Common Tax Deductions - 2009 tax return

Are you required to complete an annual tax return this year?

When was the last time you took time off work or sacrificed a lunch break to complete your annual tax return?

Did you know that over 1. 8 mil. taxpayers in Australia last year completed their annual income tax return online? That's right, over 1.8 mil people. At My Tax Zone we expect that number to continue to increase each year.

The common denominator with many who completed there tax return online is that the return was relatively simple. Many of those taxpayers who lodged their annual tax return online have similar income and deductions each year. That's where My Tax Zone's online presence can help:

• by providing information; and
• by offering an affordable, easy to use, online tax return preparation service backed up by professional support.

Either way, My Tax Zone has a solution for you:

• search our tax blog for many topics;

• for a quick reference, check our Deductions Q & A fact sheet, its FREE; or

• try our online tax estimation tool - it's FREE to use.
  

Women Focused on Financial Strategies

Two Mortgage Choice surveys have identified that Australian women plan to take decisive action with their financial positions this year.

The Mortgage Choice survey reported:

"The perception of property as a ‘safe’ investment was on the increase, with 65% of females saying the credit crunch made investing in property seem safer than shares (compared with 63% of males).

Although females overall were less likely to buy property in the next year, when they did they were marginally more likely to make an owner occupied purchase (42% of females vs. 29% of males).

Females were more likely to pick up tools and don the overalls in 2009 than men, with a higher percentage of females renovating existing property rather than purchasing a new one (44% of females vs. 38% of males).

However, they were less likely to buy shares as an alternative to property (9% of females vs. 14% of males) and less likely to buy shares in addition to property (11% of females vs. 18% of males).

Additional interesting female first homebuyer-to-be demographics were as follows:

• 33% will purchase alone.
  
• 58% will make a joint purchase with a romantic partner, while 3% will buy with siblings, 3% with parents, 3% with other family members and 1% with friends.
• 37% will be aged 41+ years when they buy (as was the case with males), 17% will be 36-40 years, 16% will be 31-35 years, 18% will be 26-30 years, 12% will be 20-25 years and less than 1% will be aged 20 years or younger.
• 20% had no idea about the property purchase process
• 58% planned to buy a house over any other property type

Males were more likely to go it alone (40%) and less likely to buy with their partner (52%).

“Some people might be surprised that such a high percentage are waiting until their 40s or beyond to purchase their first home. Depending on the size of the deposit, there is a possibility that these people will be making repayments well into their retirement years,”Ms Sheppard said.

“Perhaps the reason why more and more females are buying later in life is they are not doing enough research to establish what is possible earlier or it could be they are concentrating on other life goals first, such as career and travel”.

For a full report on the survey visit ==> Mortgage Choice Survey.

For information on property investment ==> NRAS - New Class of Investment Property

2009 tax return - Deductions Q & A's

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I have to buy tools/equipment for my job. What can I claim and how much?

You are able to claim expenditure incurred in replacing, insuring and repairing tools of trade that you use for earning your income. The amount you can claim will depend on what records you have kept.

My job requires me to keep my knowledge up to date and I buy books and journals. Can I claim them all? If technical books, trade books or journals are necessary to fulfil job function efficiently then the cost of their acquisition is deductible.

Can I claim a deduction for sun protection items?

A deduction is available for outdoor workers who buy sunscreen lotion, sunglasses and hats for use at work. The claim must be substantiated and adjusted for private use.

I have incurred travel expenses this year. What can I claim? Your travel must be relevant to your job function for you to claim a deduction for those expenses. Where this is the case you can claim the cost of transportation and incidentals. If your travel involved an overnight stay you would be able to claim for meals.

I keep a room set aside in my house for a home office and would like to claim some expenses.
If a taxpayer carries on all or part of their employment activities from home, then some portion of the home expenses can be deducted. Where a home is a place of business, deductions can be claimed on the following items of expenditure - interest, rent, house insurance, council rates, heating and lighting, depreciation, insurance, repairs, cleaning, pest control, maintenance, decorating and telephone.

I need to have a telephone for making and receiving business calls and would like to know what I can claim.
Installation costs are not deductible. However, part of the rental costs are deductible where a taxpayer is required to make calls from home. Call costs would be deductible and a log of calls must be kept. Mobile phones are claimed in the same way.

I have had to pay for child care during the year. Is this claimable on my tax return? These expenses are not claimable as a tax deduction. Eligible taxpayers may be able to claim the 30% Child Care Tax Rebate.

I am expected to maintain a well groomed appearance. Can I claim these expenses?
Expenditure on personal Grooming and haircuts are generally not deductible. There are exceptions for taxpayers involved in the performing arts fields.

