Do you remember dial-up internet access? How about audio cassettes? Don’t worry if you don’t; they are, of course, a thing of the past. A 30-year mortgage with one lender is a bit the same – a thing of the past and something that is largely obsolete nowadays, especially given the current climate. Common reasons to refinance Secure a more competitive interest rate Make the most of possible interest-saving features like offset accounts or redraw facilities Access equity for renovations, additional properties or other financial goals Consolidate debt. With the cost of living going through the roof and home loan interest rates shooting up from a record low of 0.1 since last May, more and more people are refinancing their mortgages – 2,370 every working day in Australia, to be precise. Homeowners have experienced the fastest tightening cycle in a generation, and many are ditching their current lender for a more competitive mortgage elsewhere. Analysis from the Australian Banking Association (ABA) found 70 per cent of bank customers who refinanced their mortgage in the past six months did so with another lender. If, like them, you feel it’s time to shop around, here’s why you should use a mortgage broker to refinance. Expertise you can trust At the moment there is intense competition in the home loan industry. Banks are hungry for your business and are offering all sorts of sweeteners to get you on board. Cashback offers. Rate discounts. Package deals. The whole shebang. So, how do you know which home loan is most suited for you? That’s where you need a professional on your team. A mortgage broker is a trained finance specialist. They know the system and which products best suit your needs. They are also across all the latest industry developments, so you gain access to a wealth of knowledge by working with them. Tailored finance solutions There’s no one-size-fits-all mortgage. Everyone’s financial situation and goals are different, which is why you need tailored finance solutions. A mortgage broker will find a loan that’s appropriate for your specific needs. If they think you could benefit from loan features like an offset account or redraw facility, they'll explain why. But they must work in your best interests and won’t push any extras on you that you don’t actually need. Options, options and more options If you go directly to your current lender asking for a more competitive rate, you only get what they are able to offer i.e. their loan products and the rates they are prepared to put on the table. A mortgage broker, on the other hand, has access to the full smorgasbord – a panel of lenders with different types of products, features and benefits. What about commissions? The commissions they receive are pretty similar across lenders. This ensures there’s no incentive for a broker to recommend one over another. Their role and obligation is to act in your best interests. Make your life easier Trying to understand all the different home loan products out there can be stressful and overwhelming. With a mortgage broker, they can take the burden out of refinancing. They can also liaise with your chosen lender and facilitate the whole process. Prepare for the fixed-rate cliff One-fifth of Australian home loans will revert from fixed to variable in 2023. Do you fall into this category? If you do, it’s worth speaking to a mortgage broker about your refinancing options. Your current lender’s variable rate may not be the most competitive or appropriate for your circumstances, so it’s important to get a second opinion. Clients of Collins Hume are eligible for an obligation-free finance appraisal. Contact our team on 02 6686 3000 to find out more. General Advice Warning The information provided is general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances. Your full financial situation will need to be reviewed prior to acceptance of any offer or product. This article does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.

There could be a few reasons your return refund doesn't look as robust as in past years, according to the ATO: Your refund could have been offset against other debt you have There could be a difference between the details in your tax return and the pre-fill information data Your income and deductions are different from last year. But the most likely culprit for a low refund — or even a tax bill — is the discontinuation of the low and middle income tax offset (LMITO). Introduced in 2018/19 Budget, the LMITO gave those earning between $37,000 and $126,000 a tax benefit of up to $1,500 depending on how much they earned. Those earning between $40,001 and $90,000 got the full $1500 offset. The ATO reported that more than 10 million people claimed the LMITO in the 20/21 financial year. Well, the good times are over as the LMITO ran out on 30 June 2022. So, if you have a discrepancy of about $1,500 in your 22/23 return refund, the missing LMITO could be the cause. How to contact us We’re available to assist you with tax planning including tax deductions: Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000 Read more tax planning topics here » Access our free tax factsheets here » Source: https://www.abc.net.au/news/2023-07-10/why-is-my-tax-return-so-low-this-year-tax-return-ato/102558758

