With Financial Year End Coming up, Do You Have Any Tax or Tax Return Questions I Can Answer for You?

AssociatedLnicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 10:35
Last edited 31/05/2017 - 09:17 by 1 other user

Edit final time:

Started a new thread for this to keep up with everyone's new questions. This is the link…

https://www.ozbargain.com.au/node/309978

Edit again:

Thanks for all the questions once again everyone. We have now reached over 600 comments.

I will do another Q & A in about a month when it is closer to tax time.

Hope you have all got a bit of extra general tax knowledge. ]]

If your inquiry is urgent then you can PM me.

Goodbye for now and see you in about a month!

Hi All,

I just thought with financial year end coming up in just over a month's time, many people have tax and specifically tax return related questions.

I am a tax professional and I am constantly getting asked similar questions coming up to tax time by family, friends and new clients. So I thought that I could be of some use and answer any tax questions you may have.

Disclaimer: Any advice or answers given will be general in nature and you may need to speak to a tax adviser for more personalised advice.

Ok, start posting your questions :)

Edit: Thanks for all the questions. I am trying to get to everyone as soon as I can. If I miss your question please send me a PM or ask again so that I can see it. There are so many questions I am sure i've missed a few.

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    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 12:13
      +5

      As an accountant with a business of course I would like to think that having an accountant is better than doing it yourself.

      Also, experience tells me that you are less likely to get audited if your tax return goes through an accountant as they are bound by ethical standards etc.

      Accountants know what areas you are able to claim deductions and what amounts are "reasonable" ;)

      • CheapskateQueen on 22/05/2017 - 15:10
        -6

        Using an accountant has no bearing on whether someone is audited or not. It's the tax return itself.

        To be clear, there is no test of "reasonableness", just what you perceive to go under the raider.

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 15:23
          +7

          With experience an accountant will know what amounts are reasonable, i.e what amounts a person with that salary and that occupation will be reasonable expected to incur in their course of employment.

          Having an accountant in my opinion definitely makes a difference on whether or not you are audited. It could also have a negative difference because sometimes the ATO knows that a particular accountant is claiming too many deductions and they target their clients for an audit.

          I used to work for the ATO so I have some inside knowledge of how they decide to flag particular returns/ class of clients etc.

        • [Deactivated] on 23/05/2017 - 10:21

          @CheapskateQueen

          You should google some recent ATO tax fraud cases (not the recent payroll scam). There's a pattern of the ATO going after dodgy accountants and all their clients. So, choosing a conservative accountant is less likely to result in an audit.

        • Mad Max on 23/05/2017 - 10:58

          @sp00ker:
          Yes but it is also less likely to increase the value of your deductions in a way to make it worth paying the accountant's fee versus doing the tax return yourself for free. Especially if your tax affairs are relatively simple.

        • Mad Max on 23/05/2017 - 11:00
          +1

          @nicolemcmilllon:

          I used to work for the ATO so I have some inside knowledge of how they decide to flag particular returns/ class of clients etc.

          Any chance you could share some of your inside knowledge ;-).

        • Thazza on 23/05/2017 - 20:09

          @maxi: As a tax accountant, I would say that the ATO does have systems in place where they benchmark your income and deductions across similar professions in your industry.

          Now you're probably wondering/asking how they know? Well when you state what type of employment you are in, that allows the ATO to benchmark your tax return the industry averages.

          If there's any anomalies, then it's red flagged and the ATO picks up on it.

          Also, they're quite advanced nowadays where they share data across the country and even world in respect of your affairs.

          I know of a case where an individual ITR got picked up by the ATO because they didn't disclose $500 of income from a US bank account.

        • konazz on 24/05/2017 - 01:16

          I'm all for advising clients to go and use e-tax/mytax/whatever its called now, some returns i only charge $50 if its a uni student where it literally takes me 60 seconds to do their return and they're under the thresholds. I feel sorry for them.

          But, based on your potential deductions, go see an accountant (especially once you said MV usage!). You're forgetting home office usage, mobile phone, and a few other bits and pieces already :)

          I too am from ex-ato. Funnily enough, whenever we saw a self prepared return, we'd let it go… no penalties or interest and just a pain in the ass in general if it was reasonable.

          Once you start earning bigger $$$ then it changes; and having the right accountant will mean whether you stay under the radar. The ATO has recently (finally!) started to add more weight to compliance of tax agents as a whole, before it was piece-meal.

