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Managing tax time in 2020 Critical tips for CPAs

Tax agents have begun scheduling their meetings with the client and discussing income generated from stimulus measures. During Covid-19, the economic stimulus support given to the businesses has proved to be a great support to numerous companies. Many clients have rearranged their business affairs to avail of the benefits of Covid-19 stimulus measures. We bring some critical tips for CPAs in case you come across such a client.

With the execution of economic stimulus measures by the Government of Australia, the ATO has tightened its seat belt to review claims and check the eligibility criteria to ensure the integrity of the superannuation system and tax. As expected, many businesses are reported for their flawed payment to Jobkeepers, and many have been warned for filing early superannuation without being eligible.

With the tax time on the edge, tax agents are on the job of computing income from stimulus measures under income tax return 2020. In many cases, tax agents may detect intentional fraud, concealment of information, or any action hampering the rule’s uprightness.

In some instances, tax agents may come across information that suggests potential fraud or behaviors of concern or the client may disclose actions that contradict the integrity of rules. For instance-

  • Creating unnatural restructure or fraudulent arrangement in the business to fulfill eligibility standards
  • Making false enhancement in wages of any month to maximize amounts
  • Changes in the classification of payments
  • Reschedule supplies
  • Releasing untrue statements or deceptive effort to establish a claim

Taxpayers are found guilty of repayments, interest charges, penalties, and conviction for breach of law under the Taxation Administration Act 1953 and the Criminal Code Act 1995 along with sanctions under the Tax Agent Services Act 2009. Job keeper legislation has also levied many joint liabilities for members of staff and company for the repayment of Jobkeeper amounts.

Outcomes of non-compliance

In the case of non-compliance, tax agents should make sure to acquaint the clients with all certain and possible entitlements and the penalty for the fraudulent act. On suspecting fraud, it is wise to investigate the matter from distinct aspects for better opinions of the case.

Members of CPA, Australia, will run in the need to follow the APES110 Code of Ethics for Professional Accountant (Code of Ethics) having regulations regarding the liabilities according to Non-Compliance with Laws and Regulations. It caters structure for the members to execute NOCLAR having laws regarding the financial statement of a business to its ability to continue its business or to avoid penalties.

It is highly significant for the members to remain versed with the fact that informing authority under NOCLAR is suitable only in a few cases and is applied only after unsuccessful attempts to correct the NIOCLAR charged with Governance. NOCLAR doesn’t lay any compulsion over its members to reveal any non-compliance or doubtful non-compliance when there is no responsibility to do so. Members must fulfill the applicable NOCLAR requirements and regard it as mandatory under the circumstances. It varies from case to case.

A tax agent may communicate with the clients to minimize the warnings of NOCLAR to a bearable level.

 Operation of Tax whistleblower protections

The tax whistleblower protections came into effect From 1 July 2019. It permits whistleblowers, like a tax agent, to reveal secluded disclosures to the ATO.

These disclosures are made where-

  •  There are rational reasons to believe the information implying misconduct or inappropriate affairs or situation concerning an entity or individual’s tax affairs.
  • The details may aid the entitled recipient in carrying out duties linked to those tax affairs.
  • When a whistleblower declares any form of logically supposed indecency, like making untrue statements or misrepresenting business documents to procure tax benefit via massive tax fraud, they are potentially entitled to guard.

Qualified whistleblowers enjoy protection from civil, criminal, and governmental responsibility.  Few clearly stated protections, too, are offered against contractual actions taken in answer to the revelation. The tax whistleblower laws give a tax agent a choice to disclose or not subject to their liability as per Code of Ethics. As the revelation in front of legal practitioners for lawful advice is protected, a tax agent may consider a legal professional’s disclosure as communication with the legal expert to find a suitable plan of action.

How to handle tax stress in the COVID-19 time?