The 120% skills and training and technology costs deduction for SMBs has passed Parliament Here's how to maximise your deductions Almost a year after the 2022-23 Federal Budget announcement, the 120% tax deduction for expenditure by small and medium businesses (SMB) on technology, or skills and training for their staff, is finally law. But there are a few complexities in the timing — to utilise the technology investment boost, you had to of purchased the technology and when it comes to acquiring eligible assets, installed it ready for use by 30 June 2023; that’s just seven days from the date the legislation passed Parliament. Who can access the boosts? The 120% skills and training, and technology boosts are available to small business entities (individual sole traders, partnership, company or trading trust) with an aggregated annual turnover of less than $50 million. Aggregated turnover is the turnover of your business and that of your affiliates and connected entities. $20k technology investment boost The Technology Investment Boost provides SMBs with a bonus deduction for expenses and depreciating assets for digital operations or digitising from 7:30pm (AEST) on 29 March 2022 until 30 June 2023. You ‘incur’ an expense when you are in debt for it; this might be a tax invoice or it might be a contract where you are legally liable for the cost. For depreciating assets, like computer hardware, there is an extra step. The technology needs to have been purchased and installed ready for use. For example, if you ordered 10 computers, you need to have received the computers and had them set up ready to use by at least 30 June 2023. Ordering them on 29 June won’t be enough to claim the boost if you did not receive them. The types of expenses that might be eligible for the technology boost include: Digital enabling items - computer and telecommunications hardware and equipment, software, internet costs, systems and services that form and facilitate the use of computer networks; Digital media and marketing - audio and visual content that can be created, accessed, stored or viewed on digital devices, including web page design; E-commerce - goods or services supporting digitally ordered or platform-enabled online transactions, portable payment devices, digital inventory management, subscriptions to cloud-based services, and advice on digital operations or digitising operations, such as advice about digital tools to support business continuity and growth; or Cyber security - cyber security systems, backup management and monitoring services. The technology also must be “wholly or substantially for the purposes of an entity’s digital operations or digitising the entity’s operations”. That is, there must be a direct link to your business’s digital operations. For example, claiming the drone you bought at say Christmas 2022 won’t be deductible unless your business is, for example, a real estate agency that needed a drone to take aerial images of client homes to market on their website. The expense needs to relate to how the business earns its income, in particular its digital operations. Repair and maintenance costs can be claimed as long as the expenses meet the eligibility criteria. Where the expenditure has mixed use (i.e., partly private), the bonus deduction applies to the proportion of the expenditure that is for business use. There are a few costs that the technology boost won’t cover such as costs relating to employing staff, raising capital, construction of business premises, and the cost of goods and services the business sells. The boost will not apply to: Assets that you purchased but then sold within the relevant period (e.g., on or prior to 30 June 2023). Capital works costs (for example, improvements to a building used as business premises). Financing costs such as interest expenses. Salary or wage costs. Training or education costs, that is, training staff on software or technology won’t qualify (see Skills and Training Boost). Trading stock or the cost of trading stock. Example Let’s look at the example of A Co Pty Ltd (A Co) that purchased multiple laptops on 15 July 2022 to help its employees to work from home. The total cost was $100,000. The laptops were delivered on 19 July 2022 and immediately issued to staff entirely for business use. As the holder of the assets, A Co is entitled to claim a deduction for the depreciation of a capital expense. A Co can claim the cost of the laptops ($100,000) as a deduction under the temporary full expensing in its 2022-23 income tax return. It can also claim the maximum $20,000 bonus deduction in its 2022-23 income tax return. The $20,000 bonus deduction is not paid to the business in cash but is used to offset against A Co’s assessable income. If the company is in a loss position, then the bonus deduction would increase the tax loss. The cash value to the business of the bonus deduction will depend on whether it generates a taxable profit or loss during the relevant year and the rate of tax that applies. The good news for many eligible businesses is that your technology subscriptions and other products you use in your business might qualify for the boost. The boost is claimed in your tax return with the extra 20% sitting on top your normal claim. That is, however the way the expense or asset is claimed (immediately or over time), the bonus 20% applies in the same way. The Skills and Training Boost The Skills and Training Boost gives you a 120% tax deduction for external training courses provided to employees. The aim of this boost is to help SMBs grow their workforce, including taking on less-skilled employees and upskilling them using external training to develop their skills and enhance their productivity. Sole traders, partners in a partnership, independent contractors and other non-employees do not qualify for the boost as they are not employees. Similarly, associates such as spouses or partners, or trustees of a trust, don’t qualify. As always, there are a few rules: Registration for the training course had to be from 7:30pm (AEST) on 29 March 2022 until 30 June 2024. If an employee is part the way through an eligible training course, enrolments in courses or classes after 29 March 2022 are eligible, not before. The training needs to be deductible to your business under ordinary rules. That is, the training is related to how the