People often pursue educational course whilst employed. If you are wondering whether you can claim a deduction for the self-education expenses on your Tax Return, this article is perfect for you! We will be covering the following topics:

• Are education expenses tax deductible?
• When are education expenses tax deductible?
• What type of education expenses are tax deductible?
• What can’t you claim as a self-education expense?
• The $250 reduction for some self-education expenses
• Can you claim uni fees on tax?

Are education expenses tax deductible?

For claiming a deduction for self-education expenses, the primary condition is that self-education should relate to your current work activities in your employment. You can also claim expenses for self-education if you have received a taxable bonded scholarship. To claim a deduction in case of taxable bonded scholarship you must satisfy the study requirements that are laid down to maintain your right to scholarship.

Only the expenses incurred on eligible courses can be claimed by you. Read further to understand what eligible courses mean.

When are education expenses tax deductible?

Expenses incurred for self-education are eligible for deduction only when the course results in a formal qualification and has a connection with your current work activities as an employee in a way that it fulfills one of the following conditions:

• Your level of skill or knowledge required in your current work activities is either maintained or improved; or
• The course either leads to or is expected to give rise to an increase in your income level from your current work activities.

The following types of self-education expenses are not tax deductible:

• Courses that aren’t related or are only generally related to your current work activities. For example, if you are doing an investing course whilst working as a recruiter.
• Courses that enable you to get new employment or change employment. For example, if you are doing an engineering course whilst working as an admin assistant for an engineering company. Even if you may get a higher paying job in that company, you are changing your employment from one role to another.

What type of education expenses are tax deductible?

There are following three types of expenses for which you can claim a deduction:

• General Course Expenses
• Depreciating Assets
• Car Expenses

Some expenses are not allowed to be claimed as a deduction. If you want to get a detailed list of such expenses you can reach out to us at Auditax.

General Course Expenses

There are a lot of general expenses that can be claimed in relation to courses taken by you for self-education such as course and tuition fees, fares, stationery, textbooks, phone calls, and so on. Furthermore, if an expense is incurred partly for self-education and partly for other purposes, then you can claim only the proportionate expenses related to self-education.

Depreciating Assets

Depriciation is the technical term of the loss of value of an asset over time such as laptops or furniture.

Expenses relating to depreciating assets can be claimed in two ways:

• Firstly, the entire value of the asset at once if the decline in value for that asset over the course of its life is less than $300; or
• Decline in value of the asset per year if the total decline in value of that asset over the course of its life is greater than $300.

If you also use that asset for personal or any other use, you must only claim a self-education deduction for the portion which you used for studying.

Car Expenses

Car expenses that you incur on self-education can be claimed only for the following two kinds of travel:

• From home to the educational institution and back; or

• From work to the educational institution and back.

What can’t you claim as a self-education expense?

The following cannot be claimed as self-education expenses:

• Tuition fees paid by someone else or are re-imbursed for at a later date;
• The student contribution on your fees;
• Repayment of any study or training loans including HELP, SFSS, VSL, SSL or TSL;
• Living expenses such as accomodation or meals.

The $250 reduction for some self-education expenses

For tax deductions, self-education expenses are divided into five categories. If all your expenses fall in “Category A”, then you are required to reduce your expense claim by $250. However, some expenses fall in “Category E” and are allowed to be set off against the $250 limit.

Can you claim uni fees on tax?

If you are working and studying at the same time, you can only claim uni fees on tax if the course you are studying is:

• Relevant and useful to your current employment; OR
• Likely to lead to higher earning opportunities within your field of employment; OR
• Part of a traineeship you are currently doing.

If one of the above applies to you, or if you are receiving a taxable scholarship, you may be eligible to claim uni fees and other self-education expenses on your tax return. Feel free to contact us to find out more!

 

Unless you work from home, you must be incurring expenses on your travels between home and workplace. In this article, we are going to discuss how and to what extent you can claim these as well as other travel expenses in your tax return. 