2020 was the year that every business of the world had planned for expansion, profitability, and stability. However, it gifted anxiety, fear, and challenges to individuals as well as to business houses. With Covid-19 overshadowing lives, jobs, businesses, etc., it would probably be marked as the worst year for centuries. At the individual level, safeguarding our health from the deadly virus became our priority. Simultaneously, people in businesses ran in the need to stabilize their mental health with the taxation period on the verge.

Preventive measures turned out to be the only solution for every individual, and likewise, CPAs came for the rescue of businesses. Covid-19 pandemic has increased uncertainty, and the task to maintain stability and accomplish official formalities is beyond the word called difficult. CPAs are the only clouds that could drizzle a bit and provide the pacifying cooling effect in the hot storm of dust and heat in the form of Covid-19.

Those owning an accounting practice are versed with the degree of stress involved in it. With pandemic hampering everything around, the anxiety has got deepened with financial and psychological aches. Overcoming or battling with such high intensity of stress may not be easy, but it isn’t impossible to cope with ideal tools and approaches. Ironically, clients look for their accountant as a tool for stability, control, and support.

It is noticed that many accounting businesses have undergone a handsome revenue drop up to 40 % or above. Many CPAs are devoting this phase on mere establishing relationships by providing services either at nominal prices or free of cost. It is quite evident that stress is showing an upward trend on the graph with income scaling downwards.

Dr. Grant Blashki, a renowned clinical adviser, states that people in business are strictly required to need to maintain their health, happiness, and mental wellbeing. A widespread prescription stores its solution like regular exercise, proper and fruitful intake of diet, adequate sleep, sticking to a healthy routine and socializing with friends and family. It is also essential to stay attuned with the virtual tools and use them in the best and advantageous way, establishing and allocating the time for WFH and family life. It is advised not to allow problems to elevate beyond your control.

Overruling the wheel of stress

Disrupted sleep and constant worry about lethargy and low energy are some of the alarming symptoms of stress. However, staying disconnected from colleagues, friends, and family leads to negativity and drops the performance. It is time to go for professional help if any individual quickly identifies these.

For those on a WFH or work from home mission, it is crucial to structure a routine, have the zeal to stick to it, and be in touch with colleagues. Avoid working late or staying awake late or sleeping when the sun shines in the sky. One should emphasize on refreshing and refocusing

Meditation is undoubtedly fruitful, and doing things that exhilarate you should be focussed. The main motive should be breaking the cycle of stress. Take out time from your schedule when only you and positivity rendezvous with negativity far off.  You may even try to form a gratitude list to distract yourself from problems and have a sheer focus on positive things in your life.

Few tips to drop down stress and pressure

Dr. Blashki states that his organization, Beyond Blue, has crafted a website referred to as Heads Up, which contains videos, articles, blogs, and interviews, especially targeting folks in businesses. In short, all the above content has the message and guidance of modes to stabilize business advisors’ mental health. It also offers tips on how they can aid others to come out of blues. It creates an opportunity in a way to strengthen the relationship with clients. With uncertainty all around in business, clients look for all-round support and advice from advisors. Extending support beyond fiscal issues would be valued more during this phase.

Another way out is to conduct workshops for clients to build mental peace and tips for managing the business in the rough patch. Helping others is highly effective in reducing problems and stress. You may find your problem almost negligible in front of others, and the peace obtained from helping others is incomparable. It imparts a great sense of achievement.

We all are dependent on each other, and a small effort in helping others in business or at a personal level can be a massive contribution to the community.

Some tips for tackling

  • Take time off from your business problems and drain your stress during it.
  • Be close and connected with family and friends.
  • Strike balance between work and home realms.
  • Reach out to the accessible resources for your mental stability.
  • Be aware of warning signs, such as fatigue and social withdrawal.

Australia’s Economic Forecast 2020/21

The world is still battling with Covid-19. And like other economies of the world, the Australian economy is also close to collapsing. The impact is visible, with unemployment predicted to shoot up in Australia.

