Archive for category: Tax

If you run a business, you may find yourself struggling to keep up with annual tax obligations. Between managing your staff, your investors, and other challenges, it’s easy to forget about the responsibilities that come with owning a business in Australia. In this article, we’ll review what you need to know in case you miss tax deadlines.

What Are Tax Return Due Dates?

Tax due dates vary based on the type of business structure you choose. The Australian Tax Office (ATO) has a full list of lodgment due dates for the different types of returns and filings. It’s in your best interest to be informed about these dates so you can avoid any issues that come with late filings. 

What Happens When You File Late?

If you lodge your tax returns late, you may be penalized by the ATO. This penalty can range from $180 to $900 for small businesses, depending on how long your returns take to arrive. The penalty can also add a rate of interest, starting from the due date of payment until your tax liabilities are paid. The interest rate at this stage is  7.04% for taxpayers

For those of you who cannot pay the ATO on the due date,  be sure to contact the ATO about a defaulted tax payment arrangement. You can reach out to the ATO directly to request an extension to the due date for tax returns by calling them at 13-28-66.

What Can You Do to Avoid Late Tax Returns?

While it’s not ideal to lodge your business tax returns late, sometimes it just can’t be avoided. In case you end up lodging your business tax returns past the due date, it’s best to pay the outstanding tax as soon as possible.

If you have to pay tax for the income you received for the last financial year, you can make a tax payment before you lodge your income tax return. Tax payments are often due shortly before the income tax return is due or within a short time after that date.

The ATO can charge interest on any late payment of income tax liability, but you can prevent this from happening by making the tax payment before you lodge your tax return. If you don’t have all the information available to accurately calculate your tax liability, you can make an estimate and pay that amount as a down payment on your bill. Remember, the money will not count as a payment on your tax bill unless you file your return with the ATO.

Additionally, you need to pay off any outstanding tax returns from the previous two years. This can be accomplished by paying off the last year’s tax return entirely and setting up a payment plan for the current year. This will prevent your interest from continuing to compound on any previous years’ returns.

Conclusion

We hope this article proves to be useful when it comes to helping you deal with issues that come with filing late tax returns. To avoid any of these issues, it would be wise to lodge your tax returns in a timely manner. If you need more help with this, be sure to reach out to a professional accountant.

If you’re looking for an accountant on the Sunshine Coast to help you with your business’s finances, SMB Accounting is here to help. We offer various accounting services, such as individual tax returns, small business accounting, SMSF audits, trust account audits, special financial statements, and more. Learn more about how our accountants can help your business today!

So, you have a work-related trip coming soon, and you wonder how much of your travel expenses can you claim. If you are a small business owner or an independent worker who manages their taxes without an accountant, you might find the answers you need in this article. Here is what you need to know.

Defining a Work-Related Travel Expense

“Work-related travel expenses” refers to the соmеrсiаl travel expenses incurred by a taxpayer that is related to carrying out their job. It can be within or outside Australia.

Allowed Work-Related Travel Tax Claims

The ATO allows taxpayers to claim tax deductions for the following expenses:

• Transport costs (such as cost of fuel, ferry, train or taxi fares)
• Travel allowance paid to you by your employer or client (if applicable)
• Traveller’s cheques and foreign exchange fees
• Motor vehicle expenses (such as fuel, registration and loan interest costs)
• Telephone and internet charges
• Accommodation and meals
• Other expenses (as approved by the ATO)

You can refer to the ATO website for a comprehensive list of allowed work-related travel expenses.

What You Cannot Claim

Travel expenses cannot be claimed if they are not directly related to employment.

For example, you cannot claim travel expenses as a deduction if:

• Your employer or client covers the full cost of the work-related travel expenses; or
• Your employer or client reimburses you for work-related travel expenses after the expenses incurred.

Here are some examples for your reference:

Some common expenses that cannot be claimed include:

• Non-work-related telephone calls
• Expenses for travel within your workplace
• Meals and accommodation paid for by your employer or clients
• Travel insurance
• The cost of your flights, unless it is part of an allowance paid to you by your employer
• Travel to and from the airport

What If Your Employer Gave You Allowance?

If your employer or client gave you a travel allowance, you could claim tax deductions for the work-related travel expenses you incurred.

For example, you were required to travel from Sydney to Melbourne for work reasons, and your employer gave you an allowance of $400. That means you can claim $400 as a deduction.

The expenses claimed as a tax deduction must not exceed the allowance received. However, if you received less budget, you are required by the ATO to report the amount of expenses claimed as a tax deduction.

What If Your Employer Did Not Give You Allowance?

The ATO allows you to claim tax deductions for the work-related travel expenses you incurred, based on a reasonable amount.

