Tax Tips

Tax Tips

bucket companies thumbnail

‘Bucket Companies’

Discretionary trusts are attractive business structures as they can provide the following benefits: • Flexibility with income distributions (income can be allocated in different ...
duoble dip company vehicle thumbnail

‘Double Dip’ For Employees Claiming Motor Vehicle Expenses Reimbursed By Their Employer

Employees can have their work related motor vehicle expenses paid or reimbursed by their employer. They can also claim a deduction under the ‘cents ...
four year construction exemption thumbnail

‘Four Year Construction Rule’

Generally the main residence exemption applies from the date a completed dwelling becomes the taxpayer’s main residence i.e. from the date they actually move ...
20000 tax exemption thumbnail

$20,000 Asset Write-Off

Small businesses (i.e. those with an annual turnover of less than $2m pa) can claim an immediate deduction for assets they start to use ...
15 year cgt exemption

15 Year Small Business CGT Exemption

If the 15 year small business capital gains tax (CGT) exemption applies then any capital gains on the sale of business assets will be ...
farm exemption thumbnail

Accelerated Depreciation for Farmers

From 12th May 2015 the following accelerated depreciation applies to primary producers: • Immediately deduct the cost of fencing and water facilities such as ...
remote sites thumbnail

Accommodation and Meals at Remote Sites

The ATO defines an area as remote if it is not in, or adjacent to, an eligible urban area. This means at least 40 ...
director fees

Accrued Directors’ Fees

Accruing directors’ fees is a tax deferral strategy as the company receives a tax deduction in one financial year, but the related party (directors), ...
accrued expenses thumbnail

Accrued Expenses

Accrued expenses are expenses that have been incurred, but not yet paid. They are recognised for accounting purposes in the financial statements before being ...
infinity thumbnail

Active Assets Indefinitely

An active asset is an asset that is owned by a taxpayer and used in a business by the taxpayer, an affiliate of the ...
agribusiness scheme thumbnail

Agribusiness Schemes

Agribusiness is now a common managed investment option for investors. Agricultural investments fall into two main categories, forestry and non-forestry. Forestry managed investment schemes ...
airport lounge memberships

Airport Lounge Memberships

The primary function of Airport Lounge Clubs is to provide airline travellers with business facilities, food, drink and a relaxing environment. Business facilities provided ...
Business assets

Allocating the Purchase Price of Business Assets Acquired

A business contract to purchase a business is a legally binding agreement between the purchaser and vendor. Although the contract can be verbal, a ...
Art

Art

Small businesses buying art for their offices, workshops or factories will be entitled to a tax deduction for the cost if each item of ...
Averaging tax for authors

Averaging for Authors, Artists, Inventors and Sportspersons

Special professionals such as authors of literary, dramatic, musical or artistic work, inventors, performing artists, production associates or sportspersons typically find their professional income ...
Value shifting rule

Avoiding Value Shifting Rules

Value shifting occurs where transactions are structured to shift value out of assets so that the assets market values and tax values are distorted. ...
Bad Debt

Bad Debts

Almost all business entities make sales on credit as it generally increases their total sales. Businesses expect a certain percentage of their credit sales ...
Bitcoin

Bitcoin

Bitcoin was created in 2009 by Satoshi Nakamoto as the world’s first cryptocurrency and is the biggest. Currently there are 669 cryptocurrencies in the ...
Blackhole expenditure

Blackhole Expenditure

Section 40-880 provides a deduction for certain business capital expenditure (i.e. blackhole expenditure) on a straight-line basis over a 5-year period. Section 40-880 only ...
bona fide travel allowance

Bona Fide Travel Allowance

A bona fide travel allowance is a travel allowance paid to an employee who is required to travel overnight for work purposes where the ...
business entity changes

Business Entity Changes

Business entity changes involve transferring a business from its current structure to a more advantageous structure. The most common reasons for a business restructure ...
Business or hobby

Business or Hobby?

