Frequently Asked Questions

FAQs

When you run a small business, you cannot afford not to know the numbers that effect its growth. We pride ourselves on delivering our business clients the financial facts along with the strategies to maximise performance – whether you’re a business of 1 or 1000.

Strategies
For Individuals

As the end of another tax year rapidly approaches on 30 June, we’ve put together an End of Financial Year FAQs to help you maximise tax time benefits.

I worked from home before COVID-19 and my work pattern has not changed as a result. Am I entitled to claim the shortcut rate of 80 cents per work hour for my additional running expenses?

Yes, the new shortcut method can be used for all individuals working from home. Even those who worked from home prior to the COVID-19 pandemic. Be aware that the shortcut method applies to those hours worked between 1 March and 30 June 2020. Taxpayers can also choose to continue to claim using existing methods which are outlined below.

-the work
-related portion of your actual expenses
-the fixed rate of 52 cents per hour plus the work
-related portion of expenses not covered by that rate.

To find out which is the most appropriate method for your circumstances, book an appointment with an RJS Professional here to discuss the most appropriate method for your circumstances.

If I claim my actual running expenses, what records do I need to keep?

Taxpayers will need to retain receipts for expenses, in addition to the records showing all work-related use. This method will have individuals calculate the size of their home in addition to the size of the work-related space. Remembering to also include the total of household running expenses (electricity & gas).

To apply this method, taxpayers will need to calculate the business percentage by dividing the area of work-related space by the total house area, then multiply this rate against the total costs. This is the amount that may be claimed. Click here to view the ATO’s working from home calculator. Or book an appointment with an RJS Professional here to discuss the most appropriate method for your circumstances.

If I suspend my private health insurance due to losing my job and my income for Medicare Levy Surcharge (MLS) purposes is above the threshold will I be liable for MLS?

If you and all of your dependents were not covered by an appropriate level of private patient hospital cover, and your income for MLS thresholds is either met or above, you may still be required to pay the surcharge. The rate depends on your income for the surcharge threshold. This applies unless you (and your dependents if you have them) are exempt from paying the Medicare levy. Click here to find out more about the Medicare Levy Surcharge exemption.

If I lose my job and suspend my private health insurance part way through the year will I get a partial exemption from the Medicare levy surcharge, if my income for MLS purposes is above the threshold?

If you hold hospital cover but temporarily suspend payments for that cover, then you may have to pay the surcharge for the days that the private health cover was not in force. This will be determined from the information the health provider and the taxpayer provide to the ATO.

I have lost my job as a result of COVID-19 and have found another job. Will I be taxed at a higher rate because it is considered a second job?

No, if you have lost your job, then you are entitled to claim the tax free threshold to reduce the amount of tax that is withheld from your pay from the new job.

Remember to tell the new employer that you want to claim the tax-free threshold by answering ‘Yes’ at question 8 ‘Do you want to claim the tax-free threshold from this payer?’

You can see how much tax the employer will withhold from your payment by using the tax withheld calculator. Click here to view it.

I am not an Australian resident. I am staying in Australia for longer than I expected because of COVID-19. What are my Australian tax obligations?

You may need to lodge an Australian tax return if you earn any assessable income from an Australian source. Your Australian tax obligations generally remain unchanged as a taxpayers salary, wages, investment income, etc will still be assessed.

All foreign-sourced income will also be assessable unless you are a temporary Australian resident.

Tax matters can be complicated. It’s best to seek advice from an RJS Professional on 1300 27 28 29.

Will my tax residency for tax purposes change as a result of me returning to Australia due to COVID-19?

Whether you are a resident for tax purposes in Australia is dependent on your individual circumstances. If an individual is here temporarily for some weeks or months because of COVID-19, then the individual will not be considered an Australian resident for tax purposes if the following is in force:

  • Usually live overseas permanently
  • Intends to return there as soon as able to.

It is important to consider that circumstances may complicate the matter if the individual:

  • Ends up staying in Australia for a lengthy period
  • Do not plan to return to your country of residency when able to do so.