My employer expects me to wear specific clothing for work. What would I be able to claim?
Compulsory uniforms are generally deductible provided they identify you as an employee of that organisation. A requirement to simply wear specific colours is not enough to make the clothing deductible. Corporate wardrobes are also deductible if certain conditions are met. The uniform design must be registered with AusIndustry. You may also claim maintenance costs (laundry, dry cleaning and repairs) for tax deductible clothing.

Can I claim fees paid to my tax agent?
Fees paid to a registered tax agent for preparation of your return, amendments and generally handling your tax matters are all deductible. You can also claim travel to your registered tax agent. Registered tax agents are the only people legally able to charge for the preparation of tax returns.

I buy tea towels from a charity each year when they ring me. Can I claim this as a deduction?
No. You are receiving something for the money expended. This is considered to be a purchase not a donation. The same applies to the purchase of raffle tickets.

Am I entitled to claim $300 work related expenses as this does not have to be substantiated?
No you cannot just claim $300. You must actually incur any expense before it is claimed. Whilst you may not need receipts for expenditure up to $300 you must have still spent the money and it must be relevant to your employment.

Is there a limit on how much I can claim as a tax deduction each year?
There is no limit on the amount claimed each year. The expenditure must be work related and you may need receipts to substantiate the expenditure. Keeping incomplete, incorrect or no records at all may be limiting your ability to claim deductions. Advice can be obtained from a registered tax agent.

Is a credit card slip acceptable as a receipt?
Yes, provided it gives full details of the supplier and date of purchase. Taxpayers can make a notation on the receipt indicating the type of goods that were purchased. Many taxpayers use the internet to purchase or pay for their work related expenses. The ATO will accept Bpay or email receipts provided they contain the necessary information: date, supplier, nature of the goods and the amount.

Medicare Levy 2009 Unchanged

There were quite a few changes affecting 2009 - 2010 tax returns in the 2009 budget. Fortunately, the rate of medicare levy is unchanged with income thresholds increasing resulting in less medicare levy payable.

However, there are other changes that are relevant for the 2009 tax return and beyond:

• Medicare Levy Surcharge for 2009 changed ==> Surcharge Changes

• Changes to income tests affecting various entitlements ==> New Income Tests

HELP/HECS Debt - Early Repayment

Planning on making a voluntary HELP repayment?

If you have a HELP debt and plan to make a voluntary repayment, you can make repayments to the Tax Office at any time and for any amount. You may receive a bonus of 10% of the payment amount for repayments that:

• are $500 or more, or
• clear your debt.

You may also benefit if you make a voluntary repayment before indexation is applied on 1 June 2008. It is important to allow enough time for the payment to be processed and credited to your account before 1 June. The indexation rate for 2008 is 2.8%

If, after making a voluntary repayment, you still have an accumulated HELP debt and your HELP repayment income is above the minimum repayment threshold, you may still have to make a compulsory repayment.

Business Structure - Trusts

Choosing a business structure when starting up a business is an important element of the setup phase.

Business structure is important as it can impact on taxation, liability of owners, succession, ownership issues and disposal of your business.

Trust is a relationship where a business is transferred to a third party (trustee) who has legal control and has a duty to operate that business to benefit someone else (beneficiaries).

Traditionally, trust structures provided taxation benefits and asset protections. However, many of the tax benefits associated with trust structures have been eliminated or substantially reduced by legislation. But in recent time, case law has imposed some challenges in relation to asset protection. For that reason, it is recommended to seek separate legal advice in relation to setting up certain trusts.

There are also many variations of trusts intended for various purposes, for example, discretionary trusts, unit trusts, hybrid trusts, bare trusts and installment warrants. Various legal experts write trust deeds which are sold through various suppliers. Accordingly, trust deeds can vary in wording and intention, with some authors claiming their product as superior to others.

Features of trust include:

• asset protection of business owners/operators (with increasing limitations)
• flexibility in relation to distribution of income and subsequent taxation benefits
• beneficiaries generally not liable for debts of a business
• trust deed can limit activities
  
• high costs of setup and maintenance
• higher degree of complexity for business owners
• increasing regulations in relation to ownership and management
• losses of a trust can not be distributed to beneficiaries
• retention of profits in a trust can attract taxation penalties

The ATO's Personal Services Income (PSI) regulations can impact on labour only type business operations. Advice should be obtained from a registered tax agent or practicing accountant.

For a FREE fact sheet ==> Trust Business Structure

For a summary of the four types of business structures ==> Business Structures Explained

2009 etax Online

Anyone can do their own tax return. 75% of 2009 tax return preparers will use a tax agent to complete their returns.

Many want to do it themselves to save money and avoid the hassle of finding a reliable tax consultant, waiting for appointments or wondering if the ATO will audit their return.

This is where we help you. For a small cost we take the hassle out of doing your 2009 ATO etax online income tax return completely by yourself. Our new online tax service is available Australia wide.

It doesn't matter where you are, you can do your 2009 income tax return lodgment yourself and still get support from our team of tax professionals.