Working out whether you are operating a business or hobby is important as a business is subject to tax, insurance, employment laws, and other ...
Carbon Sink Hole Forest

Carbon Sink Forests

A carbon sink is a natural or artificial reservoir that accumulates and stores some carbon-containing chemical compound for an indefinite period. The process by ...
Cash vs accrual accounting

Cash vs Accrual Accounting Methods

Businesses can use two methods of accounting for their income and expenses, cash or the accrual method. Cash accounting is based on the cash ...
Depreciating assets

Changing Effective Life of Depreciating Assets

Depreciating assets are assets that have a limited effective life and can reasonably be expected to decline in-value over the time they are used. ...
Transition to retirement

Commuting a Transition to Retirement Income Stream

There are many reasons why people continue to work past age 55. Some need the money, but others enjoy the mental stimulation and social ...
Company Harvey Norman

Companies

In Australia a company is a separate legal entity that is registered with the Australian Securities and Investments Commission (ASIC). Companies are regulated under ...
work uniforms

Compulsory Work Uniform

A compulsory work uniform is a uniform that the employer strictly enforces and makes compulsory for all employees to wear. The uniform must be ...
superannuation contributions

Concessional Superannuation Contributions

Superannuation contributions can be either concessional or non-concessional. With concessional superannuation contributions the payer of the super will be claiming a tax deduction for ...
crowdfunding

Crowdfunding

Crowdfunding involves using the internet and social media to raise funds for specific projects or particular business ventures. Typically the promoter of the project ...
crystallise capital losses

Crystallise Capital Losses

Capital Gains Tax (CGT) was introduced into Australia on 20th September 1985, by the Hawke/Keating government. The tax generally only applies to assets acquired ...
Death benefit

Death Benefit Employment Termination Payments

A death benefit eligible termination payment is a payment made by the deceased’s employer for unused sick leave, a gratuity, or golden handshake following ...
deceased estate

Deceased Estates Taxed Under s99

A deceased estate is the property of a person who has died. It only includes property the deceased owned in their own name so ...
workers compensation payments deductions

Deductions against Workers Compensation Payments

Workers compensation is a form of insurance payment paid to employees if they are injured at work or become sick due to their work. ...
delayed income

Delay Income

Cash accounting is based on the cash received and the cash paid out. In cash accounting, if you invoice a client you don’t record ...
Leaving Australia

Departing Australia Superannuation Payment

Temporary residents are taxpayers who hold a temporary visa granted under the Migration Act 1958, are not Australian citizens or the holder of a ...
dividend deductions

Dividend Deductions

Australia has one of the highest proportions of share ownership in the world with more than 6.48 million Australians (or 36% of the adult ...
Division 43

Division 43

Division 43 allows certain capital expenditure incurred on income producing buildings to be eligible for capital works deductions/building write-off. It is actually a capital ...
Division 7A

Division 7A

Division 7A is an ATO integrity measure to ensure that private companies don’t make tax free distributions of profits to shareholders or shareholders’ associates ...
divorcing spouses CGT

Divorcing Spouses CGT Asset Rollover

The Australian Bureau of Statistics report ‘Marriages and Divorces, Australia, 2013’ confirms there were 118,962 marriages registered, and 49,917 divorces granted in that year. ...
Public donations library

Donations

Taxpayers are generally entitled to claim donations and gifts made to Deductible Gift Recipients (‘DGR’), including various funds, authorities and institutions listed or described ...
double tax agreement

Double Tax Agreement

Double tax agreements (DTA) are agreements between Australia and approximately forty four other countries that aim to prevent double taxation, fiscal evasion, and assist ...
double deductable super

Double the Deductible Super Contributions Limit

This strategy allows a taxpayer to claim two deductible superannuation contribution limits in the one year by bringing forward the following years limit as ...
Eligable termination payments

Eligible Termination Payments

Eligible termination payments (ETP) are lump sum payments paid to an employee on resignation, retirement or death. The payments are assessable income to the ...
employee meal expenses

Employee Meal Expenses on Business Premises

Employee meal costs, like lunch during a normal work day, are normally private non- deductible expenses. But an employer can provide the following meals ...
employee share scheme

Employee Share Schemes

Employee share schemes are designed to give employees a share ownership in the company they work for. This can be structured in various ways ...
Truck driver

Employee Truck Drivers

Australian truck drivers are often away from home overnight as they need to deliver goods long distances. Long distance truck drivers who deliver goods ...
Employing the family

Employing the Family

This involves the small business employing family members, e.g. the spouse or older children employed as bookkeepers, receptionists, labourers, secretaries, managers, gardeners, etc. The ...
entertainement

