Financial & Taxation Services
All financial and taxation needs under one roof….
CONNECTED FINANCIAL & TAXATION SERVICES PTY LTD
Connected Financial & Taxation Services Pty Ltd is an Adelaide based public accounting business designed to service PAYG individuals as well as self-employed trades people and small business.
Connected Financial & Taxation Services Pty Ltd offers a full tax accounting, BAS and book keeping service at an affordable professional fee.
We can assist you with all aspects of business, from the establishment and preparation of Companies and Trusts through to PAYG tax returns for individuals.
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For specific financial advice and wealth creation strategies, we recommend speaking to the experienced team at Financial Lifestyle Solutions SA.
Phone 08 8100 3370 now to book an appointment.
Income related questions & answers
I have inherited some money. Is it taxable?
The inheritance is not taxable unless you are advised by the executor that a part is taxable. However, if you invest the income from the estate then any earnings will be taxable.
I have just received a letter from the tax office saying that I did not declare some interest from my bank account. What should I do?
If you believe this is incorrect you should contact your bank to verify the income details for your accounts. The bank should notify the ATO in writing if this information is not correct. You have 28 days to correct this information. However, if you have omitted the income, you will not need to contact the ATO. They will amend your return and send you a new assessment requesting payment of the additional tax, a general interest charge and, in some cases, penalties. If you require assistance with your communication with the ATO, H&R Block can help.
What is a Living Away From Home Allowance?
A Living Away From Home allowance is paid by employers when they require an employee to work in an area that is different to their normal workplace and the employer pays the costs to the employee for living away from home.
For example, I work and live in Melbourne and after a few months the company requires me to go to Regional NSW for a few months to do some work there. They pay me an allowance for the costs of living in regional NSW because they have requested me to work there for a time. I do not need to declare it in a tax return. It is an allowance paid by an employer to an employee and is not subject to tax by the employee, provided it is paid in accordance with the tax office guidelines. No expenses can be claimed against this allowance.
From 1 October 2012, the LAFHA continued to be taxed to the employer under the Fringe Benefits Tax system. However, the employer is able to reduce the fringe benefits tax payable on the amount paid to the employee, for a maximum period of 12 months, provided the employee meets the following conditions:
- maintain a home in Australia for their own personal use and enjoyment at all times whilst required to live away from home for their work; and
- provide a declaration relating to living away from home.
If these rules are satisfied, the employer is able to reduce the taxable value of the LAFHA by:
- The amount of the employee’s actual substantiated accommodation expenditure while living away from home; and
- The amounts incurred by the employee for food or drink costs while living away from home, less a statutory amount if applicable.
A friend told me about an investment that he was interested in and suggested that I put some money into it as well. He says we could make a large amount of money but I think it sounds too good to be true.
You are wise to be cautious. Not all schemes are genuine and often promise large tax deductions that they say will be allowed by the tax office. It is wise to check out any investment scheme before putting your money into them. If you invest in a risky tax scheme, you could lose some or all of your money, and you may have to pay back any refunds due to over-claimed deductions as well as interest and penalties.
Before investing in any tax scheme it is advisable to seek independent advice from a professional advisor and/or the tax office. Information and warnings about investment schemes and scams can be found on the Australian Securities and Investment Commission and the Australian Competition and Consumer Commission SCAMwatch website.
Can all the interest from our joint accounts be declared in my wife's tax return because her income is much lower than mine?
All income must be declared by each recipient on the same basis as the accounts are held. Interest from a joint account must be split 50/50. You cannot declare it all on your wife’s tax return and doing so could lead to an ATO audit.
My 14 year old daughter has received $600 from a trust distribution. Does she have to lodge a tax return?
Yes she will have to lodge a return. Prior to the 2012 income year a minor could have earned up to $3,333 from investments before any tax would be payable on that income. However, from 1 July 2011 the Government removed the ability of minors to access the low income rebate for unearned income (such as interest, dividends, rent, royalties, trust distributions etc.). This means that a minor who earns over $416 in unearned income must lodge an income tax return.
Personal exertion income (such as salary & wages) will still have tax payable on it, but that tax payable can be reduced by the low income tax offset but all unearned income will not attract the low income rebate and be taxed at minors’ rates.