Expenses for travel between home and workplace 

The expenses that you incur for commuting between your home and workplace are generally considered as personal expenses. However, there are some situations wherein you can claim a deduction for travel expenses for travel between home and workplace and between two workplaces. 

Travel expenses include those incurred on driving your car, ride-sharing, flight tickets, taxis, etc. Further, if the expenses are incurred partly for personal expenses, then you must claim only that portion of expenses that relates to work duties. 

Claiming Car Expenses on your Tax Return

These expenses can be claimed by you when you are using your own care for performing work-related duties. There are two methods as follows to determine the amount of deduction: 

Cents per kilometer method 

Here is how the method works: 

• You may claim a deduction of 72 cents per kilometer.
• Maximum of 5,000 work-related kilometers can be claimed however they must be legitimately work related. 
• No other car expenses other than the 72 c/km may be claimed if using this method. 
• Records evidencing work-related kilometers is to be maintained. 

Logbook method  

The logbook method functions in the below manner: 

• Work-related percentage of the car expenses is calculated 
• The percentage is applied to the car expenses to arrive at the deduction 
• Expenses that can be claimed includes the decline in value and running costs 
• Records such as logbook and odometer readings shall be maintained 

Other travel expenses 

If you incur any other travel expense in relation to your work then you may claim the same as a deduction. These expenses may include toll charges, car parking, accommodation expenses when staying in another state for work purposes, fuel expenses on a bike, and so on. Make sure while claiming a deduction that you reduce the portion of expenses relating to personal expenses. 

Accommodation expenses 

If you are required by your employer to travel for business reasons to the other states then you might be receiving accommodation allowance. This is an income which you shall disclose in your tax return. Only if you show the allowance as an income, you can claim the accommodation expenses. There are some other conditions as well which are needed to be fulfilled to claim accommodation expenses. 

What Travel Expenses can’t you Claim on your Tax Return? 

Relocation expenses  

You might incur expenses when you take a transfer in your existing job or when you switch to a new job. These expenses relating to your relocation or removal can’t be claimed as a deduction. 

Fines 

Fines such as overspeeding fine can not be claimed as an expense deduction. 

For example- overspeeding 

Normal trip expenses 

The cost that you incur on your travel between your home and workplace is a private expense that can’t be claimed. 

If there is anything for which you need clarity you may reach out to our team at Auditax. 

As the COVID-19 pandemic has hit the country, we have seen how there has been a paradigm shift in the work styles and work from home has become a common phenomenon. If you are also working from home, you may want to know what all expenses you can claim as a deduction while finalizing your tax return and how you can calculate these expenses.

Here is a glimpse of what all you can find in the article.

1. Conditions for claiming a deduction.
2. Which expenses can be claimed as a deduction?
3. Calculating additional running expenses using the shortcut method.

Let’s get started!

Conditions for Claiming a Deduction

Let us have a look at what all conditions will have to be fulfilled to claim a deduction for work from home expenses.

• You must incur the expense by way of spending money. This would mean that you can’t claim a deduction for those items or facilities that are provided to you by your employer.

• The expenses that you claim shall have a direct nexus with your work and income.
• You must have records that can substantiate the expenses incurred by you.

Make sure all these conditions are met so that you can claim the deduction.

Which Expenses Can be Claimed as a Deduction?

If you are temporarily working from home then you can claim a deduction for additional running expenses that you incur in connection with your work such as:

• Electricity expenses including the expenses incurred on lightening, cooling and heating as well as electric items that you use for your work;
• Cleaning costs related to your dedicated work area;
• Phone and internet expenses;
• Home office equipment such as laptops, printers, telephones, furniture, etc. You can either claim the full cost of such items that cost up to $300; if the cost of items exceeds $300 then you can claim a deduction for decline in the value of such items.
• Other running costs such as computer consumables and stationery.

However, you must note that you can’t claim a deduction for occupancy expenses such as property rent, rates and taxes, interest on property loans, etc.

Calculating Additional Running Expenses Using the Shortcut Method

In this method, you can claim 80 cents for every work hour for additional running expenses provided you are carrying out employment duties and not just occasional emails or calls. You should note the following points when you use this method.

