1% for the Planet membership announcement Collins Hume has recently joined 1% for the Planet, pledging to donate 1% of annual revenue to support organisations focused on the environment. “We wanted to announce that Collins Hume has officially joined 1% for the Planet starting this financial year,” said Partner Peter Fowler. “It’s important to us that we witness first-hand the positive difference we make. We want to make a living legacy that will be timeless — one that’s about contribution as opposed to consumption.” Collins Hume’s living legacy Collins Hume can choose to partake in any number of lifestyle choices on our doorstep. We thrive in our locale, and our kids are healthy and strong. ​ “Given this, it would be remiss of us not to play a small part in bringing basics such as clean drinking water, sustenance, education, and hope to people worldwide,” says Peter. ​ ​“That’s the kind of legacy of which we can all be proud. To make that happen, we work both locally AND globally.” "Currently, only 3% of total philanthropy goes to the environment and, only 5% of that comes from businesses. The planet needs bigger support than this, and our growing network of business members is doing its valuable part to increase giving and support on-the-ground outcomes. We're excited to welcome Collins Hume to our global movement," says Kate Williams, CEO of 1% for the Planet. In addition to joining 1% for the Planet, Collins Hume is also working hard behind the scenes to achieve its climate-neutral certification. “We are thrilled that by coming to work every day, we can add value to our clients’ business and lifestyle, whilst doing our bit to make the planet a healthier and happier place,” Peter added. Read more about Collins Hume’s living legacy at https://www.collinshume.com/legacy. About 1% for the Planet 1% for the Planet is a global organisation that exists to ensure our planet and future generations thrive. They inspire businesses and individuals to support Environmental Partners through membership and everyday actions. They make environmental giving easy and effective through partnership advising, impact storytelling and third-party certification. By contributing 1% of their annual revenue, thousands of 1% for the Planet members have raised over $300 million to support approved Environmental Partners around the globe. Environmental Partners are approved based on referrals, track record and environmental focus. Thousands of Environmental Partners worldwide are currently approved. Look for the logo to purchase for the planet, learn more or join at onepercentfortheplanet.org.

We look at the current state of play and the likely impact Climate change featured heavily during the election and now the Albanese Government is putting into place some of the promises it made. The Government’s Climate Change Bill passed the House of Representatives in early August and is now before the Senate Environment and Communications Legislation Committee for review. But what impact does the legislation have on business and consumers in Australia? Under the Paris Agreement, a legally binding international treaty, Australia and 192 other parties committed to substantially reduce global greenhouse gas emissions to limit the global temperature increase in this century to 2 degrees Celsius while pursuing efforts to limit the increase even further to 1.5 degrees. At this level, the more extreme impacts of climate change - floods, heatwaves, rising sea levels, threats to food production - can be arrested. As part of this commitment, the parties are required to communicate their emissions reduction ambitions through a Nationally Determined Contribution (NDC). On 16 June 2022, Australia communicated its updated NDC to the UN, confirming Australia’s commitment to achieve net zero emissions by 2050, and a new, increased target of 43% below 2005 levels by 2030 (a 15% increase on the previous target). The Climate Change Bill enshrines these emission targets into legislation. The Bill itself sets an accountability framework for climate targets but does not introduce mechanisms to cut emissions. Impacted industries The energy sector is at the heart of climate change producing around three-quarters of global greenhouse gas emissions. In Australia, the CSIRO says energy contributes approximately 33.6% of all emissions, with a further 20.54% from stationary energy (from manufacturing, mining, residential and commercial fuel use), transport 17.6%, and agriculture 14.6%. The future of the energy industry is also at the crux of the Government Powering Australia policy. Emissions reduction is not just a social obligation but a necessity as investment tilts towards lower emission suppliers. As an example, the 2022-23 Federal Budget committed a $120 billion 10-year infrastructure pipeline. The June 2022 Business Council of Australia Infrastructure in a world moving to net zero report provides a series of recommendations to address the way in which Government invests including the adoption of low carbon materials on public projects and options for reducing emissions during construction, understanding the whole of life emissions impact of infrastructure projects and potentially adopting the UK style PAS2080 standard on carbon management infrastructure, and a shift in procurement to lower carbon supply chains. If these considerations have not made it into business production and supply chain planning, they will soon. Amongst other initiatives the Government have committed to: $20bn investment in Australia’s electricity grid to accelerate the decarbonisation. An additional $300m to deliver community batteries and solar banks across Australia. Up to $3bn investment in the new National Reconstruction Fund to support renewables manufacturing and low emissions technologies. Powering the Regions Fund to support the development of new clean energy industries and the decarbonisation priorities of existing industry. Double existing investment in electric vehicle charging and establish hydrogen refuelling infrastructure (to $500m). Review the effectiveness of the Emissions Reduction Fund that provides businesses with the opportunity to earn Australian carbon credit units for every tonne of carbon dioxide equivalent a business stores or avoids emitting through adopting new practices and technologies. New standardised and internationally-aligned reporting requirements for climate risks and opportunities for large businesses. Reduce the emissions of Commonwealth Government agencies to net zero by 2030. In essence, business can expect directed funding for co-investment in emission reduction technology, Government spending to be through the lens of the renewed emissions targets, and for new funding opportunities to advance low emission technology. But emissions reduction is not just about industry. Land use change can have a significant impact on emissions through reductions. For example, a reduction in forest clearing in 2020 reduced emissions by 4.9%. One initiative needs to go hand in hand with the other. In 2021, fossil fuels represented 67.5% (59.1% coal) of the total annual electricity generation and renewables 32.5% (an increase of 5% on the previous year with the spike contributed by small-scale solar, and large-scale solar and wind farms).