I have shares and received franked dividends this year but have no other income. Do I have to lodge a tax return to get the franking credits refunded to me?
You do not have to lodge a full tax return. You can complete the Refund of Franking Credits for Individuals form which can be lodged by telephone or mailed to the ATO.
Do I need to declare my overseas pension?
In most cases overseas pensions are taxable and, if you are an Australian resident, you will need to include the amount in your tax return. There are a few exceptions to this rule. Please call H&R Block on 13 23 25 if you are not sure.
Do I have to declare income from Centrelink (Newstart, Austudy) on my tax return?
All income must be declared. This is because the tax office needs to determine what tax rate applies to your other earnings for the year. You may be entitled to an offset to ensure that no tax is payable on your benefit.
You can access the information required from Centrelink online services, Express plus mobile apps and at self-service terminals at Dept. Human Services Service Centres. H&R Block can also look up the required information for you.
I have just moved permanently to Australia. Do I have to pay tax on the money that I have brought with me?
You will only have to pay tax on any earnings that you make from the time that you moved to Australia. If the money that you brought with you earns interest in a bank account you will have to pay tax on the interest.
I will be going to Europe for six months and intend to work while I am away. Will I have to pay tax in Australia on the money that I earn overseas?
The income will be taxable unless you have worked overseas continuously for more than 90 days and are working on a specific Australian government project or deployed overseas as a member of an Australian government agency. In these cases the income will be tax exempt.
If your overseas income is not exempt, you will need to declare the income on your Australian tax return and may be entitled to a foreign income tax offset for any foreign tax that you paid on that income.
Tax deductions related questions & answers
Can I claim a deduction for sun protection items?
A deduction is available for outdoor workers who buy sunscreen lotion, sunglasses and hats for use at work. The claim must be substantiated and apportioned for private use.
I have to buy tools and equipment for my job. What can I claim on my tax?
You are able to claim expenditure incurred in replacing, insuring and repairing tools of trade that you use for earning your income. If the cost of any item is more than $300 then it will have to be depreciated (i.e. claimed over its effective life). The amount you can claim will depend on what records you have kept and to what extent you use it for income producing purposes.
My job requires me to keep my knowledge up to date and I buy books and journals. Can I claim them all?
If technical books, trade books or journals are necessary to fulfil your job function efficiently then the cost of their purchase is tax deductible.
I have a job which requires me to be on the road a great deal and I have to use my own car. What do I need to do so that I can claim a tax deduction for my car?
There are four different methods for claiming work related motor vehicle expenses and each have different record keeping requirements. To use the method that ensures you the best claim it is advisable to keep a log book and all receipts for expenses (e.g. insurance, registration, repairs, services, tyres, etc.). You do not have to keep receipts for petrol as H&R Block can work that out for you using a yearly average formula. Your log book should be kept for a minimum of 12 consecutive weeks and generally it will be valid for five years unless there are significant changes in your circumstances. You also need to keep the opening and closing odometer reading for each year.
It is not necessary that you use the same claim method each year. The choice of method should be made on the basis of which is more favourable to you and which you have the appropriate records for. If you don’t have a current logbook or have not retained all receipts you will be limited in which method you can choose. You cannot, however, claim any car expenses if your car is salary packaged.
I am expected to maintain a well groomed appearance at work. Can I claim these as tax deductions?
Expenditure on personal grooming and haircuts are generally not deductible. There are exceptions for some taxpayers involved in the performing arts field.
My employer expects me to wear specific clothing for work? What would I be able to claim on my tax?
Compulsory uniforms are generally deductible provided they identify you as an employee of that organisation or in a specific occupation. A requirement to simply wear particular colours is not enough to make the clothing deductible (for example a waiter being required to wear black and white clothing) nor is a requirement to wear a store’s own brand of clothing (they are still conventional clothing and not tax deductible). Corporate wardrobes are also deductible if certain conditions are met. The uniform design must be registered with AusIndustry. Provided that the clothing is deductible then you may also claim maintenance costs (laundry, dry cleaning and repairs).
I work in a fashion clothing store and am required to wear the clothing that is sold in the shop. The garments have the manufacturer’s logo on as part of the design and I buy them at a discount. Can I claim the cost of this clothing?
