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Last week over 2,000 bookkeepers, accountants and software partners came together for the 2016 Xerocon South. Xerocon launched a number of new and exciting elements Xero had been working on including;

The introduction of the Government’s Enterprise Tax Plan Bill, if passed, will see important tax breaks for small businesses with a turnover of up to $10 million. Australian Small Business and Family Enterprise Ombudsman, Ms Kate Carnell noted that “An important element of this budget is empowering small businesses to generate much needed economic growth though tax breaks that allow them to re-invest and grow their business.” From 2016-17 financial year, small businesses with an annual turnover of less than $10 million may see a company tax cut to 27.5%. This is expected to decrease the tax of 870,000 companies. This is part of a 10 year government plan to eventually decrease all company tax by 25% to encourage investment and higher-paid jobs. A 5% tax discount is proposed to be introduced for unincorporated small businesses as well as immediate deductibility on assets under $20,000.

Xero has many excellent add-ons, the newest have been discussed below.

Expensify
Expensify offers one-click expense reports in real-time, which allows you to track your business and personal expenses. The Xero integrations allow you to customize how expenses are coded to Xero accounts, tracking categories, customer contacts, and more. This integration leads to a more seamless accounting and bookkeeping experience and alleviates the headache of business administration. Expensify is focused on building for the small business, and making sure a customer never outgrows their product.

Hubdoc
Hubdoc extracts key information from your receipts, invoices and bills and stores them in one secure location on the cloud, easily accessible wherever you are. Hubdoc works by snapping, emailing, or scanning an invoice or receipt and then, based on the information in the document, files it to its appropriate folder. You can then publish the document data to Xero, making for seamless integration and bookkeeping process. Now this may sound like ReceiptBank but one cool feature HubDoc has that ReceiptBank doesn’t is the ability to automatically pull bills and statements from your online accounts. This means you don’t need to log in every month to ten different sites to collect your monthly invoices such as your phone bill. Hubdoc can help you simplify your business, go paperless, and offers bank level security for your documents.

TSheets
TSheets is a mobile timesheet app which simplifies and streamlines tedious tasks like payroll, invoicing and labour costing. TSheets mobile time tracking allows for employers to see who is working and where they are working. This is ideal for maintaining employees who work remotely or switch locations regularly. TSheets allows employees to clock in and out in real time or enter their time manually and allocate time to custom fields, projects or tasks. Easily track and manage employee sick leave, annual leave and paid time off. You can schedule employees by shift, job or task and send your roster to your employee’s phones as soon as it is ready. Simple to use, easy to edit and always in sync, with customisable alerts and calendar integrations.

• Xero set up and training
• Help with all Xero issues or problems
• ReceiptBank set up and training
• VendHQ set up and training
• Deputy set up and training
• Bookkeeping
• Business advisory and coaching services
• Self managed superannuation funds solutions
• Accounting
• Taxation consulting and compliance
• Tax planning solutions
• Small business software advice, set up and training
• Payroll training
• All types of Tax Returns
• BAS and IAS statements

If you are making some extra cash on the side with Uber, Airbnb or any other sharing economy platforms, the ATO will be going through your tax return with a fine tooth comb. Dana McCauly from news.com.au goes into detail in her recent article “Tax Office cracks down on sharing economy” .

After Uber begrudgingly agreed to its GST obligation the ATO warned its 20,000 to declare their incomes or be audited and penalised. Now the ATO has its eyes set on Airbnb with plans to audit some 75,000 hosts currently listed on the home sharing site. Research by the Deloitte Access Economics states that 53 per cent of Australian consumers “participated in some form of collaborative economy” last year and share economy is now shaping up to be a major player in Australia’s economy.

CPA Australia Head of Policy Paul Drum warns that hiding income from the tax man is not only illegal but foolish in the digital age. The ATO now has the ability to analyse transaction data at almost the click of a button and can crunch land tax receipts and ask “how can this tax payer afford that property?” Although some people believe the ATO can only delve seven years back, if you have been hiding out, which means you have been committing tax fraud and evasion, there is no limit to how far back the ATO will make you pay.

One of the biggest myths about share economy income is that you don’t have to declare sporadic or one-off transactions. Everything you earn from the initial dollar needs to be accounted for. For Uber drivers GST must be paid on every dollar but Airbnb hosts are exempt. Many Airbnb hosts now run their business through their accountant which takes care of keeping track of earnings and expenses.

Etax.com.au general manager Simone Gielis says sharing economy participants should know the following rules:

Whether for an extra bit of cash on the side or as your primary income source you must declare any income made through sharing economy platforms such as Uber and Airbnb. Keep track of your income and expenses and report honestly. Those found to be under-reporting will end up owing back taxes and be dealt with fines, penalties and interest charges.

Although your income is boosted from your Uber driving or rental you need to be aware that your tax payable rises with it. A percentage of your sharing economy income should be set aside otherwise you may get a nasty shock when it comes to paying your tax.

