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Tax deduction for landcare operations

You may be able to claim a tax deduction for capital expenditure on a landcare operation in Australia in the year it is incurred. Providing you are a primary producer, a rural land irrigation water provider who incurred the expenditure on or after 1 July 2004, or a business using rural land for taxable uses (excluding mining and quarrying businesses) you are eligible to claim a deduction.

Many operations fall under the category of a landcare operation.

For instance, when you primarily and principally:
– eradicate, exterminate or destroy plant growth detrimental to the land.
– put in fences to keep animals from areas affected by land degradation to prevent or limit further damage and assist in reclaiming the areas.
– eradicate or exterminate animal pests from the land.
– construct drainage works to control salinity or assist in drainage control.
– prevent or combat land degradation by means other than fences.

Other operations the ATO defines as a landcare operation include:
– constructing a levee or similar improvement
– erecting fences to separate different land classes as set out in an approved land management plan
– for expenditure incurred on or after 1 July 2004, a structural improvement or alteration, addition, extension or repair to a structural improvement that is reasonably incidental to the construction of a levee or drainage works.

Recouped expenditure
When you claim a deduction and receive recoupment, the recoupment is assessable income. However, you cannot claim a deduction if the capital expenditure is on plant unless you incurred the costs on certain fences, dams or other structural improvements.

If landcare expenditure is incurred by a partnership, each partner is entitled to claim the relevant deduction for their share of the costs.

Posted on 22 August '18, under Tax. No Comments.

Inclusivity in the workplace

Creating a workplace environment that fosters inclusivity and belonging for all is important for the longevity of your business.

When people feel safe and a sense of community, they are bound to feel happier and thus enjoy being connected to your business. There a number of ways to create this for your workplace:

Appropriate training and orientation
Employees, contractors and customers need to understand from their first encounter with your business that is a safe and inclusive environment. This means appropriate training and orientation must be given to instil specific values. It is much easier to employ individuals who agree with and respect inclusive workplaces than to try and change the workplace ethos later down the track.

Team building
Team building is a great tool for breaking down barriers between employees. It allows individuals to bond and connect outside of the everyday work environment. There is a large array of activities that constitute as team building. For example:
– Staff retreats
– Icebreaker games
– Office luncheons
– Create office sport tournament
– Open workplaces
– Group work and problem-solving tasks

Business ethos and values
Creating a workplace with an inclusive vibe is not just about introducing a bunch of team building activities and expecting everyone to feel valued; it has to be embedded in your brand. This means that as the boss, it needs to start with you. You can’t expect your employees to thrive if they don’t feel that their leaders value them.

Posted on 21 August '18, under Business. No Comments.

Super contribution caps: the basics

Making contributions to your superannuation fund is a great way to grow your nest egg, however, there are caps on the amount you can contribute every financial year to be taxed at lower rates. Once you go over these caps, you may be required to pay additional tax.

The cap and extra tax amount will vary depending on your age, the financial year the contributions relate to, and whether the contributions are concessional (before tax) or non-concessional (after tax).

Concessional contributions
Concessional contributions include compulsory employer contributions and salary sacrifice amounts. There is a cap on the amount you can make, and payments are taxed at 15 per cent.

Non-concessional contributions
These are after-tax income contributions and are not taxed in your super fund. However, like concessional contributions, caps also apply to non-concessional payments. From 1 July 2017, the cap was reduced from $180,000 to $100,000 per year. This will remain available to individuals aged between 65 and 74 years providing they meet the work test. The cap is indexed in line with the concessional contributions cap.

The non-concessional cap is also nil for a financial year if you have a total super balance greater than or equal to the general transfer balance cap ($1.6 million in 2017-18) at the end of 30 June of the previous financial year.

Exceeding your non-concessional contribution cap
When you exceed your non-concessional contribution cap, you need to lodge an income tax return for that year. The ATO generally issues a determination if the return is not lodged within 28 days of the due date. You can withdraw the excess non-concessional contributions (and any earnings – the earnings would then be included in your income tax assessment).

Posted on 21 August '18, under Super. No Comments.

Rental property and tax

The Tax Office is reminding individuals who either own or are looking to purchase a rental property that there are essential record-keeping and taxation obligations that they must meet.

Examples of records to keep (for the period the individual owns the property for and up to five years after it is sold), include:
– Rental income
– Contract of purchase and sale
– Expenses
– Loan and refinancing documents
– Periods when the property was used for private use (i.e., family use)
– Steps taken to rent out the property (i.e., advertising)

Individuals must also declare all income they receive from renting out their property.
Examples of income may include:
– Rent received (before fees or expenses)
– Reimbursement for deductible expenditure
– Any fees collected from cancelled bookings
– Insurance payouts
– Booking or letting fees

Individuals can claim many expenses related to the property as immediate tax deductions or deductions over a number of years.

Immediate expense deductions include:
– Repairs and maintenance on the property
– Loan interest
– Property management fees

Expenses to claim as deductions over a number of tax returns include:
– Depreciating assets
– Capital works or improvements
– Borrowing expenses

Expenses accrued in buying or selling the property, using the property for personal use or travelling to inspect the property will not qualify for tax deductions.

While individuals can not claim expenses relating to buying or selling the property, these will form part of the Capital gains tax (CGT) calculations.

Posted on 21 August '18, under Tax. No Comments.

Blunders to avoid when naming your business

The name you choose to give your small business is an important, yet challenging decision. These few words must represent the branding image you wish to present to the public and in particular, your target market.

To help you make the best decision, here are four things to avoid when choosing your business’ name:

1. A long name
Always pick a name that is short and simple. Preferably something that rolls right off the tongue. A long and confusing name that is hard to pronounce will also be one that is difficult for customers to remember.

