Brilliant Money Solutions | Tax Agent | Accountants | Business Advisors
Brilliant Money Solutions | Tax Agent | Accountants | Business Advisors
Brilliant Money Solutions | Tax Agent | Accountants | Business Advisors

News Article

Man's Best Friend, but how much is your Pet really Costing you?

This infographic explores pet ownership, average costs and pet insurance in Australia to see how much a pet really costs.

Tax Tips

What can I Claim as Home Office Expenses?

If carrying on a home based business you may claim office expenses as long as the work area is separate and distinct. Deductible items include heating, lighting, depreciation of furniture and equipment and cleaning. The percentage apportionment is normally done on floor space. Think carefully before claiming council rates and mortgage interest as this will trigger partial Capital Gains Tax if the property is sold. Best advice is to keep a diary.

Going Concern -Exemption
The sale of an enterprise as a going concern is GST-free if certain requirements are met. This means that if you sell an enterprise as a going concern, GST is not payable on the sale.
A sale of a going concern is a sale where:
- All of the things necessary for the continued operation of the enterprise are supplied to the buyer; and
- The supplier carries on the enterprise until the day it is sold.
- A sale of an enterprise as a going concern is GST-free where:
- The sale is for consideration,
- The purchaser is registered or required to be registered for GST, and
- Both parties agree in writing that the sale is of a going concern.
If all these requirements are met, GST is not payable on the

Do I need to pay tax on board money received from having a lodger?
Generally all rental money received needs to be declared and any corresponding expenses applied, however if it is a domestic arrangement that might not be the case. What is a domestic arrangement? A situation where the home owner charges the boarder a proportion of the costs actually incurred on food, electricity etc. What this means is a situation where everyone is sharing equally in the costs of living at the residence. Arrangements of this nature are not considered to make any profit and therefore the homeowner will not have to declare the board money received. (This is general advice only and individual situations may vary.)

Donations V Purchases
If you give to a charity but receive something for the money expended, this is considered to be a purchase and not a donation. The amount expended is non tax deductible.
An example is raffle tickets. You may wish to simply make a donation and claim a tax deduction.

Sun Protection
Occupational categories that are generally likely to work outdoors may be eligible to claim costs incurred in relation to sun protection items such as sunscreen and sunglasses.

Tax Agent fees
Expenses incurred for managing a taxpayer's income tax affairs or complying with an obligation imposed by Commonwealth Law are deductible in the year the expense is incurred.
However what is often overlooked is that a visit to your tax agent may also be a tax deduction. Taxation Determination TD 94/92, the Tax Office states that the cost of travelling to a recognised professional tax adviser for the purpose of having an income tax return, a Business Activity Statement or an Income Activity Statement prepared is deductible.
In addition, other incidental costs such as the cost of accommodation, meals, taxi fares and travel insurance are also deductible.

Single Car Families and Motor Vehicles Expenses
Where a car is jointly owned a common error when claiming deductions is that couples assume because the car is already claimed by one person, expenses cannot be claimed by the second person. This is incorrect.

Business Travel
Ensure you keep accurate records for your work related travel expenses, especially where your travel is for 6 consecutive nights or more, you must record in a travel diary:
- The nature of the activity;
- The day and approximate time it began;
- How long it lasted;
- Location of meeting.

Interest Claims
Due to a High Court case in 1999 known as Steele's Case, it was confirmed that interest incurred before a business starts operations can be deductible. This is particularly the case for developer's expenses incurred in the construction phase.

Negative Gearing
May be explained as paying more interest and other outgoings than you receive in income from your investment. There are also other (non cash outgoings) such as depreciation which are also tax deductible.
Although negative gearing reduces the holding cost of an asset through tax savings, as a wealth accumulation technique, it is predicated on eventual capital gains. As such choose a quality asset to invest in, taking independent financial advice.
You can engage us to do a cash flow analysis for any new property you may be considering buying.

Legal Expenses
Legal expenses incurred in gaining assessable income are deductible but only if they are not of a capital or private nature. However, there may be a deduction under "black hole expenditure".

Division 7A - Loans
Loans to company shareholders or associates
should be reviewed prior to 30 June. Loan agreements should be in place, otherwise there is the danger that outstanding loans can be treated as an unfranked deemed dividend.

Eliminate Capital Gains
If you have made a large capital gain, check if you are eligible to make a tax deductible contribution into your super. If you are an employee receiving substantial employer support, consider salary sacrificing salary into super and spending down on the capital received from the CGT event.

Client Gifts
An income tax deduction is available for gifts of alcohol or food hampers provided to clients provided they are taken away for private consumption. This means gifts made where there is immediate consumption such as in a restaurant are not deductible. Gifts of other items such as cosmetics and perfumes are also tax deductible and input tax credits may be claimed.

Get the Structure Right
When commencing a new venture take professional advice to ensure you are properly structured. A simple company is not always the best way to go for capital gains purposes. Trusts have become increasingly popular. Consider asset protection having one "at risk" spouse holding company directorships and the other "not at risk" spouse controlling private assets which may be placed in an asset protection trust.

When is my tax return due?
If you lodged late last year or are a few years behind generally your lodgement due date is 31 October. If you are up to date and on our client list your lodgement due date is 15 May of the following year. 

Hobby versus being in Business
Something clients often say to me is: "I thought I had to make $50,000 to be in business". There is no threshold of income to determine if you carrying on a business. Many factors need to be taken into consideration when determining if you are in business as opposed to a hobby. Some of these factors include a view to a profit and operating in a systemised and organised fashion.  

Motor Vehicle Cents per kilometre expense claim
A very common way to claim motor vehicle expenses is through the cents per kilometre claim (work kilometres travelled must be under 5000km. You don't need a log book but you do need a reasonable estimate of your kilometres travelled. The current ATO rate is $0.66 per km. 

Only take advice from qualified professionals
As the end of financial year comes around and people start preparing for their annual trip to the accountant there seems to be no shortage of tax advisors down at the local pub. These people no doubt have graduated from the school of hard knocks, however tax advice can vary greatly depending on personal situations. Please come to us first before acting on any tax advice.  

A tax deduction is only worth your tax bracket.
For example if you are in the 30% tax bracket you need to spend $1000 to get $300 back. You are still $700 out of pocket. In my opinion you should not spend money solely for a tax deduction.

Will private health insurance help me pay less tax?
Only if you are a high income earner, being a single person who earns more than $90,000 or a family with combined income above $180,000 (threshold increases with children). If you are a single parent with a child the threshold is $180,000. If you don't have private health insurance with hospital cover you will have to pay additional Medicare levy (known as Medicare levy surcharge).

Depreciation. What does it really mean?
Depreciation generally speaking is where you claim the cost of an asset over a few years. Example: the ATO expects that a laptop will last three years so you claim the cost over three years. Assets over $300 are generally depreciated.

Claiming a Tax Deduction for Income Protection vs Life Insurance
Generally speaking income protection (or sickness and accident insurance) is a tax deduction however no deduction is allowed for life insurance (death and disability).

Winning the Lottery is a Tax Free Gain Generally, you do not have to declare:
  • rewards or small gifts such as cash birthday presents (however, gifts may be taxable if they are large amounts or you receive them as part of a business-like activity or in relation to your income-earning activities as an employee or contractor).
  • prizes you won in ordinary lotteries, such as lotto draws and raffles
  • prizes you won in game shows, unless you regularly receive appearance fees or game-show winnings.
  • gamblers' winnings. Reason being: gambling is not considered a profession, it's treated as a hobby or recreational activity. The Australian government views gains from gambling activities not as income, but as a result of good luck.
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