Archive for the ‘General Tax News’ Category

This is my post for the year and hopefully I will be back in February 2012. I would like to take the time to wish all my clients, friends and readers a very Happy Christmas and a prosperous New Year. 

I am from the old school whereby Christmas was a time for Midnight Mass, friends, family, presents, a hot baked dinner, too much to eat, swimming, sunburn and a generally great time. These days it seems that to be politically correct we must stay out of the sun, leave Christ out of Christmas and wish everyone a Happy Holiday, well that is not me and it is not Australian. So have a very Merry and Holy Christmas.

The Christmas holiday season is also a wonderful time for us to remember the friends and customers who help our business grow and make our jobs a pleasure all year long. Our business would not be possible without your continued support. 

We will be closing on the 22nd of December at 12.00 pm, and will re-open on the 9th of January at 8.00 am.

So have a safe and happy Christmas, enjoy the break (if you get one), and safely see in the New Year, which, by the way is 2012.

 Boy, 2012, I remember celebrating the bi-centenary in 1988, what a party that was. I remember seeing in 2000 when the Y2K bug was supposed to destroy the world, now we have 2012 when global warming will melt the polar ice caps and we will all be flooded out. Way back in 2010 I commented on Teflon Kev’s policy on ETS which was to tax people out of existence in order to stop every one spending so manufacturing would cease and the world would cool down. Imagine, we now have the Greens in power with a female Prime Minister who whacked on a Carbon Dioxide tax to discourage spending. 

Next stop 2020 and we can revisit the hot spots of today. Y2K failed and so may ETS.

In closing we’d like to take this moment to again say thank you and send our best wishes to you and your families. May your new year be filled with all the success and happiness you deserve.

Merry Christmas from everyone at

Coulcher’s Personal Accounting & Taxation Services

What is refund fraud?

Refund fraud is the attempt to obtain a tax refund dishonestly by deception or other means. A variety of offences including non-lodgement of forms or receiving a fee for preparing an income tax return on behalf of a taxpayer while not being a registered tax agent.

Common types of refund fraud include deliberately over-claiming deductions, offsets, or expenses, by providing false or misleading information understating income and/or fictitious payment summary details. Intermediaries deliberately lodging false claims on behalf of clients (with and without client knowledge)

For example, A NSW plumbing company was convicted and fined $22,000 for 16 offences for failing to comply with court orders to lodge 4 income tax returns and 4 GST returns. So what is your situation?

An ACT bus driver was convicted and fined a total of $6,600 for 3 offences for failing to comply with court orders to lodge income tax returns.

A NSW concreting business owner was convicted and fined $17,000 for 21 offences for failure to comply with court orders to lodge quarterly business activity statements.

A NSW cleaner was sentenced to two and a half years in jail for making fraudulent BAS claims. She used forged documents in an attempt to obtain a financial advantage by deception.

Last Tuesday the federal Labor Government introduced a mid-year mini-budget. Surprise, surprise, there were yet more tax increases, probably so that they could afford the massive pay rises they voted for themselves.

 The current tax system is highly weighted against the single income family such that if you earn $30,000 you pay $2,550 tax yet if you were part of a married couple earning $15,000 each than no tax would be payable. Of course the politicians who set the rules listen to bureaucrats that get paid no matter how little work they do and have no idea how hard life is in the real world. Apparently their role is to identify tax savings without understanding the implications or collateral damage caused by those changes.

 Where am I going with this? Well I have a 55 year old client who currently earns $55,000 per annum. He has a stay at home wife. I cannot say that she is a non-working wife because she tells me she works harder than John. Now on the $55,000 he earns, John pays $10,375.00 in tax. As Joan does not have an income John is entitled to a spouse rebate of $2,286 meaning he only pays $8,089.00 Now, if both John and Joan worked and earned $27,500 each, the tax payable would be around $2,137.50 each or a total of $4,275.00, some $3,814 less than poor Johnny currently pays. Well the dingbats in Canberra have decided that John does not pay enough tax and, from 1 July 2012, have increased his tax bill by $43.96 per week or $2,286.00 per annum by abolishing the spouse rebate to which he is currently entitled. This means he now pays $6,100.00 more than a couple earning the same income. In fact a couple could earn a combined income in excess of $80,000 before they pay the same tax as John. Our mate Swanny thinks that if you were born after 1^st July 1952 then you should have a job. It’s great that we now have a government that looks after the workers.

