Tax return rules to change

first_img Facebook Twitter: @NeosKosmos Instagram As the final cut-off date for submitting 2011-2012 tax returns approaches, new rules on deductions that small businesses can claim may save traders from having to pay thousands of dollars to the ATO. Regulations coming into force in 2012-2013 allow businesses to immediately write off a proportion of equipment and vehicle purchase costs rather than depreciate their value over a number of years. Paul Simopoulos, senior accountant with Melbourne’s Suttie Financial Group, told Neos Kosmos that the new ruling on expenditure up to $6500 for equipment is part of a package of incentives that includes encouraging businesses to buy vehicles. “Those with an annual turnover of less than $2m a year can buy a piece of equipment or tools, and they can write that cost off immediately – up to a value of $6500 – rather than get the depreciation value deducted over a number of years,” he said. “People staring down the barrel of a big profit, and possibly a hefty tax bill, could plan to buy something before the end of June so that they can get the full write-off in this financial year.” Mr Simopoulos – whose company will file in excess of 1400 tax returns this year for its clients – said that another change to allowances will make it easier to invest in a business vehicle. “Partly to stimulate the auto industry, people will be able to claim a $5000 deduction when they buy a vehicle new or used. “To be eligible you have to have an ABN, and you must be offering your services to more than one employer or customer.” Claiming expenses against earnings – a key calculation for all – is something that many tax payers may not be making the most of, says Simopoulos. “For individuals, many people aren’t aware they can claim their study expenses – course fees, travel, vehicle usage, and that’s for any study that’s related to their current source of income, or that will allow them to earn more within the same field. “For instance, that applies to a nurse studying the next unit that enables her to move on to a higher-paid nursing job.” Mr Simopoulos stressed that for anyone deemed as an Australian resident for tax purposes, all income from foreign sources must be declared. “If someone has income streams from overseas it’s important to talk to a registered tax agent to discuss your options. “If people want to be dodgy and not pay tax anywhere they’ll get caught eventually. We see it happen. The countries are talking to each other.” As a result of the ATO’s global data integration systems, financial audits of tax returns are common, says Simopoulos. “Once a week we’re seeing the ATO ask to do an audit. That happens when they pick up something that has been omitted. “The majority of these are the result of picking up on where income hasn’t been included, or where expenses are higher than the benchmarks that the ATO set for different industries – particularly for businesses that deal in cash.”last_img read more