1. Any necessary work related expenses should be done before 30th June 2017. 2. The ATO is having great success with audits on clients with high expenses claims. No matter how obvious the need is for the expense, the ATO will not accept a deduction without proof of the expense. 3. Uniforms – professional business clothing or suits are not permitted unless carrying employer’s logo. 4. Receipts must be kept for protective clothing and work boots. 5. Individuals using their motor vehicles for work purposes must keep a record including a log book for 13 weeks. Receipts and records for motor vehicle expenses must be kept. 6. If individuals are only using their motor vehicle for occasionally work related trips than a diary record of the kms travelled is permitted. This method can be used for a maximum claim of 5,000 kms at 0.66 cents a kilometre. 7. Self-education expenses must be related to your current occupation. They cannot relate to a career change. If there is confusion on this, please contact us for clarification. 8. Deductions are allowed for Income Protection, not Life Insurance. Premiums for income protection as a result of sickness or accident are a deduction. However, if paid by your employer or your superannuation fund these are not accepted. 9. Individuals who have high expense work related deductions must keep a record of receipts. This is highly advisable to also get a letter from your employer that these expenses are necessary. The ATO is auditing a high percentage of individuals claiming large deductions and they are unforgiving on individuals without the proper record of receipts no matter if the tax payer can show they had to incur the expense.
The Australian Taxation Office (ATO) requires that all receipts be kept for proof of purchase when claiming any of the above.
SMALL BUSINESSES, COMPANIES & PARTNERSHIPS:
The preceding issues also apply to companies and small business. If a business is claiming motor vehicle expenses for motor vehicles as opposed to trucks and 2 ton Ute, a log book must be kept and an adjustment must be made for private usage.
1. The ATO is still allowing the deductions for plant and equipment cost up to $20,000 per item to be 100% expenses in the year of purchase. The total cost must be less than $20,000 after GST. You cannot write off $20,000 for something that costs $28,000. 2. Self-employed workers can claim a deduction of $25,000 for superannuation contributions. These must be paid prior to 30/06/2017 to claim in the 2016/17 tax year. 3. Small businesses and companies reporting on a cash basis - Income receipts can be delayed until July, this will reduce income. Similarly if expenses such as insurance, rent or leasing can be paid in advance this will also reduce income. 4. We never recommend that you spend money to save tax. You should only spend on necessary expenses. Remember when buying motor vehicles, only $57,581 (2016/17) is allowable for deprecation. Any amounts over this cannot be claimed.
INVESTMENTS / RENTAL PROPERTIES:
1. As from 1st July 2017 all travel deductions relating to inspecting, maintaining, or collecting rent for a rental property will be disallowed. 2. Depreciation on plant and equipment will not be able to be claimed after 9th May 2017 (budget night) unless it can be shown to have been purchases by the current investors. In the past we have estimated various amounts for plant and equipment on the purchased of a second hand property. This deduction will not be allowed unless there is a listing of plant and equipment purchased on the contract or it has been purchased by the investor afterwards. 3. Investment properties should not be purchased with the main reason to reduce tax. There is a reasonable chance that in the future tax benefits on negative geared properties will be reduced.
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