 I have previously mentioned the imposition on employers by having to pay extra superannuation for their staff, well the mini-budget emphasised the Governments view on saving for retirement, they are against it. I have been a strong supporter of the Superannuation co-contribution scheme whereby low income earners could contribute to their super fund and, because they were saving for their retirement, the Government would assist by conbtributing$1.50 per $1. The Labor Government thought this was too generous and had already reduced the co-contribution to $1 per $1. Now they have totally stuffed the system and put out the message loud and clear, saving for retirement is not a good idea. They have virtually abolished the co-contribution scheme by limiting the amount you can contribute to your own super to $500 in order to qualify for a co-contribution amount of $250. Now with the way fund managers are managing superannuation funds what is the incentive to add extra to your super? For some strange reason the Association of Superannuation Funds of Australia think this is a good idea. Have a great day, more next week.

Clients are often confused as to how long and what records need to be kept to comply with the A.T.O. Confusion can arise as the A.T.O requires some records to be kept for five years and others seven years from the date on that year’s Notice of Assessment issued by the A.T.O or where no assessment is issued from the date of lodgment of the tax return.

• Five years; non-Company records, generally individuals and non-company entities that do not have employees.
• Individual tax payers should keep records for five years. If you have a rental property then you should keep all records for a further five years after the rental property is sold.
• Seven years; financial records for companies, most employee records and all records of fringe benefits and capital gains.
• If you store financial records electronically you must be able to produce a hard copy if required.
• Employee records may need to be kept longer to comply with Workers Compensation Act.

• For depreciating assets, you must keep records for the entire period over which you claim deductions for the decline in value of those assets. You must keep your records for a further five/seven years from the date of your last claim.

If you organise your records weekly including updating your registers and filing the documents away you will reduce stress and stay on top of the task. It also allows you to find documents easily when needed.

Following is a list of ‘typical’ information required to be kept for between five & seven years, although the list is typical information used by business’ not every business will use every one.

Further information is available from the Tax Office website.

When can you claim a deduction for work related clothing? This area seems to cause some confusion and here we hope to clear this up.

 Compulsory Uniforms

As stated by the ATO ‘You can claim the cost of buying, renting, repairing and cleaning occupation-specific clothing, protective clothing and certain work uniforms.

You cannot claim the cost of purchasing or cleaning a plain uniform or clothes you bought to wear for work that are not protective or specific to your occupation even if your employer tells you to wear them – for example, a bartender’s black trousers and white shirt or a manager’s suit or stockings.’

A deduction is allowable where the wearing of uniform or specific clothing is compulsory and the clothing readily identifies a particular organisation with the use of such things as logos, initials, insignias on buttons or pockets. These should be of a sufficient size to be clearly visible to the observer. Clothing is unique when it has been designed and made for only one employer and is not available to the public. You may be able to claim a deduction for shoes, socks and stockings where they are compulsory and an essential part of the distinctive uniform which is specified in your employer’s uniform policy.

Specific Clothing

This is clothing that is specific to your occupation and would allow the public to easily recognise your occupation – for example, the checked pants a chef wears.

Protective clothing

Clothing that provides a sufficient degree of protection against risk of injury or illness that may be encountered during your duties at work are claimable. Examples of these include steel capped boots, gloves, safety coloured vests, fire resistant and sun protection clothing, non-slip nurse’s shoes, heavy duty shirts and trousers.

Overalls, aprons and other clothing worn so as not to damage or soil your normal clothes is also considered protective. Keep in mind jeans and other clothing that offer no extra protective qualities are not considered protective clothing.

 Non Compulsory Work Clothes

You cannot claim expenses incurred for non-compulsory work uniforms unless your employer has registered the design with AusIndustry – if you are unsure check with your employer or go to www.ausindustry.gov.au.

Remember shoes, socks and stockings or single items of clothing can never form part of a non-compulsory work uniform.

 Laundry

Where a deduction for work clothing is allowable you will generally be able to claim the cost of laundry. You may use a reasonable basis to work out your claim if it does not exceed $150. The ATO considers reasonable $1 per load, including washing, drying and ironing if no other clothes are included in the wash. Where other clothes are in the wash the rate is reduced to 50 cents.

 Allowances

You cannot automatically claim a deduction simply because you received a uniform, clothing, laundry or dry-cleaning allowance from your employer.