admin October 15, 2017 No Comments

Are You Looking for a Dandenong Tax Agent?

Are You Looking for a Dandenong Tax Agent who provides personal attention into your tax affairs? Don’t worry, Accountants at Lotus Smart are ready to help you. We are approachable, friendly and provide advice for your maximum tax returns. Those are the reasons why our clients love us and we are building up our practice bigger and better.

Accountants at Lotus Smart are committed to offer you the first class tax advice, at a reasonable price. We are based in Dandenong North and provide service in surrounding suburbs including Narre Warren, Berwick, Hallam, Hampton Park, Lyndhurst, Lynbrook, Cranbourne and Noble Park.

We offer all kinds of tax returns services from simple individual tax return to multiple years and complex business tax returns. We prepare tax returns for partnerships, companies, trusts and Self Managed Superannuation Funds (SMSF). We take time to understand your business and personal circumstances and spend many hours to research on supporting your business better.

We deliver premium service to all our clients and ensure maximum possible return in a legal manner. No job is small or big for us. We are proactive and deal with you happily whether you are a sole trader or owner of a multi-million dollar business. We ensure that information about you and your business is fully protected and secured. We respect and protect the privacy of your information. Each and every client is very important to us.

Personal Tax Returns

We handle all individual income tax returns from basic to complex. Your tax return will be prepared and lodged by a registered tax agent and lodged to ATO within 24 hours. Our specialisation on individual income tax covers, but not limited to:
– Rental Property
– Capital Gain calculation
– Profit shares from partnerships & trusts
– Personal Services Income
– Sole trader business income and expenses
– Centrelink payments
– Investment income

Business Tax Return

Lotus Smart Accountants look after all your taxation obligations no matter what industry you are in. The experience gained during our interaction with different industries for last 20 years has put us on a preponderant position among our direct and indirect rivals. Our extremely high efficient business taxation services are:

– Business Activity Statements (BAS)
– Installment Activity Statements (IAS)
– Business Tax returns including schedules such as Depreciation & loss schedules depend on different circumstances
– Fringe Benefit Taxation
– Payroll tax returns
– Taxable Payments Annual Report for construction industry
– Preparation of PAYG payment summaries for employees

Communication with our clients and ATO is our top priority. We deal with ATO in a timely manner and assist you to appeal to ATO for the waiver of fines and penalty if you have the genuine reasons for such appeal. We have a variety of clients from diverse range of industries. Hence, we are well aware of all of your industry requirements and obligations. Our diversified client base mostly comprises of:
– Cafes, Restaurants and take away shops
– Property developer
– Family Day Care Educators
– Printing businesses
– Construction and Building businesses
– RTO (Registered Training Organization)
– Petrol station
– Transportation & Courier services
– Engineering services
– Saloons, beauty parlous and cosmetic business

We are just a phone call away. Call us today on 03 8751 5768 to book your tax time appointment.

admin May 4, 2016 No Comments

Reserve Bank of Australia cuts cash rate to 1.75%

The Reserve Bank of Australia on Tuesday cut the official cash rate to 1.75 per cent in a bid to address falling prices and an economic downturn.

 

The Australian Bureau of Statistics on Wednesday published a report of deflation in Australian economy. The consumer price index (CPI) contracted 0.2 per cent in the three months to the end of March, taking the annual rate to 1.3 per cent, compared with 1.7 per cent at the end of December. This is below the target inflation rate which the RBA is mandated. The RBA would like to keep the inflation by 2 to 3 %.

 

NAB, CBA and Westpac have already passed on the full rate cut to its home loan customers. ANZ is the only bank not passing on the full rate cut. Instead, ANZ Bank will reduce its home loan rates by 0.19 of a percentage point.

 

If the 25 basis point cut was fully passed on to home loans by the banks, it would equate to a $43-a-month saving on a typical 25-year $300,000 mortgage.
admin October 7, 2015 No Comments

Dandenong Accountant for Investment Property

Investment in the property market is very common way of accumulating wealth among Dandenong families. While every individual will have different goals, “negative gearing” is a term that attract many investors in the real estate market. Negative gearing occurs when the cost of owning a rental property is in excess of income it generates each year. This taxable loss thus created, can normally be offset against other income including your wages or salary. This will lead to reduction of your taxable income and consequently the tax liability.

