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Your Work-Related Travel Expenses Can Lead To A Healthier Tax Refund

Tax tips, tax, it expenses, startups, small business
Employees can incur substantial work-related travel expenses. This is almost unavoidable given the nature of personal business transactions and the importance of outbound client management. These travel expenses can, however, boost your tax refund with some big tax deduction claims!
 
Of course, if your employer has already reimbursed you, you cannot claim! Though if the claim is up to you, be sure to follow this guide.
 
Work related travel expenses refer to any travel related expense that directly relates to your specific job function. Depending on your circumstances, and provided you have the necessary documentation, you can claim the cost of transport, incidentals and even meals if you were away overnight!
 
Travel expenses you can claim on your tax return under item D2 can include:

  • Accommodation
  • Incidental expenses
  • Air, bus, train and taxi fares
  • Bridge and road tolls
  • Parking fees
  • Car hire charges
  • Meals (if your travel included an overnight stay)

To claim any work travel expenses, your travel must be specifically work-related. Taxi, bus, train and rental car expenses are tax deductible if you travel for work purposes.
 
Keep a travel diary to support your claim, particularly if your work trip goes overnight or longer. If you don’t have a travel diary you can download a travel diary template from etax.
 
You can also claim the cost of travel between two different workplaces. These rules apply whether you travel by train, bus, taxi or your own private vehicle.
 
Do not under any circumstances forget the golden rule – keep your receipts!
 
For more information on tracking your expenses, or claiming tax deductions, please visit nudgeaccounting.com.au or call 1300 068 343.

Business Activity Statement (BAS) returns

The basics of setting up a start-up
Whether you are a small business operator or just starting up, you often find yourself flat out running the daily business operations and focusing on the bottom line to spend any time thinking about ATO requirements.
 
Knowing and addressing these tax requirements can be difficult. At Nudge, our Chartered Accountants look after your small business accounting needs including GST and BAS lodgement, making it easy for you to focus on what’s important to you – running a successful business.
 
Put simply, the BAS return is a by-product of the GST. It is the difference between GST collected (for customers) and GST paid (to suppliers).
 
Your BAS is used for reporting (where applicable) on a range of tax obligations including:

  • Goods and Services Tax (GST)
  • Luxury Car Tax (LCT)
  • Fuel tax credits
  • Wine Equalisation Tax (WET)
  • Pay-As-You-Go (PAYG) withholding and instalments
  • Fringe Benefits Tax (FBT) instalments, and
  • Deferred company instalments

 
The overall aim of the BAS is to allow you to report and pay a number of tax obligations in one transaction.
 
All businesses who are registered for GST must lodge a BAS for each period (monthly or quarterly). As part of our featured services we lodge your BAS quarterly on the following dates:
 

 Quarter

 Due date

 1 – July, August and September

 28 October

 2 – October, November, and December

 28 February

 3 – January, February and March

 28 April

 4 – April, May and June

 28 July

 
The benefits of using a qualified Nudge Chartered Accountant to lodge your BAS form for you are limitless. We know all the requirements and will help you maximise your deductions, meet your commitments on time and provide constant support if you have any questions or concerns.
  
References

Australian Government (2015) Reporting activity statements
ATO (2015) Due dates for lodging and paying your BAS

Are you claiming all your tax offsets?

Tax tips, tax, it expenses, startups, small business
Tax is confusing at the best of times. No matter how much the ATO try to simplify things, there are always hidden deductions, offsets, rules and regulations. So how do you know what to claim and offset? Often it’s best to talk to your accountant, but here is a quick guide to help you make sense of your tax rebates.
Tax rebates or offsets directly reduce the amount of tax payable on your taxable income. In general, offsets can reduce your tax payable to zero, but on their own they can’t get you a refund.
There are several offset categories from which you can claim and you will generally fit into one of these. The categories are:

  • Receipt of government benefits
  • Dependents
  • Health insurance
  • Medical expenses
  • Senior Australian and pensioner allowances
  • Super related tax offsets
  • Low-income earners
  • Zones and overseas forces

 
Let’s take a look at each individual category.
 