business earns its income. A registered training provider needs to charge your business (either directly or indirectly) for the training (see What organisations can provide training for the boost). The training must be for employees of your business and delivered in-person in Australia or online. The training provider cannot be your business or an associate of your business. Training expenditure can include costs incidental to the training, for example, the cost of books or equipment necessary for the training course but only if the training provider charges the business for these costs. Let’s look at an example. Animals 4U Pty Ltd is a small entity that operates a veterinary centre. The business recently took on a new employee to assist with jobs across the centre. The employee has some prior experience in animal studies and is keen to upskill to become a veterinary nurse. The business pays $3,500 for the employee to undertake external training in veterinary nursing. The training meets the requirements of a GST-free supply of education. The training is delivered by a registered training provider, registered to deliver veterinary nursing education. The bonus deduction is calculated as 20% of the amount of expenditure the business could typically deduct. In this case, the full $3,500 is deductible as a business operating expense. Assuming the other eligibility criteria for the boost are satisfied, the bonus deduction is calculated as 20% of $3,500. That is, $700. In this example, the bonus deduction available is $700. That does not mean the business receives $700 back from the ATO in cash, it means that the business is able to reduce its taxable income by $700. If the company has a positive amount of taxable income for the year and is subject to a 25% tax rate, then the net impact is a reduction in the company’s tax liability of $175. This also means that the company will generate fewer franking credits, which could mean more top-up tax needs to be paid when the company pays out its profits as dividends to the shareholders. What organisations can provide training for the boost? Not all courses provided by training companies will qualify for the boost; only those charged by registered training providers within their registration. Typically, this is vocational training to learn a trade or courses that count towards a qualification rather than professional development. Qualifying training providers will be registered by: Tertiary Education Quality and Standards Agency (search the register – includes States and Territories) Australian Skills Quality Authority (ASQA) Victorian Registration and Qualifications Authority (search the register) Training Accreditation Council of Western Australia While some training you might want to have engaged might not be delivered by registered training organisations, there is still a lot out there, particularly the short-courses offered by universities, or the flexible courses designed for upskilling rather than as a degree qualification. If you have recently completed performance reviews for staff and training is part of their development pathway, it might be worth exploring. How to contact us We’re available to assist you with tax planning including tax deductions: Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000 Read more tax planning topics here » Access our free tax factsheets here »

What changed on 1 July 2023? Employers and business Superannuation guarantee increases to 11% from 10.5% National and Award minimum wage increases take effect. The minimum salary that must be paid to a sponsored employee - the Temporary Skilled Migration Income Threshold - increased to $70,000 from $53,900. Work restrictions for student visa holders reintroduced to 48 hours per fortnight. The cap on claims via the small claims court procedures for workers to recover unpaid work entitlements increases from $20,000 to $100,000. Energy Bill Relief Fund for small business kicks in – it will apply to your energy bills if you meet the criteria. Sharing economy reporting to the ATO commences for electronic distribution platforms. Superannuation Superannuation guarantee increases to 11% Indexation increases the general transfer balance cap to $1.9 million. Minimum pension amounts for super income streams return to default rates. SMSF transfer balance event reporting moves from annual to quarterly for all funds. For you and your family The new 67 cent fixed rate method for working from home deductions – make sure you have a record of when you work from home. The ATO won’t accept a simple “I work from home every Wednesday” x 8 hours calculation. Access to the first home loan guarantee expands to “friends, siblings, and other family members.” The Medicare low income threshold has increased for 2022-23. The child care subsidy will increase from 10 July 2023 for families with household income under $530,000. See the Services Australia website for details. New parents able to claim up to 20 weeks paid parental leave. Access the age pension increased to 67 years of age. Important: 1 July 2023 wage increases For employers, incorrectly calculating wages is not portrayed as a mistake, it’s “wage theft.” Beyond the reputational issues of getting it wrong, the Fair Work Commission backs it up with fines of $9,390 per breach for a corporation. In 2021-22 alone, the Fair Work Ombudsman recovered $532 million in unpaid wages recovered for over 384,000 workers. On 1 July 2023, award rates of pay and the National Minimum Wage increased by 5.75%. It is critically important that all employers review their payroll systems and ensure they are applying the correct rates and Awards. The National Minimum Wage applies to workers not covered by an Award or registered agreement. From 1 July 2023, the National Minimum wage has increased to $23.23 per hour ($882.80 per week for a full time employee working a standard 38 hours week). For casuals, the minimum wage including the 25% casual loading is a minimum of $29.04 per hour. For workers under an Award, adult minimum award wages increase by 5.75% applied from the first full pay period on or after 1 July 2023. Proportionate increases apply to junior workers, apprentice and supported wages. In addition, the superannuation guarantee increased from 10.5% to 11% on 1 July 2023. If the employment agreement with your workers states the employee is paid on a ‘total remuneration’ basis (base plus SG and any other allowances), then their take home pay might be reduced by 0.5%. That is, a greater percentage of their total remuneration will be directed to their superannuation fund. For employees paid a rate plus superannuation, then their take home pay will remain the same and the 0.5% increase will be added to their SG payments. Cents per kilometre increase The cents per kilometre rate for motor vehicle expenses for 2023-24 has increased to 85 cents. How to contact us We’re available to assist you with tax planning including tax deductions: Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000 Read more tax planning topics here » Access our free tax factsheets here »

FBT on cars, other vehicles, parking and tolls How FBT applies to cars, other motor vehicles, electric cars, car leasing, car parking and road tolls. It’s a common myth that fringe benefits tax (FBT) doesn’t apply to dual cabs. However, this isn’t correct. Here’s what you need to know about FBT Cars and FBT Read how FBT applies to cars, private versus business use, car leasing, and calculating the value of a car fringe benefit. Exempt use of eligible vehicles Your employee’s limited private use of a ute, van or other eligible vehicle may be exempt from FBT. Read more » Electric cars exemption From 1 July 2022 employers do not pay FBT on eligible electric cars and associated car expenses. Read more » Car parking and FBT Read how FBT applies to car parking, exemptions for small businesses and disabilities and how to calculate taxable value. Road and bridge tolls and FBT Find out when FBT applies to road and bridge tolls, and work out the taxable value of tolls. While there’s an exemption for eligible commercial vehicles, this applies only if private use is limited. If you are taking the work ute to the footy every weekend, you may need to re-evaluate your FBT obligations. How to contact us We’re available to assist you with tax planning including tax deductions: Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000 Read more tax planning topics here » Access our free tax factsheets here »

Super savings and strategies Tax deductions for topping up super You can make up to $27,500 in concessional contributions each year assuming your super balance has not reached its limit. If the contributions made by your employer or under a salary sacrifice agreement have not reached this $27,500 limit, you can make a personal contribution and claim a tax deduction for the contribution. It’s a great way to top up your super and reduce your tax. For those aged between 67 and 74, you will need to meet the ‘work test’ to contribute personal concessional contributions and claim a deduction - you must have worked at least 40 hours within 30 consecutive days in a financial year before your super fund can accept voluntary contributions from you. To be able to claim the tax deduction for these contributions, the contribution needs to be with the super fund before 30 June (watch out for processing times). You will also need to lodge a Notice of intent to claim or vary a deduction for personal super contributions with your super fund before you lodge your tax return to advise them of the amount you intend to claim as a deduction. Bringing forward unused contribution caps If your total super balance is below $500,000, and you have not reached your cap in the previous four years, you might be able to carry forward any unused contributions and make a larger tax deductible contribution this year. For example, if your total concessional contributions in the 2021-22 financial year were $10,000, you can ‘carry forward’ the unused $17,500 into this financial year, make a higher personal contribution and take the tax deduction. This is a helpful way to reduce your tax liability particularly if you have made a capital gain. If you have never used your contribution cap, for example you have recently become a resident or have returned from overseas, you can also bolster your superannuation by contributing the five years’ worth of concessional contributions in one year (assuming you have not reached your balance cap). Doubling the benefit for SMSFs For self managed superannuation funds, a quirk in the way concessional contributions are reported means that a concessional contribution can be made in June, but not allocated to the member until 28 days later in July. The practical effect is that a member can make a contribution of up to $55,000 this financial year (2 x the $27,500 cap - assuming you have not used your cap) and take the full tax deduction, but the fund recognises the contribution in two amounts; one amount in June and the second allocated to the member from the SMSF’s reserve in July. This strategy is particularly helpful for the self-employed who need to boost their superannuation and reduce their tax liability in a particular year. Top up your partner’s super With a cap on how much you can transfer into a tax-free retirement account, it makes sense to even out how much super each person holds to maximise the tax savings for a couple. If your spouse’s assessable income is less than $37,000, make a contribution of $3,000 or more on their behalf and you can take a tax offset of up to $540. Another way of topping up your spouse super is super splitting. If your spouse has not retired and below their preservation age, you can roll over up to 85% of a financial year’s taxed splitable contributions to their account. Thinking of retiring? Wait until 1 July From 1 July 2023, indexation will increase the general transfer balance cap, the amount you can transfer into a tax-free retirement account, by $200,000 to $1.9m. For those contemplating retiring very soon, by waiting until after 1 July 2023 before starting a retirement income stream, you will have access to this additional $200,000 cap of tax-free superannuation savings. How to contact us It's important to speak to a financial professional before taking any action on superannuation strategies. Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000 Read more tax planning topics here » Access our free tax factsheets here »

Tax savings for you There are some simple things you can do to reduce your personal tax: Claim the cost of working from home — If you work from home some days, keep a diary of the hours you have worked at home to claim the 67 cents per hour shortcut rate. Other methods apply for home-based businesses and where your expenses are higher and claimed separately. Costs connected to your job — If you spent money related to your work that was not reimbursed by your employer e.g. meals while you were away overnight, etc, you can generally claim these (make sure you have receipts). Check the ATO’s industry specific guides on what’s reasonable to claim. Donations reduce your tax — If you are likely to have a big tax bill this year from gains you have made, consider a larger-than-usual donation to a deductible gift recipient (DGR) charity before 30 June. Top up your super — You can claim a deduction for contributions you personally make to super from after-tax income up to $27,500 per annum (assuming you have not reached your transfer balance cap). You need to lodge a notice of intent to claim with your super fund. See below for super strategies. Pay in advance — While paying in advance for deductible expenses doesn’t save you cash, if you need to reduce your tax bill, you can pay some deductible expenses for next year by 30 June and take the tax deduction this year. Studying for work — Self-education expenses that are related to the work you do are often tax deductible, although there are some parameters around this. So, if you have been taking short courses to improve your knowledge, you can often claim the cost of the course and some other related expenses. Just be aware that study costs to obtain new work or to start a new business are not covered. The study needs to be related to how you earn your income now. Building and managing your investments — The costs of earning interest, share dividends and income from your investments are generally deductible. This includes the account fees for investment accounts, interest on loans for investments you earn income from, the cost of investment seminars if they are directly related to investments you have made (not intending to make), fees for investment advice relating to existing investments, ongoing investment management fees, and specialist journals and subscriptions related to your investments. But, brokerage fees, an initial investment plan, transaction fees, etc are not generally deductible. Avoiding penalties The ATO can apply a penalty if you fail to declare income in your tax return that results in a tax shortfall. Penalties start at 25% of the tax liability owing and then escalate quickly if you were reckless (50%), or intentionally tried to evade tax (75%). Then, if they are really unhappy with you, they can increase the penalty base amount by 20%. There are also penalties that can apply if there is no shortfall but you didn’t take reasonable care, were reckless, or intentionally disregarded your obligations. Penalties of up to 75% of the tax liability can also apply if you don’t lodge your tax return and the ATO takes a position on what they believe you owe - tax is still owing even if you don’t lodge your return. If you are an Australian resident for tax purposes (and not classified as a temporary resident), you are taxed on your worldwide assessable income - salary, wages, director or consulting fees, some allowances, bonuses, commissions, interest, pensions, rental and other investment income, and if you are a content creator, gifts and other income. For those with income from overseas, if you have paid tax on that income overseas, you will need to declare the income on your tax return but you might be eligible to reduce your Australian tax bill by the tax you have already paid overseas. The ATO is upfront about what their tax time targets are so if you ignore the warnings then it’s less likely they will consider any omission an honest mistake. A bit like watching those border control shows when someone claims that they had no idea that seafood is considered a food and should have been declared. Getting rental properties right If you are earning income from an investment property, you can claim deductions for your expenses. These expenses fit into two categories; what you can claim now, and what is claimed over time. You can claim interest on loans, council rates, repairs and maintenance, and depreciating assets costing $300 or less, in the year that you paid for them. Other items, like structural improvements, ovens, adding fences and retaining walls, are depreciated over time. Rental properties are a major target for the ATO this year: Rental income – Declare all rental income (including short term stays, renting out a room in your house, insurance payouts, rental bonds retained). Rental expenses – Rental expenses can only be claimed for the portion of time that the property was rented or genuinely available for