The ATO has released updated information on claiming cryptocurrency losses and gains in your tax return The first point to understand is that gains and losses from crypto are only reported in your tax return when you dispose of it — you sell it, convert it to fiat currency, exchange it for another type of asset, buy something with it, etc. You cannot recognise market fluctuations or claim a loss because the value of your crypto assets changed until the loss is realised or crystallised. Gains and losses from the disposal of cryptocurrency should be reported in your tax return in the year that the disposal occurred. If you made a capital gain on crypto that was held as an investment and you held the crypto for more than 12 months then you may be able to access the 50% Capital Gains Tax (CGT) discount and halve the tax you pay. If you made a loss on the cryptocurrency (capital loss) when you disposed of it, you can generally offset the loss against capital gains you might have (unless the crypto is a personal use asset). But, you can only offset capital losses against capital gains. You cannot offset these losses against other forms of income like salary and wages, unfortunately. If you don’t have any capital gains to offset, you can hold the losses and carry them forward for another future year when you can use them. If you earned income from crypto such as airdrops or staking rewards, then these also need to be reported in your tax return. And remember, keep records of your crypto transactions. The ATO has sophisticated data matching programs in place and cryptocurrency reporting is a major area of focus. 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.

The RBA lifted the cash rate to 1.85% in early August 2022 The increase comes a few weeks after Reserve Bank Governor Philip Lowe told the Australian Strategic Business Forum that “…we're going through a process now of steadily increasing interest rates, and there's more of that to come. We've got to move away from these very low levels of interest rates we had during the emergency.” He went on to say that we should expect interest rates of 2.5% - how quickly we get there really depends on inflation. The RBA Governor has come under increasing pressure over comments made in October 2021 suggesting that interest rates would not rise until 2024. At the time however, Australia was coming out of the Delta outbreak, wage and pricing pressure was subdued, and inflation was low. That all changed and changed dramatically. Inflation is now forecast to reach 7.75% over 2022 before trending down. We’re not expected to reach the RBA’s target inflation rate range of 2% to 3% until the 2023-24 financial year. In the UK, the situation is worse with the Bank of England predicting that inflation will reach around 13% over the next few months. The UK has been heavily impacted by the war in Ukraine with the price of gas doubling, compounding pressure from post-pandemic supply chain issues and price increases. With interest rates rising, what can we expect? Deputy RBA Governor Michele Bullock recently said that Australia’s household credit-to-income ratio is a relatively high 150%, increasing in an environment that enabled households to service higher levels of debt. But it is not all doom and gloom. “Strong growth in housing prices over 2021 and early 2022 has boosted asset values for many homeowners, with housing assets now comprising around half of household assets,” she said. The recent downturn in house prices has only marginally eroded the large increases over recent years. Plus, households have saved around $260m since the pandemic creating a buffer for rising interest rates. This, however, is a macro view of the economy at large and individual households and businesses will face different pressures depending on their individual circumstances. For businesses, the rate increase has a twofold effect. It is not just the rate rise and the higher cost of funds in their borrowings. That by itself is significant but at this stage, if anything, it is the lesser issue. The more significant impact comes from negative consumer sentiment and the flow through effect on sales and cash flow. In general, your debts should not exceed around 35-40% of your assets. There will be some exceptions to this with new business start-ups and first home buyers. Review the cost of cash in your business, reviewing rates, and the configuration and mix of loans to ensure you are not paying more than you need to. If possible, avoid having private debt as well as business and investment debts. You can't get tax relief on your private debt. Keep an eye on debtors and don’t become your customer’s bank. How to contact us We’re available to assist your business. Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000.