The Australian government cleared its Economic and Fiscal perspective after being trapped by the virus. It has set out the impact of Covid-19 on finances and the world economy. It further stated that all support provided by the government had protected the economy from the negative outcome due to the pandemic. This measure has taken Australia out of the downturn.

It is anticipated that the economy of Australia will shrivel by 2.25 percent in 2020/21. In the year 2020, the government predicts a 3.75% contraction in economic activities, before ascending in 2.5 % in 2021. The government further predicts that the rate of unemployment will escalate to 8.75% in 2020/21, which was computed 7.4 % in June 2020. The government forecasts that unemployment will be at its peak in December 2020, with figures of 9.25%.

The government further mentioned that the JobKeeper subsidy’s introduction came to the rescue of unemployment and hasn’t allowed it to go beyond the forecast. Such a measure saved approximately 70,000 folks from getting unemployed, which otherwise could have risen the unemployment rate by 5% more than the current unemployment rate.

Whereas, others gave unenthusiastic estimation. The OECD concluded with the forecast that the economy of Australia will contract 5 percent in 2020 due to COVID-19 infections) which will further decline to 6.3 percent if the infections from the virus hit back with more power. The OECD stated that next year, the economy would grow by only 1 %. The OECD stated that the system should confirm that the social safety net is ample and think of investing in energy efficiency expansion.

As per the current scenario with Australia still fighting with more rounds of infections, the economy could not return to its stage in December 2019. It could level it up to the growth rate in 2019 around 2022 only.

As per the forecast of Australian Treasury:

  • US economy will reduce by 8.0 percent in 2020 and grow up 4.75 percent in 2021
  • China is anticipated to grow 1.75 percent in 2020 and 8.25 percent in 2021
  • Japan will shrivel 6.25 percent in 2020 and nurture 2.75 percent in 2021
  • India will shrink by 4 percent in 2020 and grow up 4.25 percent in 2021
  • The Euro area will be worse affected by a shrink of 8.75 percent in 2020 and a growth of 5 percent in 2021.

 From Fiscal point of view

 

According to government, it has endowed the economy with A$289 billion in monetary and balance sheet measures, roughly 14.6 percent of GDP. Fiscal aid further continues with the JobSeeker Bonus Payment, the JobKeeper wage subsidy, and the Cash Flow Boost.

Balance sheet steps taken by the government include the SME bank loan guarantee scheme. The straight fiscal aid by the government approximates at 9 percent of GDP, which is undoubtedly among the largest packages offered by the rest of the countries of the world. It is considered that colossal expenditure will save the finances of the nation. The fundamental deficit is estimated to be A$85.8 billion in 2019-20 or 4.3 percent of GDP. However, in the year 2020-21, the deficit is presumed to escalate to 9.7 percent of GDP.

Net debt of the KIWI’s is predicted to breed from A$488.2 billion in 2019-20 to A$677.1 billion in 2020-21.

Policies introduced

In addition to tax and superannuation relief from the government, it has recently introduced and implemented various policies to safeguard the economy from prospective damage.

  • Extension of the application period for early access to superannuation

To provide a way out to people struggling amidst COVID-19, the government permitted people to procure superannuation with the maximum limit to $10,000 in 2019/20 and $10,000 in 2020/21 income year on the tax-free ground. The application period will also be extended to 31Dec 2020 from 24th September 2020.

  • Extension of COVID-19 SME Guarantee scheme

The Coronavirus SME Guarantee Scheme has been declared to save and provide working capital to SME’s (small and medium enterprises). The scheme is extended from September 2020 to June 2021. According to the program, the government caters assurance of half or 50% of the loan offered by entitled lenders to small and medium-sized businesses.

  • Expansion of Apprentice and Trainee wage subsidy

Apprentices and Trainees wage subsidy is also expanded. The new wage subsidy gave small business employers 50 % of an apprentice or trainee’s wages for nine months with the limit of A$7000 every quarter. The subsidy slated to end on 30th September 2020 shall extend to 31st March 2021. It has been expanded from 1st July by the inclusion of medium-sized businesses.