Just like you would with your business or job, keep a record of any expenses you incurred and receipts/invoices of these transactions and you may be able to claim back a portion (or all) at tax time.

If you are renting out a room or apartment, you can claim expenses and depreciation for the percentage of your house that was rented, for the duration someone was paying. You can also claim internet, phone bills, utility, council rates and depreciation on furniture. The most important thing to claim is interest on your mortgage. Ridesharing drivers can claim work-related expenses including insurance and registration costs, car maintenance, repairs and cleaning costs.

If you are unsure of how the sharing economy impacts your individual tax obligations you can enlist the services of a professional tax agent. To avoid being in over your head, or to minimise the additional stress this may be causing you, contact us today.

When claiming work expenses in your tax return, whether by yourself or through your accountant, we often struggle with determining what we can claim. We have devised a list of work related expenses you can claim on your tax return this year, some may even surprise you!

1. Clothes and Make Up

If you have ever completed your tax return this is generally the first area you go to claim your expenses. Whether it be for laundry, protective steel cap boots or your uniform you’d be hard bent to find a person who didn’t jump at the opportunity to claim back on this expense. What some people don’t know is that you may also be able to claim your new hand bag/suitcase (if you can prove it carries more than just your lunch!).

2. Electricity

For those of you that work from home the chance to claim back on electricity may seem too good to be true. By keeping a log book of your work hours you can claim 45c per hour which, if you work an average 40 hour week, can lead to a deduction of more than $900 off your next tax return.

3. Car Use

Although you can’t claim travel to and from work (as much as we’d all like to!) you can claim travel to see clients, and to work sites. The ATO will be very strict when checking this deduction this year so make sure you have kept a log book and it is up-to-date.

4. Mobile Phone

Walk past any cafe and I can almost guarantee you’ll find someone suited up typing on their phone with a serious expression on their face. Now whether they are conversing with their boss, crunching numbers, or just on a really hard level of candy crush we may never know. One thing we do know is that you can claim a percentage of mobile usage as a work expense. The ATO will be cracking down on this so don’t claim 100% of your phone usages as a tax write off.

5. Office Equipment

Buy a new standing desk this last financial year? Why not claim it? You can claim office equipment, such as desks, stationary, ink, and antivirus software.

6. Income Protection Insurance

If you pay your Income Protection Insurance separate to your Super Fund you can claim this as a tax expense. If you Super Fund and Insurance is together, you cannot.

7. Self-education expenses

Work in a cafe and had to take a barista course? Were you required to undergo a first aid training course? Any education expenses which are required by your employee or are designed to improve your skills set for work can be claimed.

All these expenses can be claimed on your tax return, provided that you have proof of purchases for expenses under $300. Although there is the magic $300 claimable without receipts, the expenses still must be work related, regardless of whether you provide receipts or not.

To help you keep track of your expenses the ATO has developed an app where you can record your expenses, track trip kilometres and store photos of your receipts. This can then be uploaded straight to your online tax return or can be sent to your accountant. This is perfect for people always on the go, click here to learn more.

Claiming deductions just go easier with the ATO my deductions app.

Not sure what you can and can’t claim? Contact us and we will be happy to help you out.

InTheBlack’s Paul Drum has outlined, what we believe to be, an insightful list of tax tips for small business. These have been summarised below, or you can take a look at the article in detail here:

Check eligibility for small business tax regime

Small business entity’s (SBEs) are individuals, partnerships, companies, and trusts that have an annual turnover (excluding GST) of less than $2 million. While meeting the $2 million turnover test automatically entitles SBEs to choose certain concession it is important to note that additional eligibility tests apply to some claims, like the small-business CGT concession.

Maximise depreciation deductions

SBEs will get an immediate tax deduction for almost all purchased individual assets costing under $20,000, purchased from 7:30pm AEST on 12 May 2015 to the given that it is used for an income producing purpose.

For business assets first used, or installed and ready to use prior to 12 May 2015, an immediate deduction can be claimed if the cost of the asset was less than $1,000.

For businesses registered for GST, the $20,000 threshold is calculated on a GST-exclusive basis, but for businesses not registered for GST, the threshold is calculated on a GST-inclusive basis.

A depreciating asset that is not immediately deductible (an asset costing $20,000 or more from 7.30pm on 12 May 2015 or an asset costing $1,000 or more prior to that time) will be automatically depreciated at a flat rate of 15 per cent in the year it was bought to the extent the asset is used for income-producing purposes, and is used or installed ready for use by 30 June 2015.

Take advantages of the tax rate cut for small business from 1 July 2015

A number of tax planning opportunities have opened up with the reduction of company tax to 28.5 percent, and the proposed introduction of a five percent small business tax discount on income tax payable on business income received from an unincorporated entity that meets the SBE test, capped to $1,000 per individual.

In particular, eligible businesses can bring forward expenses into this financial year, and delay revenue into the next financial year.

