With Financial Year End Coming up, Do You Have Any Tax or Tax Return Questions I Can Answer for You?

AssociatedLnicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 10:35
Last edited 31/05/2017 - 09:17 by 1 other user

Edit final time:

Started a new thread for this to keep up with everyone's new questions. This is the link…

https://www.ozbargain.com.au/node/309978

Edit again:

Thanks for all the questions once again everyone. We have now reached over 600 comments.

I will do another Q & A in about a month when it is closer to tax time.

Hope you have all got a bit of extra general tax knowledge. ]]

If your inquiry is urgent then you can PM me.

Goodbye for now and see you in about a month!

Hi All,

I just thought with financial year end coming up in just over a month's time, many people have tax and specifically tax return related questions.

I am a tax professional and I am constantly getting asked similar questions coming up to tax time by family, friends and new clients. So I thought that I could be of some use and answer any tax questions you may have.

Disclaimer: Any advice or answers given will be general in nature and you may need to speak to a tax adviser for more personalised advice.

Ok, start posting your questions :)

Edit: Thanks for all the questions. I am trying to get to everyone as soon as I can. If I miss your question please send me a PM or ask again so that I can see it. There are so many questions I am sure i've missed a few.

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closed Comments

        • [Deactivated] on 23/05/2017 - 23:17
          -2

          @sp00ker: you shouldn't talk when no one asked you a question, maybe you can learn a thing or two from your kid.

  • andyfc on 23/05/2017 - 20:20

    Hi!

    Thanks for answering all our questions.

    If my work is paying for a university course (that meets requirements of self-education expenses), can i claim the self-education deductions?

    E.g.

    1. I drive to uni, don't go to work in the week of uni, it would be 400 km per week of my own cost (travel: home-uni-home). Can i do the cents per kilometre method?

    2. On the same idea, can I also claim depreciation of my own person laptop which i do uni work on? As well as internet?

    Thanks!

  • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 23/05/2017 - 20:26

    1. You can't claim travel from home to uni. Even if you could the 400km would result in such a minimal amount in your pocket I woudn't bother.

    2. You can claim the depreciation on your laptop and internet, on a proportion basis for private use.

  • Thazza on 23/05/2017 - 20:33

    OP, as a fellow accountant. I've just browsed your webpage and note that you have Superannuation services on your website.

    I'm sure you're aware. But the accountant's exemption for Superannuation advice has ended. Us accountant's can longer advise on superannuation matters (i.e. advise them to contribute into super, establish an SMSF, start a pension, etc) without having an AFSL license / undertaken the RG146 course.

    These matters generally do need to be covered in an SoA (statement of advice) - well that is the approach that the Firm I'm working in takes.

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 23/05/2017 - 20:38

      You can't advise them but you are still able to tell them the super law.

      For example you can say that contributions cap is 25k next year. You can't advise them to put 25k in.

      • Thazza on 23/05/2017 - 20:45

        Yep. You're correct.

        But anything short of stating fact would require the license/RG146.

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 23/05/2017 - 20:49

          :)

    • [Deactivated] on 23/05/2017 - 22:31

      Yes, the dreaded RG146 course!

  • Mcbargains on 23/05/2017 - 20:37

    I have just purchased an investment property which I am renovating and setting up as an airbnb but don't think it will be ready by EOFY. How can I maximise tax benefits and should I hold off until next financial year before buying any furnishings.

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 23/05/2017 - 20:39

      If the property is not available for rent this year then you can't claim any deductions in your tax return. It would probably be best to hold off on incurring expenses until the property is available to rent. I.e next financial year

  • lollyball on 23/05/2017 - 20:59

    Not sure if has been asked, but if I have obtained/inhereted money and do not want to make it part of my taxable income, apart from giving to my family, what other ways can I store/structure this money? Eg $100k
    Regards

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 23/05/2017 - 21:17
      +1

      Where did you obtain or inherit it from. If it is coming from a source in which you do not have to pay tax on it then you dont have to do anything with it.

      You can keep it in a bank account and you will only pay tax on the interest earned.

      If you are referring to paying tax on the 100k then it will depend on how and why you are receiving it.

