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The First home super saver (FHSS) scheme was introduced by the Australian Government in the Federal Budget 2017–18.
The FHSS scheme allows you to save money for your first home inside your superannuation fund.
This will help first home buyers save faster with the concessional tax treatment of super.
From 1 July 2017, you can make voluntary concessional and non-concessional contributions into super to save for your first home.
From 1 July 2018, you can then apply to release your voluntary contributions, along with associated earnings, to help you purchase your first home. You must meet the eligibility requirements to apply for the release of these amounts.
You can use this scheme if you are a first home buyer and both of the following apply:
You can apply to have a maximum of $15,000 of your voluntary contributions from any one financial year included in your eligible contributions to be released under the FHSS scheme, up to a total of $30,000 contributions across all years. You will also receive an amount of earnings that relate to those contributions.
There are a number of important things you need to know if you plan to use the FHSS scheme:
You can start making super contributions from any age. However, you can’t request a release of amounts under the FHSS scheme until you are 18 years old.
Also, you must have:
Eligibility is assessed on an individual basis. This means that couples, siblings or friends can each access their own eligible FHSS contributions to purchase the same property. If any of you have previously owned a home, it will not stop anyone else who is eligible from applying.
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Source: Australian Taxation Office
The term cryptocurrencies is generally used to describe a digital asset in which encryption techniques are used to regulate the generation of additional units and verify transactions on a blockchain.
Cryptocurrency generally operates independently of a central bank, central authority or government.
The creation, trade and use of cryptocurrency is rapidly evolving. This information is our current view of the income tax implications of common transactions involving cryptocurrency. Any reference to ‘cryptocurrency’ in this guidance refers to Bitcoin, or other crypto or digital currencies that have the same characteristics as Bitcoin.
If you are involved in acquiring or disposing of cryptocurrency, you need to be aware of the tax consequences. These vary depending on the nature of your circumstances.
Everybody involved in acquiring or disposing of cryptocurrency needs to keep records in relation to their cryptocurrency transactions.
If you have dealt with a foreign exchange and/or cryptocurrency there may also be taxation consequences for your transactions in the foreign country.
A CGT event occurs when you dispose of your cryptocurrency. A disposal can occur when you:
If you make a capital gain on the disposal of a cryptocurrency, some or all of the gain may be taxed.
Certain capital gains or losses from disposing of a cryptocurrency that is a personal use asset are disregarded.
If the disposal is part of a business you carry on, the profits you make on disposal will be assessable as ordinary income and not as a capital gain.
While a digital wallet can contain different types of cryptocurrencies, each cryptocurrency is a separate CGT asset.
Cryptocurrency is only capable of being acquired, held and transacted with. The period of holding and the nature of the transaction is relevant to whether your cryptocurrency is a personal use asset.
The relevant time for determining whether or not it is a personal use asset is at the time of its disposal.
During a period of ownership, the way that cryptocurrency is kept or used may change. For example, cryptocurrency may originally be acquired for personal use but ultimately be kept as an investment.
The longer the period of time that a cryptocurrency is held, the less likely it is that it will be a personal use asset.
Cryptocurrencies are not a personal use asset if it is acquired, kept or used:
If you have to exchange cryptocurrencies you own to Australian dollars (or to a different cryptocurrency) to purchase or acquire the items for personal use or consumption, then this strongly indicates the cryptocurrency you own was acquired, held and used for a purpose other than personal use or enjoyment.
Some capital gains or losses that arise from the disposal of cryptocurrencies that are a personal use asset may be disregarded.
Cryptocurrency may be a personal use asset if it is used mainly to purchase items for personal use.
Only capital gains you make from personal use assets acquired for less than $10,000 are disregarded for CGT purposes. However, all capital losses you make on personal use assets are disregarded.
Click here for further information on how Griffin & Associates can assist in your tax matters.
Source: Australian Taxation Office
Technology-driven changes to the employment market are seeing record numbers of Australians claiming home office deductions. But a high level of mistakes has prompted the Australian Taxation Office (ATO) to increase attention, scrutiny and education for home office expenses.
Assistant Commissioner Kath Anderson said that last year, 6.7 million taxpayers claimed a record $7.9 billion in deductions for ‘other work-related expenses’. These included expenses related to working from home.
“There is a rising trend of employees working from home, and while extra costs related to working from home are usually deductible, we are seeing some taxpayers either over-claiming or claiming private costs,” she said.
“There is mounting evidence that many taxpayers don’t know what they can and cannot claim. In particular, we are seeing some taxpayers claiming expenses they never paid for, expenses their employer reimbursed, private expenses and expenses with no supporting records,” Ms Anderson said.