Entertainment

Generally expenditure on entertainment is not tax deductible. This includes expenditure entertaining clients, business lunches, social functions, Christmas parties, etc. As an exception to ...
Environmental protection agency

Environmental Protection Activities

Environmental protection activities (EPA) are undertaken to prevent, fight or remedy pollution or to treat, clean up, remove or store waste from the business ...
Family trust

Family Trust Distributions to Adult Children

Family trusts are discretionary trusts established to hold a family’s assets or conduct a family business. The terms and conditions under which a family ...
primary producers

Farm Management Deposits

The Farm Management Deposits (FMD) scheme allows eligible primary producers to move income from a year in which they don’t need it, to a ...
FTB

FBT Exemptions and Reductions

Fringe benefits are extra benefits supplementing an employee’s ‘money wage’ or salary. The most common fringe benefit in Australia is company cars. When these ...
Australian Film incentives

Film Industry Incentives

There are three tax offsets available for certain Australian production expenditure incurred by a production company in making a film, where a minimum level ...
new apartments thumbnail

Five Year Rule for New Residential Premises

A residential premise includes houses, units and flats that are occupied or can be occupied as residences. It does not include vacant land. When ...
amsterdam foreign pension

Foreign Pension Undeducted Purchase Price

Most countries, including Australia, structure their welfare systems so that taxpayers contribute to the country’s welfare systems during their working life and start drawing ...
fuel efficient luxury cars

Fuel Efficient Luxury Cars

Fuel efficiency is the distance you can travel on an amount of fuel. A vehicle that only uses 7 litres of fuel to travel ...
fuel tax credits mining

Fuel Tax Credits

Fuel tax credits provide businesses with a credit for the exercise or customs duty that’s included in the price of fuel used in: Off-road ...
General pool balence

General Pool Balance Less Than $20,000

Businesses with a turnover of less than $2 million pa have two choices in calculating their deductions for depreciating assets – the simplified depreciation ...
Genuine Redundancy Payments

Genuine Redundancy Payments

An employer has four valid reasons for terminating an employee’s employment: Capacity – This relates to the employees ability to perform the job. Conduct ...
GST Going Concern

GST Going Concern Exemption

The sale of a going concern is GST-free if all of the following apply: Payment is made for the supply, The purchaser is registered ...
holiday homes

Holiday Homes

Holiday homes are homes that people own in order to holiday in and that are located in a different location to the home they ...
home office occupancy

Home Office Occupancy Expenses

If a taxpayer’s home has the character of a ‘place of business’ then occupancy costs like interest expenses, rates, rent, maintenance, etc., may be ...
home to work travel

Home to Work Travel

Normally home to work travel for an employee is not tax deductible as it is deemed private travel. It is possible for an employer ...
husband and wife

Husband and Wife Partnerships

A partnership is a business entity in which two or more individuals or entities combine their skills and money, and share the profits and ...
income protection

Income Protection Insurance

Income protection insurance, also known as sickness and accident insurance, provides an employee with monthly income payments to replace their salary income when they ...

Intangible Depreciating Assets

Intangible assets are identifiable long-term assets of a business that have no physical existence. Examples include goodwill, patents and copyright. Some intangible assets have ...
interest deductions for rental properties

Interest Deductions for Rental Properties

The ATO data shows 1.8 million individuals own an investment property with 67% of those investors recording a loss on their rental income. The ...
investment bonds

Investment Bonds

Investment bonds (also known as insurance bonds) are tax efficient long term investment vehicles. Investment bonds are structured as a life insurance policy under ...
Itinerant travel

Itinerant Travel

Itinerant travel is defined as working in different places for short periods of time. Employees that may have itinerant travel include home care nurses, ...
motor vehicle

Jointly Owned Motor Vehicle

Most spouses jointly own their assets, including all their motor vehicles. This is the case even though the motor vehicle registration departments of several ...
legal fees

Legal Expenses

Legal expenses are the solicitor fees, court costs, and other expenses involved in dealing with legal matters. Legal expenses can be incurred in getting ...
life insurance

Life Insurance Held Through Superannuation

Both self-employed business owners and employees who are eligible to claim a tax deduction for superannuation contributions, or who can salary sacrifice, should consider ...
living away from home

Living Away from Home Allowances

Many careers require employees to live away from their normal place of residence to perform their work duties. This is common with mine workers, ...
log book