Seeking professional advice when starting a business

The government has proposed that professional expenses situated with starting a new business be fully deducted in the year they occurred as of 1 July 2015. If a new business and possible, we advise you hold off from seeking professional advice until after the end of financial year.

Review salary sacrifice arrangements

Employees can consider salary sacrifice arrangements under which their gross salary may be foregone to obtain either a packaged car for fringe benefits tax (FBT) purposes,  or they can make additional superannuation contributions.

Make trust resolutions by 30 June

Trustees of discretionary trusts are required to make and document resolutions on how trust income should be distributed to beneficiaries for 2014/15 by 30 June at the latest.

If not executed by 30 June, any default beneficiaries under the deed will become entitled to trust income and subject to tax, or the trustee will be assessed at the highest marginal tax rate on any taxable income derived by the trust.

A trustee must be able to show how an effective resolution was made through draft minutes, file notes or an exchange of correspondence documented before year end.

Stream trust capital gains and franked distributions

Trustees of discretionary trusts can stream capital gains and franked dividends to different beneficiaries of the trust deed allows the trustee to make a beneficiary “specifically entitled” to those amounts. This must be documented before 30 June.

Private company loans

Income tax law can potentially treat a payment or loan by a private company to a shareholder or associate, or the forgiveness of a shareholder’s or associate’s debt, as an unfranked seemed dividend unless an exemption applies.

The most common exemption is to enter into a written loan agreement requiring minimum interest and principal repayments over a specified loan term.

Private companies can do various thing before 2014/15 tax returns need to be lodged, including repaying loans, declaring a dividend or entering a complying loan agreement before the return needs to be lodged.

Prevent deemed dividends in respect of unpaid trust distributions

Any unpaid distribution owed by a trust to a related private company beneficiary that arises on or after 1 July 2014 will be treated as a loan by the company, if controlled by the same family group. The associated trust may be taken to have derived a deemed dividend for the amount of the unpaid trust distribution in 2014/15. This may, however, ne prevented by paying out any unpaid distribution, or a complying loan agreement entered into before 2014/15 tax return is due for lodgement.

Write-off bad debts

Income tax deduction for bad debts can be obtained by businesses when various conditions are met;

• The debt still exists at the time it is written off
• Debt is effectively irrecoverable
• It is written off in the accounts as bad in the year the deduction is claimed
• Must have been previously brought to account as assessable income or lent in the ordinary course of carrying on a money-lending business
• Certain additional requirements must be met if creditor is either company or trust

Super guarantee

Employers are required to contribute 9.5 percent of employees’ salary to the super fund of their choice under the superannuation guarantee. Tax deductions for personal contributions can be made if you’re substantially self-employed.

SMSFs and employer contributions

From 1 July 2014, employers with 29 or more employees are required to pay superannuation contributions electronically. For further information what is required for this, take a look at one of our blogs.

The following blog, by Taxpayers Australia, we found, laid to rest many of the frequently asked questions that arose from this announcement. These included:

• How does the deduction work?
• What constitutes a ‘small business’?
• Is the $20,000 threshold inclusive or exclusive of GST?
• When can I claim a deduction?
• How do the rules work with vehicle trade-ins?
• What happens if the asset is used for both business and private use?
• Can a deduction be claimed for second hand assets?; and
• What are the consequences if the law is not enacted?

1. Systems and Organisation

2. Documentation

3. Planning

• correct catalogue numbers
• bar code details
• source of origin
• associated spare part data
• shipping and physical storage location details

4. Communication

The end of the financial year is always a busy time but with the tips below you can take action now to streamline your payroll for the end of the financial year.

To start off, set up auto super before the cut off. You can do this by clicking this link and following the instructions, or, alternatively, contact us.

If you are already using auto super and need to pay super contributions by 30 June we suggest that batches are submitted no later than 1pm Monday 22 June to make sure they reach the super funds in time.

If you have not yet done so, now is a good time to do reconciling. For those who have Xero, this is simple and easy. To reconcile Payroll in Xero, you need to:

• Generate a Payroll Activity Summary Report
• Then reconcile it with your General Ledger transactions

The total earning, total superannuation and total tax amounts need to match. If they don’t, it’s time to make amends. Here are a list of common problems and how to resolve them:

Problem: Payroll is higher than what’s showing in the General Ledger.
That could mean: A draft bill hasn’t been created for all your pay runs.
Solution: You first have to identify any pay runs that need a draft bill, and then create them.

Problem: The General Ledger is higher than what is showing in Payroll.
That could mean: Multiple draft bills have been created, other transactions have been coded to the payroll account, or payments have been reconciled to the wages expense account rather than the wages payable account.
Solution: Delete or void an invoice or credit note. Or, edit the spend money transactions.

Here at Rush and Associates we pride ourselves in being able to provide you with the best possible service to benefit you and your business. If your Payroll and General Ledger do not match, or you have any other queries or issues, please do not hesitate to contact us so that we can assist you. Ensuring that your End of Financial Year is as smooth and stress free as possible, is a top priority for us.