• You can claim the deduction even if you don’t have a dedicated work area.
• All the deductible running expenses discussed above that you have incurred additionally due to working from home can be claimed as a deduction.
• If you adopt this method then you can’t further claim a deduction for the same expenses anywhere again.
• To arrive at the deduction amount, you must maintain records of the number of hours that you have devoted to work, such as timesheets.
• While filing your 2020-21 return make sure you quote the “COVID hourly rate” in the return.

You must have heard that businesses need to lodge BAS, but what is BAS? Well, to begin with, BAS stands for Business Activity Statement. It contains details of GST that the business collected at the time of sales, and that the business will eventually pay or forward to the ATO. If your business is registered for GST, you will have to lodge the BAS to the ATO on a periodical basis. The Business Activity Statement comprises details about Goods and Services Tax (GST), Pay as you Go (PAYG) instalments, PAYG withholding tax, and other taxes as well. 

Tax components as reported in BAS and lodging criteria for businesses registered for GST 

 

1.Goods and Services Tax (GST) 

GST is 10% of the sales amount that is added to the total sales figure in your sales invoices. This amount needs to be paid to the ATO and doesn't form income for a business. While paying the GST, a business is allowed to deduct the GST that the business paid on its purchases and other expenses. 

2.Pay As You Go withholding (PAYG Withholding) 

The business activity statement also tells us about the withholding taxes deducted from wages i.e., detailed employee's wages and tax withheld thereupon. The PAYGW tax is calculated using a sliding scale of tax and a little complex process. You can take the help of a bookkeeper or ATO website for calculating it. 

3.Pay as you Go Instalment (PAYG Instalment) 

It is nothing but the instalment of tax payment that is calculated on your estimated taxable income of the current year. It helps you in planning and budgeting the payment of income tax and helps you maintain a regular cash flow. The paid instalment will be auto-populated on BAS when it becomes available; you can vary this instalment amount in the BAS. And when you lodge your BAS to the ATO, it will reflect in ATO report as instalment tax paid for the year. 

4. Other taxes 

Other taxes might include Fringe benefits tax, Luxury car tax (LCT), Wine equalization tax (WET), Fuel tax credit, and so on. 

Lodging criteria for Business registered for GST (unless advised otherwise by the ATO) 

• You need to lodge quarterly if GST turnover is less than $20 M and the ATO has not asked you to report monthly. 
• If your GST turnover is more than $20 M, you need to lodge BAS monthly. 
• If you have voluntarily registered for GST and the GST turnover annually is less than $75,000, then you can lodge it annually. 

 

To wrap it all, a Business Activity Statement (BAS) is an important piece of document, as it details the GST that your business owes to the ATO. It helps you in planning tax payments on due dates and it also helps in keeping track of all your business activity in one place. You can lodge your business activity statement online or take help from the tax agent if you do not want to do it yourself. Also, you can opt to lodge by email. Hope you have got a good idea regarding the business activity statement, lodging criteria, and ways to lodge it to ATO! 

If your business is covered under the definition of a small employer, then you must read this article. Until now small employers were not required to report the amounts paid to closely held payees through Single Touch Payroll (STP). But this exemption is no more valid with effect from 1st July! This means that any amount paid by employers to closely held payees shall be reported through STP 1st July onwards. Let us discuss this in detail now.

To begin with, let us see what is meant by closely held payees and how do you report them through STP.

Meaning of closely held payees and their STP reporting

A person is said to be a closely held payee of a paying entity if the person is a relative of such entity making payments. For instance, if amounts are paid to family members of a family–owned business, then such amounts need to be reported through STP.

Thus, all amounts you as an employer pay to closely held payees on and after 1st July shall be reportable.

How do you do STP reporting for closely held payees?

Now that we know what closely held payees mean, let us have a look at how we can report amounts paid to them via STP.

Reporting on or before the payment date

You can choose to report the amounts paid to closely held payees on or before each pay date.

