Every year, it comes around again.  We can help reduce the inconvenience and anxiety in preparing your income tax return, get it done on time, and get it right.

We can help you with advice on strategies to help reduce the overall tax on your income.

Tax Returns for Individuals

We can help you claim deductions relevant to your work and advise how to keep the necessary documentation.  Without proper documentation you can find your deductions may be rejected.

Changes to the rules on claiming super contributions can work to your advantage, but you need to speak to us before the end of the financial year so you know you are getting the maximum advantage.

Some individuals have had deductions rejected by the Australian Taxation Office because they describe themselves as ‘contractors’ where the Personal Services legislation treats them as employees.  It is important to know and understand the different circumstances which might allow you to claim deductions as a bona fide contractor.

Travel allowance claims are always contentious.  Just because you are paid a travel allowance, does not entitle you to a deduction for the same amount.  We understand the rules and can show you what you can claim.

Uniforms and laundry are valid deductions but if your work clothes can be used on the weekend and are not branded with your employer’s logo, then the expense is not deductible.  Sometimes, the distinction is not clear and this is how we can clarify matters for you.

Residency status can affect how you are taxed.  There are complex taxation agreements between some countries which can work in your favour if you understand them.  We know how they work and can simplify things so you know your tax return is correct.  With our help, you can be sure you are paying the right amount and not being taxed twice.

Rental Properties and Negative Gearing

You might ask what are the benefits of negative gearing?  Well, many people use the loss to offset income from salaries which results in them paying less income tax overall.  However, in the end, a loss is a loss.

So why do so many people get involved in negative gearing?  They are really holding the property with an expectation of making a Capital Gain, that is, the property will be sold at a higher price than what they originally paid.

This assumption works well for some and not so well for others.  A lot depends on where the property was bought, how much was paid for it and many other factors such as changes in transport links, schools and other events. 

Sole Traders

Does a Sole Trader have to lodge a separate Income tax return?  Well no, they must include their business income in their personal tax return.  Separate disclosures must be made and all the usual rules of allowable business deductions apply including calculation of depreciation and lease deductions.  Many sole traders seek our advice so they can claim the correct proportion of business expenses in relation to vehicles and home office expenses.

 Partnerships

Where a business is run between partners then a separate income tax return must be lodged for the partnership.  The taxable income for the partnership is then split between them and included on the individual income tax returns for each partner.

Generally, if you are running a business then you are entitled to claim many of the related costs, however like most tax legislation it is never that easy.  There are exceptions that we are trained to identify.  It is worth remembering that depending on your turnover, you may have to charge GST and remit this to the ATO.

If you have employees then you are subject to the same rules as other employers.  You have to deduct tax from their wages, make super guarantee contributions.  We can advise you of your obligations and help you meet them.

 Trust Income

A trust is usually established by a settlor who puts assets into a trust for the benefit of a beneficiary.  The trustee is often a natural person, but may be a company, who manages the trust on behalf of the beneficiaries.  The trustee is responsible for lodging income tax returns, making payments to the ATO and beneficiaries and other statutory requirements.

There are many different types of Trusts:

• Unit Trusts
  Is a trust where the beneficiaries have a defined proportion of the assets held in trust which are called ‘units. Beneficiaries receive income according to the number of units they hold.
• Discretionary Trusts
  The amount of income and assets distributed to the beneficiaries is at the discretion of the trustee which can be useful when the trust is set up for family members.
• Family Trusts
  These are set up for the benefit of family members and can be set up as either discretionary or unit trusts depending on the purpose.
• Testamentary Trusts
  These are set up under terms of an individual’s legal will and testament and comes into effect after that person is deceased. They can provide flexibility over the distribution of assets and income to beneficiaries and may be useful when leaving assets to children.  There can be significant income tax advantages in using testamentary trusts.
• Superannuation Trusts
  It is not widely understood, but Superannuation Funds operate in Australia as trusts where assets are held for the purpose of providing superannuation payments to the beneficiaries.  The taxation of Superannuation funds is specific and complex. Learn more.
• Bare Trusts
  Bare Trusts are a structure used by Self Managed Super Funds to acquire property where the fund takes out a loan to fund part of the purchase.
• Hybrid Trusts
  Hybrid Trusts combine the characteristics of more than one of the above types of trusts.  Typically, they have discretionary characteristics within a unit trust structure.

 Companies

A company is established by incorporation under the laws of the Corporations Act in Australia which makes it a separate legal entity subject to income tax.  Directors are responsible for running the company and meeting all its legal obligations.  Shareholders receive dividend payments which often have imputation credits attached to the payment, these credits can be used to offset personal income tax but there are rules to how they are recorded in your tax return.

A company must lodge its own income tax return annually and disclose payments of dividends and keep a record of the tax imputation credits which is called a ‘franking account’.

Registering for GST is something most business must do, including companies.  They must remit GST payable to the ATO on a monthly, quarterly or annual basis.  They are required to lodge Business Activity Statements (BAS) with the ATO which disclose the GST details, Income Tax details and tax deducted from salaries and wages.

Many companies that deduct tax from employees’ wages are required to remit that to the ATO each month, even if they only report GST quarterly.  For the periods where they are not required to remit GST they report the tax deducted from wages on an Instalment Activity Statement (IAS).

Most business expenses are deductible against a company’s income but there are rules about claiming costs that are part of setting up the business, we can help clarify this for you.

Purchase of assets such as vehicles are not immediately deductible but can be claimed over time as depreciation expense.  Different assets can be claimed at different rates, so it is wise to seek advice.

Some assets can attract a full deduction in the year of purchase if they meet strict criteria, set out in the Income Tax Act.  These concessions change from year to year and it is important to get the right advice at the right time so that your company can benefit.

Business losses can be claimed against future profits but it is critical to note that there are strict rules that determine whether you can claim this deduction.  We have been able to advise our clients on how to utilise any business losses for their advantage.

When it comes to Capital Gains in companies, then it is important to talk to us before you purchase an asset like business property because there are tax issues which are often overlooked in this area.

Superannuation Funds

Taxation of superannuation funds is different to other trusts because of the many specific laws governing this area.  The advantage of holding assets in super relates to the low rate of income tax.  Also, when a fund moves into ‘Pension Mode’ these advantages can really add up for you.

We are able to advise whether holding your assets in super is appropriate for you.  Find out more about Superannuation.

Contact us today.

Disclaimer:
The above services are provided by Stanley & Stewart Accountants Pty Ltd ABN 76 114 691 673, trading as Stanley & Stewart Chartered Accountants, a company that is not licensed to provide financial planning services.
Any financial planning services required are provided by Stanley & Stewart Financial Planning Pty Ltd ABN 97 611 554 299, an Authorised Representative of Politis Investment Strategies Pty Ltd ACN 71 106 823 241 AFSL No 253125.
Liability limited under a scheme approved by Professional Standards Legislation.