Receipt of government benefits
The beneficiary tax offset is available if you receive certain Australian Government allowances and payments.
No tax is paid if you:

  • receive any of the qualifying benefits and allowances, and
  • have no other taxable income

 
Any assessable income that you receive beyond these benefits may require some tax to be paid. To claim the offset, declare the payment you receive at the correct item on your tax return.
 
Dependents

There are several offsets within this category. You may be entitled to a tax offset if you maintained your:

  • spouse
  • child or sibling aged 16 years or older
  • spouse’s child or sibling aged 16 years or older
  • parent, or spouse’s parent if they are an invalid or carer

 
For more information about what constitutes an invalid or carer please go to the ato.gov.au website.
 
Health insurance
Entitlements to a private health insurance rebate or tax offset depend on your income level. The amount of private health insurance rebate you are entitled to receive is reduced if your income is more than a certain amount. You can claim your private health insurance rebate as a:

  • premium reduction, which lowers the policy price charged by your insurer
  • refundable tax offset through your tax return

 
Medical expenses

As the ATO states, net medical expenses are your total medical expenses minus refunds from Medicare and private health insurers that you, or someone else, received or are entitled to receive.
The net medical expenses tax offset is being phased out.
To be eligible to claim the offset in your 2014-15 income tax return, you must have either:

  • received the offset on your 2012-13 and 2013-14 income tax assessment (the final year you can claim is 2014-15), or
  • paid for medical expenses relating to disability aids, attendant care or aged care (people with these expenses can continue to claim until 1 July 2019)

 
You may not be eligible to receive the medical expenses offset if other tax offsets have reduced your tax payable to zero.
 
This offset is income tested. If you are eligible for the offset, the percentage of net medical expenses you can claim is determined by your adjusted taxable income and family status.
 
Senior Australians
Senior Australians may be eligible for the seniors and pensioners tax offset (SAPTO).
SAPTO can reduce the amount of tax this demographic is liable to pay. In some cases, this offset may reduce your tax liability to zero and you may not have to lodge a tax return.
Eligibility is based on conditions relating to your income and eligibility for an Australian Government pension. You must meet the age requirement for the Age pension to be eligible for the offset.
In some cases, you may also be able to transfer your eligible spouse’s unused SAPTO to you.
 
Super related tax offsets
The two super-related tax offsets for which you may be eligible are:

  • Australian super income stream tax offset
  • Tax offset for super contributions on behalf of your spouse

 
The first offset occurs if you receive income from an Australian super income stream. If this is the case you may be entitled to a tax offset equal to:

  • 15% of the taxed element, or
  • 10% of the untaxed element

 
The offset amount available to you will be shown on your payment summary.
 
You’re not entitled to a tax offset for the taxed element of any super income stream you receive before you turn 55 years old unless the super income stream is either a:

  • disability super benefit, or
  • death benefit income stream

 
You’re not entitled to a tax offset for the untaxed element of any super income stream you receive before you turn 60 years old unless:

  • the super income stream is a death benefit income stream; and
  • the deceased died after they turned 60 years old

 
To receive the offset for super contributions on behalf of your spouse you must make contributions to a complying superannuation fund or a retirement savings account on behalf of your spouse (married or de facto) who is earning a low income or not working.
 
You will be entitled to a tax offset of up to $540 per year if you meet all of the following conditions:

  • the sum of your spouse’s assessable income, total reportable fringe benefits amounts and reportable employer super contributions was less than $13,800
  • the contributions were not deductible to you
  • the contributions were made to a super fund that was a complying super fund for the income year in which you made the contribution
  • both you and your spouse were Australian residents when the contributions were made
  • when making the contributions you and your spouse were not living separately and apart on a permanent basis

 
Low-income earners
If you are a low-income earner, or work part-time, the ATO will work out the offset amount for you.
 
Zones and overseas forces
Zone tax offset

You must have lived or worked in a remote area (not necessarily continuously) for:

  • 183 days or more during the current income year; or
  • 183 days or more in total during the current and previous income years – but less than 183 days in the current year and less than 183 days in the previous income year, and you did not claim a zone tax offset in your previous year’s tax return

 
If you lived in a zone for less than 183 days in the current income year, you may still be able to claim a tax offset as long as you lived in a zone for a continuous period of less than five years and:

  • you were unable to claim in the first year because you lived there less than 183 days; and
  • the total of the days you lived there in the first year and in the current year is 183 or more

 
Overseas forces tax offset

You may be eligible for an overseas forces tax offset if you serve in a specified overseas locality as a member of one of the following:

  • Australian Defence Force
  • Australian Federal Police, or
  • United Nations Armed Forces, and income relating to that service is not specifically exempt from tax

 
This is a basic offset guide, based on information provided by the ATO. For a more comprehensive guide to offsets, you should speak with your accountant or spend some time further investigating the ATO’s website.