rent. If, for example, you did not make the property available for rent while you were renovating it, you cannot claim the cost of the expenses over this period. Sometimes the ATO will argue that a property is not genuinely available for rent even if it is advertised as being available. This can be relevant for properties in locations where there is very little demand during certain times of the year. Interest and redraws – If you have refinanced or redrawn on your rental property loan for personal expenses like holidays or a car, this will impact the interest you can claim. Sale of assets – If you earned income from a residential property (renting out a room or the whole house), then it’s likely you will pay capital gains tax on any gain you make on the sale of the property. However, if the property was your home for a period of time, you might be able to claim a full or partial exemption from CGT. In some cases it will be necessary to obtain a valuation of the property at the time it is first used to produce income if it has previously only been used as your main residence. Tax Time Targets for Individuals Key tax time targets include: Rental property income and expenses Income and ‘gifts’ from online content creation (OnlyFans, YouTube, TikTok etc) Cryptocurrency gains Gig economy workers (not declaring income) Foreign income (not declared) Work-from-home expenses (inaccurately claimed), and Work-related expenses (overclaimed). Increasingly sophisticated data matching programs mean that the ATO is more likely to notice if you have failed to declare income from the sale of assets, income earned through platforms, and made a gain on crypto transactions. You can offset your assessable income against any allowable deductions you can claim. To be tax deductible, an expense must be directly related to how you earn your income. When it comes to expenses, if you are claiming for items not normally associated with your industry, claim the same amount or same items each year (cut and paste claims), or claim amounts outside of the norm, then it is likely the ATO will take a closer look. How to contact us We’re available to assist you with tax planning including tax deductions: Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000 Read more tax planning topics here » Access our free tax factsheets here »

Tax savings for your business Bring forward the purchase of assets If there are large assets your business needs to buy (or upgrade), you have until 30 June 2023 to use the temporary full expensing rules. These rules enable businesses with an aggregated turnover of up to $5bn to fully deduct the cost of the asset upfront rather than being claimed over the asset’s life, regardless of the cost of the asset. The temporary full expensing rules are of benefit if your business would like to reduce the tax it pays in 2022-23, and the purchase of the asset is not going to put a strain on cashflow. If the business does not have tax to pay, and you utilise the rules, this will often give rise to a tax loss that can be carried forward to future years, although companies have access to some loss carry back rules for the 2022-23 year. Timing is important. The asset needs to be “first held and ready for use” by the 30 June 2023 deadline to qualify for an immediate deduction in the 2023 tax return. Just having a contract in place won’t qualify if you have not taken possession of the asset. If you are buying a work vehicle which is classified as a car and is mainly designed to carry passengers then remember that there are rules which limit the deductions that can be claimed if the cost of the car is above the car limit ($64,741 in 2022-23). From 1 July 2023 until 30 June 2024, small businesses with an aggregated turnover below $10m will be able to immediately deduct assets costing less than $20,000 in the year of purchase using the instant asset write off. For other businesses, assets will be depreciated using the general depreciation rules over time. Declare dividends to pay any outstanding shareholder loan accounts If your company has advanced funds to a shareholder or related party, paid expenses or allowed a shareholder or other related party to use assets owned by the company, then this can be treated as a taxable dividend. The regulators expect that top-up tax (if any applies) should be paid by shareholders at their marginal tax rate once they have access to these profits. This is unless a complying loan agreement is in place. If you have any shareholder loan accounts from prior years that were placed under complying loan agreements, the minimum loan repayments for the 2022-23 income year need to be made by 30 June 2023. It may be necessary for the company to declare dividends before 30 June 2023 to make these loan repayments. Commit to directors’ fees and employee bonuses Any expected directors’ fees and employee bonuses may be deductible for the 2022-23 financial year if you have ‘definitely committed’ to the payment of a quantified amount by 30 June 2023, even if the fee or bonus is paid to the employee or director after 30 June 2023 (within a reasonable time). You would generally be definitely committed to the payment by year-end if the directors pass a properly authorised resolution to make the payment by year-end. The employer should also notify the employee of their entitlement to the payment or bonus before year-end. Write-off bad debts You can claim a bad debt as a deduction if the income is brought to account as assessable income and you have given up all attempts to recover the debt. It needs to be written off your debtors’ ledger by 30 June. If you don’t maintain a debtors’ ledger, a director’s minute confirming the write-off is a good idea. Review your asset register and scrap any obsolete plant Check to see if obsolete plant and equipment are