Aged care planning and the 'sandwich' generation Too many things to do ... pulled in many directions ... and never enough time Setting the scene Jean is in her early 60’s working hard in a busy professional career and has retirement on her mind. But that’s not all that was on her mind ... Jean’s husband is about the same age and thinking of retirement as well. They have two young adult children who have just started their working lives and both are still cozied up in the family home with no departure date in sight. In her “spare time” Jean does most of the jobs around the house and generally keeps her household together. Jean’s Mum is in her mid-80s and lives in her own home across town. Sadly, Jean’s Dad suddenly passed away a few years back. Jean visits her Mum regularly and she is starting to get concerned about how her Mum is managing alone at home. Jean has a brother and a sister who aren’t living close by and therefore don’t visit their Mum anywhere near as often as Jean does, instead relying on news from Jean about how Mum is going. Sound familiar? This scenario plays out in many households across Australia. Welcome to the “sandwich (or “caught in the middle”) generation” ... where your “daily balancing act” is to look after your own children and your parents ... oh and don’t forget about looking after yourself along the way. The job is often highly time-consuming, emotionally straining and stressful. What typically happens As much as Jean has tried to talk to her Mum about getting some “extra” help, the discussion often starts and ends with words spoken such as “I don’t want to talk about it”, “I’m fine”, “it’s not me yet”, “you’re so busy and I didn’t want to bother you” to name a few. Have you heard this before? Exasperated, Jean (literally) struggles on. And often the struggle continues until there is some form of crisis. Then things have to happen ... and seemingly fast. It’s best to talk ... but that’s often not easy How does Jean get everyone on board to sit down and have a meaningful conversation? There are many articles written about asking parents what they need or want both now and into the future. Sometimes these strategies work ... and sometimes they go nowhere. Getting everyone around the dinner table who needs to be there and talking about things often produces great outcomes. Putting a written plan together about what’s important and who does what and when is a big contributing success factor. But, many Australians don’t want to do this ... and even fewer actually do it (until a crisis occurs of course). Logistically, actually doing something like this often proves difficult. If Jean could only do one thing right now ... what would it be? Do this ... Jean’s Mum had always been in-charge of her family finances – from when she was married until now. She kept great records of everything (and that means “everything” without throwing “anything” away). However, in recent times, Jean had noticed things weren’t being kept as organised by her Mum – she would often see documents sitting on the dinner table and around the house and found boxes (and boxes ... and boxes) of all types of paperwork stored in cupboards and drawers. Of all the conversations that families can and should have, finances are never the easiest. So, Jean went out and purchased (for only a few dollars) an A4 plastic hardcover folder with plastic inserts and gave it to her Mum. She suggested that Mum keep all her latest statements, such as cash and term deposit accounts, superannuation and age pension, shareholdings, house and content insurance, rates, telephone and electricity bills; even copies of her latest legal documents such as her Will, Enduring Power of Attorney, etc in the folder. If one of these statements arrives – Mum simply had to take out the previous statement and replace it with the new statement. Mum could store or file the old statement wherever she wanted to. Mum then simply had to put the folder in a place where she knew to find it and let Jean know where that was as well ... just in case. Periodically, when Jean visited her Mum, she would ask where the folder was and how was it going. She would then have a look through it “over a cuppa” to make sure things were being kept and stored properly and update it with her Mum if needed. No deep and meaningful discussions about money and finances ... Jean just knew where the folder was if she needed to find it and it was a great starting point for her if she ever needed to step in and stand up to run her Mum’s financial affairs. There would never be any time-consuming, and stressful, “search” through Mum’s home for these important documents. The folder also served as a useful “conversation starter” about how things were going for her Mum and what she might want now, or need in the future. And this conversation led to the next conversation and the next conversation ... in a relaxed and casual environment. How Family Aged Care Advocates fit in That’s where Family Aged Care Advocates can step in, with guidance and support to help families identify the relevant options to help you make informed decisions to get the best care outcomes for the people you love and care for most. FACA are independent aged care specialists only interested in the right outcomes for Jean and her Mum, and your family. Sidenote Among the many jobs that Jean had in her busy life as a professional career woman, wife, Mum, peace-keeper and carer, she was also the “chief finance officer and record keeper” at her own home. She must have missed the family meeting for that job nomination as well. Jean was so impressed with the idea for her Mum that she also implemented the same “folder” system in her own household and told her husband and children where to find the folder if she wasn’t around (just in case for whatever reason).