  • chobani4lyf on 22/05/2017 - 12:10

    What are some of the other "secret" deductions people can generally get away with?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 12:15

      There are no secret deductions. Generally speaking, most employees will not have many deductions as most expenses incurred will either be paid by your employer or reimbursed to you by your employer (either way not deductible to you).

      Depending on the industry you are in, there may be some expenses that you can "get away with" as you put it. For example, it would be reasonable to think a construction project manager drives from project to project and thus will be expected to have travel deductions.

      • chobani4lyf on 22/05/2017 - 12:21

        What are some common things my friend who is an Auditor that is not me can "get away with"?
        Currently have education expenses and dry cleaning < $300

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 12:24
          +1

          Deductions under $300 in total do not need to be substantiated.

          An Auditor may be required to travel to various clients premises to conduct audits. This may result in various travel expenses.

          They may also be required to purchase a laptop bag/suitcase to carry their belongings in.

          Having an accountant claim these deductions in your tax return is probably better than you doing it yourself…. I mean your friend ;)

        • chobani4lyf on 22/05/2017 - 12:33
          +1

          @nicolemcmilllon: Think I will let my friend know!

  • dasher86 on 22/05/2017 - 12:37

    you can claim a maximum of 5,000 business kilometres per vehicle
    you do not need written evidence to show how many kilometres you have travelled, but we may ask you to show how you worked out your business kilometres

    what is sufficient evidence to show how you worked out your business kilometres ;)

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 12:41

      Please note business kms does not include travel from home to work or work to home. It can only be travel from your work to another place of work or to a client's premises.

      Sufficient written evidence would be for example, traveling 15km each way from Sydney to Manly every Tuesday to assist a client with data entry. i.e 15km x 2 x 52 weeks = 1,520 business kms

      • dasher86 on 22/05/2017 - 12:46

        excellent i 'travel' from different places of work on a 'regular' basis.

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 12:48
          +1

          Another way they substantiate the claim is by contacting your employer and finding out if you are required to travel for work purposes. This is because if your travel is so "regular" then most employers would be paying you a travel allowance.

          Depending on your occupation, for example if you work at Kmart - it might be obvious you do not need to travel to different sites for work.

        • dasher86 on 22/05/2017 - 13:26
          +1

          @nicolemcmilllon:
          i'm an accountant.

        • ihgjuk on 23/05/2017 - 15:07

          @nicolemcmilllon:

          If your employer pays you a travel allowance, does that preclude you from also claiming a deduction for the travel?

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 23/05/2017 - 15:11

          @ihgjuk:

          Quite the opposite. If your employer pays you a travel allowance then it means you clearly need to travel for work.

          You include the allowance as income in your tax return and claim your actual travel expenses as deductions.

      • moonphase on 23/05/2017 - 12:25
        +2

        I know some people start their work by going straight to the place - client site - rather than visit the office.

        In this case, do you still need to calculate from your work to the place or your home to the place?

  • JetLi on 22/05/2017 - 12:47

    Do you enjoy your job?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 12:50
      +4

      I own my own business with my partner. If i didn't enjoy it, I would find something else to do.

      • JetLi on 22/05/2017 - 13:04

        so you're a tax agent? HR Block/ITP style…

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 13:06
          +3

          Individual tax returns only make up about 10% of our overall tax returns lodged. So we are most definitely not like HR Block.

  • kusakababe on 22/05/2017 - 13:23
    +4

    Fantastic Thread OP! Thanks so much, confirmed a lot of what I have only heard from non-accountant acquaintances and learned so much more. Can I please ask two things:

    1. We have built our first home 2 years ago and later this year we plan to rent this first home and move to our second home which we also built and plan to be our long-term family home. What would you recommend we prepare now in order to maximize tax benefits and minimize tax payments if we eventually decide to sell the first home?

    2. My husband and I have a two year old son and I am not aware of any tax breaks we have received from gaining a dependent. This is me being quite ignorant - I dont really know if I should expect any tax breaks from this but I do remember a long time ago when I was childless, people telling me you get all sorts of government benefits for raising children costs.

    Thanks in advance! If you could also let me know how we can avail your services that would be great!

  • Godric on 22/05/2017 - 13:25

    Can i lodge my tax return without any of it going towards my HECS?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 13:31

      Only if your adjusted taxable income is below the threshold, which for 2017 is $54,869.

      • Godric on 22/05/2017 - 15:20

        Mine was last year and it still went all to my HECS debt, lodged my tax return through mygov : (

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 15:26

          Was your adjusted taxable income higher than the threshold perhaps (it adds back negative gearing, reportable fringe benefits, reportable super contributions etc).

