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ATO is targeting taxpayers who are passively holding vacant land for the development of future rental properties. 

To be entitled to deductions on vacant land, you must demonstrate that active and genuine steps have and are being undertaken to build a dwelling and make it available for rent as soon as it's completed.  It is expected that efforts are made to have the property completed within normal industry timeframes.  Exceptions will be allowed with events out of the taxpayers control for finalisation of building.

If you decide to sell the vacant land or your intention to build on the land changes, you can no longer claim any deductions.

Overtime Meal Expenses

In order to claim overtime meal expenses you must satisfy the following:

 

  • you received a genuine overtime meal allowance from your employer that was paid under an industrial law, award or agreement
  • you purchased and consumed a meal during your overtime
  • you have included the amount of the meal allowance as income, and
  • if your claim was more than $30.60 per meal, you have written evidence, such as receipts, that shows the cost of the meals 
    (Please note: An amount for overtime meals that has been included as part of your normal salary and wages – for example, under a workplace agreement, is not an overtime meal allowance

Work Related Deductions

You must be able to substantiate your claims for deductions with written evidence if the total amount of deductions you are claiming is greater than $300. The records you keep must prove the total amount, not just the amount over $300.

ATO now requires items claimed under this category to be itemised.  Therefore, please provide a detailed breakdown of deductions you may want to claim.

If work related portion of tools and equipment and professional libraries each costs $300 or less, you will be able to claim an immediate deduction for these. Otherwise they will need to be depreciated over their effective life.

  • The fixed rate has increased to 52 cents per hour.  To claim using the fixed rate method, please keep records of your actual hours spent working at home for the year, or keep a diary for a representative four week period to show your usual pattern of working at home.


  • Generally, you cannot claim a deduction for occupancy expenses such as rent, rates, mortgage interest and insurance


  • Phone, internet and stationery costs are claimed separately.  Phone and internet are claimed based on a percentage of business usage of your monthly invoices.

Scammers impersonate ATO Phone Numbers

Scammers are sending pre-recorded messages in record numbers and are manipulating caller identification so that your phone displays a legitimate ATO phone number despite coming from an overseas scammer. 

If you are a client of ours, the ATO will generally contact us, rather than contacting you directly.  If the ATO calls, they will not display a phone number or use a pre-recorded message.  Please ensure you never give personal information or bank account details to anyone over the phone. If in doubt please contact us immediately.

Increased Scrutiny of Home Office Claims

According to the ATO, a record number of claims have been made for expenses incurred whilst working from home.

Reportedly, due to a high number of mistakes, errors and questionable claims for home office expenses, the ATO has recently advised that it will be increasing attention, scrutiny and education on these claims this tax time.

 

The $20,000 threshold has been recently extended to 30 June 2019.

If you buy an asset and it costs less than $20,000, you can write off the business portion in your tax return for the relevant income year.

You are eligible to use simplified depreciation rules and claim an immediate deduction for the business portion of each asset (new or second hand) costing less than $20,000 if:

·         you had a turnover less than $10 million (increased from $2 million on 1 July 2016), and

·         the asset was first used or installed ready for use in the income year you are claiming it in.

Assets that cost $20,000 or more can't be immediately deducted. They will continue to be deducted over time using the general small business pool. You write off the balance of this pool if the balance (before applying any other depreciation deduction) is less than $20,000 at the end of an income year.

The $20,000 threshold applies from 12 May 2015 to 30 June 2019 and reduces to $1,000 on 1 July 2019.

 

No need to actually "downsize" for downsizer contributions

From 1 July 2018, individuals aged 65 or over may use the proceeds from the sale of an eligible dwelling that was their main residence to make superannuation contributions (referred to as 'downsizer contributions'), up to a maximum of $300,000 per person (i.e., up to $600,000 per couple), without having to satisfy the age or gainful employment tests that usually apply.  

This measure was announced in the 2017/18 Federal Budget, and aims to provide an incentive for older Australians to 'downsize' their home.  

This, in turn, is expected to reduce pressure on housing affordability by freeing up stocks of larger homes for growing families.  

Importantly, it should be noted that there is no requirement for an individual to actually 'downsize' by acquiring a smaller property, or to even acquire another property at all.  

In this regard, all that is required is that the individual (or their spouse) 'downsizes' by selling their 'main residence'. 

The individual can then move into any living situation that suits them, such as aged care, a retirement village, a bigger or smaller dwelling than the one sold, a rental property, or living with family.

Also, the property sold does not need to have been the individual's (or their spouse's) main residence during their entire ownership of it, provided the property was owned for at least 10 years and was their main residence at some time during the ownership period.  Therefore, the sale of an investment property that at one stage was their main residence may enable an individual (or their spouse) to make downsizer contributions. 

Employee denied deductions for work-related expenses

An employee photographer has been denied deductions for travel expenses (when travelling with his family), and other purported work related expenses.

The AAT held that the travel expenses were primarily incurred for the purposes of a family trip or holiday and were therefore non-deductible, as they were private and domestic in nature.

Also, in relation to the taxpayer's reliance on bank statements in the absence of invoices and receipts, the AAT observed that "evidence of the mere transfer of funds, be it by way of bank transfer or by any other means, is not sufficiently informative of the actual character of an expense", so the other disputed expenses could not be claimed as allowable deductions.

Get ready for Single Touch Payroll

Single Touch Payroll (or 'STP') is mandatory for 'substantial employers' (being those with 20 or more employees) from 1 July 2018.

All employers are required to count the number of employees on their payroll on 1 April 2018 to find out if they are a substantial employer (note that this can be done after 1 April, but they need to count the employees who were on their payroll on 1 April). 

They must count each employee (not the full time equivalent), including full-time, part-time and casual employees, as well as those employees based overseas or absent or on leave (paid or unpaid).

Employers that are part of a company group must include the total number of employees employed by all member companies of the wholly-owned group.

However, employers don't have to include the following in the headcount:

  • any employees who ceased work before 1 April;
  • casual employees who did not work in March;
  • independent contractors;
  • staff provided by a third-party labour hire organisation;
  • company directors or office holders; or
  • religious practitioners.

Note that, although directors, office holders and religious practitioners are not included in the headcount, if the employer starts reporting through STP, the payment information of these individuals will need to be reported (because the payments are subject to withholding and are currently reported in the Individual non-business payment summary).

Employers don't need to send the ATO the headcount information, but they may want to keep a copy for their own records.

Once an employer becomes a substantial employer, they will need to continue reporting through STP even if their employee numbers drop to 19 or less (unless they apply for and are granted an exemption).

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