Log Book for Motor Vehicles

Taxpayers can claim motor vehicle expenses based on two methods, cents per kilometre or the log book method. The cents per kilometre method is ...
loss companies

Loss Companies or Trusts

This strategy involves directing business or investment income across to a taxpayer’s loss-company or trust. Loss companies and trusts are entities that have either ...
luxury car

Luxury Car Leases

Australians purchased approximately 1.1 million new cars in 2015 with over 95% of them imported from overseas. Australian manufactured car sales are falling as ...
main residence

Main Residence 6 Month Rule

Home ownership is a widely held aspiration in Australia, providing security of tenure and long term economic benefits to home owners. Owning a home ...
my own tax

Managing Tax Affairs

A taxpayer can claim a deduction for expenses they incur in managing their own tax affairs. These expenses will be deductible in the year ...
margin scheme

Margin Scheme

Normally the amount of GST payable on a taxable supply of real property is calculated as 1/11th of the GST-inclusive price. In contrast, where ...
Negative Gearing

Negative Gearing

Negative gearing is where borrowed funds are used to invest in either property or shares and the income generated (at least in the short ...
Family Home

Negatively Gearing the Family Home

The general rule is that interest on borrowings used to purchase the family home is non-deductible. An exception to this is where a discretionary ...
non commercial losses

Non Commercial Losses

Individuals operating a business, as either a sole trader or in partnership, where the business makes a loss, may be able to offset the ...
non resident australian income

Non-Residents’ Australian Income

It is essential that taxpayers correctly determine whether they are residents for tax purposes or non-residents as the tax consequences are very different. The ...
novated motor leases

Novated Motor Vehicle Leases

A novated lease is a type of motor vehicle lease common in Australia that allows a business to lease a motor vehicle on behalf ...
occupation health counseling

Occupational Health and Counselling

Occupational health is the promotion and maintenance of the highest degree of physical, mental and social well-being of workers by establishing and maintaining a ...
overseas conferences

Overseas Conferences, Courses and Study Tours

Employees undertake overseas conferences, courses and study tours for a variety of reasons including to improve their qualifications and knowledge, experience another culture, travel, ...
overseas super transfer

Overseas Super Transfer

Australia is a county of migrants with over 27.7% of the resident population having been born overseas (6.4 million people). Persons born in the ...
overtime meal expenses

Overtime Meal Expenses

Generally meals, snacks and drinks bought and consumed while working are considered to be private and non- deductible. An exception to this rule applies ...
partnership

Partnership of Discretionary Trusts

A partnership is a business entity in which two or more individuals or entities combine their skills, resources and money and share the profits ...
passive assets

Passively-Held Assets

Owners of passively-held assets (like offices, factories, and warehouses) are not carrying on a business, so are not entitled to access the capital gains ...
penelties fines

Penalties, Fines and Interest

Section 26-5 of the ITAA 1997 specifically makes penalties or fines imposed as a result of breaches of an Australian law non-deductible. Examples of ...
personal services income

Personal Services Income (PSI)

Personal services income (PSI) is income produced mainly from an individual’s personal skills or efforts. Basically it’s income that has the characteristics of employment ...
prepaid income

Prepaid Income – Arthur Murray Case

This strategy deals with how a taxpayer receiving an up-front pre-paid income from a contract that straddles several tax years is taxed on the ...
prepayment

Prepayment Deductions

Prepayments are amounts paid for by a business in advance of the goods or services being received at the period or year end. Small ...
primary production business

Primary Production Business

A primary producer is an individual, partnership, trust or company carrying on a primary production business. A primary producer is carrying on a business ...
private health insurance

Private Health Insurance

The Medicare levy surcharge (MLS) is designed to reduce the demand on the public Medicare system. The Medicare levy surcharge is payable if an ...
property depreciation

Property Depreciation Reports

A property depreciation report (also called a depreciation schedule) sets out the tax depreciation and building write-off claims for new or existing investment properties ...
property related transactions

Property Related Transactions

The sale of a property can be taxed in one of three ways: Carrying on a business – For example, a property developer building ...
property seminars

Property Seminars

A good property investment seminar provides investors with the facts and figures, as well as successful strategies, to take advantage of opportunities in the ...
protective clothing