          If you think you will be under the threshold this year, probably worth coming to me to prepare your return to make sure you dont pay any HELP this year.

  • badonde on 22/05/2017 - 13:41

    Say you owned your own company and had a decent profit for this FY (about 100k) , assuming you only earned 5k from other sources and have paid yourself 35k from the company - what would be the most tax efficient way of allocating that profit?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 13:45
      +2

      Many things to consider, if you have a family, what is your partner's income.

      Simplified, you're probably best paying yourself a wage of the entire $100,000. The tax on that would be approximately $27,000 which is lower than the company tax rate of 28.5%.

      It also allows you access to the money without having to take it out as a loan from the company.

      If you do not need the money, you can loan it to your company and take it out when needed.

      • badonde on 22/05/2017 - 16:39

        Thanks Nicole, this is really helpful.

        No family, partner (joint director) earned 0 other revenue (has been paid $38k from company).
        So dividing all company profits 50/50 would perhaps be a good option.

        I just figured that for each $ above 38k, personal tax is 32.5% whereas company is 28.5
        So seems better to somehow leave money in the company and find a way to invest it from there especially if the money is not needed personally - does that make sense?

        Could you briefly mention any other clever ways for a company to invest profit eg pump more into super, look into property etc?

        Thanks again Nicole, really appreciate it!

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 21:33
          +1

          Whilst after a certain amount you are paying 32.5% when you factor in the lower tax rates for the amounts up to 37000 the tax rate is actually Lower. That's how u end up only paying 26000 for 100k worth of income.

          It is better to have the money outside of the company because keeping it in the company means that eventually you will take it out and have to pay tax on it. Better off doing it now incase the business grows and you have higher incomes in the future.

          Also a company doesn't have access to 50% capital gains discount which is another reason to purchase property in your personal names.

    • Thazza on 23/05/2017 - 20:16

      Note, that paying a wage from the Company can attract other types of administrative costs.

      I.E. Workers Comp insurance, payroll tax (if you're over the threshold). You will probably have to determine if it will be worth it for you if you decided to do that. Btw, Payment of a wage to you as a director of the Company is A-Okay (irrespective of the amount). However, it will also need to be disclosed in your workers comp insurance.

      Also a few other things to consider:

      • ATO can review the return and query what type of role your family has in the business. I.E. If you're paying a wife $70K a year for administrative help (invoices, filing, etc) then the ATO can deem it to be profit splitting.
      • What type of business is being run through the Company. I.E. If it is PSI or not.

      Another way of paying profits from the Company is just to pay out a dividend to the shareholders, where you will get franking credits attached to it.

      • konazz on 24/05/2017 - 01:23

        This ^

        Paying a wage is subject to workers comp and superannuation. So you will need to pay an additional 9.5% in super + workers comp (i have a roof restoration client on… 24.83% WC…OMG!). Don't do it.

        There's a few options
        - pay a dividend. If you have an franking credits, might as well attach them.
        - make sure your taxable income for each stays under $87k, before you go into 37%+2% marginal tax rate.

        And this is why all my clients are put into trusts (tradies, brickies etc.). So much easier to deal with at the end of the year :) As they all spend the money anyway!

  • ChickenTalon on 22/05/2017 - 14:23

    Say you…
    Owned your own company (but were an employee) earning 110k (with about 30k worth of deductibles for car, home office etc. So 80k taxable income). Currently living in a rental property.
    Mrs earning $130k salary from a large corporate. About to go on mat leave for 12 months starting 1 August. Mrs can take 6 months half pay, then all unpaid.
    Rental income from previous primary residence ~34k. Interest on loan & strata/water for that property 20k

    What's the best way to structure my earnings given my Mrs will not be earning much next year?
    Do I stop paying my salary immediately and then put that extra pay into next FY. Then set up income splitting with the mrs?

  • rave75 on 22/05/2017 - 14:24

    I bought my first and only property which settled at the end of June 2014. I got my first tenant at the end of Sept 2014 and has been rented until now. My question is, is there any way to avoid CGT when I sell the property? I heard you need to live in the property for the first 6 months after you purchase it to avoid CGT which I didn't do.

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 14:31

      Are you planning to move into it?

      Did you live in it from June until September 2014?

      • rave75 on 22/05/2017 - 14:50

        Yes, I did, but somewhere in mid Sept, I tried to rent it and only moved after I found a tenant. Still even though I lived there, I didn't change all my billing address because I knew I will only be there temporarily.