Please seek advice on 1300 27 28 29 to understand the possibilities as the consideration as potential tax outcomes.

What happens if I earn employment income that is paid leave while I am in Australia temporarily?

Those who usually work overseas and earn foreign-source employment income may need to declare it in Australia. For those who have been on leave since arriving in Australia and are receiving foreign income from paid leave (such as annual or holiday leave) may be considered foreign-sourced income.

Check with an RJS Professional on 1300 27 28 29 to find out what is most appropriate for your circumstances.

What if I get a wage or salary in Australia and my home country has a double tax agreement with Australia?

Employment income derived by a person who is a resident of another country (after applying the double tax arrangements (DTA) tie-breaker rules) and is performing duties in Australia for a short period, will not be taxed in Australia. DTA’s must be confirmed before assuming this is the case as the wording, conditions and time periods vary from agreement to agreement.

Generally, employment income will not be taxed in Australia if:

  • you are a resident of a country with which Australia has a DTA (the DTA country)
  • you are not present in Australia for more than 183 days in aggregate in either an income year or a 12-month period (depending on the applicable DTA)
  • your salary and wages are paid to you by, or on behalf of, an employer that is not a resident of Australia
  • your salary and wages are not deductible against the profits of an Australian permanent establishment of your employer.

Check with an RJS Professional on 1300 27 28 29 to find out more

I am working overseas because of COVID-19. What are my Australian tax obligations?

If you usually live and work in Australia but you are temporarily overseas as a result of COVID-19, there is no change to your Australian tax obligations.

I am a temporary resident. Can I access my super under the COVID-19 early access arrangements?

It depends. Some eligible temporary residents can apply to access up to $10,000 of their super until 30 June 2020. Otherwise, if you have worked and earned super while visiting Australia on a temporary visa, visitors may like to consider applying for this super to be paid on departure as an Australia superannuation payment (DASP) after you leave.

If the bank defers loan repayments for a period of time as a result of COVID-19, can I continue to claim interest on the loan as a deduction?

Yes. If interest continues to accumulate on your loan, it remains deductible. Even if the bank defers the repayments.

I use personal superannuation strategies to build my nest egg for retirement. Which also have a positive impact on my tax position. Are there any other strategies I should be considering?

Before adding to super, keep in mind that the money will be inaccessible until certain conditions are met. There are caps on how much can be contributed to super each year.

  • Government Co-Contributions

    Superannuation co-contributions help eligible individuals boost their retirement savings.

    For those who are low or middle-income earners and make personal (after-tax) contributions to superannuation, the Government may also make a contribution up to a maximum of $500 per financial year.

    The amount the Government will contribute will depend on your income and how much after-tax contributions have been made to the fund during the financial year.

    You don’t need to apply for the super co-contribution, when you lodge your tax return, the Government will work out if you’re eligible.If your total income is equal to or lower than the threshold of $38,564 and you make an after-tax contribution of $1,000 to your superannuation account, the maximum Government contribution will apply.

    If your total income is between the lower threshold and the higher threshold of $53,564, your maximum entitlement will reduce progressively as your income rises.

    If your total income is equal to or lower than the threshold of $38,564 and you make an after-tax contribution of $1,000 to your superannuation account, the maximum Government contribution will apply.

    If your total income is between the lower threshold and the higher threshold of $53,564, your maximum entitlement will reduce progressively as your income rises.

    There are other eligibility criteria to be aware of. Click here to find out more or talk to an RJS Professional and obtain advice specific to your circumstances.
  • Boosting a spouse’s super and reduce tax.

    In your spouse earns low or no income, you may be able to make a superannuation contribution and obtain a tax off-set.

    The spouse’s assessable income needs to be equal or less than $37,000 for the financial year for the full tax off-set to apply.

    Contribution limits are aligned to the spouse’s contribution caps and are on a scaled basis, phasing out when their income reaches $40,000.

