By Hugo Schouten Accountant, Adelaide, Australia.
20 October 2001.
TAX RETURN TIME FINISHES ON 31 OCTOBER.
Tax Agents can help you to lodge a Tax return correctly. If you haven't lodge last year's return, don't despair! I can help you. You can email me on 1 Jul 2004.
See link at the bottom of the page.
The 1998/99 Commonwealth Budget.
Some substantiation issues.
Claiming your Internet costs.
Common errors in claims.
Links to other Tax Pages.
For Income Tax Rates Click here
This affects your Tax Return at 30 June 1999.
THERE ARE NO NEW ANNOUNCEMENTS. SOME PREVIOUSLY ANNOUNCED MEASURES WILL OPERATE FOR 1998/99.
A new broadly based tax rebate on individual savings and/or undeducted personal superannuation contributions is to be phased in over 2 years.
The rebate will be available for resident individual taxpayers with respect to their undeducted member superannuation contributions and net personal income from other savings and investments up to an annual cap of $3000. The savings rebate will not be means tested.
The measure will be introduced in two stages, with a 7.5% rebate from 1 July 1998 (providing an initial rebate of up to $225 in 1998-99) and the full 15% rebate from 1 July 1999 (providing a maximum rebate of $450 pa from 1999-2000).
The rebate will apply to the first $3000 of taxable income from savings, however derived. For example, the rebate would apply to the whole of the interest earned on $60,000 invested at 5% pa.
The savings rebate will apply on the basis of net personal income from savings and investment. This would include such items as interest receipts, dividend income (grossed-up by imputation credits), net rental income, net capital gains, privately funded pensions and annuities (including Commonwealth and State Government employee pensions), assessable life insurance and friendly society bond bonuses, partnership income, trust income and attributed foreign income.
The savings rebate will also apply to net business income received by an individual, such as income derived from operating as a sole trader or a partnership.
PERSONAL SUPER CONTRIBUTIONS REBATE (Previously announced)
Alternatively, the rebate can be claimed in respect of any payment of personal contributions into superannuation up to $3000. A person who pays $3000 into superannuation will get a $450 tax rebate when it is fully operational.
For personal superannuation contributions made by low to middle income earners, the first $1000 of contributions would attract both the savings rebate and the existing 10% rebate available to individuals earning up to $31,000.
Taxpayers will be able to vary their provisional tax in anticipation of the new rebate.
DATE OF EFFECT - The rebate operates at a half rate (7.5%) from 1 July 1998 and at the full 15% rate from 1 July 1999.
SUPERANNUATION GUARANTEE SYSTEM - ABILITY TO OPT OUT (Previously announced)
In the 1996-97 Budget, the Government stated its intention to allow employees earning $450 to $900 per month from an employer the opportunity to receive wages or salary in lieu of superannuation guarantee (SG) contributions.
The ability to opt out will apply to eligible employees receiving monthly salaries of $450 to $900. Employees, by agreement with their employer, can opt out of SG arrangements on commencement of employment or once annually thereafter. Employees will be able to opt back into superannuation arrangements at any time.
DATE OF EFFECT - The proposal will apply from 1 July 1998. The introduction of opting out has been delayed until 1 July 1998 to allow time for the ATO, superannuation funds and employers to prepare the necessary documentation and alter systems.
Car expenses are excluded from the $300 substantiation
threshold. Therefore you can get more expenses into this $300 amount before substantation
is required. The cents per kilometre method of calculating car expenses may
be applied if the employee travels more than 5000 Kms. However, the claim can only be
calculated up to a maximum 5000 Kms even if the travel was more.
Laundry of protective clothing or uniforms expenses up to $150
may be without receipts being provided. However, the amount comes within the $300
substantiation threshold.
Taxpayers will be able to write on receipts the nature of the
purchase if the supplier does not do so.
Taxpayers can show from independent evidence (eg bank statement)
when a payment was made if the supplier's statement does not show this.
Reasonable meal allowance expenses are not included in the $300
substantiation threshold.
Log books and expense diaries no longer need to be signed.
Records must be kept for 5 years (plus the year of income)
whereas previously it varied from 3 years to 7 years.
If your employer has directed you in writing that you are to log into the Internet as part of your employment and the employer does not reimburse you, you may be able to claim a deduction.
If you are an employed computer Professional you may be able to claim the cost as Professional development if you use it to access computer articles or knowledge.
If you are a student in a computer course and the course requires you to access the Internet, you may be able to claim a deduction IF
(1) you are receiving Austudy
(2)OR you are currently employed in a computer related field.
Records required to Substantiate the amount of a claim for employees or students are:
(1) the monthly access statement from your provider and the credit card statement from you bank showing a matching payment.
(2) the amount of 'business use' compared to 'private use'. You can only claim for the business proportion of the Internet charges, computer and modem depreciation, software and phone calls. You need to keep a diary record of computer use, modem use and Internet use separately for each. Record the time spent for 'business use' and 'private use' for one month at a minimum. Then you can claim the business use percentage at the end of the year.
If you are self-employed see the link to Record keeping at the bottom of this page.
NOTE: You must see your Accountant or Tax Advisor for further advice on any tax matters.
You can email me if you want to ask any Tax question. Email to me.
You can engage my professional services by Internet at commercial rates.
Allowances paid by employer NOT included as income, but an
expense claimed against the allowance.
Allowances included as income but amount automatically claimed
without regard to substantiation. All claims must be substantiated.
Vacant land treated the same as principal place of residence for
CGT purposes. Capital Gains Tax applies to sale of land.
Self-education claims with no nexus to income and current
occupation. Self education claims can only be made if it applies to the CURRENT job (or
you receive Austudy).
Motor vehicle expenses: log book method claimed but log book not
kept nor odometer readings kept.
Rental properties: nominal rents charged to family and friends
but high expenses claimed.
No apportionment of expenses of holiday homes rented out when the
owner occupies the home.
"Unusual" or "excessive wear" does not
qualify for clothing deductions.
Footwear cannot be claimed for conventional boots and
"non-slip" footwear.
Home office expenses: interest, rent and rates claimed but no
business carried on at home.
Truck drivers (employed) claiming meal expenses when working
"long" days is not allowed. A deduction requires driver to sleep away from home.
Incorrect interpretation of residency status when claiming
parent rebates eg claiming the rebate where money is sent overseas.
Employees claiming deductions for personal superannuation
contributions. This is not allowed but a rebate may apply.
The Commissioner has also indicated that the ATO will be checking rental income this year as well as directors' fees, tips, bonuses, partnership or trust income, and income from the sale of any asset eg a vacant block. Source: ATO, June 1996; ATO media release Nat 96/19, 6 June 1996
You have been warned! For
any further information email me.
Oz Tax, Australian Taxation Index at Flinders University.
Taxation Institute of Australia.
Go to Accounting Links on the Internet.
Go to Record-keeping for Self Employed and Small Business.
Go to news for your Income Tax return 2001.
Go to Australian Tax Questions and Answers. Includes Income Tax Rates.
Go to changes in self-education
expenses.
Maintained by Hugo Schouten Accountant.