  • JobKeeper Wage Subsidy extension 

As per the latest introductions by the government, the JobKeeper payment that was scheduled to end up on 27th September 2020. It will extend to 28th March 2021 to eligible businesses and not for profit. The payment rate is slated to decrease from $1500 per fortnight for eligible employees and $1200 per fortnight for business participants from 28th September 2020 and $1000 per fortnight from 4th January 2021.

Accountants and Bookkeepers Essential for Stage 4 Lockdown

Amidst the Corona Virus outbreak and early lockdown phase, only necessary services were allowed. But now gradually, more services are being added to the essential service slot to confirm the smooth functioning of the economy. The Victorian Premiere is now requested to include accountants and bookkeepers as necessary services post stage-four lockdown restrictions.

All nine professional bodies of the Tax Practitioners Stewardship Group buzzed Victoria Premier Daniel Andrews to permit accountants, bookkeepers, tax practitioners, and other related professionals to commence their work out of home in their offices or at the client’s premises on the proposed stage 4 lockdown in Victoria. These nine bodies include CPA Australia, Chartered Accountants Australia, and New Zealand, the Tax Institute, Institute of Public Accountants, The Institute of Certified Bookkeepers, National Tax and Accountants’ Association Ltd, Tax & Super Australia along with the Association of Accounting Technicians.

It was urged as Victoria noticed 428 new COVID-19 cases on Friday, which is also a maximum single-day increase out of the total 429 total everyday cases in entire Australia on 28 March. Victoria Chief health officer has declined to rule out restrictions of stage 4, with the residents compelled to wear a face mask while being on public places.

Accountants and Bookkeepers have been regarded as necessary services as tax time is approaching, and individuals need them for professional advice. Due to COVID-19, taxpayers have a hard time managing their funds and rely on the Tax Return refunds for livelihood and living expenditures. Folks looking for non-business tax advice like in the case of superannuation too are having tough times. Other than the above, business clients, also are running in need of consultancy of tax and account practitioners for filing their tax returns, to draw the advantage of Government stimulus packages along with checking the eligibility for Victorian Business Support Fund Expansion grant.

Businesses would also require the advice of Economic Statement Update on 23 July and the 2020–21 federal budgets in October. It is recommended as well as requested that the Victorian Government to publically recognize the needs of the time and make their statement in support of bookkeepers and accountants. It is further requested to investigate the practical execution under the lockdown 4 stage vigilantly. It is immensely crucial that tax practitioners, bookkeepers, accountants, and other professionals from the accounting realm support businesses and individuals with their essential pieces of advice.

How COVID-19 has impacted the young CAs, and how can they take advantage of this current time?

The Novel Corona Virus has changed the working style across the globe, with the world going virtual. What seemed unrealistic earlier has now become an integral part of our life with the spread of COVID-19. Across the world, with some limitations and a bunch of advantages, every business and every profession is learning to overcome the deadly emotional and fiscal outcomes of the pandemic. For young Chartered Accountants (CAs), the outbreak of the deadly virus has created uncertainty and dilemma about their future.

COVID-19 outspread will be remembered for generations for the commencement of new working styles by facilitating businesses on virtual platforms, pay cuts, work from home trends, and rising unemployment with a large number of people going jobless. Just like other professions, CAs in New Zealand and Australia are also facing the outcomes of economic crunches due to the Corona Virus. They have been the victim of uncertainty about their future too.

Psychology professor Paula Brough requested that the young CAs be prepared for worse conditions, which could be a reduction in working hours or losing a job with the economy getting weak. Losing a job would amount to more significant difficulties of managing households, releasing expenses, payment of insurance premiums, or home installment or rent.

It is, therefore, vital for young professionals to maintain their physical strength. Taking a break is advisable, and so is seeking someone for support.

Working on soft skills

With the businesses facing hold up or multiple issues for their profitable survival, it is considered to be an excellent time for the novice or young CAs to inculcate soft skills which would aid them to combat the uncertain world.