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 15:05

          Unfortunately, be you only moved in it for less than a month (moved in September, rented it out end of September) I would say you cannot claim the full main residence exemption.

          Has it been rented since 2014 till now? If so, any gain will be completely taxable (with a 50% discount for holding it for more than a year).

        • rave75 on 23/05/2017 - 11:51

          @nicolemcmilllon:

          Sorry I meant i moved in after I settled on 30/6/14, lived there until sept with very minimal furniture. So i stayed there almost 3 months

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 23/05/2017 - 12:18

          @rave75:

          Because you didnt change your billing address it will be argued that you had not moved in properly. Also the length of time only being 3 months won't work in your favour.

          You could try to apply for a private ruling with the ATO and see what they say.

        • rave75 on 23/05/2017 - 12:30

          @nicolemcmilllon:

          Water bill is under my name. Is that sufficient though? Is there any minimum stay to be deemed main residence?

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 23/05/2017 - 12:37

          @rave75:

          Rule of thumb is 6 months but as long as you lived in it you can try to argue that you had no intention of moving out and at that time it was your primary place of residence.

          The fact you didnt change your driver's license address would be a big indicator.

          Also, no one will ever check so just go with it. Disclaimer that is a personal opinion.

        • cheapm8 on 23/05/2017 - 12:48

          @rave75:

          https://www.ato.gov.au/General/Capital-gains-tax/In-detail/R…

          "there is no minimum time a person has to live in a home before it is considered to be their main residence" but it depends on other factors too.

        • Thazza on 23/05/2017 - 20:21

          @cheapm8: The general rule of thumb is 6 months.

          Mainly because the NSW OSR does stipulate that the PPR exemption for land tax purposes is 6 months.

          "The owner must use and occupy the land to qualify for the exemption. The land will not be considered to be the principal place of residence unless the owner has continuously used and occupied the land for residential purposes since 1 July in the year preceding the relevant taxing date (31 December). "

          http://www.osr.nsw.gov.au/info/legislation/rulings/land/lt08…

        • Donaldhump on 23/05/2017 - 21:42

          @rave75:

          algorithm
          1.) move in 6-12 months
          2.) move out 6 years
          goto 1.

  • spearmint on 22/05/2017 - 14:25

    Thanks OP, for a very useful post.
    I have two investment properties registered under my name. However, the loan is jointly under myself and my wife's name. I am employed full-time and my wife part-time. Can we both claim 50% of the total interest and other expenses as deductible expenses? Or is it only me that can make a claim? How does it work? What is most tax saving way to own investment properties in a family?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 14:37
      +2

      You should be accounting for the rental income/expenses in your personal. That includes 100% of the interest regardless of who's name the loan is in.

      What you could do is pay interest to your wife in which she includes that in her income and then she claims the interest deduction leading to a nil effect in her tax return. That would allow you to claim 100% of the interest deduction as you would be paying 50% to the bank and 50% to her. However there is no need, just to simplify it is better just to claim 100% of the interest in your return.

      Once the properties are completely paid off, you could open up a family trust and then make distributions to your wife for the net rental income as she has lower taxable income.

      Please note if you do decide to put the property in the trust, you would lose ownership legally as the trust would own it.

      • spearmint on 22/05/2017 - 14:40

        Thanks

        • Thazza on 23/05/2017 - 20:29

          To be honest, unless you were comfortable with paying the transaction costs in moving the property into the name of the trust I would recommend against doing so.

          OP forgot to mention that you will need to pay stamp duty in the property(ies) that you transfer across into the trust (calculated on the Market value of the property).

          Additionally, this is seen as a Capital Gains Event in the eyes of the ATO. So you will need to pay tax on the Capital Gains if you do move it.

          I.E. Market Value of the property less cost base x 50% (assuming you held it longer than 12 years and are eligible for the 50% cgt discount).

          Most people I'm aware of wouldn't be comfortable in paying these costs for the pure comfort of streaming rental income to family members.

          There would be better ways in structuring your finances to be most tax effective.

      • Shuey on 22/05/2017 - 16:16

        If the property is in 2 names; mine and hers.. but she is on a higher tax bracket, can she claim 100% of the interest and I claim none?

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 16:24

          No she can't as the property is in your name and the rental income has to be in your tax return.

        • Shuey on 22/05/2017 - 16:41

          @nicolemcmilllon: Okay, so since the property is in both our names.. I guess it's an equal 50:50 distribution then?