sitting on your depreciation schedule. Rather than depreciating a small amount each year, if the plant has become obsolete, scrap it and write it off before 30 June. Small business entities can choose to pool their assets and claim one deduction for each pool. This means you only have to do one calculation for the pool rather than for each asset. Bring forward repairs, consumables, trade gifts or donations To claim a deduction for the 2022-23 financial year, consider paying for any required repairs, replenishing consumable supplies, trade gifts or donations before 30 June. Pay June quarter employee super contributions now Pay June quarter super contributions this financial year if you want to claim a tax deduction in the current year. The next quarterly superannuation guarantee payment is due on 28 July 2023. However, some employers choose to make the payment early to bring forward the tax deduction instead of waiting another 12 months. Realise any capital losses and reduce gains Neutralise the tax effect of any capital gains you have made during the year by realising any capital losses – that is, sell the asset and lock in the capital loss. These need to be genuine transactions to be effective for tax purposes. Raise management fees between entities by June 30 Where management fees are charged between related entities, make sure that the charges have been raised by 30 June. Where management charges are made, make sure they are commercially reasonable and documentation is in place to support the transactions. If any transactions are undertaken with international related parties then the transfer pricing rules need to be considered and the ATO’s documentation expectations will be much greater. This is an area under increased scrutiny. Protecting against risk: Is it a business expense? Really? For a few years now, very generous provisions have been in place that allow businesses to claim the cost of assets used in the business in the year of purchase instead of having to deduct them over time. But, this has led to some serious problems where some products have been promoted as being tax deductible without proper consideration being given to the way the tax rules operate. Artwork is one example. If your business buys artwork to display in areas of your office where it would be viewed by clients, then assuming it is used in connection with your business and is likely to decline in value, the business can generally claim depreciation deductions for tax purposes. Depending on the situation, it might be possible to claim an immediate deduction. If, however, the artwork is displayed in a home office then the risk of the ATO querying this is much higher. If the artwork is an investment piece and you expect it to appreciate in value, then it’s unlikely to be a depreciating asset and would not normally qualify for an immediate deduction. Another scenario is a boat used for “marketing purposes”. If your business buys a boat, claims the cost of the boat and the expenses, the ATO will expect to see the benefit to your business of this and will be checking to see if the boat has been used privately by employees or shareholders (yes, they do look at your social media). If there is private usage of the boat then this can give rise to a range of complex tax issues. For example, this could trigger an FBT liability or a deemed unfranked dividend under the rules in Division 7A. It gets very messy. In general, the ATO is likely to review any expense where the cost outweighs the likely value to the business of acquiring it, particularly for assets that people are likely to want for their own pleasure. How to contact us We’re available to assist you with tax planning including tax deductions: Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000 Read more tax planning topics here » Access our free tax factsheets here »

Meet Riley Gollan, a versatile accountant with a passion for sport and the great outdoors Riley enjoys the challenge and variety that comes with working in tax and values the progressive culture at Collins Hume. But what inspired Riley to pursue a career in accounting? Not having a specific pathway in mind, he took an internship in Lismore to see what accounting was about and found that he enjoyed tax and set his sights on public practice. Now responsible for doing tax returns and BAS, providing bookkeeping assistance and preparing financial statements, Riley is developing relationships with business owners and individual taxpayers. He is an accounting and tax jack-of-all-trades, especially since he is also currently studying for his CPA qualification, exposing him to a variety of accounting scenarios. Riley is proud to be part of Collins Hume, “The Partners are young and I can see they have lives outside of work, they’re not just living in the office. Our firm is progressive with a great culture so I get exposed to a wide range of work.” Outside of work, Riley loves being outdoors and active. He is a competitor in the Ballina basketball competition and also plays for the Byron Beez rep team. Riley has recently taken on a new challenge by adopting a kelpie x papillon dog. If you're in the Ballina area, you might even spot him training his new pup, Melo. Before joining Collins Hume in 2020, Riley had roles in audit and tax for firms in Lismore and Murwillumbah and is now an integral part of Jamie's and Peter's teams. He holds a Bachelor of Business (Accounting and Finance) from Southern Cross University, as well as a Diploma of Sport Development from Victoria University. He is also a Xero Certified Advisor. Connect with Riley https://www.linkedin.com/in/rileygollan/. Copyright 2023. Collins Hume Ballina and Byron Bay

Please take a few moments to watch our video update about pricing changes from June 2023 and let us know if you have any queries.