Communication with the client is vital.

It is immensely crucial for young CAs to have strong communication with their clients and not rely on others. With the outburst of COVID-19, we shouldn’t expect them to be experts or technically proficient. CA’s are expected to work on their interpersonal skills. Communication from both ends is important and more significant to develop understanding and reliability between the two.

With everything on the internet, clients can have easy access to all information, but an advisor is always needed for expert and sound advice. Your communication skill should have an impact on being remembered and understood by the client. Your words should encourage clients to react and act. The bespoke response is requested to clients in their verbal style as one key won’t fit in all locks. New technology should be used to make the client understand like video calling or conferencing in place of traditional phone calls.

Adapt the new trends and be tech-savvy

The young and new CAs should be versed with the latest technology trends and be tech-savvy as much as possible. Being a CA, you should be creative, forward-thinking, and do planning to be ahead of time with new technology as it eases the work with newly added and improved features. So, go and check the most exceptional software company and its ideal pricing proposal. Know what tools are being used for screen sharing or video recording.

Every year, thousands of technological tools are introduced. Use the best one for an appropriate time to know it entirely before you suggest them to your client.

 Virtual association with like-minded people

Owing designation of CA is like icing on the top and imparts excellent benefits as you get to associate with the people having a similar mindset, approach, and knowledge. It facilitates you to connect with the folks belonging to the same industry and get acquainted with other chartered accountants.

Work from Home Tips to make you more Productive

Work from Home (WFH) is the new trend of 2020, and thanks to the deadly pandemic COVID-19, that has made the lesser preferred trend to be the need and rage of the year. Some have found work from home to be a blessing while others have a tough time working in their personal space. Work from home involves significant challenges too, along with easing problems like driving for hours to office, etc.

In this article, we bring you ten hacks proven to be quite useful in enhancing productivity while working from home. Check them out and try to implement them to enjoy high productivity amidst the comfort of home.

Value your time

Don’t schedule anything else during your working hours. People often indulge in everything other than their essential office work while being away from the office. It is vital that you set your working hours and don’t let any other thing interrupt you while you are working from home. Time management is essential to have outcome-driven working at home.

Stick to the calendar

Try to save your forthcoming schedule on the calendar. With the world on a digital platform, you may use Google calendar, outlook calendar, or Apple calendar. Block time for things on your calendar schedule. Often the calendar makes the decision and helps with its guidance by telling you what to do on a priority basis. It works as a boss to self-employed folks also and aids in being more productive.

Go out a bit too

Sitting the whole day at home and working normally lessens productivity as one gets sluggish and sick of sitting in the same posture. Changes are a must, and for a change, go out and raise your productivity. You can try sitting in the sun with your laptop or go for a walk

 Strike balance between home time and work time

Your office hours at home mustn’t eat up the family life you spend at home doing household and quality time with your family. One needs to strike a balance between home time and work time and excel in both walks of life.

 Concentrate on your current task

The idea of founding an office is to avoid distractions at home. While working from home, make sure that you do what is in your hand first and not let your focus get distracted.  Learn to focus on one task only. Multiple tasking is considered proficiency, but while working from home, kindly avoid it as you may end doing nothing eventually.

Website blocking software

Often while working on the system, notifications catch out attention, and we go on to browse social media apps like youtube, FaceBook, or switch on chatting. It usually consumes a good number of hours of the day, which is sheer wastage that you could have turned useful otherwise. Get website blocking programs from the market to not let anyone distract you.

Be officially dressed

Working in casuals always may not give you the feel of the office, and often it affects the intensity of work.  Being in official attire keeps the mind in the right frame and aids in sticking to work. Also, you may immediately switch to video calling or video conference without being afraid of your appearance.

Go for a time tracking app.

Wastage of time is inevitable while working at home, and to minimize wastage, it is vital to use a time tracking app. It would help in adding accountability and increasing productivity.