    There are other eligibility criteria to be aware of. Click here to find out more or talk to an RJS Professional and obtain advice specific to your circumstances.
Can I access the money inside super at a later date if I need it?

Before adding to super, keep in mind that the money will be inaccessible until certain conditions are met. There are caps on how much can be contributed to super each year.

It’s important to take the caps into account as penalties may apply if exceeded. Make sure any contributions are received before June 30 to claim a deduction or offset for that financial year. With electronic transfers (including BPAY) the contribution takes effect the day the super fund receives the money, not the day of transfer. So don’t leave it to the last minute, talk to an RJS Professional today about maximizing your superannuation contribution caps, because with planning… retirement is just the beginning.

Superannuation
FAQs

Strategies
For Business

With the end of the financial year approaching, it’s a great time to make smart decisions about your finances. Taking action before 30 June can open up more opportunities for you.

We know that there isn’t a one-size-fits-all solution to accounting, wealth management and business growth. So we’ve outlined some tax-effective strategies that you may benefit from.

We can help you find what strategies are right for you and/or your business

Can I claim a tax deduction for payments made to workers/contractors

No, the deduction will apply if the business does not meet its PAYG withholding obligations. However, a deduction will apply to salary, wages, commissions and bonuses paid to employees. It will also apply to payments for the supply of services where a contractor has not provided their ABN.

Is my audit insurance tax deductible?

Yes, the premium paid for audit insurance is tax-deductible. It also covers the cost of defence in the event of a claim. The ATO continues to benchmark businesses, with cash businesses become a major focus. Technology is becoming more advanced so be aware of information sharing and matching between government and non-government institutions.

How much is the instant asset write-off?

The instant asset write-off caps at $30,000. However, due to COVID-19, from 12 March to 30 June the instant asset write-off was increased to $150,000 excluding GST.

What is the depreciation limit for motor vehicles?

The depreciation limit for the 19/20 FY is $57,581 – it applies to both the depreciation as well as the GST credits claimable.

Can I use the work vehicle for private use to reduce the possible FBT?

The ATO continue to focus on the use of work vehicles for private use. Business owners may consider limiting the length per trip and total km per annum.

Can I delay the receipt of income to the following tax year to defer the tax payable?

Yes, if the businesses accountant is using the income on a cash basis method. Delaying receipt until after 30 June, will delay the tax liability by a full tax year. If however, the business uses the accrual method, it is important to hold back issuing of invoices for the deferral to apply.

Can I delay the receipt of income to the following tax year to defer the tax payable?

Yes, if the businesses accountant is using the income on a cash basis method. Delaying receipt until after 30 June, will delay the tax liability by a full tax year. If however, the business uses the accrual method, it is important to hold back issuing of invoices for the deferral to apply.

If accounting on a cash basis, should I pay creditors by 30 June?

If cash flow allows, creditors’ accounts should be paid by 30 June to maximize deductions. The 12-month rule will apply to prepayments for expenses such as registrations, insurance and subscriptions. Accounts under $1,000 are excluded from the 12-month rule.

Should I restructure my business to a corporate entity for tax reasons?

Depending on your circumstances, consider restructuring to a corporate entity to take advantage of the flat company tax rate. Companies with a turnover of $50 mil or less will be taxed at 27.5% in 2019 FY (this is expected to drop to 26% from 1 July 2020).

Should I introduce a corporate beneficiary to a discretionary trust for tax reasons?

If a re-structure to a corporate entity is not feasible, consider making a distribution to a company to maximize tax at 30%

Should I write off bad debts?

Consider paying dividends to shareholders before the end of the financial year to utilise the higher rate of imputation credits, which will lower post 30 June.

Have I taken advantage of the Government Stimulus packages available to my business?

The Australian Government has released a number of relief packages to help business owners through the impact of the COVID-19 pandemic, click here to take a look and speak with an RJS Professional on 1300 27 28 29. Running a business is a never-ending business. We can help.

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