      • lollyball on 23/05/2017 - 21:35

        Let's say for example received from a relative and I dont want to pay any tax on interest of the money. Therefore not in my name. How?
        Regards

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 23/05/2017 - 23:01
          +1

          Why would you not want to pay tax in your name. The interest will be minimal. You could open a trust and put the money in the trust. then the interest can be distributed to family members. the cost of the trust may even be greater than the interest.

          you can just put it in a bank account in your partners name but you will lose legal ownership of the money. not worth it for a few hundred dollars in tax.

  • frostman on 23/05/2017 - 21:04

    Whats the bet NicoleMcMillon is from the ATO, ready to pounce on your IP when you suggest something dodgy? :P

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 23/05/2017 - 21:10

      Yes because an ATO employee would know as much about tax as I do. You clearly don't deal with the ATO on a daily basis ;)

  • leesangyee on 23/05/2017 - 21:38

    Hi OP,

    Sorry if I missed a similar question.

    As a sole trader I spend on average an hour a day doing administrative work using my home office (i.e. a study room equiped with computer, printer, shelving units and stationary). Can I actually proportinately claim utility bills as business deduction?

    Thanks in advance.

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 23/05/2017 - 21:41

      realistically the only utility bill would be electricity - apportion it based on rooms would be the quickest and easiest

      You will be able to claim depreciation on the computer, printer (as a small business owner you can write them off the first year)
      you will be able to claim a portion of internet costs and other running costs

      • leesangyee on 23/05/2017 - 21:44

        Thanks - do I claim by the proportion of time, or area of the room/house, or both?

        Can I not justify to claim gas because I have gas heating?

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 23/05/2017 - 22:59

          Yes you can

        • techboy on 24/05/2017 - 08:12

          @nicolemcmilllon:
          He would be able to claim home office expenses, much easier than trying to figure out the 'extra' electricity/Gas he is using.

  • akyeeeahdude on 23/05/2017 - 21:40

    Hey Nicole, my wife is a sole trader (contractor) under an ABN. If she earns less than the tax free threshold, does she need to lodge a tax return?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 23/05/2017 - 21:42

      Yes if you have an ABN and earn income, you are required to lodge a return regardless.

      • akyeeeahdude on 23/05/2017 - 21:44

        Thanks Nicole - much appreciated.

        Just to confirm, as she does not earn a large income, there is no need to lodge a BAS is there (she is under GST threshold and does not charge GST)?

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 23/05/2017 - 21:47

          That is correct. no need for BAS if she is not registered.

          Just the tax return at the end of the year.

          She will also have to include your taxable income in the spouse section, and you will do the same in your return.

  • OzFrugie on 23/05/2017 - 22:27

    Is the cost of making wills, PoA, and related docs tax-deductible since/if there is a tax-component of it?

  • OzFrugie on 23/05/2017 - 22:30

    How does one find a good accountant? How can they identify one before the appointment?

    *Good accountant in this case is one who is qualified and able to give tax-related advice proactively, not the one who just get tax return done in 1 hr and collect the fee annually..

  • mungas on 23/05/2017 - 22:31
    +1

    Great effort Nicole! I don't need any advice myself re tax, but am very impressed of your emphasis to answer everything :)

  • dealsniper on 23/05/2017 - 22:34

    I recently bought a computer over $300 for study and will be depreciating it over three years. If I decide to buy another computer during the next three years, can I depreciate both computers at the same time? Thanks in advance

  • cristobaljamesy on 23/05/2017 - 22:39

    Hi OP,

    May I ask if I can (claim) travel in my personal vehicle to the head office of my company (on the way to work) to collect items like a laptop, keys etc before continuing my journey to the workplace?

    My journey is over 150km each day and I plan to work there for only 4-6 months hence why I wish to claim back a portion of my travel/fuel costs.

    Thanks in advance!

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 23/05/2017 - 22:50

      Use the cents per km method and claim up to 5000 business km

      • cristobaljamesy on 23/05/2017 - 22:55

        Thanks for your prompt reply, can I claim both portions of the travel to and from the office (as its about halfway)?

      • techboy on 24/05/2017 - 08:13

        Can't claim travel costs if it is 'on the way' to work !

      • frostman on 24/05/2017 - 08:14

        I heard claiming 5,000kms (like 4K-5K) may get the ATO to request a letter in writing from your employer to back up the logs?