Take time for joy

In the hassles of managing the work at home, take out the time for your home as a rejuvenating act is vital. You may try your hands in the kitchen or going out on a long drive to refresh yourself. Working all day isn’t humanly possible; everyone needs to schedule joy to not to recreate yourself but to augment your productivity in the office front.

The government extends the time for early access to super due to the pandemic.

Superannuation refers to a special provision made by the Australian government to motivate people living in Australia to save funds for their post-retirement phase. It can be referred to as a pension plan or a type of employment funded pension, which is partly mandatory in Australia and enjoys tax benefits.

Australia, too, hasn’t been unaffected with the outbreak of Covid-19, and the residents are bestowed little more time to apply for the release of superannuation.

As per the latest economic and fiscal updates released by the Government of Australia, the early limit for superannuation applications has now been extended to 31st December 2020. Before being hit by the deadly COVID-19 pandemic, all eligible citizens and permanent residents of New Zealand and Australia were given the time limit up to 24th September to apply for superannuation via ATO online service in myGov.

The scheme now empowers the applicants to withdraw by 30th June the maximum amount of $10,000, succeeded by withdrawal up to $10,000 from the very next day of July. Early access has been an essential feature of superannuation for those facing financial crunches. The COVID-19 just facilitated the early access choice to the people if they have professionally undergone at least 20 hours or more working hour reduction.

Figures of folks benefitted in Australia till date with superannuation.

  • The figures for withdrawal from the scheme have been $25.3 billion from the commencement of the program.
  • Also, over 2.8 million applications for withdrawal have been received ever since the liberty was offered.
  • Applications to have access to the superannuation fund from 1st July to 12th July have been 818,000.
  • The average payment from the month of inception has been $7, 718 with an expected rise to &8,755 on reconsideration of application in July.

 ATO to check eligibility of applicants

The ATO has declared to scrutinize every application to ensure that the integrity of the scheme is maintained and not misused. Data from over 3 million Australians have been verified to check eligibility for the release of super, augment cash flow, and job keeper release.

ATO has now come up with some stringent steps to check applicants’ eligibility by investigating the trends of their salary and wages, information about their employment, etc. It is now firmly putting a check over the eligibility criteria as the folks have been found guilty of arranging the affairs through fraudulent acts. ATO will also take into account the applications for the early release of superannuation to procure tax benefits.

How much can you save with tax cuts in recent times in Australia?

The tax saving of Australians is expected to be $1080, which is further speculated to shoot to $2565 depending on their income. With the cut down in the personal income tax as suggested by the Government, it is also anticipated that Aussies will be able to save up to $2565-a-year. Treasurer Josh Frydenberg revealed that the tax concession of 32.5 % to workers is recommended to be applied in 2022 in place of 2024.

Those having income between the slot of $50,000 and $90,000 will get to save through reduction in their annual tax by $1080, whereas those having their taxable income between $90,000 and $100,000 will be able to enjoy reduction by $1215.

On the other hand, Aussies falling in the income group of $100,000 -$120,000 will get to save $1665. Further folks with the income beyond $120,000 with a maximum ceiling of $200,000 will now cherish the news of getting to save $2565.

Mr Frydenberg said that “the Government is on the verge of formulating one massive tax bracket between $45,000 and $200,000 through which Australians would not get under the liability to pay a nominal rate beyond 30 cents in the dollar. Further, he stated that the Government is seeking for the right time to execute tax cuts as it wants to augment demand, increase consumption and thereby aid people in saving more money.

It was disclosed after levying the six weeks lockdown in Victoria due to the outspread of COVID -19, which is expected to cost over $1 billion a week to the economy of Australia.

 

Banks pulled out loan holidays.

Due to the people of Australia facing financial crunches, banks went upon to lessen the load over Australian families by reducing the degree of tremors to the economy by expanding the home loan holidays by four months. The housing prices in the real estate sector were at an all-time low in the ninth month of 2019 when rescheduling offered to the borrowers was about to expire simultaneously with the Government’s Job keeper and Jobseeker scheme.