Fashion clothing is not tax deductible even if your employer requires you to wear it. Because the logo is a part of the design of the clothing and does not in itself identify you as an employee it will still not be claimable.
Am I entitled to claim $300 for work related expenses as this does not have to be substantiated?
You cannot just claim $300. You must actually incur any expense before it is claimable. Whilst you may not need receipts for expenditure up to $300 you must have spent the money and it must be relevant to your employment.
I have incurred travel expenses this year. What can I claim on my tax?
Your travel must be relevant to your job function for you to be eligible to claim a deduction for those expenses. Where this is the case, and you have the necessary documentation, you can claim the cost of transport and incidentals. If your travel involved an overnight stay you would be able to claim for meals. Travel overseas also has the requirement of keeping a travel diary.
I am paid an allowance for travel. Can I claim a deduction for that on my tax return?
A deduction will only be allowed if you have actually incurred a work related expense and have the necessary documentation. Travel to and from your job is generally not claimable unless, for example, you are carrying bulky equipment. Some awards allow for a payment of an allowance even though an expense is not necessarily incurred by the employee. If a deduction can be claimed it cannot be for more than the expense that you incurred even if the allowance that you have received was higher.
I had an overseas holiday during the year and while I was away attended a seminar that was relevant to my job. Can I claim the cost of the trip?
You cannot claim the cost of the trip because the main purpose was to have a holiday and attendance at the seminar was incidental to this. You will only be able to claim the additional expenses that you incurred to attend the seminar. These could include the registration fee, taxi fare to the seminar, etc.
Familly tax deductions related questions & answers
I have had to pay for child care during the year. Is this claimable on my tax return?
Child care expenses are not claimable as a tax deduction. Eligible taxpayers may be able to claim the Child Care Tax Rebate (CCTR) through the Family Assistance Office.
Charity tax deductions related questions & answers
I buy tea towels from a charity each year when they ring me. Can I claim this as a deduction?
You cannot claim a deduction for this because it is not a donation to the charity; rather you are receiving something for your money. Buying an item from a charity does not make your purchase tax deductible. The same applies to the purchase of raffle tickets. Only donations to registered charities are tax deductible.
Other tax deductions related questions & answers
Is there a limit on how much I can claim as a tax deduction each year?
There is no limit on the amount claimed each year, provided the expenses are necessarily incurred in earning your income. The expenditure must be work related and you may need receipts to substantiate the expenditure. Keeping incomplete, incorrect or no records at all may be limiting your ability to claim deductions. Advice can be obtained from a registered tax agent. H&R Block are happy to advise their clients on appropriate record keeping that will enable them to maximise their allowable deductions.
Is a credit card slip acceptable as a receipt?
Provided it gives full details of the supplier and date of purchase the tax office would accept a credit card slip as proof of purchase. Taxpayers can make a notation on the document indicating the type of goods that were purchased. Many taxpayers use the internet to purchase or pay for their work related expenses and so the ATO will also accept Bpay or email receipts provided they contain the necessary information; date, supplier, nature of the goods and the amount.
How long do I need to keep my receipts?
Documentary evidence should be kept for five years from the date of lodgement of the tax return in which the claims are made. If you are depreciating an asset the receipt should be kept until the item is fully depreciated (even if over 5 years).
Can I claim fees paid to my tax agent?
Fees paid to a registered tax agent for preparation of your return, amendments and generally handling your tax matters are all deductible. You can also claim travel to your registered tax agent (you are limited per income tax return to 5,000km in total across the entire return if claiming the c/km method). Registered tax agents are the only people legally able to receive payment for the preparation of tax returns.
Business tax related questions & answers
I have started my own business and wonder if I need to register for GST?
Australian businesses with an annual turnover of $75,000 or more are required to register for GST. If your business has a lower turnover you are not required to register but you may do so if you wish. You will only be required to charge your customers GST if you are registered. Your local H&R Block office can assist you with your application to register for GST. Call 13 23 25 or use our office locator to find your nearest H&R Block office.
I run a furniture delivery business and have a 5 tonne truck which is getting very expensive to run. I have heard that the government gives business tax rebates for the cost of fuel. How do I qualify for the fuel tax rebate?