Using our EzTax online service it's FREE to start your 2009 tax return.

Business Structure - Company

Choosing a business structure when starting up a business is an important element of the setup phase.

Business structure is important as it can impact on taxation, liability of owners, succession, ownership issues and disposal of your business.

A company is a legal entity separate form its shareholders and is managed by a director who has additional legal and reporting obligations.

Companies have always been popular for both limiting liability for business owners and for taxation planning. However, due to legislative changes and case law, many of those benefits have been diluted over the years.

For example, company directors today have a much larger burden of responsibility for the operations of the business than their counterparts two decades ago.

As far as taxation is concerned, the reduction in marginal tax rates and increases in income thresholds, taxation benefits have also declined. For example, in 1989, taxation benefits arose when business profits exceeded $70,000 for a typical mum and dad business. The equivalent tax benefit under current tax rates and income thresholds would not apply until business profits exceded $150,000.

Regardless, companies are still popular for business operators for several reasons:

• limited liability (but increasingly subject to changing legislation and case law)
• fixed company tax rate of 30%
• continuity of ownership
• a company structure can effective separate management (directors) and ownership (shareholders) of a business
• higher setup and maintenance costs
• popular as trustee for trust and superannuation structures
  

Due to the "separate legal entity" status of a company, sub-contractors in various industries are increasingly required by contracting businesses to use this structure.

The ATO's Personal Services Income (PSI) regulations can impact on labour only type business operations. Advice should be obtained from a registered tax agent or practicing accountant.

For a FREE fact sheet ==> Company business structure

For a summary of the four types of business structures ==> Business Structures Explained

Tax Cuts for 2010 - New Tax Rates

Marginal tax rates and thresholds for the 2010 year were announced in the 2009 Budget:

2008-09                                         2009-10

Current tax thresholds from 1 July 2008 tax thresholds Income range ($)	Tax rate%	New tax thresholds from 1 July 2009 tax thresholds Income range ($)	Tax rate%
0 – 6,000	0	0 – 6,000	0
6,001 – 34,000	15	6,001 – 35,000	15
34,001 – 80,000	30	35,001 – 80,000	30
80,001 – 180,000	40	80,001 – 180,000	38
180,000 +	45	180,000 +	45

For 2009-10, the upper threshold for the Low Income Tax Ofset will increase from $60,000 to $63,750, and from 1 July 2010, to $67,500. The maximum Low Income Tax Offset is $1,350 for the 2009/10 year up from $1,200 for 2008/09.

Tax savings for various income ranges is as follows:

Gross Income	2008/09 tax	2009/10 tax	Saving
$20,000	$900	$750	$150
$40,000	$5,200	$4,900	$300
$60,000	$12,000	$11,700	$300
$80,000	418,000	$17,850	$150
$100,000	$26,000	$25,450	$550
$120,000	$34,000	$33,050	$950
$140,000	$42,000	$40,650	$1,350
$160,000	$50,000	$48,250	$1,750
$180,000	$58,000	$55,850	$2,150
$200,000	$67,000	$64,850	$2,150

Pensioner Bonus Scheme Abolished - 2009 Budget

For some time the Pensioner Bonus Scheme has rewarded Australians eligible for the age pension with a lump sum bonus for continuing to work after their relevant pension age.

The 2009 Budget closed the Pensioner Bonus Scheme to new entrants from 20 September 2009. The Labour government believes the vast majority of participants would have continued in the workforce in the absence of the scheme.

Discontinuance of the scheme will not affect entitlements to existing members of the scheme.

People turning age 65 post 20 September 2009 who continue to work will benefit from a new Work Bonus scheme. Under the new scheme 50% of the first $500 per fortnight of employment income will not count for income test purposes.

We recommend anyone eligible for the scheme pre 20 September 2009 should register as early as possible as no registrations will be accepted post the abolition.

Overseas Income Exemption Removed

Overseas Employment Income Exemption Removed - 2009 Budget

Currently, taxpayers who work outside Australia for a period of 90 days and two years are exempt from Australian income tax, providing the income is taxed in the country where earned, even if the tax rate is lower than in Australia.

Hidden away in the small print of the 2009 Budget papers is the removal of this exemption. The changes will apply from 1 July 2009.

While exemptions from the changes will apply to government workers, charity workers, military and police personnel, the implications of the change will be significant:

• When tax in the country where the income is earned is lower than Australia, affected taxpayers will pay more tax, in many cases receiving a bill at the end of the year.
• Ttaxpayers will be required to record and maintain details of income earnings and relevant deductions while traveling overseas in order to prepare their Australian tax returns correctly and obtain maximum refunds.
• ALL affected taxpayers will face extra compliance costs to lodge tax returns in Australia and claiming foreign income tax offsets.
• Some taxpayers may be tax more than previously, depending on where they work
• Affected taxpayers, many of whom will be backpackers earning extra income to support their travel, will need to seek assistance from tax professionals to complete their income tax returns
• In some countries, like Saudi Arabia, where it is not easy to qualify as a resident, taxpayers who might otherwise stretch their overseas contracts to two years to avoid Australian tax, could be stung with a large tax bill.
  