Protective Clothing

Protective clothing is clothing, helmets, goggles, or other garments or equipment designed to protect the wearer’s body from injury or infection. The hazards addressed ...
provisions and reserves

Provisions and Reserves

Provisions and reserves are similar as they both deal with losses and liabilities and reduce a business’s net assets and equity. The main way ...
psi entity

PSI Entity

Personal services income (PSI) is income produced mainly from an individual’s personal skills or efforts. Typically this is when more than 50% of the ...
reducing super

Reducing Super Guarantee Payments

In 1972 the Keating Labour government introduced a compulsory ‘Superannuation Guarantee’ system as part of a major reform package addressing Australia’s retirement income policies. ...
Refinancing

Refinancing the Family Home

Often when taxpayers have paid off the mortgage on their family home they decide to get a loan to purchase a new family home ...
Division 293

Refund of Division 293 Tax for Temporary Residents Permanently Leaving Australia

The Government introduced the Division 293 tax in 2012 to ensure high income earners on the 47% tax bracket are not benefiting excessively from ...
Relocation expenses

Relocation Expenses

Relocation costs can be expensive and are often $10,000 - $20,000. Employees who relocate for work purposes however, are not entitled to a tax ...
Rental property

Rental Property Repairs

Rental property investments are very popular in Australia with over 1.8 million individuals (8% of the Australian population) reporting to the ATO as having ...
Research and development

Research and Development

The research and development (R&D) tax incentive came into effect on 1st July 2011 and encourages companies to engage in R&D by providing a ...
Resident vs non resident

Resident vs Non Resident

Determining a taxpayer’s residency status is important as Australian tax residents are taxed on their world-wide income (Australian and overseas) where-as non-residents are only ...
retirement exemption

Retirement Exemption – CGT Concession for Small Business

There are four capital gains tax (CGT) concessions available for small businesses. The concessions reduce the capital gain on business assets that must be ...
sole trader

Rollover from Sole Trader to Company

A sole trader business structure is very simple and services many small business owners well. More complex business structures include partnerships, trusts and companies. ...
private motor vehicle

Salary Packaging Private Motor Vehicles

When a motor vehicle is used 100% for private purposes there is normally no tax deduction available on the expenditure. With this strategy an ...
rental expense

Salary Packaging Rental Property Expenses to Double Dip and Save the GST

Investors owning a residential rental property are not entitled to claim an input tax credit for the GST included in rental property expenses paid. ...
School building

School Building Fund Levy

A school building fund is a public fund established and maintained exclusively for providing money for the acquisition, construction and maintenance of a building ...
scrip for scrip

Scrip for Scrip Rollover

As at October 2015 the Australian Stock market was comprised of 2,216 listed entities with a combined market capitalisation of $1,596,640 million. The listed ...
self education

Self Education Expenses

Taxpayers self-education expenses will generally be deductible where they are directly connected to the taxpayer’s current job or income earning activities and: The course ...
self development seminars

Self-Development Courses and Seminars

Self-development courses include personal development courses, success seminars and personal/executive coaching. The self-development field is very broad and covers activities that improve awareness and ...
Self managaged super

Self-Managed Super Fund Borrowings

The general rule is that self-managed super funds are prohibited from having any borrowings. As an exception to that rule, since 2007 super funds ...
service arrangement

Service Arrangement

A service arrangement generally has the following features: The taxpayer (and this could be a sole trader, trust, partnership or company) carries on a ...
share buybacks

Share Buybacks

A share buyback occurs when a company repurchases some of its shares from shareholders. This reduces the number of shares on issue and the ...
investment seminar

Share Investment Seminars

The Australian Stock Exchange Ltd (ASX) is an Australian public company that operates Australia’s primary securities exchange, called the Australian Securities Exchange. The ASX ...
Share trader vs investor

Share Trader ‘v’ Share Investor

Whether a taxpayer is a share trader or share investor depends on the specific facts of each case. The main factors to consider include ...
small business owner

Small Business CGT Rollover

The small business CGT rollover allows a taxpayer to choose to defer all or part of a capital gain made on an active asset ...
small business income tax offset

Small Business Income Tax Offset

Some 96% of all Australia’s businesses are small businesses, employing over 4.5 million people and producing over $330 billion of economic output per year. ...
self managed super