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 20:58

          @Shuey:
          Correct

      • wlz2000 on 22/05/2017 - 20:52

        Hi Nicole, my wife and I own a rental property in 50/50 ownership. My wife does not work at the moment. You mentioned I can pay interest to my wife therefore I can claim 100% of interest and expense. How to implement it in practice? say, do I need any proof? Or I can claim it without explanation?

        Thanks very much.

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 20:59
          +1

          You can't do it because the property is in both your names.

          It would only work if the property was in your name and the loan was in both your names.

        • wlz2000 on 22/05/2017 - 21:06

          @nicolemcmilllon: Thanks heaps for the prompt reply. Can I ask a follow-up question?

          I want to invest small amount of money (a few grands at most per year mainly shares) for each of my two kids. I wonder what is the most cost and tax effective way to set things up?

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 21:23

          @wlz2000:

          What is your taxable income most years? Also do you have a partner. What is their approximate taxable income?

        • wlz2000 on 22/05/2017 - 21:34

          @nicolemcmilllon: Thanks Nicole. PM with my details.

        • twilsoncrow on 22/05/2017 - 23:00

          @nicolemcmilllon:Hi fantastic help that you are offering. I am interested in the scenario where the property is in one name and the loan is in both names. How does it work if I pay my partner interest and then I can claim 100% of interest and expense.

          We currently split the rent and expenses 50/50 Thanks in advance

  • angelkulit025 on 22/05/2017 - 14:54

    Hi Op, thanks for your giving your insightful advices here on OZB, my question during tax time are deductions.
    I really have a hard time to find any work-related expenses and deductions which is connected with my field of work - (Administration/Education Support - Government School in VIC). Can you give me some examples please. thanks!

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 15:16

      If you had incurred deductions then it would be easy for you to know what expenses you had to pay in the course of your employment.

      The good news is that you do not have any deductions. Which means you did not spend any money out of your own pocket :)

      • angelkulit025 on 22/05/2017 - 15:38

        well that will mean i will have to pay ATO some money. That happened one time i didn't put any deductions in. =(

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 15:40

          Have a look at your last payslip and PM me your year to date income and year to date tax withheld and I do a quick calculation to see if you will have to pay money this year.

          Also let me know what kind of work you do.

  • whooah1979 on 22/05/2017 - 14:56

    What is the best way to reduce one's tax liabilities where two partners with their own abn run one business?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 15:18

      Your question is a little ambiguous. Do you each have your own ABN as soletraders and you are running the same type of business? You can't be running the same business by definition as you each have your own ABN.

      • whooah1979 on 22/05/2017 - 16:07

        Same type of business where each partner is issuing invoices one half of the clients.

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 21:29

          To start with you may consider operating as a company where deductions will be less scrutinised and you can decide how to split the salaries/profits at the end of the year.

          A trust can also be used if you do not prefer to use a company.

          Not sure if you're both registered for gst but combining the income may result in you having to register for gst.

        • whooah1979 on 22/05/2017 - 22:02

          @nicolemcmilllon:

          thanks for the advise. much appreciated.

  • Thundaja on 22/05/2017 - 15:03

    Hi Nicole,

    I have never used an accountant before as my returns have been pretty straight forward, however this year I have had many changes which make me think I should look at using one.

    Do you have any advice on what to look for in a good accountant? Any recommendations? Red flags to avoid?

    Thanks!

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 15:19
      +1

      Well I would recommend my partner and I, which are the best accountants (in my biased opinion).

      What changes have you had that have you thinking you need an accountant? Sometimes having an accountant is purely for peace of mind as you know that someone who knows what they're doing is taking care of your affairs as to avoid any unnecessary headaches.

    • JetLi on 22/05/2017 - 16:21
      +1

      CPA or CA qualification as a minimum.

  • Ozbargainite on 22/05/2017 - 15:21

    I have an apartment that I rent out. Recently I replaced the air conditioner, can I claim depreciation on the new unit?

  • Gaz1 on 22/05/2017 - 15:23
    +3

    A very generous & useful post - thanks!

  • K G B on 22/05/2017 - 15:25

    Hi Nicole,
    If I have a trust set up to collect my company profits, is there any benefit since I have a home loan? Wouldn't I be better off getting all profit and placing it into home loan rather than retain money under trust?

    Unless I transfer the house to trust, would it then make more sense?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 15:29

      The trust receives profits from your company. Where are you distributing the profits to from the trust? I assume the trust is not paying tax on that income because that would be paying the most tax.

      Why are you keeping the money in the Trust?