From 1 July 2008 most Australian businesses could claim fuel tax credits for running machinery, plant, equipment and heavy vehicles used in running that business. To be eligible to make a claim the business must be registered for GST and the claim should be made on the Business Activity Statement (BAS) that is required to be lodged. The amount that can be claimed will depend on the type of fuel and what it is used for. Fuel tax credits are not available where alternative fuels (e.g. LPG) are used.
I run my own business and want to know how I can minimise my annual tax bill?
If your turnover is less than two million dollars, you would be classed as a small business entity (SBE). As such you would be able to access a number of small business concessions including income tax concessions, capital gains tax concessions, excise concessions, goods and services tax (GST) concessions, pay as you go (PAYG) instalment concessions and fringe benefits tax (FBT) concessions.
I am self-employed and have paid personal superannuation contributions all year. What can I claim?
Provided that you satisfy the eligibility criteria, you will be able to claim a deduction for the superannuation contributions you have made to a complying superannuation fund or retirement savings account. To do so you must be fully self-employed or no more than 10% of your assessable income (including Reportable Fringe Benefits and Reportable Superannuation Contributions) is from an employer. You must also have first notified your superannuation fund of your intention to make the claim and received a confirmation.
I have heard that self-employed people can claim the superannuation co-contribution from the government. Am I eligible because I paid money into my super this year and I run my own business?
You may be eligible for the superannuation co-contribution if more than 10% of your total assessable income is from running that business, eligible employment or a combination of the two. Investment income is not eligible income. If you claim any of your superannuation contributions as a tax deduction only the amount that you do not claim will be eligible for the co-contribution.
I run a small business and in June pre-paid 12 months’ rent on the premises that I operate from. Can I claim the whole amount on my tax return even though most of the payment is for next year?
If your turnover is less than $2 million you will qualify as a small business entity and will be able to claim certain eligible pre-paid expenses in the year they were paid. Some examples of prepaid expenses that can be claimed in the year they are paid are: rent, insurance and subscriptions to professional associations. Eligible expenses will be payments that are made for periods of 12 months or less and that the period covered ends in the next income year. Your pre-paid rent qualifies because the period it covers does not exceed 12 months and that period will end before the end of the next income year. The whole amount will be claimable on your tax return this year.
Business tax deductions related questions & answers
I need to have a telephone for making and receiving business calls and would like to know what I can claim?
Installation costs are not deductible. However, part of the rental costs are deductible where a taxpayer is required to make calls from home. Call costs would be deductible and a log of calls must be kept for a minimum of 4 weeks. Mobile phones are claimed in the same way.
I keep a room set aside in my house for a home office and would like to claim some expenses?
If a taxpayer carries on all or part of their employment activities from home and has an office set aside to do the work, then some portion of the running expenses can be deducted. A diary should be kept for a minimum of 4 weeks stating hours the office was used for work related purposes. The Commissioner’s rate of 34 cents per hour can then be claimed for the hours the home office is used. Only running expenses (electricity, heating and depreciation of office equipment) can be claimed for home office unless the home is being used as a place of business.
Where a home is a place of business (and is easily identified as such – for example a separate entrance, signage, clients/customers coming to set area of your home etc.), deductions can be claimed on occupancy expenses – mortgage interest, rent, house insurance, council rates, insurance, repairs, cleaning, pest control, maintenance, decorating and telephone as well as running expenses – heating and lighting, depreciation.
This year I bought a laptop and new mobile phone which I need for my work. Can I claim the cost of these on my tax return?
Items like this that you buy for use in your job can be claimed in your return. However, since the cost of these items is most likely to be more than $300 each you will not be able to claim the full cost in one year. It will be necessary to spread your claim over the useful life of the items (depreciation) and only the work related proportion is claimable. You should keep a log of work related use for a period of at least four weeks for each item to determine the proportion that you can claim.
I recently bought an iPad and have been using it for work. Will I be able to claim a tax deduction for the cost?
The ATO have confirmed that the iPad will be treated as the equivalent of a laptop. If it is used to produce assessable income (i.e. for work related activities) a claim could be made. Any claim will have to be adjusted where there is private use and if the iPad cost more than $300 the work-related proportion would have to be depreciated over its effective life. You should keep a log of work related use for a period of at least four weeks to determine the proportion that you can claim.