Let’s say that you own a rental property generating rental income of $20,000 each year. The costs of holding the property, including mortgage interest, council rate and depreciation come to $25,000. This gives you a taxable loss of $5,000, which you can use to reduce your taxable income from other sources like salary and wages. If your marginal rate of tax is 46.5 %, you will be saving a tax of $2,325.The negative gearing works better for the taxpayer in the higher marginal rate of tax.

If you know in advance that your investment will record a loss over the financial year, you can apply to the Tax Office to reduce the amount of tax taken out of your salary by your employer. This is called PAYG Withholding Variation and it can contribute towards your monthly cash flow budget.

What expenses are deductible?

The basic principle of tax in Australia is that costs necessarily incurred in earning income are generally tax deductible. Accordingly, you can claim any expenses associating with the rental property.

There are two types of costs associated with owning an investment property.

  • Cash costs include interest payments, bank fees, maintenance costs, insurance premiums and property management fees.
  • Non-cash cost which is depreciation. If you add the amount of cash and non-cash costs and they exceed the rental income, then there is a net rental loss which may be able to be claimed against your other taxable income.

The calculation of depreciable items is specialized and should always be carried out by a quantity surveyor.

Below are examples of costs that can be claimed as deduction for the rental properties:

 

  • Interest on loans (including interest prepaid up to 12 months in advance)
  • Bank Charges
  • Council Rates
  • Body Corporate Fees
  • Advertising cost
  • Borrowing Expenses (For example, stamp duty and legal fees on mortgage)
  • Building depreciation (depending on date of construction)
  • Cleaning Costs
  • Depreciation of fixtures and fittings (light fittings, carpets etc)
  • Insurance expenses
  • Land Tax
  • Pest Control expenses
  • Property Agent’s commission
  • Repairs and Maintenance (excluding improvements which are treated as capital)
  • Telephone, postage and stationary
  • Travelling Expenses associated with the inspection of rental property
  • Water Charges
  • Gardening expenses

People often miss out on maximizing their negative gearing benefits by omitting deductions for items such as travel costs for the inspection of the property and depreciation of the building and/or fixtures and fittings.

 

Choosing a right investment property

 

Careful selection of your investment property is paramount to ensure that you are maximising the benefit from your investment property. While there are many factors to be considered, one of them is new or existing. The new property allows you to maximise your tax advantages mainly because you can claim higher depreciation in the new property. The benefit of depreciation in existing property depends upon the year of construction and associated costs. It is important to invest in areas of capital growth potential. In fact, you should be using the tool of negative gearing to maximise your return from capital growth.

At Lotus Smart, we have advanced tools and many years of expertise to project the cash flow associated with the investment property that you are planning to buy. This will give you an estimate of how much will be out of pocket expenses to yourself. We can also assist you to apply for the PAYG withholding variation so that your employer deducts less tax and you will be getting the benefit of negative gearing well in advance. Speak to us for more details as the real benefit of negative gearing depends upon your personal financial circumstance.

Dandenong Accounting for building and construction industry

Building and construction industry is extremely dynamic challenging type of industry. A successful building and construction businesses relies on professional accountants/advisers to provide guidance, analytical thinking and foresight. At Lotus Smart we understand the challenges faced by construction business which includes dealing with the complex tax and GST laws, new tax payment reporting system and cash flow management. We have assisted many businesses in construction industry to really nail there plans.
As part of the 2011-12 Federal Budget, the Government announced the introduction of taxable payments reporting for businesses in the building and construction industry. Taxable payment reporting system is applicable to those primarily in the building and construction industry and which makes payments to contractors for building and construction services. The aim of the new system is to improve compliance with tax obligations by those contractors who are currently not doing the right thing.
The information reported about payments made to contractors will be used by ATO for data matching to detect contractors who have defaulted with their tax obligation. For instance, those who have not:
  • Lodged their tax returns
  • Included all their income on tax returns that have been lodged.
  • Registered for the GST even though they are required to do so.

What details need to be reported?

