Adams Accounting Blog

  • Accessing your superannuation early

    Generally, you cannot access your superannuation before you reach a certain age and have met a condition of release (usually retirement). However, there are limited circumstances where the superannuation law allows you to access your superannuation early. These include: - Severe financial hardship - Compassionate grounds - Terminal medical condition - Permanent incapacity - Temporary incapacity SEVERE FINANCIAL HARDSHIP You may be able to withdraw some of your super is you have received eligible government income support payments continuously for 26 weeks and are unable to meet reasonable and immediate living expenses. The minimum amount that can be paid is $1,000 and the maximum is $10,000. You can only make 1 withdrawal from your superannuation due to financial hardship in any 12-month period and tax is deducted from this payment, and the payment is included as income in your tax return. Contact your superannuation fund to request access to your super due to severe ...
  • Do you rent out your holiday house?

    The ATO has always focussed on taxpayers who claim deductions for holiday homes that are not actually available for rent or only available to friends and family. But this year, the ATO have these types of rental properties in their sights. You can only claim deductions for your holiday home if your property is genuinely available for rent. You cannot claim for times when you were using it for your own personal holidays or letting friends and family stay rent-free. Holiday home owners also need to remember that if their property is rented to friends and family at mates rates, they can only claim deductions for expenses up to the amount of the income received. New technology, data matching and other systems allow the ATO to identify unusual claims. Where something raises a red flag, it will be investigated. Property owners whose claims are disproportionate to the income received can expect scrutiny from the ATO. Be sure to keep accurate records of the income you receive fr...
  • Claiming home office costs

    CLAIMING HOME OFFICE EXPENSES If you perform work duties from home you may be entitled to a tax deduction. Home based businesses and salaried employee alike are both eligible so long as there is a clear connection to income produced, fulfilment of the employee’s role and a dedicated work area. Occasional work from home does not guarantee deductibility of occupancy costs. What can I claim? - Occupancy costs (rent, mortgage interest, rates, water, land tax, insurance) - Home office equipment such as chair, desk, printer, computer, telephone which may be eligible for immediate deduction or deducted over several years depending on your circumstance and the cost - Telephone phone calls, texts & data - Internet - Electricity & gas - Cost of repairs to office space and equipment - Cleaning - Stationary How much can I claim? Given your working from home there is always going to be private use so claiming 100% is very risky. Method 1: Actual running costs The foll...
  • Business vs. hobby

    We get asked from time to time if your side business is seen as a hobby or a business by the ATO. Here is some information about how the ATO views it. In the ATO's view, it will often be the case that an activity is a hobby where: • the taxpayer does not intend to make a profit and there is no system to allow a profit to be produced • losses are incurred because the activity is motivated by personal pleasure • transactions are isolated and there is no repetition or regularity of sales • the activity is not carried on in the same manner as business activity • the activity is on a small scale (although hobbies can be expensive!) • the taxpayer’s intention is to carry on hobby, recreation or sport • any products are sold to friends and family and not to the public at large. Warning: A hobby can develop into a business. A taxpayer whose hobby is growing should consider if they should treat it as a business. Timing — when does a business start? Identify...
  • Are your passwords safe from attack?

    With cyber crime on the rise, we thought it would be a good time to explain how important it is to have secure passwords in place! A strong password will have the aim of defeating ‘brute-force’ attacks. This is where hackers use sheer computing power to try thousands of possible passwords, until they stumble on the right combination. By adding more characters to the mix, you increase the number of possible combinations an attacker must try. It can take as little as 1.8 seconds for a modern supercomputer to break an 8-character password which contains only lower case characters. Adding uppercase letters, digits & symbols will require much more time to crack. The strongest passwords are memorable multiple word phrases rather than a ‘password’. Ideally, they would be an unforgettable combination of unexpected words, rather than a predictable English sentence. Using longer, more complex phrases with random works, makes it much more difficult mathematically for a ...
  • ATO cracks down on work related expenses