        • techboy on 24/05/2017 - 09:51

          It is best to get a 'letter' from your employee.
          If it is on the way to work then as I said no you can not claim it.
          If you went to work and then drove to HQ and back to work then yes you can claim it.
          Keep a record of dates and kms travelled.

  • dealsandstuff on 23/05/2017 - 22:45

    Hey there, just wondering what the deal is with shares held in trust for a child? My son turned 18 a couple years ago but I haven't transferred ownership of the shares yet, just confirming that we're correct in assuming he doesn't need to do anything on his returns while they're still in my name? Thanks for your time!

  • amsaini15 on 23/05/2017 - 22:51

    Hi Nicole. Thanks for excellent initiative to provide great service to Ozbargain community.

    I have 2 questions.
    I bought a place in June 2007 and moved in Sept 2007 (previous tenants lease was still left and hence could not movie in straightaway).
    I have been living in it for last 10 years. If I move to my other house, rent this place for 5 1/2 years, Can I claim full CGT exemption? Thanks
    You mentioned "assuming you don't move into another primary place of residence" in the previous post. Does this mean moving to another house of my own would not allow me to claim full CGT exemption. If yes, then what will be CGT implication in this case? Thanks

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 23/05/2017 - 22:53

      if you move to another place for 5.5 years and still choose to keep the first house your primary place of residence then that house will receive the full exemption.

      the house you move into will not be your primary place of residence as you can only have one at a time

      • amsaini15 on 23/05/2017 - 23:11

        Thanks for clarifying. That's what I thought but got confused with previous comments. As I understand I can claim primary place of residence exemption on one property only.

        One last question, If I sell a property in India which I got as inheritance, would I be paying tax in both countries - India and Australia? That doesn't sound correct. Also I may not bring sale money here but still pay tax here?
        Anyway to avoid this? Thanks

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 24/05/2017 - 08:43

          There are complicated rules regarding selling an inheritance and the timing of the sale.

          I would suggest you sit down with your accountant to discuss.

  • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 23/05/2017 - 23:08
    +4

    Thanks for all the questions once again everyone. We have now reached over 600 comments.

    I will do another Q & A in about a month when it is closer to tax time.

    Hope you have all got a bit of extra general tax knowledge.

    See you guys in a month or so :)

  • prinzw on 23/05/2017 - 23:47

    Can I still file tax return deductions if I am taking Family tax benefit? is there any relationship between income tax and family tax benefit? (always curious the name source of the FTB,,,,,)

    • techboy on 24/05/2017 - 08:21

      If you are working and have deductible expenses then yes.
      You are taxed on your total income so work + FTB
      e.g. $25,000 + 12,000 = $37,000 taxable income.

      • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 24/05/2017 - 08:42

        Whether or not you are receiving FTB has no bearing on whether or not you need to lodge a tax return.

        Once you have lodged a tax return, the FTB takes your adjusted taxable income (broadly, your taxable income + fringe benefits + reportable super contributions + net investment losses) in calculating the FTB you are entitled to.

      • Pizdets on 24/05/2017 - 08:44

        Thats incorrect. You are taxed only on your income. $25,000 is your taxable income. Not the inclusion of FTB.

        • techboy on 24/05/2017 - 09:30

          Sorry you are right, bit of a head cold…, I was thinking of other taxable Centrelink payments.

  • bibekl on 23/05/2017 - 23:47

    What about the full time uni student? Can I clain tax for Macbook and iphone?

    • techboy on 24/05/2017 - 08:23

      If you are full time uni student and DON'T work and have had any tax taken out then NO you can not.
      If you work then there has to be a direct connection between your work and your study.

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 24/05/2017 - 08:40

      Stop using the phrase "claim tax". There is no such phrase.

      You claim a deduction when an expense is incurred in earning taxable income.

      As you have no taxable income (being a student) there is no connection between the expense incurred and any taxable income.

  • Aneurism on 23/05/2017 - 23:48

    Is there any way to tell if an accountant has a solid and up to date foundation of knowledge with Trust Accounts ? eg is it a requirement for CAs and CFAs to be knowledgeable and up to date with Trust accounts ?

  • twilsoncrow on 23/05/2017 - 23:49

    Hi fantastic help that you are offering. I am interested in the scenario where the property is in one name and the loan is in both names. How does it work if I pay my partner interest and then I can claim 100% of interest and expense.

