As you move forward into 2018, your professional resolutions and objectives start to come into play. Here are the latest tax news in March 2018, let’s find out how they will impact your business:
The top three GST claim essentials
When you make purchases for your business, you can only claim GST credits if you meet the following criteria:
- your business is registered for GST
- the purchase price includes GST
- you have proper tax invoices for purchases above $82.50 (including GST)
Whether you’re an independent contractor, a freelancer or paying for work on a regular basis, you need to check your tax invoices for the amount of GST paid, rather than dividing your total business costs by 11.
Tip: If the invoice says “price includes GST”, you can divide the total purchase price by 11 only when the item was used for business purposes alone.
How does that work?
If the item includes private use, you can only claim a GST credit for the portion used for business.
What’s most important is that you hold valid tax invoices for business purchases over $82.50 (including GST). That’s because other documents such as bank statements, purchase orders or delivery receipts aren’t sufficient to meet the tax invoice requirements.
You might also be interested in: A Guide on Your Business Tax Rates
How to stop tax bills from piling up
Did you know you that you don’t have to wait for a bill in order to pay your tax? Pre-paying can help you prevent your tax bills from piling up and creating a strain on your cash flow.
You can make payments at any time, for any amount and as often as you’d like. The bad news is, you will still need to report full amounts, but you will only need to pay the balance owed.
Here’s what you need to do to your tax prepay:
- get your payment reference number (PRN) through the business portal or myGov (if you are a sole trader)
- identify how much you need to pay by using the online tools and calculators provided by the ATO
- use your usual payment method
Updates on small business benchmarks
The ATO has updated its small business benchmarks in order to identify businesses that might represent a higher risk in terms of tax compliance.
What does that mean to you?
It’s important not to fall outside these benchmarks, although, this might not always indicate an actual problem with ATO.
It could simply mean that your business is performing poorly relative to others in the industry or that it operates using a different model.
A warning on franking credit arrangements
This taxpayer alert released by ATO regards certain franking credit benefits for shareholders who acquire shares on a limited risk basis.
The alert relates to schemes involving Australian taxpayers who legally acquire, but have little or no economic exposure to an additional parcel of the same shares.
A scheme will involve the following conditions:
- use of security lending arrangements
- use of repurchase agreements or derivative contracts
So, the issue comes from taxpayers receiving the benefits of the imputation, in breach of the rules. It is a matter of system integrity and what needs to be done in order to protect it.
The foreign resident vacancy fee
As you might know from late 2017, certain foreign owners of residential dwellings need to pay an annual vacancy fee.
If you don’t want to pay it, you’ll need to make sure your dwelling has been genuinely rented by you (the owner) or family members for more than six months annually.
The annual vacancy fee applies to:
- foreign investors who make a foreign investment application for residential property
- foreign investors who purchase a dwelling with a New Dwelling Exemption Certificate that was applied for by a developer
ATO’s focus on “other work-related expenses”
If you have included claims for work-related expenses at label D5 this year, it’s important to make sure you can prove the following:
- money was spent by you and not reimbursed
- the expense was directly related to earning the income
- you have sufficient evidence as proof
All evidence is needed, regardless of the fact that you qualified for reduced substantiation requirements.
You might also be interested in: February 2018 Tax And Accounting News: All You Need To Know
Want to find out more about how these updates affect you?
One of our specialists here at Shuriken Consulting is ready to assist you with any questions you might have about the latest tax and accounting updates. Get in touch with us today!