The changes will cause inconveniences for many taxpayers and force them into considering more sophisticated tax planning. Recommendations we often make to clients in this category include:

• Negative gearing and investment property - while there are significant tax savings associated with negative gearing, investment properties registered with the National Rental Affordability Scheme (NRAS) offer the additional benefit of $8000 tax credits per year - for ten years
• Superannuation (either SMSF, retail or platform), even with some of the shine removed by the 2009 Budget, superannuation still offers tremendous scope for investment opportunities and tax savings.

My Tax Zone, in association with our affiliate partners in property and financial planning, are able to provide sound taxation advice and effective investment opportunities to taxpayers affected by the changes.

For further information contact David Maynard or David Fong on 07 3208 3888 or email dmaynard@mytaxzone.com.au.

Alternatively, for more information about investment properties registered with the National Rental Affordability Scheme ==> NRAS New Class of Investment Property

Claim up to $10 Donations without receipts

If you donated to help people affected by the Victorian bush fires and Northern Queensland floods during the year ended 30 June 2009, you can claim your deductions with minimum fuss.

Claim up to $10 without receipts:
People who gave one or more donations of $2 or more to ‘bucket donations’ conducted by an approved organisation can claim a tax deduction equal to their total contribution up to $10 in their 2008-09 tax return without needing to provide a receipt.

If you made a web or phone donation over $10, your web receipt or credit card statement will be enough. Others are provided with a receipt for their donations.

For more information on 2009 tax return ==> 2009 Tax Return Checklist

Business Sturcture - Partnetrship

Choosing a business structure when starting up a business is an important element of the setup phase.

Business structure is important as it can impact on taxation, liability of owners, succession, ownership issues and disposal of your business.

A partnership business structure is a little more complex than sole proprietorship. With this structure, two or more people start a business and can legally share profits, risks and losses in accordance with the terms and conditions of a partnership agreement or, where no formal partnership agreements applies, in accordance with the common law terms and conditions of partnership.

The main features of a partnership include:

• a Partnership is an association of people who carry on business in common
• it is not a separate legal entity
• all partners are collectively liable for all business debts
• because it is not a separate legal entity, there can be no transfer of ownership between partners or to non partners
  
• any change of ownership requires dissolution of the partnership
  
• profits and or losses are distributed to partners in accordance with terms and conditions of partnership agreement
• Capital Gains Tax concessions can apply
• each partner can participate in management
  

The ATO's Personal Services Income (PSI) regulations can impact on labour only type business operations. Advice should be obtained from a registered tax agent or practicing accountant.

For a FREE fact sheet ==> Partnership Explained

For a summary of the four types of business structures ==> Business Structures Explained

Negative Gearing excluded from other Tax Programs

Total net investment losses, where the amount of allowable deductions of an investment exceeds the amount of income received from the investment, are applied against other income to determine “Taxable Income”. Taxation benefits are obtained from a net investment loss based on a taxpayer’s marginal rate of tax.

Changes relating to net investment losses to apply from 1 July 2009, while not affecting its impact on “Taxable Income”, will affect income tests for other government measures. From this date, net investment losses will be added back to income to work out whether a taxpayer meets the income tests for the following tax programs:

• Medicare levy surcharge
• Higher Education Loan Programme and Student Financial Supplement Schemedebts
• Dependency tax offsets
• Senior Australians tax offset

The following types of net investment losses are taken into account:

• Rental property investments
• Shares
• Managed investment schemes
• Forestry managed investment schemes
• A right or option in respect of any of the above

For details on how "adjusted taxable income" is used for other government benefits ==> Adjusted Taxable Income

eTax 2009 to commence soon

You can see what your tax refund will be using this tool: Free Online Income Tax Calculator

The ATO will release its 2009 version of etax early July 2009.

Changes relating to 2009 etax will reflect changes to 2009 tax return items such as education tax refund. However, the same complications and difficulties will exist with the 2009 etax:

• download of software
• pre-requisites to using the software
• requiring users to read the TaxPack
• lack of help and support
• relying on your own knowledge to comply with complex taxation laws
• minimising refunds

Inconveniences such as these have been overcome by My Tax Zone with E-z-Tax:

• Easily lodge a basic return
• FREE to try
• FREE tax refund calculator
• Finish returns at own pace
• FREE support
• No previous year assessment details required

Business Structure - Sole Proprietor

Choosing a business structure when starting up a business is an important element of the setup phase.