Taxpayers can legitimately claim additional costs incurred as a direct result of working from home, but need to be careful not to claim private expenses as well.
“Claims for the work-related portion of expenses like phone, internet, depreciation of your computer, printing and stationary are all allowed,” she said.
“But one of the biggest issues we are seeing is people claiming the entire amount of expenses like their internet or mobile phone, not just the extra bit related to work. In reality, the rest of us are subsidising their private phone calls and internet usage, which is not okay,” she said.
According to Ms Anderson, the additional costs of running expenses like electricity for heating, cooling and lighting are deductible. However, you need to be able to demonstrate that there were additional costs.
“If working from home means sitting in front of the TV or at the kitchen bench doing some emails, it’s unlikely that you are incurring any additional expenses. However, if you have a separate work area, then you can claim the work-related portion of running expenses for that space,” she said.
While employees can claim additional running costs associated with working from home, occupancy costs are limited.
“Employees cannot generally claim occupancy-related expenses like rent, mortgage repayments, property insurance, land taxes and rates,” Ms Anderson said.
Ms Anderson warned that employers are sometimes contacted to verify expenses.
“Taxpayers claiming working from home expenses should remember that we might contact their employer to confirm their claim. Sometimes we discover that the employer paid the costs, either upfront or through reimbursement. While other times we discover there was no need for the employee to work from home at all.”
According to Ms Anderson, record-keeping is a key focus area for the ATO this year.
“This tax time we expect to disallow a lot of claims where the taxpayer hasn’t kept records to prove that they legitimately incurred the expense and that the expense was related to their work,” she said.
“To claim working from home expenses, taxpayers must keep supporting records such as receipts, diary entries and itemised phone bills or other records. Even though detailed receipts are not required for phone and internet claims up to $50 per year, it’s not an automatic entitlement – you still need to be able to show how you calculated your claim,” she said.
“The ATO has a handy Home Office expenses calculator on our website to help taxpayers calculate their claim, and a very good guide to working from home,” Ms Anderson said.
While technology is allowing more employees to work from home, it is also allowing the ATO to deploy sophisticated systems. These systems help to spot claims that don’t add up. It also helps to identify claims that are out of the ordinary compared to others in similar occupations earning similar income.
Ms Anderson said there are three golden rules for taxpayers to follow to get working from home claims right. “One – you must have spent the money yourself and not been reimbursed. Two – the claim must be directly related to earning your income, and three – you need a record to prove it.”
Click here for more information on how Griffin & Associates can assist with your tax requirements.
Source: Australian Taxation Office
There are changes to the company tax rates. The full company tax rate is 30% and the lower company tax rate is 27.5%. The following shows when to apply the lower rate and how to work out franking credits.
Company tax rates apply to:
The full company tax rate of 30% applies to all companies that are not eligible for the lower company tax rate. Eligibility for the lower company tax rate depends on whether you are a:
From the 2017–18 income year, companies that are base rate entities must apply the lower 27.5% company tax rate.
A base rate entity is a company that both:
Base rate entity passive income is:
You need to be a small business entity to be eligible for the lower company tax rate in the 2015–16 and 2016–17 income years.
For the 2016–17 income year, the lower company tax rate is 27.5%. This lower rate applies to small businesses that both:
For the 2015–16 income year, the lower company tax rate was 28.5% for small business entities with an aggregated turnover less than $2 million, and carrying on a business for all or part of the year.
From the 2017–18 income year, you need to be a base rate entity, rather than a small business entity to be eligible for the lower tax rate.
From the 2017–18 income year, to work out the company tax rate for franking your distributions, otherwise referred to as ‘corporate tax rate for imputation purposes’, you need to assume your aggregated turnover, assessable income, and base rate entity passive income will be the same as the previous income year.
For the 2017–18 income year, your corporate tax rate for imputation purposes is 27.5% if either:
Otherwise, your corporate tax rate for imputation purposes is 30%.
For further information on how Griffin & Associates can assist with your taxation requirements, please click here.
Source: Australian Taxation Office
As tax time 2018 kicks off, the Australian Taxation Office (ATO) has profiled the five most common tax mistakes and the personalities most likely to have tax time troubles.
Assistant Commissioner Kath Anderson said it’s often simple mistakes and misunderstandings that trip people up. “While we know most people want to get it right, our audits and reviews show that there are five main areas where taxpayers are most likely to get it wrong.”
The top five mistakes include taxpayers who are:
Ms Anderson says many of the mistakes are avoidable. Taxpayers can do a few things to make sure their tax time experience is stress-free.