You can claim a deduction based on a reasonable amount, provided the work-related travel expenses you incurred are supported by evidence such as:

• Receipts
• Diary entries
• Mileage

How to Keep a Travel Diary

What you should do before you start claiming for your work-related travel expenses is to keep a travel diary and record all the details of your travel, including the following deductible expenses: accommodation, meals, car expenses etc.,

It would be best if you keep a travel diary detailing:

• The reason for the trip
• Where you travelled to and from
• The duration of the trip
• The date and place of the trip
• The name and address of the organisation, person, or property visited
• The number of kilometres travelled or the amount of petrol used
• The total amount of travel expense you incurred
• The amount of your travel allowance you received
• Other benefits you received from your employer or client (if any)
• Any other relevant information

This travel diary will help substantiate your work-related travel expense claims during the tax return filing.

Conclusion

If you are a small business owner or an independent worker managing your taxes, it would be in your best interest to claim as many tax deductions as possible. Should you need to go out to travel for work, keep in mind that you need to have a travel diary to record all details of your work-related travel expenses. More importantly, keep all your receipts.

Let experts deal with your tax preparation, audits, financial preparation, and more while you focus on your work. SMB Accounting has been the trusted accountant on the Sunshine Coast since 1993. Call us at 1300 854 159 to learn how we can serve you.

While audit quality may not be your top priority, you may want to reassess and reallocate resources towards your business’ ability to improve and maintain audit quality. Now, we understand if you’re a little hesitant to do this as you may not know much about what audit quality is. This is why we thought it would be useful to put together a brief discussion on this topic. If this is something that you want to learn more about, read on as we go through everything you need to know about audit quality.

What Is Audit Quality?

Audit quality encompasses the key characteristics that create an environment where audit data is likely to be accurate and reliable. Audits are considered to be high quality when the following conditions are met:

• Exhibited appropriate values, ethics, and attitudes.
• Applied a thorough audit process that complied with regulations and standards.
• Provided accurate and timely reports.
• Interact appropriately with any and all relevant stakeholders.

Financial statements must be reviewed in a consistent and thorough manner by qualified auditors, but that process is only effective when the auditors have support from the company’s management and all other relevant parties.

Why Is Audit Quality Important?

Financial reports provide investors with the information they need to make confident business decisions. The goal of an audit is to ensure that these reports are credible and accurate. Improving the quality of audits and ensuring consistency in audit procedures is key to maintaining investors’ confidence in the audits’ conclusions.

If a company fails but its financial report did not properly account for its lack of viability and issues that lead to its collapse, its directors and the auditor will be brought into question. In the case that investment decisions are based on financial reports that do not reflect the true financial position and performance of a company, this is a clear red flag.

How Do You Improve Audit Quality?

Given how important audit quality is, you may be wondering how to improve your business’ overall audit quality. Here are a couple of things that you can do:

• Conduct effective quality reviews of your audits regularly.
• Identify root causes of findings and develop action plans to address these findings.
• Review staff structure to ensure that they are well equipped to handle complex audits.

While this may seem like it requires a lot of time, manpower, and resources, improving the quality of your audits will prove to be beneficial for your business. Think of this as an investment that will help your business. 

Conclusion

We hope this article proves to be useful when it comes to furthering your understanding of audit quality. While new concepts may be rather intimidating, this article should be enough to help you get started. Be sure to keep the information that we’ve discussed in mind so you can make the best possible decisions for your business. With that being said, take note that we’ve merely covered the basics in this article. For more information on audit quality, we suggest reaching out to a professional.

If you’re looking for an accountant in Caloundra to help you with your business’s finances, SMB Accounting is here to help. We offer various accounting services, such as individual tax returns, small business accounting, SMSF audits, trust account audits, special financial statements, and more. Learn more about how our accountants can help your business today!

As part of the 2020 Budget Digital Business Plan, the Australian government wants to implement the Modernising Business Registers program. In this program, the ABRS (Australian Business Registry Services) was to be established to help businesses register and manage the information they share with the government. This is to be rolled out between 2021 to 2024, and the first change is that directors need to get a DIN (Director Identification Number).

Today, we want to shed light on the DIN to help you understand what it is, why you need it, and how to obtain it:

What is a DIN?

The DIN is a unique identification number for a director in the business industry. This number will make it easy for the government and businesses to identify a director by name. The identification number is mandatory for the directors of certain businesses and companies, the Australian Taxation Office (ATO), and the Australian Securities and Investments Commission (ASIC).

Why Do We Need a DIN?

As part of the Modernising Business Registers program, the DIN is being introduced as a way to help the government identify directors. This will help them track directors of Australian companies and enable the officers to gather information about the director.

If a director doesn’t have a DIN, they won’t be able to open one. This is because the government will be using the DIN when they verify the identity of directors using an online portal that they will use to register businesses.

How to Get a DIN?