One of the biggest complaints from salespeople in a tight economy is the time it takes to achieve a sale. So, what can you do to speed up the sales process? Sell the solution, not the product Branding is wonderful but unless your brand is as mighty as Coca-Cola, it’s unlikely people will purchase what you have based on brand alone. It’s more important than ever to have clarity about why your product or service is valuable to your audience and why they should be buying it from you. The point is to understand what the most meaningful message is for your customer and that is unlikely to be a product feature list. Sell the savings Does your product offer your customer any efficiency gain or benefit beyond value over time? Can you justify it with real examples such as testimonials and worked examples? If it does, you need to ensure that you articulate this message. If there is a benefit, ensure you highlight it and emphasise the result. Try and stay away from long-range forecasts. If it is going to take a few years to see the real value then this is not a compelling selling point in the current market. You are only as strong as the weakest link in your sales process If your first point of contact is the weakest link in your sales chain, then you need to fix it. Help your team identify and capitalise on opportunities by giving them the training and structure they need. Value-added discounts Discounting is a common strategy to increase sales but it comes at the cost of your margin. If you are going to discount, do it strategically. For example, when David Jones wanted to build the number of customers holding a David Jones AMEX, they offered a limited-time 30% discount storewide to everyone who either held or applied for the card on the spot. And, staff were trained to encourage the adoption of the AMEX at the checkout. Yes, it was a big discount, but it created an event for existing store card holders and ramped up acquisition to the store card program. The added benefit is that loyalty programs work; the probability of selling to an existing customer is around 14 times higher than a new customer. In tough economic times, it’s common for the volume of products purchased by customers to go down. You can overcome some of this reticence by packaging items together and encouraging sales volume by offering a discount on the second item or on bundles. If you are going to package, ensure you are not packaging low-margin products and then discounting them. Packaging works best when you package products with higher profit margins or when you boost the sales volume of slow-moving stock by combining it with faster selling stock. 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.

Partner spotlight on Jamie Doyle Jamie Doyle is Collins Hume’s small business specialist working with established businesses and start-ups, streamlining their setups, structuring and software so they can realise their full potential. The key to small business success is ensuring that the right processes are in place and continue to be kept in check. Anyone in a business can have a great idea and seeing a great idea seized upon and implemented, big or small, will fire up even the most timid of us. Jamie is all about setting entrepreneurs on the right path from the outset. Using cloud accounting data Jamie is also able to assist business owners on a deeper level with Virtual Chief Financial Officer (VCFO) reporting and insight to enhance business performance. For both start-up and established enterprises, Jamie is on hand as a cloud specialist with a breadth of knowledge spanning Australia’s major accounting software solutions and the add-ons specific to each industry. He is behind some remarkable business efficiency projects where business owners have experienced better efficiency, fewer errors and faster payment times thanks to Jamie transitioning their accounting to the cloud. More and more we're seeing successful businesses tapping into Collins Hume’s strategic business advice and reporting to take advantage of having a financial mentor on tap to help them make important decisions. A common trait of successful business people is that they look to specialists for help. Collins Hume Partner, Jamie Doyle CPA, holds a Bachelor of Business (Accounting) and is a Registered Tax Agent, Xero Certified Advisor and Law Society of NSW External Examiner.

A reminder of what changed on 1 July 2022 Business Superannuation guarantee increased to 10.5% $450 super guarantee threshold removed for employees aged 18 and over Small business GST and PAYG tax instalments lowered (the total tax liability remains the same, just the amount the business needs to pay through the year is lowered) ATO guidance on how profits of professional firms are structured comes into effect introducing new risk criteria New guidance on unpaid trust distributions to corporate beneficiaries comes into effect that may treat some unpaid distributions as loans and trigger tax consequences Individuals Superannuation guarantee increased to 10.5% Work-test repealed for those under 75 to make or receive non-concessional or salary sacrifice super contributions (the work test still applies to personal deductible contributions) Age for downsizer super contributions reduced to 60 years and older Value of voluntary super contributions that can be withdrawn under the First Home Saver Scheme increased to a total of $50,000 New ATO guidelines on trust distributions come into effect primarily impacting distributions to adult children Home loan guarantee scheme extended to 35,000 per year for first home buyers and 5,000 per year for single parents Australia’s minimum wage increased 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 »