Business structure is important as it can impact on taxation, liability of owners, succession, ownership issues and disposal of your business.

Of the four principle business structures, Sole Proprietorship is the most common form of business ownership.

Main features of Sole Proprietorship include:

• simple to setup
• low cost to establish
• complete control
• minimal government regulation
  
• full entitlement to profits
• little disclosure of financial information
  
• private assets exposured to liability
• restricted to small one person business operations

The ATO's Personal Services Income (PSI) regulations can impact on labour only type business operations. Advice should be obtained from a registered tax agent or practicing accountant.

For a FREE fact sheet ==> Sole Proprietor Explained

For a summary of the four types of business structures ==> Business Structures Explained

Business Structures - Which one for me?

Choosing a business structure when starting up a business is an important element of the setup phase.

Business structure is important as it can impact on taxation, liability of owners, succession, ownership issues and disposal of your business. The four principle business structures include:

• Sole Proprietor
• Partnership
• Company
  
• Trust

Business operators are not limited to one structure alone. For example, it is common for some businesses to apply two or more business structures - eg. business is owned/operated in a company while the plant, equipment, fixtures and fittings are held in a family partnership or trust. This is a common practice for professionals where the primary service operations are separated from administration - commonly called a "service entity".

When considering a separate "service" entity, consideration also needs to be given to taxation guidelines and rulings relating to what operations can be divided off and that charge rates are reasonable. Where payments associated with service entity arrangements are excessive or the services are not reasonably connected to the conduct of the business, then the ATO may question some aspects of the service fee. It can be critical for business to seek advice from a tax professional.

Before you start a business you should consider the advantages and disadvantages of each type of structure. Your business structure can affect the safety of your personal assets and taxation, the continuation of the business upon ownership change and will determine what registration process you will need to undertake.

Some of the factors to consider when choosing the structure most suitable for you are:

• legitimate tax minimisation
• establishment fees and maintenance costs
• asset protection
• type of business
  

Remember - you are not locked into any structure. You can change the structure as your business and your personal circumstances changes or grows

The ATO's Personal Services Income (PSI) regulations can impact on labour only type business operations. Advice should be obtained from a registered tax agent or practicing accountant.

For a FREE Fact sheet ==> Business Structures Explained

Fuel Tax Credits - Tips to Avoid Common Mistakes

5 tips to avoid common mistakes when claiming fuel tax credits:

1. Justify your claim with accurate records
Keep accurate records of your fuel purchases and how the fuel is used in your business.

2. Only make claims for eligible fuel types and usage
You can’t claim fuel tax credits for all fuel types or fuel usage.

3. Meet environmental criteria
If you use a heavy diesel vehicle on a public road and your vehicle is manufactured before 1 January 1996, you must meet one of the environmental criteria to claim fuel tax credits. For example, you can do this by servicing your vehicle in line with the manufacturer’s maintenance schedule or endorsed generic schedules and keeping your records.

4. Apply the correct rate
The correct rate is:

• 17.143 cents per litre for fuel you use in vehicles with a GVM greater than 4.5 tonne travelling on a public road
• 38.143 cents per litre for fuel used in specified activities that have been elgibile since 1 July 2006
• 19.0715 cents per litre for fuel used in other activities, machinery, plant and equipment.

Check the current rates.

The diesel vehicle GVM can equal 4.5 tonne if you acquired it before 1 July 2006.

The rate of 19.0715 cents per litre is 50% of the full rate of 38.143 cents per litre. The full rate will apply to all these activities from 1 July 2012.

5. Calculate your fuel tax credit amount
Don’t claim the amount you paid or the number of litres of fuel you bought.

Work out your fuel tax credits using this formula:

Litres of eligible fuel x Relevant fuel tax credit rate = Fuel tax credits

Write this amount at label 7D on your business activity statement. Keep records of your calculations.

(source: Extract from ATO NAT 70439-01.2009)

50% Investment Allowance - 2009 Budget

The Small Business and General Business Tax Break will be expanded to allow a bonus deduction of 50% to small businesses with a turnover of less than $2 million that acquire an eligible asset between 13 December 2008 and 31 December 2009 and install it ready for use by 31 December 2009.

The previously announced investment allowance of 30% and 10% will continue to apply to all other business - ie. the 50% bonus deduction is not in addition to the 30% investment allowance.

Read our previous post on ==> 30% investment allowance

Superannuation - 2009 Budget Changes

The pre budget speculation that the transition to retirement condition of release would be removed did not eventuate. However, concessional contribution caps were reduced and a temporary reduction in the matching government co-contribution will occur.