    Do you claim other work-related expenses such as telephone, stationery, internet and home office costs? BEWARE - the Australian Taxation Office focus area for the coming financial year will be other work-related expenses! On 20th February 2018, the ATO assistant commissioner said that 6.7 million taxpayers claimed a record $7.9 billion in other work-related expenses in the 2017 financial year. Some of you may receive an email from the ATO telling you that they have noticed your other work related expenses are quite high compared to others in the same industry. Legitimate other work related expenses can include home office, union fees, mobile phone and internet, tools, meals and equipment, but they are only deductible if they meet the ATO’s three golden rules. Firstly, you must have paid for it and not been reimbursed. Secondly, it must be directly related to earning your income and not a private expense, and, Thirdly, you must have records to prove it. Many of us...
  • Tax on additional super contributions

    Division 293 additional income tax on super contributions What is this additional tax? Division 293 of the Income Tax Act was introduced from the 2012–13 year to reduce the tax concession on superannuation contributions for individuals with income greater than the Division 293 threshold (it’s a wealth tax introduced by a Labour Government). From 1 July 2017 onwards, the Division 293 threshold is $250,000, prior to this it was $300,000. Division 293 additional tax can be charged at 15% on some or all off an individual’s taxable contributions to superannuation for the year. Your super fund has already paid 15% income tax on these contributions. Whom does Division 293 tax apply to? You're liable to pay Division 293 tax if you have taxable contributions for an income year to superannuation. Income Division 293 tax is calculated based on your income for Div. 293 purposes This information is collected from your income tax return once you have lodged it. Contr...
  • Cryptocurrencies and tax

    CRYPTOCURRENCIES & AUSTRALIAN TAX So you’ve put some hard earned cash into the newest investment sector known as cryptocurrencies, made a gain but not sure what, if any, tax implications investing in cryptocurrencies has. Unfortunately for those lucky enough to be in the green there are tax implications, similar to that of share investing, which I will touch on later. Firstly, cryptocurrencies were made famous by Bitcoin and it’s extreme volatility. Overall the value of Bitcoin has soared since Bitcoins inception in 2009 from USD$0.003 March 2010 to currently USD$10,313. That is a staggering 3,437,666% increase! In amongst that huge gain is several times where Bitcoin has dropped up to 50-75% value in a matter of days, meaning investment is not for the feint hearted. Meaning USD$10 in March 2010 then would get you 3,333.33333333 Bitcoins, those Bitcoins would right now be worth USD$34,376,666.67 if you managed to stave off the temptation to sell along the way or lik...
  • Can I claim my work clothes as a tax deduction?

    Over the past five years, claims for uniform and laundry deductions have increased by around 20%. This has made the ATO sit up and take notice. The ATO assistant commissioner Kath Anderson has stated that too many taxpayers’ beliefs around how to claim clothing deductions are wrong. She described these taxpayers as “confused” and sought to clarify and remind them that you can only claim deductions for occupation-specific clothing. There are a clear set of guidelines for business owners, employees and the self-employed regarding claiming clothing. Anderson said, “You have to have spent the money yourself and can’t have been reimbursed, two - the claim must be directly related to earning your income, and three - you need a record to prove it.” This has been a hot topic over the past year. A government discussion paper has proposed that all non-compulsory work uniforms could be removed from the list of acceptable tax claims. This would include those uniforms worn by ...
  • ATO myDeductions app for your smartphone

    For those taxpayers who have difficulty keeping all their deductible receipts together, the ATO ‘myDeductions’ app may be the answer. Simply download the ATO app to your smart device and choose whether you'd like to use the tool as an individual, sole trader, or both. The app allows you to record work/business expenses, other tax deductions such as donations, vehicle trips and income (if you are a sole trader). It also allows you to upload photos of your invoices and receipts. At tax time you can simply email the file to your tax agent. Make sure you record your information on a single device throughout the year because you can only upload once per financial year. Back up your data regularly in case your device is broken, lost or stolen.


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