2. A ‘plain Jane’ name
While it is essential to pick a name that is easy to say, it is wise not choose a name so general that it will not convey any of the branding personality of your business.

3. Choosing a name too similar to your competitors
It will ensure you do not stand out from the crowd and is likely to confuse your customers.

4. Does not speak to your story
Find a name that speaks to your business’ origin story. In this way, you will create the brand in the name.

Posted on 7 August '18, under Business. No Comments.

Launching a business: mistakes to avoid

Launching a new business for the first time is an exciting phase for every entrepreneur. However, it is important to increase your chances for success by being aware of and avoiding common mistakes that can occur when beginning a business.

Take a look at these five common errors.

Being unprepared
Starting a business is incredibly challenging, and will take a lot of hard work, time and effort. You must mentally and physically prepare yourself and develop a realistic self-care plan to avoid burning out halfway through.

Bypassing market research
You may think you have a great idea, but to ensure it will translate to a profitable business always involves market research.

Sticking with a lousy business idea
Research tells you it is likely to be a flop, but you refuse to let your business idea go.

Refusing to delegate
Trying to do everything yourself is both impossible and inefficient. It also leads to a toxic workplace. To foster a healthy and productive work environment, you must trust your team, and work together to move the business forward.

Running out of capital
Nothing sinks a business quite so quick as running out of money. It is important to plan and budget in the beginning for the amount of capital you will require to keep your business afloat.

Posted on 7 August '18, under Business. No Comments.

Protect yourself from early super release scams

When it comes to protecting your nest egg, avoid getting caught out by a promoter of an illegal early release super scheme.

Early release super scheme scams will involve a promoter contacting you and offering to help you access your super early. They usually target individuals under significant financial pressure or those who are not knowledgeable about super laws and the repercussions and penalties involved in illegally accessing your super.

You can only access your super when you meet a condition of release.

Generally, when you:
– Are 65 years old (even if you have not yet retired).
– Reach your preservation age and retire.
– Reach your preservation age and begin a transition to retirement income stream while still working.

There are special circumstances where you may be able to access your super early.

These special circumstances include:
– Severe financial hardship
– Temporary or permanent incapacity
– Compassionate grounds
– Temporary residents leaving Australia
– Super death benefits (inheriting super)
– Super less than $200
– Terminal medical condition

To avoid falling for an illegal early super release scam, be wary if the promoter:
– charges high fees and commissions;
– requests identity documents;
– claims you can access your super and put the funds towards whatever you wish;
– and tries to persuade you to transfer or rollover your super from your existing fund to a self-managed super fund (SMSF) in order to access your super before you are legally entitled.

Posted on 7 August '18, under Super. No Comments.

Avoid these top tax misconceptions

As tax time continues, the ATO has announced the top misconceptions many individuals make when completing their claims for tax deductions.

Four popular tax misunderstandings include:

1. Individuals can give credit card statements as proof of claim

Debunked: When making a claim, individuals must be able to show they spent the money, what the money was spent on, the supplier and the date the purchase was made unless record-keeping exceptions apply.

2. Individuals can automatically claim $150 for clothing and laundry, under $300 for work-related expenses or 5000 kilometres for car-related expenses

Debunked: While taxpayers are not required to provide receipts relating to the above in certain circumstances, these are not ‘standard deductions’ everyone can just claim. An individual can only claim if they have spent the money, and the expense relates to earning their income. They must also be able to explain how they calculated the amount.

3. Individuals can claim home-to-work travel

Debunked: Individuals can only claim home-to-work travel in limited situations, i.e., in some circumstances where they must transport bulky equipment.

4. Individuals can claim work clothes when required to wear a particular colour

Debunked: Individuals can only claim a deduction for work clothes if they are required to purchase a uniform that is unique and distinct to their employer or because they are required to buy occupation-specific or protective clothing to earn their income.

Posted on 7 August '18, under Tax. No Comments.

Cash-only business? Consider making the switch

The Tax Office has released further findings that reveal cash-only businesses could be missing out on a significant chunk of revenue simply by not offering customers the option of electronic payment.

An ‘inconvenience’ was the most popular word consumers surveyed in the study used to describe when a business does not provide the option to pay via card.

Cash-only may also be having a direct effect on the business’s reputation. The results determined that Australian customers are twice as likely to perceive ‘cash-only’ as negative rather than positive – with many respondents questioning whether the business is honest and paying less tax (regardless of whether this may be fact or fiction).

While change may be difficult, cash-only businesses might like to consider the benefits that exist with no longer operating in cash. For instance, electronic tap-and-go payments take less time and cost around 9 cents less than payments made in cash.

By providing electronic payment only, a business can find it easier to keep more accurate record-keeping as well as help them to meet their tax and super obligations.

Posted on 3 August '18, under Business. No Comments.

Hiring temporary residents: employer super obligations

Employers are being reminded by the Australian Tax Office (ATO) not to forget that along with permanent residents; temporary residents are also entitled to super guarantee (SG).

In most cases, an employer will be required to pay SG on top of their employee’s wages (temporary residents included) if they pay them $450.00 or more before tax in a calendar month.

Providing the temporary resident has met all the requirements, they can submit their claim for the super that their employer has paid as a ‘department Australian superannuation payment’ (DASP) once they have left Australia.

The ATO is encouraging employers to notify their temporary resident workers of the DASP application as it will be easier for these individuals to get the required supporting documents certified in Australia and then lodge once they have left the country.

Posted on 3 August '18, under Super. No Comments.

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