Reducing the concessional contributions caps

The Government has announced a proposed reduction to the contribution caps effective from the 2009-2010 financial year. The reductions are as follows:

• The concessional contributions cap will be reduced to $25,000 per annum (indexed), with effect from the 2009/10 financial year.
• The transitional concessional contributions cap (applicable to individuals aged 50 and over for the 2009/10, 2010/11 and 2011/12 financial years) will be reduced to $50,000 per annum.
• 'Grandfathering' arrangements will apply to certain members with defined benefit interests as at 12 May 2009 whose notional taxed contributions would otherwise exceed the reduced cap.
• The current cap on non-concessional contributions is $150,000 per annum (2008/09 financial year) and will remain at that level in 2009/10. In the future, the cap will be calculated as six times the level of the (indexed) concessional contributions cap.

(source: AMP Financial Planning Pty Ltd)

Private Health insurance Rebate - Budget Changes

The 2009 Budget has introduced three new ‘Private Health Insurance Tiers’ to better balance the mix of incentives for people to take out private health insurance and will apply from 1 July 2010.

The existing 30% through to 40% PHIR arrangements will remain in place for singles with income of less than $75,000pa and families with income of less than $150,000pa.

• Tier 1 applies to singles with income of more than $75,000 (more than $150,000 for families). The PHIR will be 20 per cent if under 65, increasing to 25 per cent from age 65 and 30 per cent from age 70. The surcharge for not taking out private health insurance will remain at 1 per cent.
• Tier 2 applies to singles with income of more than $90,000 (more than $180,000 for families). The PHIR will be 10 per cent if under 65, increasing to 15 per cent from age 65 and 20 per cent from age 70. The surcharge for not taking out private health insurance will increase to 1.25 per cent.
• Tier 3 applies to singles with income of more than $120,000 (more than $240,000 for families). There will be no PHIR. The surcharge for not taking out private health insurance will be increased to 1.5 per cent.

(Source: AMP Financial Planning Pty Ltd)

Paid Parental Leave

The Government will introduce a Paid Parental Leave scheme from 1 January 2011.

The government funded scheme will provide eligible parents with up to 18 weeks of leave at the Federal Minimum Wage, currently $543.78 per week. These payments will be treated as taxable income and will affect entitlement to family assistance payments, but will not be counted as income for income support payments.

Read more >

Family Tax Benefit - 2009 Budget Changes

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Tax Benefit Part A:
From 1 July 2009, Family Tax Benefit Part A (FTB-A) payment rates will be indexed by the CPI, consistent with other family payments such as Family Tax Benefit Part B and the Baby Bonus.

Freezing of the upper income thresholds for Family Tax Benefits and Baby Bonus:
The Government will reform family payments through maintaining the higher income thresholds for family payments at their current level until July 2012. The following higher income thresholds will remain fixed until July 2012:

• the Family Tax Benefit Part B primary earner income threshold, which will remain at $150,000;
• the income threshold for receiving the dependency tax offsets, which will remain at $150,000;
• the Baby Bonus eligibility threshold, which will remain at $75,000 of family income in the six months following the birth or adoption of a child (equivalent to $150,000 a year); and
• the higher income-free area of Family Tax Benefit Part A, which will remain at $94,316 of family income (plus $3,796 for each child after the first).

Read other posts ==> Family Tax Benefit Calculator

Read other posts ==> Family Tax Benefit Part A Explained

(Source: AMP Financial Planning Pty Ltd)

Super Co-contribution - 2009 Budget Changes

The Government will temporarily reduce the matching rate and maximum co-contribution that is payable on an individual's eligible personal non-concessional superannuation contributions, with effect to contributions made from 1 July 2009. Under this measure, the matching rate will be:

• 100 per cent for 2009/10, 2010/11 and 2011/12, with a maximum co-contribution of $1,000, reduced by 3.333 cents for each dollar by which the person's total income exceeds the shade out threshold for receiving the full co-contribution;
• 125 per cent for 2012/13 and 2013/14, with a maximum co-contribution of $1,250, reduced by 4.167 cents for each dollar of total income above the shade out threshold; and
• 150 per cent from 2014/15 onwards, with a maximum co-contribution of $1,500, reduced by 5 cents for each dollar of total income above the shade out threshold.

The co-contribution starts to shade out at $30342 income, and is NOT indexed.

(Source: AMP Financial Planning Pty Ltd)

2009 Tax Refund Pack

Tax refund pack - For your FAST refund, prepare your 2009 tax return online with the help of a tax professional.

• Refund calculated for you
• Error checking
• Perfect for wages and investments (excluding property)
• Ask a tax professional session included
• Provides benefits of conventional consultation
• ELS Lodgment (Tax Agents only)
• ATO approved software
  

MY Online Tax - the tax refund pack where you enter your own 2009 tax return and a My Tax Zone tax professional reviews, edits, signs and electronically lodges it.

If you have previously used the ATO's TaxPack you will need to know that the ATO is phasing it out - read more in this post ==> 2009 Taxpack being Phased Out.

