gpl_partners gpl_partners

August 2019

Up to 9 in 10 ‘other’ expenses adjusted as ATO reveals dodgy claims

Close to 90 per cent of claims in ‘other’ deductions were adjusted last year as the ATO reveals a number of unusual claims it disallowed, including a $58,000 wedding.

       

 

ATO assistant commissioner Karen Foat has revealed that nearly 700,000 taxpayers claimed almost $2 billion of ‘other’ expenses last year.

Accountants Daily understands that a random sample of 400 of those ‘other’ expenses claims saw adjustments made to 88 per cent of them.

Last year, the ATO revealed an $8.7 billion inpiduals tax gap, with adjustments required for 72 per cent of its random sample of 868 returns.

With ‘other’ expenses, the ATO said it saw a mix of incorrect claims from self-preparers and returns lodged by a tax agent by refrained from giving a breakdown in figures.

“For self-preparers, the errors range from honest mistakes to deliberate over-claiming. In some instances, we have seen cases where a taxpayer has been dishonest with their tax practitioner about the legitimacy of expenses incurred,” an ATO spokesperson told Accountants Daily.

$1,700 in Lego and $24,000 for the cost of raising twins

The top five most outrageous claims seen by the ATO in tax time 2018 included a taxpayer attempting to claim $1,700 for the cost of Lego kits purchased for their children throughout the year.

Another saw a taxpayer trying to claim wedding expenses of approximately $58,000, claiming this was in relation to a work related overseas conference.

“He fraudulently claimed $33,087 in his return and $25,259 in his wife’s. This taxpayer was prosecuted,” said the ATO.

One taxpayer made a claim for “the cost of raising twins” totalling $24,000, while another claimed for the “cost of raising three children”, with one taxpayer stating “new born baby expensive” when making their claim.

Many taxpayers tried to claim the purchase of a new car, in the excess of $20,000, with one taxpayer attempting to claim $3,659 for a car purchased as a gift for their mother.

“A couple of taxpayers claimed dental expenses, believing a nice smile was essential to finding a job – and was therefore deductible. It isn’t and their claims were disallowed,” said Ms Foat.

“Where people make genuine mistakes, we simply disallow the claim. But when people are deliberately making dishonest claims, particularly for large sums, we will disallow the claim and may impose a penalty.

“We want people to understand what expenses they can claim and receive every dollar they are entitled to. But making incorrect claims that are personal or private take funding away from providing essential community services, and that’s not ok.”

 

 

Jotham Lian
31 July 2019
accountantsdaily.com.au

 

 

Downsizer Super Contribution

Australians who are 65 years old or older may make a downsizer contribution into their superannuation of up to $300,000 from the proceeds of seeling their home.

       

 

The downsizer contribution can still be made even if the contributor has a total superannuation balance (TSB) greater than $1.6 million.

A few points are:-

  • will not affect the TSB until 30 June at the end of the financial year
  • can only be made for the sale of one home
  • not tax deductible and will be taken into account in determining eligibility of the Age Pension
  • there is no requirement to purchase another home
  • must have held an ownership interest in the home for 10 years
  • limited to the lesser of $300,000, or the total capital proceeds received from the sale of the interest in the home
  • can be both owners (i.e. $300,000 each)
  • within 90 days of the change of ownership.

Early planning will ensure you don’t miss the boat.

 

 

AcctWeb

Tax payers to receive beefed up tax returns.

Great news!! The Tax Office will now start processing beefed-up tax refunds after the government’s $158 billion tax cut plan was passed in full.

       

 

Read more on the Budget website.

The Treasury Laws Amendment (Tax Relief So Working Australians Keep More of Their Money) Bill secured passage in the Senate on Thursday, with stage one delivering a doubled end-of-year rebate for low and middle-income earners to $1,080, up from $530.

Stage two, for the 2022–23 and the 2023–24 income years, will see the first personal rate of income tax of 19 per cent raised to the $45,000 threshold, up from $41,000. The top threshold for the 32.5 per cent tax bracket will also be raised from $90,000 to $120,000.

The third stage, set for 2024–25 and later income years, will see flatter tax brackets, namely 19 per cent for those earning between $18,201 and $45,000, 30 per cent for incomes between $45,000 and $200,000 and 45 per cent as the highest rate for incomes above $200,000.