“Know what you can legitimately claim. There are three golden rules for work-related expenses. You must have spent the money yourself and not have been reimbursed, it must be directly related to earning your income, and you must have a record to prove it,” Ms Anderson said.
“This tax time we will be paying close attention to claims for private expenses like home to work travel, plain clothes, and private phone calls. We will also be paying attention to people who are claiming standard deductions for expenses they never paid for.”
Tax can sometimes be tricky, but it’s not tricky to keep good records.
“Around half of the adjustments we make are because the taxpayer had no records, or they were poor quality. Yet it’s so easy to keep your records, using the myDeductions tool in the ATO app. Just take a photo, record a few details and then at the end of the year upload the information to your agent or to myTax.”
Another tip is to include all your income. “A temp job, cash jobs, capital gains on cryptocurrency, or money earned from the sharing economy is all income that must be declared. We are constantly improving our data matching tools and even a one-off payment may be enough to raise a red flag.
“We know some people lodge early because they want their refund, and that’s fair enough. But we amend returns for thousands of taxpayers that leave out some of their income. This can delay your refund or even see you owing money to the ATO. If you wait until mid-August, we will have pre-filled most of your income information for you, to help you get it right to start with.”
Pre-fill is available whether you choose to lodge online with myTax, or with a registered tax agent.
For those intending to push the boundaries, the ATO has you in its sights.
“We are increasing our investment in education and assistance, as well as reviews and audits. This year we are expecting to make contact with more than 1 million taxpayers either directly or through their agents,” Ms Anderson said.
Finally, if you make a mistake, don’t panic.
“We know people sometimes make mistakes or forget to include something on their return. If you’re in that situation, try to fix it as soon as you can to minimise any interest and penalties. Either contact your agent or lodge an amendment online.
“Remember: Whether you use a tax agent or lodge it yourself, you are responsible for the claims you make. Take the time to check your deductions are legitimate and you have listed all your income before lodging.”
Click here to find out how our office can assist in preparing your income tax returns and avoiding these common tax mistakes.
Source: Australian Taxation Office
A focus on work-related clothing and laundry expenses this Tax Time will see the Australian Taxation Office (ATO) more closely examine taxpayers whose clothing claims don’t suit them.
“Last year around 6 million people claimed work-related clothing and laundry expenses, with total claims adding up to nearly $1.8 billion. While many of these claims will be legitimate, we don’t think that half of all taxpayers would have been required to wear uniforms, protective clothing, or occupation-specific clothing,” Assistant Commissioner Kath Anderson said.
With clothing claims up nearly 20% over the last five years, the ATO believes a lot of taxpayers are either making mistakes or deliberately over-claiming. Common mistakes include people claiming ineligible clothing, claiming for something without having spent the money, and not being able to explain the basis for how the claim was calculated
“Around a quarter of all clothing and laundry claims were exactly $150, which is the threshold that requires taxpayers to keep detailed records. We are concerned that some taxpayers think they are entitled to claim $150 as a ‘standard deduction’ or a ‘safe amount’, even if they don’t meet the clothing and laundry requirements,” Ms Anderson said.
“Just to be clear, the $150 limit is there to reduce the record-keeping burden, but it is not an automatic entitlement for everyone. While you don’t need written evidence for claims under $150, you must have spent the money, it must have been for uniform, protective or occupation-specific clothing that you were required to wear to earn your income, and you must be able to show us how you calculated your claim.”
Ms Anderson said the ATO also has conventional clothing in its sights this year. “Many taxpayers do wear uniforms, occupation-specific or protective clothing and have legitimate claims. However, far too many are claiming for normal clothing, such as a suit or black pants. Some people think they can claim normal clothes because their boss told them to wear a certain colour, or items from the latest fashion clothing line. Others think they can claim normal clothes because they bought them just to wear to work.
“Unfortunately they are all wrong – you can’t claim a deduction for normal clothing, even if your employer requires you to wear it, or you only wear it to work”.
Ms Anderson warned taxpayers thinking of over-claiming that the ATO’s technology and access to data is improving each year.
“We now scrutinise every return and we have sophisticated analytics to identify unusual claims, including comparing taxpayers to others in similar occupations earning similar income. If a red flag is raised, we will investigate. It might be as simple as checking with your employer to check if you were required to wear uniforms or protective clothing,” Ms Anderson said.
The ATO is concerned that the results from its random audit program show lots of taxpayers over-claiming by a small amount.
“We know that some people think $150 is not a large amount and that nobody will notice if they over-claim. But while $150 might not be big individually, when you multiply it over millions of taxpayers, it adds up to a lot. And besides, no matter how small, other Australians shouldn’t be expected to wear your over-claiming.”