      • K G B on 22/05/2017 - 16:05

        I'm just going through trust set-up and trying to figure out best legal way to save money on tax.
        If I disburse trust money as it comes in to different recipients with lesser income than I then less tax is paid. yes?

        Would it be of any benefit keeping money in trust in terms of tax reduction?

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 16:07

          The worst thing would be to keep the money in the trust as the trust pays tax at the highest possible rate.

          To minimise tax, consider who the trust can distribute some of the money to.

          i.e your wife, any kids over 18 etc.

          There are a variety of factors to consider here and I would need a lot more information to make an informed decision of the best possible tax minimisation strategy.

  • yycan on 22/05/2017 - 15:25

    Question on income for Medicare levy surcharge purposes: what does total net investment losses mean? What if my income is hovering at the $90k level and I have made a investment loss (due to interest paid) on my managed fund?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 15:30

      Net investment losses means it will add back any losses you have.

      For example if you have $1,000 trust income from your managed fund and $2,000 interest deduction, then your taxable income is effectively reduced by $1,000 which is the net loss.

      When calculating your adjusted taxable income, it will add back that loss to effectively calculate your income as if that investment was at Nil for that financial year.

      • yycan on 22/05/2017 - 15:35
        +1

        Ah thanks that explained it. I tried to find the info on the internet to no avail.

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 15:36

          No problem. Feel free to contact me during tax time if you need assistance with prep or lodgment of your return :)

  • Them3lguy on 22/05/2017 - 15:25

    Hi Op,

    Thanks for sharing your knowledge.

    Got couple of questions,seeking your expert (General Advice) :) .

    1. There are no questions asked for deductions upto $300 by ATO, what would be the best heads under which we can claim 'em (for and employee working in office with no travel duties at all) , I have so far got laundry, alarm clock, newspapers are there any hidden gems /common deductions I am missing out on?

    2. Which super account do you suggest to low income families where house hold income is around $75k with no kids. Present have got about 7k each in super with industry. Thinking of putting in something g extra$ 1000 each in super for both of us but admin fee and other various fees kills it.

    Thanks heaps.

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 15:34
      +3

      1. For deductions under $300 they do not ask any questions. Therefore it doesn't matter what you categorise them as. Personally I wouldnt even bother breaking them down. Just put $150 in Laundry which is D3 and another $150 in 'other work expenses' which is D5.

      2. To be honest all the industry funds are similar, and doing some research to find a better Fund may result in minimal if any actual monetary gains to your balance. If you want to reduce some of your fees, have a look at what insurance policy they have (income protection, life, TPD) and think about reducing or cancelling it).

      • Them3lguy on 22/05/2017 - 15:48
        +1

        Thanks Heaps Nicole

      • eapster on 22/05/2017 - 19:37

        I dont understand why everyone recommends claiming laundry on their tax returns? My understanding is that you can only claim laundry if you have an occupation specific clothing eg nurses or protective gear or uniforms?

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 19:43
          +1

          That is true. But most people are claiming less than or about $150 and believe it or not, the ATO could not care less about someone claiming such a small amount considering $300 worth of deductions do not need to be substantiated.

  • cuteduck on 22/05/2017 - 15:33

    What is the best accounting software to use for small business i.e sole trader? Xero, myob or quickbooks

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 15:35

      Depending on the number of transactions you have.

      What kind of business is it and how many transactions will you have each week?

      Do you have debtors and creditors, or will it be on a cash basis?

      • cuteduck on 22/05/2017 - 18:55

        medical professional..the number patients seen each week up to 40.
        I have to bill the patient for surgery.

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 19:04

          Have a look at Xero, it is easiest to use for non accountants.

          Also consider having an accountant or bookkeeper do all this for you. An accountant may charge a bit more, but it will save you the headache and hassle of doing it yourself.

  • fukunaga on 22/05/2017 - 15:48

    Hi, I've just started out with a new business (as a sole trader) and have had expenses setting up the business. I do not have any income yet as it has not been fully launched. Will I still be able to claim these expenses without any income to offset it yet?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 22/05/2017 - 15:51

      What type of expenses have you incurred? Is it research and formation expenses or everyday expenses like telephone/internet etc.

      If it is everyday expenses, then you can claim them now but they wont offset your other income until you start earning income as a sole trader.

      If they are formation expenses, then you will be able to claim them over a 5 year period. i.e 20% each year.

      • fukunaga on 22/05/2017 - 15:54

        Thank you for the reply. The expenses are for web hosting, purchasing stock and renting a PO Box - so I suppose formation expenses.

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