    We currently split the rent and expenses 50/50 Thanks in advance

    • techboy on 24/05/2017 - 08:25

      Expenses can only be claimed by the people in the title.
      So 1 name on title means only one person can claim expenses.

  • zrach on 24/05/2017 - 00:20

    Can you still get taxed even if you worked overseas and have paid tax there?

    • techboy on 24/05/2017 - 08:26

      Yes, but if you have been taxed over there then you may gat a tax credit if there is a double tax agreement with that country.

      • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 24/05/2017 - 08:39

        You will be taxed on worldwide income if you were an Australian resident for tax purposes for that financial year.

        A double tax agreement just means that they would have withheld less in the foreign country.

        You may be entitled to a tax credit here regardless if a double tax agreement exists.

  • atris17 on 24/05/2017 - 00:51

    I am a dentist, a sole trader with ABN number.. just started doing contract work with this 1 dental practice

    Question

    1) Super Contribution - Is there a certain amount of super i have to contribute to my super account, or is it voluntary super contribution?

    2) BAS - Do I do BAS once every financial year?

    3) 20,000 Tax Deduction - Do I Qualify for this deduction?

    4) Looking for a Tax Accountant to do my Income Tax Retun, BAS and Sole Trader Tax return? PM your details

    • techboy on 24/05/2017 - 08:28

      (1) No
      (2) Depends on what you registered for annually or quarterly.
      (3) Yes
      (4) They will probably get back to you…..

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 24/05/2017 - 08:38

      Mark, I have PM'd you :)

  • slosh on 24/05/2017 - 01:10

    Why doesn't capital gains tax take into effect 'time value of money'?
    Also, what's the standard procedure you notice when selling assets that incur a capital gain? Do individuals generally spread this over different financial years and between spouses?

    • [Deactivated] on 24/05/2017 - 07:17

      Why doesn't capital gains tax take into effect 'time value of money'?

      Does any tax? At least you get a 50% discount with capital gains.

      Do individuals generally spread this over different financial years

      Difficult to this with property … maybe with other assets.

      • techboy on 24/05/2017 - 08:29

        Depends on type of asset and when you sell items.
        best to sell items that will generate high CGT in years of low taxable income to lessen tax.
        what do you mean time value of money?

        • [Deactivated] on 24/05/2017 - 09:20

          what do you mean time value of money?

          Basically the rate of inflation. For example say today $1000 buys a car and or buys a weeks worth of groceries. You decide to buy the car. In 10 years, the car is worth $1100 and you sell, but the same basket of groceries costs $2000. The government expects you to pay capital gains tax on the $100. @slosh is arguing/suggesting that you shouldn't pay tax on the $100 gain, because in 'real' terms you've lost money.

        • techboy on 24/05/2017 - 09:46

          @sp00ker: Depends on what class of assets they are: Capital Gains are disregarded if (1) Personal use assets (boats, cars, furniture, electrical goods etc) purchased for under $10,000. (2) Collectables (paintings, coins, jewellery, stamps etc) purchased for under $500.
          If they are 'other assets' then it depends if income was derived from them it does get complicated and is too lengthy to go into here. Best to have a read of Personal investors guide to capital gains tax 2016 (NAT 4152) https://www.ato.gov.au/Forms/Guide-to-capital-gains-tax-2016…

        • slosh on 24/05/2017 - 10:02

          @sp00ker: Yeah, the rate of inflation. I understand the Government probably doesn't care and just simply wants you to cough up the money but I've always been curious. For example, you purchase shares with a value of $10,000 at the age of 20. At the age of 65 (45 years later), they are now worth $200,0000. Assume the inflation rate on average is 2.5% per annum. If we discount $200,000 back to the present value (at age 20), we are left with $65,835. So $200,000 in 45 years time is actually worth $65,835 today. So you can see the difference between the two values when you take into account the inflation rate over time: $95,000 capital gains taxable income vs $27,917.5 capital gains taxable income.

        • [Deactivated] on 24/05/2017 - 10:30

          @slosh:

          $95,000 capital gains taxable income vs $27,917.5 capital gains taxable income.

          You're double dipping here. You can't expect a 50% discount on capital gains AND some sort of adjustment for inflation.