With the ATO set to start fully processing 2018–19 tax returns from today, clients eligible for the offset can expect to see the additional credits from 16 July, the official date that the Tax Office expects to start paying refunds.

“The key tip is that to get the tax offset, you have to lodge a tax return, and the earlier you lodge, the earlier you’ll get the tax offset,” said H&R Block director of tax communications Mark Chapman.

“The ATO won’t officially begin to issue refunds until the middle of the month… that will give the ATO plenty of time to add the offset into returns that have already been lodged.

“So, lodging your tax return today should ensure that you get the full offset that you’re entitled to be added to your refund payment.”

 

 

Jotham Lian
05 July 2019
accountantsdaily.com.au

 

 

10 top global corporations since 1998

A very interesting, graphical, summary of the monsters of our global economy.  Fascinating stuff!!

The following video is a really great representation of how the top 10 global corporations have changed since 1998.

 

         

 

Catch-up Contributions

July 2019 sees the introduction of the new catch-up contribution rules, which allow people with less than $500,000 in super to make extra concessional contributions up to their previously unused $25,000 annual cap.

         

 

So, if $10,000 went into your super last financial year, this financial year you could put in $25,000 plus last year’s unused $15,000.

However, take care!

The rules only apply to unused contribution caps starting from the 2018-19 financial year. 

There are many eligibility and threshold tests throughout the superannuation system.

So, obtain advice and consider regular conversations about life insurance, superannuation, retirement, etc.

 

 

AcctWeb

Life Insurance

Important:  A major change to life insurance in many super funds.

       

 

The Federal Governments Protecting Your Super package starts on 1 July 2019 and will see an estimated three million people affected as new rules automatically switch off life insurance policies in super funds that have not received contributions in 16 months.

It’s designed to stop unwanted insurance premiums eating into retirement savings.

But a side effect is that those who need insurance but haven’t contributed recently – perhaps after taking time off work to raise children may lose that protection and be unable to get it back. 

Fixing this is simple.  Contact your super fund or make a (small) contribution.

 

 

AcctWeb

Community tip-offs trigger ATO visits

Around 700 small businesses in Western Australia are set to receive door knocks from the ATO next month after the agency received intelligence around possible black economy behaviour.

       

 

The ATO is planning to visit around 700 small businesses in Broome, Cable Beach, Derby and Kununurra, Western Australia in August as it looks to tackle black economy behaviour.

ATO assistant commissioner Peter Holt said these towns have been singled out as a result of some tell-tale signs of black economy behaviour.

“Black economy signs that we look out for are things like not being registered for GST or pay as you go withholding, lifestyle and assets far exceeding reported business income, or a lack of merchant payment facilities like EFTPOS,” Mr Holt said.

“We understand that some businesses may not have merchant payment facilities due to individual circumstances. The issue is when businesses are deliberately ‘cash only’ to avoid reporting all their income. By detecting and addressing this behaviour, we’re helping to keep things fair for honest small businesses.

“Another reason we’re heading to Broome, Cable Beach, Derby and Kununurra is because we’ve received intelligence from the community that some businesses aren’t playing by the rules, such as paying their workers cash in hand and keeping them off the books.”

Prior to the visits, local businesses and tax professionals are invited to attend a one-hour information session that will explain the purpose of the visits, what to expect if visited, and how to avoid common mistakes. Single Touch Payroll information sessions will also be offered in both locations.

The industries that are more likely to be visited by the ATO include:

  • Residential building construction
  • Building completion and installation services    
  • Other construction services                    
  • Building cleaning, pest control and gardening services
  • Accommodation                    
  • Automotive repair and maintenance    
  • Cafes, restaurants and takeaway food services
  • Personal care services  

The latest number of towns set for a visit comes after the ATO announced it was planning to visit around 500 businesses in or around Port Macquarie and Wauchope in late July and early August.
 

 

Jotham Lian 
30 July 2019 
accountantsdaily.com.au

 

 

Australia at a glance

The following link takes you to a site that sets it all out in black and white, though a strong coffee will help!

         

 

One great source of data about Australia. Become better acquainted with the country we love.

An up-to-date snapshot of Australia's vital statistics.  

Please click on the following link to see all this interesting information. The areas covered are:

  • Overview
  • Markets
  • GDP
  • Labour
  • Prices
  • Money
  • Trade
  • Government
  • Business
  • Consumer
  • Housing
  • Taxes
  • Climate

 

Access all this data here.