Collins Hume Accountants & Business Advisers, one of the Northern Rivers’ preeminent and proactive accounting firms specialising in small and medium business strategy, conducted four Recover. Rediscover. Reimagine. business workshops last month to sold out sessions! Designed to support local business owners during what has been a very challenging time in the region, each workshop inspired business owners to achieve business and lifestyle success in powerful and meaningful ways. All ticket proceeds were donated to those affected by floods via Collins Hume’s global giving partner, B1G1.com. Workshop presenter Peter Fowler said, “It was great to see so many business owners attend and learn how to improve their businesses after a few tough years.” Talking about business and life purpose, resiliency and innovation, both Collins Hume clients and members of the general public were invited to attend. “With 100% of ticket sales going to Northern Rivers flood victims, we were fortunate to be able to raise nearly $3,000 in flood support to help our local community.” Each Recover. Rediscover. Reimagine. workshop encouraged attendees to think about their businesses and get inspired about being practical, reinvigorate as part of a vibrant supportive community and kickstart with a positive mindset. If you missed the Recover. Rediscover. Reimagine. workshops but would like to talk to Collins Hume on how we can assist to improve your business and lifestyle, contact us in Ballina or Byron Bay today on 02 6686 3000. Chris' workshop sessions Peter's workshop sessions

Tax time targets For landlords, the focus is on ensuring that all income received, whether long-term, short-term, rental bonds, back payments, or insurance pay-outs, are recognised in your tax return. If your rental property is outside of Australia, and you are an Australian resident for tax purposes, you must recognise the rental income you received in your tax return (excluding any tax you have paid overseas), unless you are classified as a temporary resident for tax purposes. You can claim expenses related to the property, although there are some special rules that need to be considered when it comes to interest deductions. For example, if you have borrowed money from an overseas lender you might be subject to withholding tax obligations. Co-owned properties For tax purposes, rental income and expenses need to be recognised in line with the legal ownership of the property, except in very limited circumstances where it can be shown that the equitable interest in the property is different from the legal title. The ATO will assume that where the taxpayers are related, the equitable right is the same as the legal title (unless there is evidence to suggest otherwise such as a deed of trust etc.,). This means that if you hold a 25% legal interest in a property then you should recognise 25% of the rental income and rental expenses in your tax returns even if you pay most or all of the rental property expenses (the ATO would treat this as a private arrangement between the owners). The main exception is where the parties have separately borrowed money to acquire their interest in the property, then they would claim their own interest deductions. The ATO has flagged four priority areas this tax season where people are making mistakes. With tax season upon us the Australian Taxation Office (ATO) has revealed its four areas of focus this tax season. Record-keeping Work-related expenses Rental property income and deductions, and Capital gains from crypto assets, property, and shares. In general, there are three ‘golden rules’ when claiming tax deductions: You must have spent the money and not been reimbursed. If the expense is for a mix of work-related (income producing) and private use, you can only claim the portion that relates to how you earn your income. You need to have a record to prove it. 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 »