Tax Bonus Payment Bulk Run finishes 15 May 2009

By 15 May 7.8 million Tax Bonus Payments will have been made to Australian taxpayers. This is 200,000 over the initial estimates due to the higher level of lodgments of returns during this period.

After this date, taxpayers can contact the ATO directly to enquire about the progress of payments for taxpayers who were in the initial "BULK" run. The ATO contact number is 1300 686 636.

For tax returns lodged after the "Bulk" run, the waiting time is approximately four week after processing of the 2008 tax return.

PAYG Witholding Variations for 2010

PAYG witholding variation applications (ITWV applications) for the 2010 year are now available. For variations to be in place for 1 July 2009, applications need to be prepared and lodged with the ATO at least 2 weeks prior.

This application should be used when a taxpayer wants to reduce their PAYG witholding rate for the year ended 30 June 2010.

The application is a projection of a taxpayers income, deductions etc for the year and is designed to take into account abnormal deducions and expenditure. The most common reason for an ITWV application are:

• Negative gearing (accounts for taxation benefits)
• Expenditure in relation to allowances received from your employer - eg. car allowance

My Tax Zone offers and ONLINE ITWV application, making it easy for taxpayers to manage their tax related cash flow throughout the year.

For your online application ==> ITWV Online

Negative gearing and taxation benefits ==> Negative Gearing Explained

Government incentives for investors ==> NRAS - New Class of Property Investment

e Tax ATO

With over 25 years experience in the accounting/taxation industry, the team at My Tax Zone has developed an alternative to the ATO's E-Tax online tax return preparation service - My Online Tax.

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• Checked by experience accountant/tax agent prior to lodgment (over 25 years experience)
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• Your return is lodged by My Tax Zone (registered tax agent)

Once lodged you are entitled to the benefits of being registered with the ATO as a My Tax Zone client - Priority ELS lodgment; quick access to ATO for ongoing queires; extended lodgement deadlines (conditions apply).

Our supportive team has the GENUINE expertise, experience and backup support to attend to all your online income tax needs.

Tax Pack 2009 Being Phased Out

What is Tax Pack 2009?
Tax Pack is an ATO print publication designed to help taxpayers to complete their individual income tax return. Tax Pack is divided into two parts:

• Tax Pack with the tax return for individuals
• Tax Pack supplement - additional items of the individual income tax return designed for business and investment income/deductions and various items that are less common for salary wager earners (supplementary section).

While the Tax Pack publication was intended to provide taxpayers with information to assist in completing their tax returns, it contains so much information that it creates more confusion than solutions.

Tax Pack being Phased out:
From the 2008 income tax year the ATO began phasing out the tax pack in Victoria, Western Australia and Australian Capital Territory. Tax pack will also be phased out in other states for the 2009 tax year, leaving taxpayers who self prepare their tax returns no other option than online in tax services.

Using our EzTax online service it's FREE to start your 2009 tax return and obtain a FREE estimate of your tax refund.

Applying for Super Co-contributions

You don’t need to apply for the co-contribution. All you need to do is:

• make personal super contributions (after tax) super contributions before 30 June to your super fund or retirement savings account (RSA)
• don’t claim a personal super contribution deduction for at least some of your personal contributions in your income tax return, and
• lodge an income tax return.
• notify your super fund of your tax file number (TFN)

Once your super fund has reported your personal contributions to theATO, and you have lodged your income tax return, the ATO can then calculate if you are eligible. If you are, the ATO will automatically calculate the co-contribution amount and deposit it into your super account.

Most co-contribution payments are made between November and January each year as most contributions are reported to the ATO by then.

If you don’t supply your TFN to your super fund or RSA, they cannot accept your personal contributions and you may miss out on a co-contribution

Inner Brisbane Rents Increasing greater than 10%

"INNER Brisbane rents are increasing at more than 10 per cent a year, with a downturn in new apartments expected to keep vacancies tight.

DTZ Research has shown the biggest growth has been in one-bedroom units in the inner south and inner west suburbs of South Brisbane, West End and Indooroopilly, where rents have risen by up to 20 per cent.

The median rent of a one-bedroom unit in the inner south is now $420 a week, only $10 less than the CBD median price."

Suburbs on the rise:

The suburbs DTZ expects to record the biggest increase in rents during the next 12 months:

• Nundah 19%
• West End 14%
• Fortitude Valley 12%
• Alderley 12%
• Newmarket 10%
• CBD 10%
• Cannon Hill 9%
• Spring Hill 8%
• Chermside 8%

(source: Courier Mail 2 May 2009)

Income for Surcharge Purposes

From 1 July 2009 the ATO will change the way income is calculated for various tax offsets and obligations.

Income for surcharge purposes includes your:

• modified taxable income
• reportable fringe benefits, as reported on the payment summary
• total net investment loss
• reportable super contributions.

The ATO will use your income for surcharge purposes to work out whether you have exceeded the Medicare Levy Surcharge threshold.