Reporting on a quarterly basis

Instead of reporting on each pay date, you can choose to report the information quarterly. Every quarter you need to report the information at the time when your BAS (Business Activity Statement) is due.

Reporting on estimation basis

You can also report the amounts quarterly based on estimation. The estimation should be more than or equal to a percentage based on gross payments and tax withheld last year.

You can choose any one of the above three reporting methods as per your business circumstances.

Is there still any exemption from quarterly STP reporting?

Micro employers are still exempted from the requirement of quarterly STP reporting only when they meet some eligibility criteria. To avail this exemption, the employer must be facing exceptional circumstances.

If the business experiences exceptional circumstances as suggested by the ATO, then such employers can consider applying for quarterly exemption. Such exemption would allow the micro employers to carry out the reporting quarterly for two years with the help of a registered tax or BAS agent.

In short, not all small employers are now eligible for exemption from quarterly STP reporting for amounts paid to closely-held payees. Only those businesses that meet certain listed exceptional circumstances are now eligible for exemption. If your business is also covered under exemption criteria, then you can consider applying for the exemption through the deferral tool. For this, you can also take help from registered tax or BAS agents.

Honestly speaking, receipts are those important papers that should be kept safe but somehow get lost some day or other. If you are a small business owner and you also often misplace your business receipts, then you must read this article! Today we are going to tell you why proper management of receipts is necessary and how can you achieve this simple yet annoying task.

Business receipts are essential documents that help your small business in all financial matters. Starting from complex tax filing to keeping records of deductions, receipts come to your rescue. That's why all small businesses should start taking receipt management seriously.

Is keeping receipts really that important for a small business?

If you are still wondering why a small business owner keeps receipts, we must tell you why these receipts are really helpful at the time of tax filings. While claiming business expenses, you must have receipts to substantiate your expense claim. It becomes important to ensure that a proper system is there to manage business receipts. This would save your time in managing your small business, which otherwise you would be spending in finding receipts. If you want to learn some ways for effective receipt tracking, then here are some quick tips:

File receipts ASAP

As soon as you receive the receipts, move them into files. This is because there are high chances of misplacing the receipts if you get distracted by some work or the other. DON'T make it a habit to pile up the receipts to file later when you have time. First things first, file the receipts frequently before they stack up on your table.

It is also a great idea to keep noting the business purpose of each receipt. This would help you differentiate between business and personal expenses.

Classify receipts

In addition to noting the business purpose of every receipt, it's a good habit to make a classification of your receipts based on their expense type. For example, personal expenses can be further classified as rent, travel, entertainment, insurance, and so on. Similarly, business expenses can be classified as purchases, office rent, professional fees, etc.

Go digital

We all know managing the receipts physically is a difficult task with the possibility of misplacing them or ruining them. To avoid it, you can scan your receipts and feed them into your computer. You can also use your phones to scan the receipts and save them on a cloud. No more worries that receipts will get misplaced one day!

Use apps for receipt management

You can take help of various apps that will help to keep your business receipts digitally. Additionally, these apps can help you maintain expense reports based on receipts, making financial tracking somehow easier. If you ask us, Receipts Bank is one of the best among all apps.

At last, we would say don't just follow these tricks but obey them religiously. It is important to be consistent in your receipt management process as one miss or delay can make all your efforts futile. Trust us, effective receipt management can make your life easier!

 

Businesses owners often juggle multiple tasks and with so many things to do, auditing might feel like a burden. We understand your struggle is real, but then you need to know that auditing is a legal requirement that even small businesses must follow. 

What are audit requirements as per law? 

The Corporation Act 2001 requires that a business should get audited if: 

• Annual turnover exceeds $50 million 
• Assets worth exceeds $25 million 
• More than 100 employees are employed 

If your small business doesn’t fall into any of the above categories, even then it may be beneficial to get audited. Before we move to the benefits of audit, let us understand what an audit is all about. 

What does a business audit involve? 

The main idea behind business audits is to examine the financial records of a business to verify its accuracy. During the audit, an auditor analyses the financial statements as well as the ledgers and accounting records to ensure there is no gap in financials. There are two types of audits, namely internal and external audits.  