Also,  it was found that due to the pandemic outbreak, it was observed that quite an impressive number of Australians were not in a condition to pay their rent or mortgage timely. The banking sector stated the next phase as a golden chance to those in a tough patch to repay their mortgages through restructured loans.

If borrowers are found having a hard time getting their life on track when the six months deferral expires, they will be given extra home loan holidays. Those in a good position to repay their loan will start again by paying; however, those in need will be offered continued support until they to get into a good position to repay loan and interest, said the Australian Banking Association chief executive Anna Bligh.

Accounting profession latest JobKeeper 2.0 Regulations

The Government of Australia declared six-month extension to its Job Keeper Program whose expiry was scheduled on 27 September. JobKeeper 2.0 will experience diverse payment rates, and likewise, the eligibility requirements too would be different till March 2021.

Job keeper payments are also subjected to reduction from 28 September 2020 to 3 January 2021 with the revised norms having reduction of $1,200 per fortnight for people working for 20 hours or more in a week and $750 for job keeper working less than 20 hours. In order to be eligible, businesses need to substantiate that their GST Turnover has undergone a reduction in both the quarters of June and September 2020.

Also, the rates are again scheduled to decline to $1,000 and $650 for the folks having working hours figures below 20 hours a week with effect from 4 January to 28 March 2021.  Businesses are bound to undergo retest of their eligibility again along with showing off their declining turnover test for quarters of June, September, and December 2020.

The extension is welcomed, but the jobs of accountants have been increased with the frequent change in eligibility criteria. Due to revised GST turnover and eligibility criteria, business houses will now be more careful of their cash flow and billing provisions. During this hard time, treasury’s new fact sheet, which keeps the records of entities, came up with little assistance stating that eligibility will be assessed based on details stated in BAS (Business Activity Statement). It further stated that deadline to file a BAS is ordinarily due in following months and businesses and nonprofit organizations will be required to check their eligibility for JobKeeper before BAS deadline to fulfil the terms of the wages.

Tony Greco, the general manager of the Institute of Public Accountants, stated he hopes that the guidance on actual GST turnover will be mentioned clearly before its implementation. As per the existing norms, turnover is the value of supplies accomplished in the relevant duration comprising of GST-free supplies and excluding input-taxed supplies. Before the issue of LCR 2020/1, the ATO’s website stated many times in a week but actually couldn’t clear that cash and accrual methods were concessionary modes and it got cleared with the release of LCR only.

“The LCR states clearly that the law makes the taxpayer segregate supplies done in each relevant period, and after that, it is required to work upon the value of supplies.

Time to adjust

CPA Australia’s tax policy adviser, Elinor Kasapidis, appreciated the lead duration given to implement the incoming changes as the rate and eligibility changes are subjected to implement from September 2020. He further stated that it is incredibly welcoming to see that government has replied to their feedback and promised that the Jobkeeper’s profession has sufficient notice to comprehend the changes and suggest their business clients accordingly.

Advance notice would aid businesses to seek professional advice to craft the finest course of action and know the things they may be required to become eligible.

Ms Kasapidis also requested the government to lay attention over funding voucher scheme for small business houses to seek expert advice when they couldn’t afford it. Despite this announcement, many businesses still not lookout for advice and would play with their future and business.

To aid small businesses in seeking help, the government should give them vouchers that they can use for professional advice. The tax agents would turn out to be key to the success of JobKeeper.

Save yourselves from high costs by avoiding these tax return mistakes: Recommendation by the ATO.

Australian Taxation Office came up with some essential recommendations after noticing the blunders committed by many taxpayers and have paid the high cost for it. With the Covid-19 outbreak affecting the normal life and pocket adversely, the new financial year 2020-21 immediately experienced early tax return filing, application for superannuation, and many government programs.