5 tips for surviving a tax audit

Tax tips, tax, it expenses, startups, small business
The Australian Tax Office (ATO) picks a number of taxpayers each year to drag a fine-tooth comb through their expenses. The random nature of the selection process means a taxpayer never knows when they will be chosen for a tax audit, which may make surviving one quite difficult.

 

It is wise, then, to keep in mind that the ATO is automatically informed of the following sources of income: wages and salaries, subcontract payments, social security payments, interest received from financial institutions, dividends from companies and superannuation pay-outs.

 

If you are operating a business, you also need to be mindful of any significant divergence from past performance figures and those that diverge from industry average.

Here are 5 tips to surviving a tax audit.

    1. Make sure you your papers are in order

It sounds like you are going through an Eastern European checkpoint during the Cold War and it may feel like it too. However, if you have your documents in order you should have nothing to worry about. The ATO will send out blank substantiation schedules and you will be asked to list your substantiating documentation, including for any rebates you have claimed. If the ATO is feeling particularly prickly, they will audit the last three years of your life so it is best to have documentation, receipts and invoices for this period all filed neatly away and easily accessible.

    1. Keep the goods

In some cases you will have paid for hardware that you have claimed back on tax. Computers, stationery, clothes etc… While you don’t necessarily want to take the shirt from your back, the ATO will accept the actual goods as proof of your claim. If you have lost or thrown out the receipt, this is a great way to appease the tax office. You can also hunt down the shopkeeper and ask him to retrieve the receipt, but that is time consuming, a burden for everyone involved and used only as a last resort.

    1. Don’t underclaim and over purchase

Know what you can claim. Think about how bad it looks if you have only declared $50,000 in income, but you have purchased a car, house, yacht or holiday all in the same year. If you do this, red flags are raised and the auditor will examine all public records including vehicle registry, land titles and will no doubt find any areas of large-scale tax evasion. The bottom line for survival is: declare what you must.

    1. Prepare for the interview

When you are called into the tax office, you will be interrogated. Although you can take someone with you for support, you and you alone must answer all questions. If you recall what you have spent money on, what you have claimed, where your money has gone and your cash flow and revenues, you will survive. Of course knowing all of this information is akin to studying for an exam, but well preparedness will impress the auditor and show him or her that you are above board with your approach to the tax audit.

 

  1. Keep your calm

Keep your calm when being audited. The worst thing you can do is antagonise the auditor and the last thing you need is for the auditor to exact some form of revenge. If you have prepared your returns correctly, you will survive this imposition. The best way to prepare for a tax audit is to stay calm and be co-operative without conceding more than you have to.

 

Other points of note to keep you prepared:

 

  • Thoroughly evaluate your situation
  • Examine the authorisation of the auditor before allowing access to your premises
  • Supply the auditors with an office of their own
  • Insist that the auditors direct all questions to just one person
  • Record all interviews and discussions
  • Keep receipts for all expenses claimed
  • Don’t ignore the request for audit
  • Check the amended assessment

Why You Should Act on the Small Business Tax Write-off

Why You Should Act on the Small Business Tax Write-off

If you run a small to medium-sized enterprise (SME), you should be aware of the new small business tax write-off that has significantly raised the level of business purchases that are tax deductible.

Legislation confirming a $20,000 tax write-off for business-related items purchased after 7:30pm AEST on 12 May 2015 was passed on 15 June and will be valid until 30 June 2017. This is a hefty increase from the former write-off threshold of $1000.

All SMEs and sole traders will be eligible for the tax deduction if their business has an annual turnover of less than $2 million. This recent tax-deductible incentive was originally proposed in the 2015 federal budget to encourage SMEs to spend now and invest in growth. Depending on whether your purchases exceed the threshold, you should save more on your taxes if you spend on your investments sooner than later.