Ms Anderson said there are three golden rules to follow which will help taxpayers to get their deductions right.
“One – you have to have spent the money yourself and can’t have been reimbursed, two – the claim must be directly related to earning your income, and three – you need a record to prove it.”
Taxpayers who can’t substantiate their claims should expect to have them refused, and may be penalised for failing to take reasonable care when submitting their tax return.
“To avoid the risk, we recommend taxpayers store clothing and laundry receipts in the ATO app’s myDeductions tool. Keeping accurate records that can be uploaded to myTax or provided to a tax agent will make tax time much easier.”
Claiming $150 or less for clothing and laundry (and less than $300 for work-related expenses in total)?
Make sure your claim is for eligible clothing (occupation-specific, protective or uniform). Remember, you can’t claim for plain or conventional clothing, even if your employer requires you to wear it and even if you only wear it to work.
Calculate your claim for washing, drying and ironing at:
You may be asked to demonstrate how often you wore your eligible clothing (eg. evidence that you worked three shifts a week for 48 weeks in a year).
Click here for more information on our Griffin & Associates can assist with your taxation requirements.
Source: Australian Taxation Office
In December 2017 the Australian Government introduced an annual vacancy fee for foreign owners of residential dwellings.
Under the legislation, foreign owners of residential dwellings in Australia are required to pay an annual vacancy fee if their dwelling is not residentially occupied or rented out for more than 183 days (six months) in a year.
If you’re a foreign owner of a residential dwelling you may be liable to pay the annual vacancy fee.
The annual vacancy fee is part of the Australian Government’s comprehensive housing affordability plan. It is intended as a financial incentive for foreign owners to make their dwelling available for rent and increase available housing in Australia.
The vacancy fee return must be lodged by foreign owners of residential dwellings who:
The vacancy fee may also apply where a foreign person failed to submit a foreign investment application but purchased a residential property before 9 May 2017.
Foreign owners of vacant land do not have to lodge a vacancy fee return.
You must lodge a return even where the dwelling has been occupied or made available for rent.
If the dwelling is owned by two or more people as joint tenants, you only need to lodge one return. However, if you own a share of a dwelling as a tenant in common, you each must lodge a vacancy fee return.
If any of the following occur, a vacancy fee return will not be required to be lodged:
Source: Australian Taxation Office
There are special capital gains tax (CGT) rules you need to know if you’re a foreign resident. These rules will impact you when you sell residential property in Australia.
In the 2017-18 Budget, the government announced that foreign residents will no longer be entitled to claim the main residence exemption when they sell property in Australia. This change is not yet law and is subject to parliamentary process.
If the law is passed and you are a foreign resident when a CGT event happens to your residential property in Australia, you may no longer be entitled to claim the main residence exemption. This will apply to you:
The change will apply to foreign residents as follows:
This change will only apply if you are not an Australian resident at the time of the disposal (contract date).
If you weren’t an Australian resident for tax purposes while living in your property, you are unlikely to satisfy the current requirements for the main residence exemption.
If you are a foreign resident when you die, the changes will also apply to:
For more information on how our office can assist with your taxation requirements, please click here
Source: Australian Taxation Office
From 1 July 2018, the Australian Government will introduce the Contributing the proceeds of downsizing into superannuation (downsizing) measure. Downsizer contributions are part of the governments package of reforms to reduce pressure on housing affordability in Australia.
This measure applies to the sale of your dwelling (your home), which was your main residence. It applies to contracts for sale on or after 1 July 2018.
If you are 65 years old or older and meet the eligibility requirements, you may be able to choose to make a downsizer contribution into your superannuation of up to $300,000 from the proceeds of selling your home.
Your downsizer contribution is not a non-concessional contribution and will not count towards your contributions caps. The downsizer contribution can still be made if an individual has a total super balance greater than 1.6 million.
Your downsizer contribution will not affect your total super balance until your total super balance is re-calculated to include all your contributions, including your downsizer contributions, on 30 June at the end of the financial year.
The downsizer contribution will also count towards your transfer balance cap, currently set at $1.6 million. This cap applies when you move your super savings into retirement phase.
You can only make downsizing contributions for the sale of one home. You can’t access it again for the sale of a second home.
Downsizer contributions are not tax deductible and will be taken into account for determining eligibility for the age pension.
If you sell your home, are eligible and choose to make a downsizer contribution, there is no requirement for you to purchase another home.
You will be eligible to make a downsizer contribution to super if you can answer yes to all of the following:
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