Tax Update - October 2016

October 06, 2016


The Small Business 100% Accelerated Depreciation Concession

Please note the accelerated depreciation concession (instant write off) for small business will be available until 30 June, 2017. The concession applies to depreciable assets costing less than $20,000.

Superannuation: Non-Concessional contributions Cap

In the May 2016 Budget the government proposed setting a limit of $500,000 on the amount of non-concessional contributions backdated to 2007. This proposal has now been abandoned.

On 15 September 2016 a new policy was announced. This new policy will lower the existing non-concessional (after-tax) contributions cap of $180,000, to $100,000 per annum. The bring forward rule will still apply meaning individuals under 65 years can bring forward a three year contribution (contribute up to $300,000 in one year). Individuals with a balance of 1.6 million or over will no longer be eligible to make non-concessional contributions. The $25,000 concessional contributions cap will remain. If the legislation is passed this new policy will begin on 1 July 2017.

Tax scams 

You may have heard of (or you may even have experienced yourself) fraudsters contacting people by phone out of the blue The caller claims you have overpaid your tax and are now entitled to a refund.

To obtain your refund you are asked you to first pay an ‘administration’ or ‘transfer’ fee. They may also ask for your financial details so they can transfer your ‘refund’ to you.

If you do hand over money to these scammers the chances are you won’t see it again. As well, if you give any personal details to a scammer you put yourself at risk of fraud.

Protecting yourself

  • If you receive an email or phone call out of the blue from someone claiming to be from the ATO and that you are entitled to a refund, or they asking you to confirm or update personal details, hang up!
  • Never put your tax file number (TFN) on your resume. Only give it to your employer after you have started your job.
  • Never share personal information, such as your TFN, myGov or bank account details on social media.
  • If you’re not sure whether a call or email is a scam, verify who they are by using the official contact details to call them back directly. DO not use contact details provided by a caller – find them through an independent source such as a phone book or online search.

Work-related expenses

The ATO is again kicking the work-related expenses can! With over eight million Australians claiming work-related expenses each year the ATO is reminding people to make sure they get their deductions correct this year.

Taxpayers claim over $21 billion in work-related expenses each year. In 2014/15, the ATO conducted 450,000 reviews and audits of individual taxpayers resulting in revenue adjustments of over $1.1 billion.

Case Studies

The following case studies provide insight into the ATO’s stance.

Case Study one – Travel expenses

A wine expert working at a high end restaurant took annual leave and went to Europe for a holiday. He claimed thousands of dollars in airfares, car expenses, accommodation and various tour costs. He based these deductions on the fact that he had visited some wineries. He also claimed over $9,000 for cases of wine.

All his deductions were disallowed when the employer confirmed the claims were private in nature and not related to earning his income.

Case Study two – Self-education  

A taxpayer claimed self-education expenses for the cost of leasing a residential property which was not his main residence.

The taxpayer claimed he had to incur the expense of renting the property as he ‘required peace and quiet’ for uninterrupted study which he could not have in his own home. This was not deductible.

In addition to the rental expenses, the cost of a storage facility was claimed where ‘the taxpayer needed to store his books and study materials’.

He claimed he needed this because of the huge amount of books and study material associated with his course and had no space in his private or residence where these could be stored.

The cost of renting the property was around $57,000 with additional expenses of $7,500 for the storage facility. The actual cost of the study program he attended that year was only $1,200.

His deductions were not allowed.

Please note: the above ATO’s warnings and case studies in no way should dissuade a taxpayer from claiming legitimate expenses. Remember that each work activity or occupation has its peculiarities, expenses which may not be deductible for one taxpayer maybe quite legitimate for another.

If you have any questions or further enquiries, please do not hesitate to contact us on  (02) 9713 1199  and we would be happy to assist you.