Any and all physical Items relating to the business may be deducted from tax, which excludes software and services such as marketing costs. The net worth of tax deductibles items must not exceed $20,000.

Company tax rates are also dropping from 30% to 28.5% from 1 July for entities with an aggregated turnover of under $2 million. This is the lowest small business tax rate in almost 50 years.

To take advantage of these recent changes, small businesses should bring their necessary expenditure forward and defer income to the 2016 tax year when possible, accounting for their cash flow position. During the 2015 financial year small businesses should maximise tax deductions and minimise income to secure the best position for their accounts.

For businesses looking for a sign to purchase new assets for your company, now is the time to take advantage of the current opportunities to save on tax-deductible asset purchases.

The Winners and Losers of the 2015 Budget

Tax tips, tax, it expenses, startups, small business
A major winner of this year’s budget is small businesses. The government is hoping that these small businesses will take advantage of this and start investing in their businesses in order to generate future growth. From tax cuts to asset deductions, this is the time for small businesses to invest and take advantage of their current position. Below are some of the major budget announcements impacting small businesses.

Continue reading “The Winners and Losers of the 2015 Budget”

A Nudge as we head towards the end of the 2015 financial year

Tax tips, tax, it expenses, startups, small business
With the end of the financial year almost upon us, there are some questions the Nudge team would like you to think about with regard to your small business.

  1. Are you on top of your unpaid invoices? It’s important to review your unpaid invoices (debtors list) as small businesses can claim a deduction for old debts that are unrecoverable.
  1. Are you about to do your year-end invoices? Unless you are a sole trader operating on a cash basis, income is generally assessable when an invoice is issued. This means you might want to hold off invoicing clients until July so that it is taxable in the next financial year.
  1. Do you still have old equipment on the books? It’s important to review your list of assets as small businesses can claim a deduction for the remaining value of any asset that is no longer used.
  1. Have you organised a stocktake? If your business carries stock (for example if you are a retail business), then a stocktake is generally required before the end of the year. During your stocktake, identify unsaleable and damaged stock. If you pass this stock to charities, or gift it to organisations in need, the stock can be written-off and claimed as a tax deduction.
  1. Do you need to update some of your equipment? Small businesses can claim a deduction for the entire purchase price (up to $20,000), rather than having the deduction spread over several years. So purchasing new equipment now means you will receive a tax deduction this financial year.However, please note that the legislation confirming this new threshold of $20,000 has not yet been passed by Parliament. We will provide updates as information becomes available.
  1. Will you be paying your staff a bonus? If you are paying yourself or your staff a bonus you need to think about whether you pay it in this Financial Year (to June 30) or early next year. Paying the bonus this month, will mean you can claim a tax deduction for the payment this financial year.
  1. Are you paying dividends? If your small business is a company, you need to consider if the company will be paying a dividend this financial year or next. Declaring a dividend in July means you have an additional year to pay the tax on it.
  1. Do you owe your company money? Generally, if the director or shareholder owes the company money and there is no agreement in place, the loan must be repaid by the lodgement date of the Income Tax Return for that year. Ignoring these issues could result in an unfranked dividend paid to the shareholder (which means you will effectively be taxed twice, both in the company and in the shareholder’s tax return).
  1. Are you a trust distributing income? If your small business is trading through a trust, the trustee will need to determine which beneficiaries are receiving a distribution, what the proportion of the year-end income is and then prepare a minute resolving this. We will be chatting more about this to our clients with trust structures in the coming week.
  1. Have you considered paying June superannuation early? If you pay your staff super contributions after 30 June (even though payments are not due until 28 July), then you will not be able to claim the tax deduction until next financial year. You can only claim a deduction for superannuation when the payment is received by the superannuation fund, so get in early with these payments to ensure you receive the tax deduction this financial year.

 

Cash vs. Accrual Accounting – Which Method Do I Use?

Tax tips, tax, it expenses, startups, small business

When starting a business, deciding on which bookkeeping method is best suited to your business may be confusing. Two methods that you can use are cash vs. accrual accounting.

What is Cash Accounting?