Internal audits are conducted by the business itself to ensure that there are no errors in the financial reporting. Internal audits are carried out by the employees of the business. These audits help businesses in meeting their goals. 

On the other hand, external audits are to be carried out by registered auditors, not being employees of the business. It is conducted keeping in mind the Australian Auditing Standards. Reports are issued by external auditors based on detailed analysis of evidence. 

Reasons for small businesses to conduct an audit 

• You can be sure that the financial statements that you lodge to the ATO represent a true and fair view. This means that your small business can avoid unnecessary penalties. 

• Regular audits ensure that your financial reporting is organized and accounts are clean. 
• Audits give you insight into your business finances which helps you to take important financial decisions. 
• Audit findings can help in bringing out any issues in business as well as internal controls and identifying financial frauds. 

Large businesses are required to get external audits done annually. However, for small businesses there is no such obligation; but it’s better to conduct regular audits to ensure smooth financial reporting. 

Top three situations when your business might require audits 

Sale of business 

If you are selling your small business, then the buyer would rely on audited financials only to understand the viability of buying the business. 

Obtaining grants 

If you are applying for obtaining government for your business, then you would require audit report to substantiate the amounts reflected in financial statements.  

Partnership and LLC agreements 

If you plan to enter into partnership or LLC agreements, then you must get your business audited. Investors would rely on the accuracy of financials only based on the audit report. 

Now that you know how important it is to get regular audits conducted, you should make sure you get your small business audited. After all, audits can help you to understand where your business is headed and how finances are being managed. 

 

BAS or Business Activity Statement needs to be lodged by every business that is registered for GST. In case you are delayed or overdue on your BAS lodgement, then hiding in the bush will not solve the matter. There are ATO payment plans that can help you in dealing with these debts. The ATO offers these plans to ensure the success of the small business – so get in touch with them early on to organise or negotiate a payment plan. At Auditax Accountants, we can do this on your behalf. Let us move ahead and see how you can manage your ATO payment plan for delayed or overdue BAS lodgement. 

Tips and tricks for managing the debt relating to delayed BAS lodgement 

 

Below tips and tricks that can help you out in managing the ATO payment plan debt for BAS delayed lodging with ATO: 

1. Ensure that you pay your first instalment of the payment plan on time. How you set yourself up for the first payment will impact the whole process! 
2. You can opt for an auto-debit facility from your bank account on a recurring basis so that you do not miss any future payments. 
3. It is always better to pay a little bit ahead of time. For this, you can schedule your auto-debit through net banking a few days before the due date. Because sometimes funds take time for clearance due to bank holidays or system issues. If you do this, you will always be able to pay on time and payment will not be delayed. 
4. This time you have got the leverage from ATO and your BAS lodgement is covered under the ATO payment plan, but for the next BAS lodgement, you will have to pay in full at the due date. If in case you want your next BAS lodgement to be included in your existing ATO payment plan, you will have to lodge it few days before the due date and contact ATO for adding the BAS lodgement to the payment plan immediately. 
5. Do not default on the ATO payment plan unless absolutely impossible because if you default on payment more than three times, then ATO will start the process of asking for information on the financial soundness of your business i.e., whether you would be able to pay in the future or not. Also, it will impact your business' credit rating and in rare situations, ATO can even 'garnishee' i.e., access funds from your account without asking for permission' your account. 

We would recommend that you deal with the delayed BAS lodgement issue as soon as it is possible. These plans are specifically created by the ATO to help the small businesses, so do not think you are alone, it happens now and then with every small business. The main thing is how you come out shining from the situation which you can definitely do if you follow the above tips and tricks. 

If you have hired additional eligible employees, would not you want to claim the jobmaker hiring credit? Well, there are several requirements that you as a business owner will have to fulfil to claim this credit. The very first job maker hiring credit claim period was announced for the additional eligible employees hired between 7 Oct 2020 to 6 January 2021.

