CPA Australia’s head of policy, Paul Drum says as we get closer to year end, there are a range of issues employees and students should be considering.
“There have been a number of recent changes to the tax and super system that impact individuals. The ATO is also ramping up their compliance activity around deductions employees and landlords may claim. Make sure you are aware of these, as they are an important part of your decision-making process.”
“The ATO also has a range of products that can assist you in the preparation and lodgment of your tax return but tax law can be complex and bewildering, so we encourage you to see a CPA-registered tax agent to talk about your specific circumstances,” he said.
Don’t forget to claim all your work-related deductions. Typical work-related expenses include employment-related telephone, mobile phone, internet usage, computer repairs, union fees and professional subscriptions. Note that the ATO will have a stronger focus on ensuring taxpayers claim only the work-related expenses to which they are entitled. Make sure you claim only what you are legally entitled to claim and that you have all necessary receipts or other evidence to back-up your claims.
If you use your motor vehicle for work-related travel, and such travel does not exceed 5,000 kilometres, you may be able to claim a deduction on a cents-per-kilometre basis. Under the cents per kilometre method, you must be able to show how you calculated the kilometres travelled. If your business travel exceeds 5,000 kilometres, you must use the log book method. See your tax agent for further details.
When part of your home has been set aside primarily or exclusively for doing work, a home office deduction may be allowable. Typical home office costs include heating, cooling, lighting costs, and even depreciation of your office equipment.
If you are, or have been, involved in acquiring or disposing of cryptocurrencies such as Bitcoin, you need to be aware of the income tax consequences. The ATO’s view is that in most circumstances, the gains or losses on the disposal of a Bitcoin will be caught by the capital gains tax (CGT) regime. Contact your CPA Australia-registered tax agent for advice on cryptocurrencies.
You may wish to consider making the maximum allowed concessional superannuation contribution before year end. Keep in mind that the contribution caps for the 2017-18 financial year is $25,000. Similarly, the annual non-concessional (post-tax) contributions cap is only $100,000 and the three-year bring forward provision is $300,000.
An individual likely to earn less than $51,813 in the 2017-18 tax year should consider making after-tax contributions to their superannuation to qualify for the superannuation co-contribution if their circumstances permit. The Government will match after-tax contributions fifty cents for each dollar contributed up to a maximum of $500 for a person earning up to $36,813 The maximum then gradually reduces for every dollar of total income over $36,813 reducing to nil at $51,813.
If you have a residential property that is either being rented out or is available for rent you can claim immediate deductions for a range of expenses such as interest on investment loans, land tax, council and water rates, body corporate charges, insurance, repairs and maintenance, and advertising for tenants. It’s important to remember that landlords can no longer claim travel deductions relating to inspecting, maintaining, or collecting rent for a rental property.
Self-education expenses can be claimed provided the study is directly related to either maintaining or improving your current occupational skills or it is likely to increase your income from your current employment. Typical self-education expenses include course fees, textbooks, stationery, student union fees and the depreciation of assets such as computers and printers.
Immediate deductions can be claimed for assets that cost under $300 to the extent the asset is used to generate income. Such assets may include tools for tradespeople, calculators, briefcases, computer equipment and technical books purchased by an employee, or minor items of plant purchased by a landlord.
Assets costing $300 or more that are used for an income producing purpose can be written off over a period as a tax deduction. The amount of the deduction is typically determined by the asset’s value, its effective life and the extent to which it’s used for income producing purposes.
To find out more, speak to a CPA-registered tax agent about your specific circumstances.
To find a CPA in your local area, visit the CPA Australia website.