SMSFs and Shares

A self-managed super fund (SMSF) is a trust structure that can be used to manage retirement savings on behalf of its members. SMSFs are ...
Disability Trust

Special Disability Trust

A Special Disability Trust is a trust established primarily for succession planning by parents and immediate family members for the current and future care ...
sponsorship

Sponsorship

Sponsorship is the financial or in-kind support of an activity, used primarily to reach business goals. Sponsorship is not advertising (which is a quantitative ...
partner super

Spouse Super Contributions

A spouse super contribution involves making a contribution to a spouse’s super fund to build their retirement savings. Typically this involves the working spouse ...
streaming trust

Streaming Trust Income

One of the main advantages of a discretionary trust is their ability to decide at June 30th each year, who to distribute the trust ...
sunglasses sunscreen tax

Sunglasses and Sunscreens

Many jobs require employees to spend large parts of their work day out in the sun being exposed to the sun’s damaging rays. For ...
super co contributions

Super Co-Contribution

The government’s objective with the super co-contribution scheme is to help eligible people boost their retirement savings. The super co-contribution is only available to ...
withdraw super

Super Withdrawal and Recontribution Strategy

Australia’s total superannuation assets are valued at $1.6 trillion which is roughly equivalent to the annual GDP. There are 32 million superannuation accounts in ...
tax consolidate

Tax Consolidation

Tax consolidation is a regime adopted in the tax or revenue legislation of countries which treats a group of wholly owned or majority owned ...
tax deductable dog

Tax Deductible Dogs

Dogs can be a legitimate tax deduction when used in the following ways: On farms for rounding up sheep, cattle and other livestock. Guard ...
malcolm turnbull

Tax Incentives for Early Stage Investors

Malcolm Turnbull’s Innovation Statement released on 7th December 2015 provides tax incentives for early stage investors. The tax incentives will encourage early stage investment ...
venice

Temporary Absence Rule

The temporary absence rule allows a taxpayer that is renting out their main residence for a period to still treat the property as their ...
Temporary residents

Temporary Residents

Temporary residents are taxpayers whose normal place of residence is overseas but are temporarily living in Australia. The most common category of temporary resident ...
Testamentary trust

Testamentary Trust

A testamentary trust (sometimes referred to as a will trust or trust under will) is a trust which arises upon the death of the ...
thin capitalisation

Thin Capitalisation

The thin capitalisation rules apply to Australian entities investing overseas, their associated entities, foreign controlled Australian entities and foreign entities investing directly into Australia. ...
Transfer personal investments

Transfer Personal Investments into Super

This strategy involves a taxpayer selling listed securities (whether shares or managed funds) and commercial properties into their super fund. The title of the ...
Google office

Transfer Pricing

Transfer pricing occurs where a multinational business operates in two separate countries with two separate companies and they do business together. The two companies ...
Transfering business

Transferring Business Premises into a SMSF

This strategy involves a business owner transferring their business premises into their self-managed super fund (SMSF). This has the following advantages: Rent paid to ...
Transition to retirement

Transition to Retirement

Transition to retirement income streams (TRISs) help workers transition to retirement and save tax at the same time. For taxpayers over 56 years old ...
transporting heavy equipment

Transporting Heavy or Bulky Equipment

Some employees need to transport heavy or bulky equipment to and from their work place each day to perform their job. This is often ...
travel places of employment

Travel Between Two Unrelated Places of Employment

Employees who use their motor vehicle for work related travel are entitled to a tax deduction for the costs incurred. The two methods available ...
main residence

Two Hectare Main Residence Exemption

The main residence exemption applies to the dwelling a taxpayer lives in (which may be a home, apartment, strata title unit, unit in a ...
unit trust

Unit Trust

A unit trust is a type of trust where the assets are held and administered by the trustee of the trust for the holders ...
trading stock

Valuing Trading Stock

Changes in the value of trading stock from year to year will affect the gross profits and consequently net profits of a trading business ...
pinball

X-Box, Foxtel, and Pinball Machines

Research shows that having fun in the workplace can significantly improve productivity and performance. As Richard Branson from Virgin says, “happy employees, make happy ...
Australian defence force

Zone or Overseas Forces Tax Offset

The Zone Tax Offset (ZTO) is a concessional tax offset available to individuals which reduces their tax liability in recognition of the isolation, extreme ...