Requirements to fulfil for claiming jobmaker hiring credit? 

1. You need to register your business through ATO online service or online service for business. Alternatively, you can register your business with the help of your registered tax agent or BAS agent by 30th April. 
2. You will have to nominate all the eligible employees by running the payroll event with the help of STP (single touch payroll) enabled software before 27th April. 
3. After taking the above two steps, you can claim your payments through ATO online services, or online services for business, and you can also go for help from a registered tax or BAS agent by 30 April. 
4. You can go for registration any time before the scheme ends, and you will have to do it only once. Just keep in mind that you do it before the claim period ends for the first jobmaker hiring credit. 

Key points regarding the registration 

Employers who want to claim the jobmaker hiring credit will need to register by the due date of the first jobmaker credit they are going to claim for. After the registration, employer can claim the jobmaker credit for each period; payments are made in arrears. For completing the registration, you will need to provide the following details: 

1. Baseline headcount of the employees 
2. Baseline payroll amount 
3. Contact details 

When can you not register for the jobmaker hiring credit? 

There are several scenarios where you can't register for jobmaker hiring credit, such as: 

1. If you do not have an Australian business number (ABN) for your business. 
2. A big amount bank levy was imposed on you or a member of your consolidated group for any quarter before 30 Sep 2020. 
3. You are an Australian government agency within the meaning of Income Tax Assessment Act, 1997. 
4. You are a local governing body or are wholly owned by a government agency or local governing body. 
5. You are a sovereign entity or are a company in liquidation or provisional liquidation.  
6. You are an individual who entered bankruptcy. 

Key dates for jobmaker hiring credit 

The Jobmaker hiring credit claim scheme started from 7 October 2020 and employers could claim their first claim payment relating to employees hired up to 6 October 2020. Employees that are hired after this date will not be eligible. 

Registration started on 6 December 2020; employers only needed to register once for this scheme, and the first claim period opened from 1 February 2021, and it closed on 30 April 2021. 

The end date of the job maker hiring credit scheme is 6 October 2022. 

As the Fringe Benefits Tax (FBT) year has concluded on 31st March, 2021, it is high time that you review what all fringe benefits you have provided to your employees during the year and calculate the FBT liability thereon. With the compliance clock ticking, you might need to hurry up as the return has to be lodged by 21st May, 2021. Your due date will although be different if you choose to lodge the FBT return through a tax agent. 

What all is included in fringe benefits? 

Here are some of the examples of fringe benefits that employers usually provide to their employees: 

• Entertainment benefits 

• Personal use of work car 
• Reimbursement of personal expenses 
• Payments against salary sacrifice arrangements 

However, these are some benefits that are excluded from the ambit of FBT. These include: 

• Emergency medical care 

• Equipment given as aid in work from home such as laptop 
• Emergency accommodation, food and transport facility 
• Minor benefits provided up to $300 

Frequency of FBT payments 

You are required to pay FBT due by 21st May, 2021 for the year ended 31st March, 2021. Regarding the interval of FBP payments, consider the following scenarios: 

• If you are paying FBT for the first time or your FBT payment was less than $3,000 last year: You have to pay single payment for the year. 
• If your FBT payment was $3,000 or more last year: In this scenario, you need to pay FBT in quarterly installments through activity statements. If there is any balancing payment to be made, the due for the same is 21st May. 

You might need to note that if in a year you have paid FBT installments and you don't have any FBT liability for that year, then also you need to lodge the FBT return. By doing so, you will be able to claim refund of FBT paid during the year. 

When not to lodge FBT return?  

If during the year you don't have any FBT liability and also you have not paid any FBT installment, then you need not lodge FBT return for that year. Instead, you need to fill in FBT-notice of non-lodgement as per the due date of your FBT return lodgement. 

Ways to lodge FBT return 

You have the following options to lodge your FBT return: 

• Online through Standard Business Reporting (SBR) enabled software 
• By sending physically through post to the ATO 
• Through a registered tax agent 

You can download the FBT forms for year 2021 and get started with the return lodgement process.