Cash accounting tracks the actual money that is coming in and out of your business. If you receive an invoice, you do not record the cost until you have actually paid the invoice. This also applies when you send an invoice to a customer, you do not record the sale until you have received your payment. An example of this would be if you sent an invoice on Wednesday, but didn’t receive the payment until the following Monday, you then record the income against Monday’s date.

Continue reading “Cash vs. Accrual Accounting – Which Method Do I Use?”

#TaxTipTuesday: 2015 Budget Proposal for Small Businesses

Tax tips, tax, it expenses, bookkeeper, ato, startups, small business,

There were a few exciting incentives proposed for small business in the Federal Budget released on 12 May 2015.

The most significant proposal relates to the $20,000 tax break on the purchase of equipment. If you are a registered small business with an annual turnover of under $2 million, you can claim immediate tax deductions for purchases of $20,000 and under.

Assuming the legislation is passed, this scheme comes into effect retrospectively from 7:30pm on budget night (12 May 2015) and ends 30 June 2017.

We will keep you posted about when, or if, this proposed incentive becomes law.

#TaxTipTuesday: What Are The Small Business Concessions and When Can I Access Them?

Tax tips, tax, it expenses, bookkeeper, ato, startups, small business,

Most people agree there is very little government assistance provided to small businesses. There is however one significant concession the government provides, which relates to selling your small business.

The Capital Gains Tax (CGT) concessions provide options on how to reduce the Capital Gains Tax – sometimes to ‘nil’ – when or if you finally decide to sell.

Continue reading “#TaxTipTuesday: What Are The Small Business Concessions and When Can I Access Them?”

We Are E.S.T. 2012

Who WE Are

At Nudge, we do it all for your small business: bookkeeping, accounting and tax. we can also help you with tax advice, company setups, personal tax, monthly performance summaries and specialist advice for small business owners. All work is completed by Aussie Accountants so you’ll never have to worry about compliance again.

Nudge Accounting
100% Online Accounting
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FREE Business Health Check
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Scalable Pricing Packages
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Easy Signup Process
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TESTIMONIALS

OUR COMPANY

OUR COMPANY Quality

With the uprising of technology and the plethora of competition in the majority of industries, business owners tend to seek help and assistance in managing and tailoring their business to suit the era’s needs and expectations. The process of accounting provides reports that bring key financial indicators together. Understanding financial concepts and gearing clients to financial success is what we exceed at here at Nudge Accounting.Our expertise lingers throughout the field of online accounting and engulfs all financial cases. With years of extensive experience and a dedication for our clients success, we endeavour to evolve our existing methodologies, in order to transform into Australia’s leading online financial firm.

OUR COMPANY Commitment

A successful marriage between bookkeeping and accounting will contribute to the long-term financial success of any business. Nudge Accounting takes pride with their online bookkeeping and online accounting services that encompass all aspects and sectors of finance to ensure our clients receive the utmost finest service. Commitment is an attribute we stand for as client satisfaction is always key to evolution.Our reliability is second to none, as we ensure our clients are well organised and pursuit their financial tasks with accuracy and precision. Nudge Accounting propelled their excellence and with their dynamic team of online accounting professionals transcended competition and have cemented themselves as the leading online bookkeepers in Australia.

OUR COMPANY Success

Our software and technological client interface is meticulous and seldom do alternative online accounting companies acquire this quality of infrastructure. This is what portrays our excellence and gears Nudge Accounting towards success. We ensure client satisfaction, by going through all the details and explaining financial situations to our clients. Engaging the client is what makes us stand out!Online accounting software, combined with online accounting techniques is a much more effective procedure than filling out paperwork because half the work is already done for you! Nudge Accounting take pride in providing the utmost finest online accounting service across Australia, with a variety of small to medium businesses and accounting excellence, technology and Nudge go hand in hand, just like the glove fits the hand!

WE HELPING SMALL BUSINESSES

Nudge provide exceptional accounting service and support whilst remaining price competitive. All of our packages provide the same great features for your small business accounting needs, which includes:

  • Performance Management Reporting
  • Annual Tax Return Preparation and Lodgements
  • Annual Financial Statements
  • Financial Monthly Statements
  • QTR BAS Preparation and Lodgements
  • Monthly KPI's to Identify Improvement Areas
80
YEARS OF
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100
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