If you want to register a business, you must get a DIN. Here is how to do it:

Step #1 – Determine if you need a DIN

As mentioned earlier, the DIN is mandatory for the directors of certain businesses, including companies, the ATO and the ASIC. This means that if you are running a business that requires a DIN, you need to get one. The DINs can be obtained using an online portal. To register for a DIN, you need a MyGov account. You can set one up as soon as you know you need a DIN.

If you are the director of a public company, you will have to apply for a PBN (person business number) instead of a DIN.

Step #2 – Register for a DIN

To register for a DIN, you need to visit the Government Gateway. This is an online portal that will allow you to complete the registration process. To start, you will need the following:

Go to this link Director ID Regsitration

Personal details, including your name and date of birth

Your business registration details, including business name and ABN (Australian Business Number)

Your email address

The bank account details where you want to receive the DIN

Biometrics such as a numeric device and a photograph

Step #3 – Receive your DIN

After you enter the required information and successfully register for a DIN, you will receive an email from the government. The email that you will receive will be from myGov and not the Department of Home Affairs, which also handles business registrations. This is why you should always check the source of the email and the link. The link in the email will take you to the Government Gateway, where you will be asked to verify your identity.

After you have verified your identity, you will receive the DIN in your bank account. The government will deposit the DIN in your bank account without any deductions.

Conclusion

In an effort to help the government identify directors, the Australian government has decided to roll out the DIN. The introduction of this identification number is part of the 2020 Budget Digital Business Plan. If you are running a business and is the appointed director, you should consider obtaining a DIN. It is compulsory, so get yours as soon as possible to avoid any trouble!

SMB Accounting offers individual tax returns, small business accounting, and various other services to help companies stay on top of their finances and obligations. If you are looking for accountants in the Sunshine Coast to help you with obtaining a DIN, work with us today!

Tax deductions are very helpful resources at the end of the taxable year. To get the correct amount for claiming, it’s important to keep an accurate record of your books. Good record-keeping is important anyway to make sure you are abiding by the proper regulations.

If you don’t properly calculate your deductions, you essentially lose money. Statistics even show that Australians miss out on millions of unclaimed tax deductions every year. Throughout the audit process, you’ll rely heavily on the records you’ve kept to get what you’re entitled to.

Read on for some tips to better record-keeping in preparation for tax time.

Keep Your Receipts Throughout the Year

You should make it a habit to store your receipts safely throughout the year. This will give you the proper references for your claims, especially if the Australian Taxation Office (ATO) brings any of your claims into question. This will help prevent you from paying any more tax than you have to.

A good way to organise this is in chronological order. This way, you can easily get a reference of your receipts from the date and time of the transaction. It also ensures that you can keep track of your expenses as you go along. You can also segregate your receipts under categories depending on the type of expense. 

Make sure you also keep a digital backup of your receipts for safety. In case of loss or damage, you can always refer to your digital files.

Record All of The Income You Receive During the Year

You also need to keep track of all the income you receive. This includes any salary or wages from your regular job. Beyond that, you also need to take note of investments, managed funds, allowances, dividends, and earnings from any rental properties or room letting. 

If you have a full-time job, your employer will be responsible for providing you with an annual statement with all of your yearly earnings. If you have a managed fund or real estate property, you should make sure you get that same summarised statement from your agent or fund. 

You should also note that any asset you acquire or dispose of should have a record with you. It is recommended by the ATO to keep these documents for five years from the day you are no longer required to produce any capital gains tax (CGT). 

Record All Your Tax Deductible Expenses

Finally, you need to make sure you have proof of any and all tax-deductible expenses. This comes down to receipt keeping again. If you’re not sure what applies, the following categories are considered eligible for a tax refund:

• General expenses, including charity donations, private health cover, income protection costs, tax agent fees.
• Work-related expenses such as license and certification fees, union fees, professional memberships, and gifts.
• Expenses on education, like course fees, textbooks, travel costs, food and accommodation during school trips or lessons, and library fees.
• Work-related purchases and travel expenses. This includes any equipment for your office, like furniture, organisers, computers, software, technical tools related to your field, and any electronics. Any purchase worth more than three hundred dollars will require a claim with their decline in value incorporated. For travel, this includes tolls, vehicle costs, parking, public transportation fares, flight expenses, and food and accommodations for work trips. Those that work from home can also make claims for internet, postage, and electricity on top of the previously mentioned items.
• Newly acquired asset costs and expenses for rental properties and investments.
• Recently disposed of or sold assets.
• Expenses on protective clothing and uniforms.
• Any expenses for disability and aged care.

Conclusion

If you can stay on top of the items mentioned above, you’ll have a much easier tax season. Calculating your income tax returns and deductibles can do wonders for your financial health in the long run. A good accountant should be able to help you get through these documents easily and calculate them properly. 

To prepare for the next tax season and make sure you have the right audit process, reach out to SMB Accounting. We provide individual tax returns and small business accounting. Contact us and we’ll connect you with an accountant from the Sunshine Coast ready to accomplish your accounting needs.