Working From Home

The Tax Office has earmarked home office expenses as a key focus area this tax time, citing a lack of education contributing to a high amount of mistakes, errors, and questionable claims.

According to the ATO a record $7.9 billion in deductions for ‘other work-related expenses’ were claimed by 6.7 million taxpayers last year, with the Tax Office noticing a rise in expenses related to working from home. With increasing numbers of employees working from home, extra costs related to home office could be deductible, but the ATO advise they are seeing some taxpayers either over-claiming and/or claiming private expenses which are not tax deductible.

They cite increasing evidence that many taxpayers don’t know what they can and cannot claim. In particular, they are seeing some taxpayers claiming expenses they never paid for, expenses their employer reimbursed, private expenses and expenses with no supporting records. While acknowledging that costs incurred as a direct result of working from home can be legitimately claimed, the ATO have noticed taxpayers making claims for all sorts of private expenses.

Apparently a very common issue is people claiming the entire amount of an expense (like their internet or mobile phone), not just the extra part related to their work. An ATO spokesperson advises “If working from home means sitting in front of the TV or at the kitchen table doing some emails, it’s unlikely that you are incurring any additional expenses. However, if you have a separate work area, then you can claim the work-related portion of running expenses for that space. Employees cannot generally claim occupancy-related expenses like rent, mortgage repayments, property insurance, land taxes and rates.”

The ATO have revealed that over $53 million in errors had been corrected in the first two months of tax time in 2018, stemming from “simple mistakes” such as not declaring all income or over-claiming deductions. If you are unsure about what you might be able to claim please contact our office to discuss further.

Employer Financial Subsidies Available - Check Your Eligibility

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Employer Subsidies

A wage subsidy is a financial incentive of up to $10,000 (GST inclusive) to help eligible businesses hire new staff.

Employers can access a wage subsidy if they:

  • have an Australian Business Number (ABN)
  • have not previously received a wage subsidy for the same person
  • are not an Australian, state or territory government agency
  • offer a job that is expected to be ongoing and for an average of 20 hours per week over the six months of the wage subsidy agreement
  • offer a job that complies with employment standards for the position - for example, is suitable work and pays as a minimum the national award wage.

Employers can access a wage subsidy if they:

  • work that displaces an existing employee
  • commission-based, subcontracting or self-employment positions and
  • work for an immediate family member.

Employment service providers will make flexible payments to eligible employers over six months. Employees who are Indigenous Australians have immediate access to wage subsidies of up to $10,000 if all eligibility requirements are met. The following table summarises what subsidies are available to employers:

Wage subsidy type Eligible age range Subsidy available
Restart 50 years of age and over Up to $10,000
Youth Bonus 15-24 years of age Up to $10,000
Youth 25-29 years of age Up to $6,500
Parents Any age Up to $6,500
Long Term Unemployed Any age Up to $6,500

Wage subsidies are available to eligible participants in jobactive, Transition to Work (TtW) and ParentsNext Intensive Streams. The Restart Wage Subsidy is also available to participants in Disability Employment Services (DES) and the Community Development Programme (CDP).

All wage subsidy placements must average at least 20 hours per week over the 26 week wage subsidy period. Employment must also comply with National Employment Standards.

Jobs can be full time, part time or casual. Apprenticeships and traineeships are also eligible to attract a wage subsidy.

Each wage subsidy is targeted to assist those who need it most. Please talk to an employment services provider to check your eligibility. A list of employment services providers can be found at: www.jobsearch.gov.au/service-providers or by calling the Jobseeker Hotline on 13 62 68 or the National Customer Service Line on 1800 805 260.

GST On Low Value Imported Goods - Risk For Aussie Retailers

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Imported Goods

From 1 July 2018, GST applies to sales of low value imported goods (valued at $1,000 or less) to consumers in Australia. This measure attempts to treat such imported goods in the same way as goods purchased domestically.

Australian retailers need to be careful with this new law to ensure that they aren’t incorrectly charged GST by overseas suppliers. Overseas suppliers, if they have to register for GST, can get what is called a simplified GST registration. This means that they don't have to obtain an ABN and they can't claim input tax credits, but they don't have to issue a tax invoice to the Australian retailer they sell through. It’s only when they sell direct to an Australian customer that they need to charge and collect the GST.

The GST changes are meant to target consumers, so Australian retailers registered for GST should not be charged GST on low value goods imported for use in their business. To avoid any confusion, Australian retailers should therefore provide their ABN and state they are registered for GST to their overseas suppliers.

It's quite common for Australian retailers to warehouse stock in China, Singapore, or elsewhere in Asia, and then sell goods directly to a customer. These goods are generally mailed to customers through the post and previously no GST was added to the sales value. Australian suppliers who deliver goods to Australian consumers from overseas into Australia will now have to levy GST on each of those sales.

If you think this may be an issue for your business and are unsure of the new rules please contact your StewartBrown Partner or Manager to discuss further.

FBT - ATO Attacks Work Vehicles

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Work Van

The ATO has recently revised its guidance on how fringe benefits tax (“FBT”) applies in relation to the private usage of work vehicles.

Previously the ATO issued a definitive list of eligible work-use vehicles (typically tradie, dual cab and panel vans etc), but from 1 April 2017 this list has been withdrawn and employers now have to self-assess.

In the past this law has always been about minor, infrequent travel for work vehicles, but this new ATO guidance puts the onus very much on the employer to prove that work cars are not used just as a perk to retain and attract staff. The ATO’s guidelines now suggest that a vehicle’s private use cannot exceed 1,000km in a year, and no return journey can exceed 200km. This is thought to be much more restrictive than previously understood.

While home to work travel is generally not considered private for these work vehicles, according to these new guidelines, any trip in which a home to work route varies by more than 2km will be considered a personal trip.

This new approach will potentially catch many employers unaware as they have in the past assumed that “work vehicles” (ie on the eligible vehicles list), means no FBT.

Our advice to clients who provide these work vehicles to employees is to make sure you have a policy on work-related vehicles and make sure you can monitor how it is enforced.

2018 End of Financial Year Tax Planning Checklist

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For the information of clients we enclose this checklist which you may find helpful in planning your year-end tax strategies.

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