For each contractor, the following details need to be reported each financial year:

  • Australian Business Number (ABN)
  • Address
  • Gross amount paid to the contractor for the financial year (this is the total amount paid inclusive of GST)

What need not be reported?

  • Invoices are for materials only, such as building supplies and materials.
  • Unpaid invoices as at 30 June each year as the system follows the cash basis.
  • Payment reported under PAYG withholding annual report. If amounts are withheld because a contractor did not quote an ABN, then such detail can be reported in the new taxable payments annual report instead of the PAYG withholding report.
  • Payments for private and domestic projects.

When do you need to report to ATO?

Taxable payments annual report is due 21 July each year.The first Taxable payments annual report for 2014-15is due on 21 July 2015. For those lodging activity statements quarterly, they can lodge it by 28 July 2015.

How we can assist you with the new reporting obligation?

When you need a Dandenong Accounting firm for the building and construction industry, contact our team. We can also help you to put a system in place whereby your accounting software/processes update the report as and when you make a payment to the contractors so that the year end reporting obligation can be met without much of a hassle.

Do you qualify for the Government’s tax free payment?

The Federal Government is giving away money to anyone who makes an after-tax contribution to their super fund, and who earns less than $49,488 a year (for the 2014/2015 year). This is called co contribution. To be eligible for the super co-contribution, your personal contributions need to be paid to a complying super fund.You will be entitled for the tax free contribution from the Government only if you satisfy a work test and age test apart from the income test.

How much will be the co –contribution?

If you earn $34,488 or less (for the 2014/2015 year), the Federal Government pays $0.50 (50 cents) for every dollar you contribute to your super fund from your after tax income, up to a maximum of $500 a year (subject to legislation).
For example, if you make a $1,000 after tax contribution, your super fund account receives $500 tax-free contribution from the Government. If you make a $600 contribution, the Government pays $300 into your super fund.
If you earn more than $34,488, your co-contribution entitlement reduces by 3.33 cents for every dollar you earn over $34,488, until it reaches to $49,488 (for the 2014/2015 year). For example, if you earn $38,000 and you make an after-tax contribution of $1,000, the Government’s maximum contribution of $500 is reduced by $118, which potentially gives you a co-contribution of $382.

You need to pass the following three tests in order to be eligible for the co-contribution:

1. Work test
In order to satisfy the work test, you must earn 10% or more of your income from eligible employment, or 10% or more of your income from carrying on a business, or a combination of both.
2. Income test
The Government’s tax-free co-contribution is available for any person who earns total income from employment or self-employment and earns less than $49,488 a year in the 2014/2015 financial year, and makes an after tax contribution to their super fund. This income threshold is indexed each year in line with increase in average weekly earnings.
3. Age test
You must be under 71 at the end of the financial year in which you make your after-tax contribution to be eligible for a co-contribution.
In addition to meeting the above three tests, you need to be a permanent resident or citizen and lodge your income tax return to qualify for the Government’s co- contribution.

How to claim?

All you need to do is make a personal after-tax contribution to your super account. This you can do either through your employer or by yourself paying directly to your super fund. The Tax Office will calculate your entitlement using information from your superannuation fund and tax return.
As the end of the financial year is approaching fast you need to ensure that yourpersonal contribution goes to your super account before 30th June in order to qualify for the co-contribution.
The content of this article is intended to provide a general guide to the subject matter. -Specialist advice should be sought about your specific circumstances.

Concessional and non-concessional super contribution

Superannuation plays an important role in securing your lifestyle after the retirement. Apart from the compulsory superannuation obligation contributed by your employer, you can pay extra amount at any time which helps to save your tax now and increase your savings for the future. However, there are caps on the amount of super you can contribute each financial.Contribution within such cap is called concessional contribution. If you contribute more than the cap you end up paying extra tax.

Concessional Contribution

Concessional contributions include:

  • employer compulsory super guarantee contributions
  • additional voluntary super contributions your employer may make
  • any fund costs paid by your employer on behalf of your super fund, such as administration fees and insurance premiums
  • salary sacrifice amounts
These contributions are taxed @15 % in your fund.
For the year 2014-15, the concessional cap is $30,000 if you are younger than 50 years. For those older than 50 years in 2014-15, the concessional cap is $35,000. Amount above this cap will be added to your personal income and taxed at marginal rate.