For more details go to ==> Changes to Income Tests

Senior Australians Tax Offset Changes 1 July 2009

From 1 July 2009 the ATO will be using Adjusted Taxable Income (ATI) to calculate various tax offsets and obligations.

Eligibility for the Senior Australians Tax Offset and Pensioner Tax Offset will be based on your "rebate income", arrived at as follows:

• taxable income
• adjusted fringe benefits (reportable fringe benefits * 0.535)
• total net investment loss
• reportable super contributions.
  

For more details go to ==> Changes to Income Tests

What is Adjusted Taxable Income (ATI)

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From 1 July 2009 the ATO will be using Adjusted Taxable Income (ATI) to calculate various tax offsets and obligations. Aleady in use by Centrelink, Family Assistance Office and Child Support Authority, the new measures replace the old Separate Net Income test currently used by the ATO.

The changes do not alter the way assessable income and taxable income are determined. However, from 1 July 2009, they may change the amount of tax you are liable to pay by impacting the following tax rebates etc:

• Medicare levy surcharge threshold calculation
• Medicare levy surcharge (lump sum payment in arrears) tax offset
• Dependency tax offsets
• Senior Australians tax offset
• Pensioner tax offset
• Mature age worker tax offset
• Spouse superannuation contributions tax offset
• Government super co-contribution
• Deduction for personal superannuation contributions
• Higher Education Loan Programme and Student Financial Supplement Scheme repayments.

To date it would appear that the Low Income Tax Offset is not affected by the measures. In determining eligiblity for these taxation benefits and obligations three new income tests have been developed and several existing income tests have been amended. As part of these changes two new items will be used in determining ATI:

• Reportable super contributions, and
  
• Total net investment losses.

At present, both of these items are ignored in determining entitlement to ATO tax obligations and offsets. While the changes may appear simple and non intrusive, they have the potential for nasty outcomes for many people and will add to the cost of complience and preparation of annual tax returns. Anyone with negative gearing will almost certainly be affected in some way.

Without getting bogged down with details, formulas and scanarios, property investors with negative gearing may need to review their tax positions during the year, giving consideration to the following:

• Review pay as you go withholding arrangements to ensure the amount of tax withheld by your employer will cover the amount of tax payable;
• Review ITWV currently in place to ensure the varied rate is not too low.

Because these measure are so new the ATO is still developing ATI calulation tools for taxpayers and tax agents. So taxpayers should check with their accountant/tax agent for updates.

For more details go to ==> Changes to Income Tests

For details on how Negative Gearing can impact ATI ==> Adjusted taxable Income

Changes to Income Tests

From 1 July 2009, changes to tax law will mean changes to income tests for some government benefits and obligations administered by the ATO and other government organisations.

The changes may affect the amount of tax you are liable to pay as you may no longer receive a tax offset.

Three new income tests will be used when calculating tax offsets and obligations:

• adjusted taxable income (ATI) ==> Link for details
  
• rebate income ==> link for details
  
• income for surcharge purposes ==> link for details

From 1 July 2009, the following offsets and obligations will be affected:

• Medicare levy surcharge (lump sum payment in arrears) tax offset
• Dependency tax offsets
• Senior Australians tax offset
• Pensioner tax offset
• Mature age worker tax offset
• Spouse superannuation contributions tax offset
• Government super co-contribution
• Deduction for personal superannuation contributions
• Higher Education Loan Programme and Student Financial Supplement Scheme repayments.
  

The new measures also affect a range of Cenrelink, Family Assistance Office and Child Support payments.

Australian Property Outlook

"It is predicted that the residential market in Sydney will be the first market to move forward next year, ahead of the other property classes and markets in Melbourne and Brisbane, which won't see any growth until 2011," said Mr Hecek.

(source: The Australian)

Same-sex Couples Recognised in Family Law

The Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 comes into effect on 1 March 2009. The new legislation updates the Family Law Act 1975 to provide for opposite-sex and same-sex de facto couples to access the federal family law courts on property and maintenance matters.

The changes also include recognition of financial agreements between de facto couples and superannuation splitting where determined by court proceedings. This was previously only available to legally married couples of the opposite sex.

(source ATO)

2009 Online Tax Return - Coming Soon

Coming Soon

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• Lodge tax return in as little as 10 minutes

• No credit card or up front fee required

• We can deduct our fees from the refund

• 2009 online tax return FREE to try

• FREE tax estimation before you buy

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Tax News & Alerts: Keep up-to-date with the many changes this year. FREE to Subscribe.

Property Opinion re Australia

"Australian residential property markets are in much better shape than residential markets in Britain and the US. Higher lending standards in Australia mean there are fewer defaults forcing house prices down. There is a housing shortage and immigration, despite a cut, still remains strong."

(source Brisbane Times )