          Also, you should be compounding the $10,000 for 45 years at 2.5%, rather than discounting 200k at 2.5% for 45 years, since you pay CGT at the end.

          So the comparison is really tax on 190k vs 170k … so the difference isn't as extreme as your example.

          Lastly, long term investments like this are well suited for superannuation, which provides a good shield from tax.

  • b1ackmai1er on 24/05/2017 - 07:30

    Hi thanks for helping,

    For complicated reasons I have not done my tax for the last four years.

    What is the best way to get back up to date and what consequences will I have to face up to?

    Thanks.

    • chumlee on 24/05/2017 - 08:28
      +1

      Go directly to Jail. Do not pass Go. Do not collect $200.

    • techboy on 24/05/2017 - 08:31

      Go and see a Tax accountant ASAP.
      There could be fines and interest payments.
      I have done 12 years at time with no fines.
      Generally people will get some money back so the ATO doesn't chase them as hard as the ones that owe money.

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 24/05/2017 - 08:35

      I will PM you :)

  • [Deactivated] on 24/05/2017 - 09:32

    Im working for ATO (auditor) and I'm watching everyone of you!!!!!!

    • techboy on 24/05/2017 - 09:48

      So that's why it takes a long time to answer any calls to the Ato, you are all on here reading Ozbargain…..:)

  • [Deactivated] on 24/05/2017 - 09:49

    Hello

    A few quick questions

    1. Now that June deadline is approaching, I wonder if I buy some online study annual subscription that helps me for my work as well, would I be able to claim that on my tax return? Let us say the total cost will be less than $300. Would I be able to claim the complete $300 in one go or would that be part of it

    2. My laptop broke. :( The last one I had I was using it as depreciation for last three years and it ran for extra lot of months. Now, if I buy another one (thinking of mac) , would I be able to claim it for the year or would that be only for the remaining number of days/months remaining. Now that I can only depreciate for only three years, does that not mean I am technically able to depreciate it for 2 years and 1month (considering if there is only 1 month remaining)

    3. What are the typical tax deductions we can claim for a person working in IT industry?

    • techboy on 24/05/2017 - 10:07
      +1
      1. The total cost x business use % can be claimed.
      2. you should scrap out the old laptop for a cost of $0, then claim the remaining few dollars. Then the new laptop will be claimed as cost x depreciation rate % x days left in financial year / 365 x business usage %
        The effective life of laptops has changed from 3 years to 2 years now so rate has changed from 66.67% to 100%.
        Laptop cost $3000 used 50% for business, purchased 1/6/2017 (30 days) = $3,000 x 100% x 30/365 x 50% = $124 claimed this year, the balance rolls over until next year.
      3. This is like asking how long is a piece of string, you can only claim for things that you have actually spent money on. Have a read of this https://www.ato.gov.au/individuals/income-and-deductions/in-…
  • ycon on 24/05/2017 - 09:52

    Thanks for all this. So, I've had an issue with a company I've worked with (legally) and they're offering a small $10k payout. I was never established as an employee, contractor or otherwise (dodgy employer).

    I am in negotiation about the payout, and what we "call it". Is there a way I can "frame" it to minimise tax on it?

    • techboy on 24/05/2017 - 10:12

      What ever it is it should be reported to the ATO and you will receive a payment summary for it.
      You should then see an accountant/tax professional to see if they have reported it correctly, if not then you could get it changed.
      Also make sure that whatever it is the correct amount of tax is withheld, because if not and depending on your other taxable income for the year you will be up for a tax payable (debt).

  • majik on 24/05/2017 - 10:03

    Hi OP!

    I've moved to a new city for a job. Am I able to claim my relocation expenses such as buying furniture and what not?

    Cheers!

    • techboy on 24/05/2017 - 10:09

      No you can not, it is seen as a personal choice.

  • blurrybird on 24/05/2017 - 10:17

    I work as a sole trader in the IT industry offering professional services of any nature - networking, servers, frontline support, development, you name it. Recently I flew interstate to a gaming event where I both viewed as a spectator and treated it as a networking opportunity by speaking to some of the organisers about how I could have improved systems they had running. This earned me a 'Media' pass. How much of my expenses incurred on this trip can I reasonably claim - if any?

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