The assistant commissioner Karen Foat, after observing common mistakes, has asked taxpayers to be vigilant and has warned of severe consequences if taxpayers continue to commit mistakes intentionally.

 

Standard but penalized tax return mistakes

  • Changing the nature of expenses like personal into official

 

Ms. Foat stated the emphasis of the tax office year on seeing the current working conditions, official tour cost, laundry costs have undergone decline, and work from home has enhanced.  She further stated that the tax department keeps an eye over folks claiming against official travel and laundry cost, which should be in a declining trend with the WFH trend on the rise.

 

  • A simple and honest mistake means that taxpayers may need to repay a nominal amount of cash.

It could be a small amount, but if found intentional, it could have repercussions with penalties. People who are found involved in the fraudulent making of their support documents would be charged.

  • The leading cause of confusion this year is due to the new trend of work from home gifted by outspread of Covid-19 because of home claims.

In the first month of the financial year 2020, ATO shared a unique shortcut method for folks working from home to enable people to claim a rate of 80 cents for an hour for all their running expenses in place of computing cost for particular running expenses which taxpayers would state during the normal situation. It is simple when it comes to recording the right number of working hours. However, the folks still preferring to be orthodox and like to stick to old methods of fixed-rate method or actual expense method are supposed to follow the guidelines strictly or flawlessly.

  • Double-dipping and going with multiple methods simultaneously is one of the biggest problems.

 

Numerous claims have been registered by the people asking for 80 cents per hour as per the shortcut method, along with claiming depreciation for their system, which is not acceptable. The shortcut method takes into account expenses like office furniture, electricity expenses, internets, call charges, etc.

  • The other mistake is people asking claim for an excessive period, which is beyond all possibilities.

Eighty cents per hour rate is enforced from March 1, and few folks have claimed far more than the total number of hours a day, i.e., 24 hours a day. It may be intentional or non-intentional, but it is seriously a mistake.

 

  • In addition to above, Dodgy claims which are utterly intentional on the part of taxpayers.

People have been found guilty of claiming $15000 in deductions for the carriage of bulky tools in conveyance other than actually used. A truck driver was found hiding the information of his personal expenses of DNA test and trying to get a claim for the personal expense by converting into official costs.

Three golden rules have been formulated and are ideal for work-related expenses.

  • Money is to be spent by the individual.
  • It should utterly be work-related expenses and not private
  • Records must support claims.

 

ATO is also peeping into the assertion made regarding rental income comprising of income from accommodation sharing podium. Information from such a platform is essential and is therefore included in that income. If it is not followed as stated, ATO may soon call you up.

Deceitful demand for early release of superannuation

Due to the Novel coronavirus issue, the Australian Income Tax Department has been overloaded with the income tax return lodging and applications for the early release of superannuation.

Many folks who have applied for their superannuation are actually eligible. Still, quite a nominal category of people have intentionally accessed early super even without being entitled or qualified for it. ATO has been quite lenient to those who admit their intentional or unintentional claim. On the other hand, folks found at the intentional error of early super may have to land up in the soup. A penalty of over $12,000 is provisioned to be levied over the folks found responsible for it as you are enjoying super under COVID 19 release scheme, which is usually tax-free and becomes taxable due to the program as mentioned earlier.

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Melbourne, VIC 3000

(03) 9015 8540

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Sydney Office
Level 20 & 21 tower 2 Darling Park ,
201 Sussex St, Sydney NSW 2000

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Brisbane Office
Level 27,
480 Queen St
Brisbane, QLD 4000

(07) 3011 6316

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Geelong Office
73 Malop Street Geelong VIC 3320

(03) 52982000

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Adelaide Office
Level 5, Tower 2,
121 King William Street
Adelaide, SA 5000

(08) 8423 4554

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Perth Office
Level 29 221,
St Georges Terrace
Perth, WA 6000

(08)9288 0603

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Available 24/7
T: 1300 22 36 39

Emails
info@accountsnextgen.com.au

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