SEPTEMBER 2018

The new financial year is in full swing. Can you believe it's so close the the end of 2018 already?



In this we have details of claiming FBT exemption on cars and details on the forever growing ways to get us paying the correct amount of tax.

WELCOME LENORE

FBT exemption for minor private use of cars - Safe Harbour

We haven't found anyone who likes having to keep a log book. For anyone who has taught children to drive, updating the log book for every 10 minute journey is tedious to say the least (although apparently now there is an app for it).

We have been telling our clients for a while now that the tax office are looking harder at motor vehicle claims, both as an employee tax deduction and with regards to Fringe Benefits Tax. The tax office seemed to be indicating that anyone who had a work vehicle could be asked to produce a log book to prove their work use, even if the vehicle was used 100% for work - they were in effect saying, how can you prove there is no private use unless you have a log book to confirm 100% work use.

The tax office has made a bit of a concession for Fringe Benefits Tax purposes and has issued some guidelines on when a log book won't be required to prove a vehicle is mostly for work use. If you are interested, google PCG 2018/3, but if you aren't that interested, we can let you know the main points.

If you satisfy the guidelines, you don't need to keep records to demonstrate no or minor private use of the work vehicle. The guidelines state

(a) you provide an eligible vehicle to a current employee
(b) the vehicle is provided to the employee for business use to perform their work duties
(c) the vehicle had a GST-inclusive value less than the luxury car tax threshold[5] at the
time the vehicle was acquired
(d) the vehicle is not provided as part of a salary packaging arrangement[6] and the
employee cannot elect to receive additional remuneration in lieu of the use of the
vehicle
(e) you have a policy in place that limits private use of the vehicle and obtain
assurance from your employee that their use is limited to use as outlined in
subparagraphs (f) and (g) of this paragraph
(f) your employee uses the vehicle to travel between their home and their place of work
and any diversion adds no more than two kilometres to the ordinary length of that
trip, and
(g) for journeys undertaken for a wholly private purpose (other than travel between
home and place of work), the employee does not use the vehicle to travel
(i) more than 1,000 kilometres in total, and
(ii) a return journey that exceeds 200 kilometres.



There's a whole lot of detail involved as you can expect with any tax office guidelines. If you aren't sure if this applies to you or what records you should be keeping, just give us a call.

Tax Gap and The Black Economy

The tax office spend a lot of money publicising how we are all getting away with not paying the correct taxes and in keeping us up to date with their efforts to make us honest.

An article was released in July estimating the tax gap for individual taxpayers was $8.7 billion in 2014/15. That's just income tax - there are tax gaps in other taxes also apparently. The tax gap is the government's estimate of the difference between what we are paying and what we are supposed to be paying in income tax. So you may think you are paying a lot of tax, but the tax office don't agree.

If you're interested in how they guess, sorry, calculate, the tax gap, you can find information on the tax office website.

The tax office thinks we aren't declaring all of our income and are overstating our expense claims. Business who receive cash payments have been targeted for a good while now and another group has been formed to solve this problem.

The black economy task force was set up by the federal government to claim back estimated tens of billions of dollars estimated to be lost annually due to illegal cash economy activities. There is a wide variety of activities the government includes in its definition of black economy. It includes under-reporting income, under-paying wages, paying for work cash-in-hand, sham contracting, phoenixing, identifying fraud, ABN and GST fraud, evasion of illicit tobacco, money laundering, unregulated gambling, criminal acts, counterfeit good and illegal drugs.

We attend to your tax affairs with the utmost integrity in all areas, however there are obviously some who don't and we all end up caught in the crossfire. You may find we ask for clarification or request more information on the documents you send in for your accounting affairs and are asking for more information on some claims we have been making for years - work related clothing and laundry is one of these. This is so we know that we are doing the best we possibly can for you and if the Tax Office come asking question, we have the answers.

If you're interested, you can read more on the Black Economy using the following links:

What is the black economy?

What it's like to be a 'black economy' worker

Breaking down 'black economy'

Targeting the black economy

ATO Homepage

ATO - Claiming deductions for personal super contributions

Did you know we offer $0 upfront Tax Returns?

That's right - absolutely no upfront cost to prepare your tax return and your refund is paid directly to your bank account. Come and see our friendly team to find out how (conditions apply).  

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