Tax time targets To claim a deduction, you need to have incurred the expense yourself and not been reimbursed by your employer or business, and the expense needs to be directly related to your work. What expenses are related to work? You can claim a deduction for all losses and outgoings “to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income.” That is, there must be a nexus between the expenses you are claiming and how you earn your income. It all sounds simple enough until you start applying this rule. Take the example of an actor. To land the acting job she needs to attend auditions. She wants to claim the cost of having her hair and make-up done for the audition. But, because she is not generating income at the stage of the audition, she cannot claim her expenses. The expense must be related to how you are currently earning your income, not future potential income. The same issue applies to upskilling. If you attend investment seminars with the intention of building your investment portfolio the seminar is not deductible as a self-education expense unless it relates to managing your existing investment portfolio — not a future one. Or, a nurse’s aide who attends university to qualify as a nurse. The university degree and the expenses associated with this are not deductible as the nursing degree is not required to fulfil the role of a nurse’s aide. The second area of confusion is over what can be claimed for work. If the item is “conventional” it’s unlikely to be deductible. For example, you can't claim conventional clothing (including footwear) as a work-related expense, even if your employer requires you to wear it and you only wear the items of clothing at work. To be deductible clothing must be protective, occupation-specific such as a chef’s chequered pants, a compulsory uniform or a registered non-compulsory uniform. Work-related or private? Another area of confusion is where expenses are incurred for work purposes but used privately. Internet access or mobile phone services are typical. A lot of people take the view that the expense had to be incurred for work so what does it matter if it’s used for private purposes? But, if you use the service on more than an ad-hoc basis for any purpose other than work, then the expense needs to be apportioned and only the work-related percentage claimed as a deduction. And yes, the ATO does check usage in an audit. Claims for COVID-19 tests will be a test of this rule. COVID-19 tests are deductible from 1 July 2021 if the purpose was to determine whether you may attend or remain at work. The tax deduction does not apply if you worked from home and didn’t intend to attend your workplace, or the test was used for private purposes (for example, to tests the kids before school). Claiming work from home expenses Last financial year, one in three Australians claimed working from home expenses. Now we’re out of the pandemic, the ATO will be focussing specifically on what is being claimed. If you claimed work from home expenses last year and returned to the office this year, then there should be a reduction in your work from home claim. The ATO will be looking for discrepancies. If you are claiming your expenses, there are three methods you can use: The ATO’s simplified 80 cents per hour short-cut method – you can claim 80 cents for every hour you worked from home from 1 March 2020 to 30 June 2022. You will need to have evidence of hours worked like a timesheet or diary. The rate covers all of your expenses and you cannot claim individual items separately, such as office furniture or a computer. Fixed rate 52 cents per hour method – applies if you have set up a home office but are not running a business from home. You can claim 52 cents for every hour and this covers the running expenses of your home. You can claim your phone, internet, or the decline in value of equipment separately. Actual expenses method – you can claim the actual expenses you incur (and reduce the claim by any personal use and use by other family members). You will need to ensure you have kept records such as receipts to use this method. It’s this last method, the actual method, the ATO is scrutinising because people using this method tend to lodge much higher claims in their tax return. Ineligible expenses include: Personal expenses such as coffee, tea and toilet paper Expenses related to a child’s education, such as online learning courses or laptops Claiming large expenses up-front (instead of claiming depreciation for assets), and Occupancy expenses such as rent, mortgage interest, property insurance, and land taxes and rates, cannot generally be claimed by employees working from home (especially by those who are working from home solely due to a lockdown). The ATO has flagged four priority areas this tax season where people are making mistakes. With tax season upon us the Australian Taxation Office (ATO) has revealed its four areas of focus this tax season. Record-keeping Work-related expenses Rental property income and deductions, and Capital gains from crypto assets, property, and shares. In general, there are three ‘golden rules’ when claiming tax deductions: You must have spent the money and not been reimbursed. If the expense is for a mix of work-related (income producing) and private use, you can only claim the portion that relates to how you earn your income. You need to have a record to prove it. 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 »

101 of working with the ATO is that you can’t claim it if you can’t prove it If you are audited, the ATO will disallow deductions for unsubstantiated or unreasonable expenses. Even if the expense is below the substantiation threshold of $300 ($150 for laundry), the ATO might ask how you came up with that number. For example, if you claim $300 in work-related expenses (that is, make a claim right up to the substantiation threshold), how did you come up with that number and not something else? In addition to the obvious records of salary, wages, allowances, government payments or pensions and annuities, you need to keep records of: Interest or managed funds. Records of expenses for any deductions claimed including a record of how that expense relates to the way you earn your income. That is, the expense must be related to how you earn your income. For example, if you claim the cost of RAT tests, you need to be able to prove that the RAT test was necessary to enable you to work. If you were working from home and not required to leave home, it will be harder to claim the cost of the test. Assets such as shares or units in a trust, rental properties or holiday homes, if you purchased a home or inherited a property, or disposed of an asset (including cryptocurrency). You need to keep your records for five years. These can be digital copies of the records as long as they are clear and legible copies of the original. If your records are digital, keep a backup. Records can be tax invoices, receipts, diary entries or something else that proves you incurred the expense and how it related to how you earn your income. The ATO has flagged four priority areas this tax season where people are making mistakes. With tax season upon us the Australian Taxation Office (ATO) has revealed its four areas of focus this tax season. Record-keeping Work-related expenses Rental property income and deductions, and Capital gains from crypto assets, property, and shares. In general, there are three ‘golden rules’ when claiming tax deductions: You must have spent the money and not been reimbursed. If the expense is for a mix of work-related (income producing) and private use, you can only claim the portion that relates to how you earn your income. You need to have a record to prove it. 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 »