Non-Concessional cap

The non-concessional contribution is the amount of contribution you make to your super out of your after tax income. The non-concessional cap for the year 2014-15 is $180,000. If you contribute more than this amount, the excess is taxed @49%.However, you will have option to withdraw all excess non-concessional contribution and 85% of associated earnings. There is also bring forward provision whereby you can go over the non-concessional cap by up to 2 years’ worth of contributions without.

Monitor your super

You need to continuously monitor the movement of your super fund to make sure that you are not exceeding the concessional cap. Contributions are counted towards the caps in the year in which they are actually received and credited by your super fund. For example, your employer may send April–June quarter’s super in July which will counted towards the next financial year’scaps. Hence, you need to be very careful to monitor the timing of the contribution into your super fund.

Are you claiming home expenses in tax?

You may be entitled to home office running expenses including telephone, internet, computer and software that you are required to use for the work. The requirement is that a nexus has to be established between the use and the income producing activities.

How you can claim deduction?

  • Keep a diary of the details of your actual costs and your work-related use of the office, or
  • Use a fixed rate of 45 cents per hour towards office heating, cooling, lighting and cleaning costs plus the depreciation of the home office furniture and equipment.

Please note that it is the home running expenses and not the occupancy expenses that you can claim as a deduction. Accordingly, you can’t claim a deduction for rent, mortgage interest, council rates and house insurance premiums.
Records you must keep

  • You must keep records of home expenses, such as:
  • receipts or other written evidence of your expenses, including receipts for depreciating assets you have purchased
  • diary entries you make to record your small expenses ($10 or less) totaling no more than $200, or expenses you cannot get any kind of evidence for, regardless of the amount
  • itemized phone accounts from which you can identify work-related calls, or other records, such as diary entries (if you do not get an itemized account from your phone company)
  • A diary you have created to work out how much you used your equipment, home office and phone for business purposes over a representative four-week period.
    Accountants at Lotus Smart make sure you take maximum advantage of home office deductions while following ATO’s compliance check list in this regard.

Get your dream car today with Novated lease and save on taxes!

A novated lease is a way for an employee to buy a new or used car and have their employer assist them in the repayment for that car to an agreed financial supplier.

It is a three-way deal between an employee, a financier and the employer. The employee owns the car and the employer agrees to make the lease repayments to the financier for that car as a condition of employment. In the event that employment ceases, the obligation and rights under the lease revert back to the employee.In addition to the lease rentals, the car’s operating expenses are also deducted from the employee’s pre-tax income. Some examples of operating expenses that can be packaged are:
  • Finance
  • Fuel
  • Servicing and repairs
  • Tyre
  • Registration
  • Insurance
  • Roadside assistance

Types of Novation Arrangements

1. Full or Split Novation Arrangement

  • an employee enters into a lease with a finance company
  • Employer enters into a deed of novation (tripartite agreement) with the employee and the finance company.
Under the deed of novation, employer may agree with the employee and the finance company to take on all, or some, of the employee’s rights and obligations in the original lease agreement.
  • Under a full novation arrangement, employeris responsible for making the lease payments and guaranteeing the residual value of the vehicle at the end of the lease.
  • Under a split full novation arrangement, employer are responsible for making the lease payments but they are not responsible for guaranteeing the residual value of the vehicle at the end of the lease. Your employee retains this obligation.
Partial novations usually have two distinct lease agreements that is a lease agreement between either:
  • the finance company and the employee for the vehicle
  • Employer and the employee, where the employee separately sub-leases the vehicle to the employer. Under this arrangement, the employee foregoes the right to receive payments under the sub-lease. This is in exchange for your agreement to accept responsibility for the lease payment obligations contained in the lease between the finance company and your employee.
Another form of partial novation is where the employer enters into a deed of novation with the employee and the finance company in addition to the original lease, rather than entering into a sub-lease with your employee.

 

In both types of partial novation arrangements, there is no agreement with the finance company that revokes the head lease.

 

Where employer and the employee enter into a partial novation arrangement where the head lease agreement is not revoked, separate supply is made under each lease agreement.

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