The NSW state government has released details of its much-anticipated revamping of NSW state taxes in the 2022–23 state budget. From 16 January 2023, the First home buyer property tax option will enable first home buyers to choose between: paying an upfront stamp duty, or an annual property tax. Originally, the option was to replace stamp duty with the annual property tax in New South Wales. This announcement came as part of the 2020–21 NSW state budget. The property tax option will be available to first home buyers on purchases of land worth up to $1.5 million, or $800,000 in the case of vacant land. Also, if the first home buyer chooses to pay the stamp duty instead of the annual property tax, other stamp duty concessions may still be available. Transitional arrangements are also available for contracts entered into from 11 November 2022 (date of announcement) and 15 January 2023. How to contact us We’re available to assist you with tax planning including tax deductions. Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000.

‘Ace in the Hole’ Budget 2023-24 The ‘ace in the hole’ of the 2023-24 Federal Budget was the $4.2bn surplus; the first in 15 years. The surplus was driven by a surge in the corporate and individual tax take. High commodity prices, inflation, and high employment have all pushed up corporate and individual tax receipts. But the gains can't be relied on long term. The Budget is expected to deliver a deficit of $13.9 billion in 2023-24, and a $35.1bn deficit in 2024-25. Social initiatives dominated the Budget: Energy bill relief for some households and small business Encouraging doctors to offer bulk billing by tripling the incentive for children under 16, pensioners and other Commonwealth card holders Increases to commonwealth rent assistance Increases to JobSeeker and other income support payments Expanding access to the single parenting payment The legislated stage 3 tax cuts legislated to take effect on 1 July 2024 remain in place. Stage 3 radically simplifies the tax brackets by collapsing the 32.5% and 37% rates into a single 30% rate for those earning between $45,001 and $200,000. For small business, the instant asset write-off will enable multiple assets of up to $20,000 to be written-off in the year of purchase. What wasn’t in the Budget? There was no mention of the loss carry back rules for companies, suggesting that these rules will expire on 30 June 2023, along with the temporary full expensing rules. The loss carry back rules allow eligible companies to apply tax losses against taxable profits made in certain previous income years, rather than carrying them forward to future years. There is no mention of the simplification of Division 7A. Division 7A captures situations where shareholders access company profits in the form of loans, payments or the forgiveness of debts. The 2016-17 Federal Budget proposed changes to reduce the compliance burden of Division 7A. These changes were initially meant to apply from 1 July 2018 but were deferred a number of times, before the Government announced that any changes would commence from the start of the income year following the date on which the changes receive Royal Assent. Aside from a Treasury discussion paper released back in October 2018, this issue remains in limbo. The Budget also doesn't refer to either the Skills and Training Boost or the Technology Investment Boost. These measures, announced by the previous Government, would provide a bonus deduction equal to 20% of qualifying expenditure if the legislation containing these measures is passed in its current form (Treasury Laws Amendment (2022 Measures No. 4) Bill 2022). The Technology Investment Boost is aimed at expenditure incurred between 7:30pm (ACT) on 29 March 2022 and 30 June 2023. The Skills and Training Boost is aimed at expenditure incurred between 7:30pm (ACT) on 29 March 2022 and 30 June 2024. If we can assist you to take advantage of any of the Budget measures, or to risk protect your position, please let us know. As always, we’re here if you need us!