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The Federal Budget 2021-22: Low & Middle Income Tax Asset Rebate Extension Announced

Posted on May 16, 2021 by KAW Accounting

The Low and Middle Income Tax Offset has been extended for another 12 months, meaning that taxpayers whose wage earnings situate them within a certain income bracket will again be able to receive a little extra cash back into their pockets again this year. Tax offsets are also known as rebates and directly reduce the amount of tax payable on your taxable income. Sometimes, this can lead to the payable amount lowering to zero, but these rebates cannot be used on their own to get a refund. You are only able to receive this amount after you have filed your tax return at the end of the financial year and in a lump sum amount that is in accordance with which wage bracket you are in and the amount you will receive. You don’t need to complete anything in your tax return for your low or low and middle-income tax offset to be worked out for you. Instead, the amount of tax offset you will receive is worked out for you once your tax return is lodged. If you earn under $37,000 this financial year, you will receive an offset of $225. For those who earn between $37,001 and $48,000, […]

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Gender Inequality in Superannuation

Posted on May 13, 2021 by KAW Accounting

Gender gaps can affect superannuation accounts as much as they can affect salary rates. With barriers to entering into fields, lower hourly rates of pay, less hours worked and more unpaid labour affecting the amount of super Australian women are retiring with, as compared to men. Currently, the median superannuation balance for men aged between 60-64 stands at $204,107 whereas the superannuation balance for women of the same age has a median total of $146,900. It’s a gender superannuation gap of 28%. This gender gap in superannuation balances can be impacted even more by women using maternity leave. With women taking their time off from work and losing out on super contributions during this period of paid parental leave, it can affect their super in the long run as it exacerbates the income and superannuation gaps that were already in effect during their employment. It can also be exacerbated by existing salary gaps across the workforce. Despite traditionally male-dominated fields experiencing high percentages of female graduates entering into the workforce, the positions that they fill are not always high-ranked, irrespective of experience. There are threeproposed measures with regard to how the superannuation gap could be addressed at a macro level. […]

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The Shortcut Method: Claiming Your Work From Home Deduction

Posted on May 10, 2021 by KAW Accounting

There’s a new normal towards how Australians are approaching their work, with remote working now a more viable option for businesses and their employees, and it’s affecting the way that Australians now make claims for tax. With many businesses affected by city-wide lockdowns during parts of the 2020-21 financial year, and some whose employees preferring to remain as work-from-home or remote workers after theirs had ended, it’s more important than ever for work tax deductions to be correctly claimed and the process duly followed. Where once the expenses and claims that needed to be made during tax return season could be more clearly defined in terms of business or pleasure, work-related expenses or personal expenditure, remote working and work-from-home employees need to keep careful records of what they can and cannot claim as “home office expenses”. To simplify the process of claiming these expenses, the ATO introduced a “shortcut method” applicable to the 2020-21 financial year as a result of the impact COVID-19 has had. This method is only applicable from 1 March 2020 through 30 June 2021. Depending on an individual’s circumstances, it may be a better alternative to employ when claiming home office expenses than the fixed rate […]

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How Super For Contractors Can Work

Posted on May 5, 2021 by KAW Accounting

Contractors who run their own business and sell their services to others have different obligations to their super than what employees in a business may usually have. A contractor (also known as an independent contractor, a subcontractor, or a subbie) who is paid wholly or principally for their labour is considered to be an employee for super purposes, and may be entitled to super guarantee contributions under the same rules as other employees. A contract may be considered ‘wholly or principally for labour’ if: You’re paid wholly or principally for your personal labour and skills You perform the contract work personally You’re paid for hours worked, rather than to achieve a result If hiring a contractor to perform solely their labor for a fee, the employer may also have to pay super contributions on their behalf. In this sense, if you are a contractor who is being contracted to an outside business than your own to perform your usual work or labour, your employer must contribute to your super the same way they would any other employee. This could be seen in an example of an electrician who runs their own small business, or is employed by a small business […]

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What Are The Consequences Of Improperly Lodged Tax Returns?

Posted on May 4, 2021 by KAW Accounting

With tax return season approaching quickly this year, you may have already started looking into lodging your income tax return. Ensuring that your details are correct and that any information about your earned income from the year is lodged is the responsibility of the taxpayer and their tax agent. However, if during this income tax return process the tax obligations of the taxpayer fail to be complied with, the Australian Taxation Office has severe penalties that they can enforce. Australian taxation laws authorise the ATO with the ability to impose administrative penalties for failing to comply with the tax obligations that taxpayers inherently possess. As an example, taxpayers may be liable to penalties for making false or misleading statements, failing to lodge tax returns or taking a tax position that is not reasonably arguable. False or misleading statements have different consequences if the statement given results in a shortfall amount or not. In both cases, the penalty will not be imposed if the taxpayer took reasonable care in making the statement (though they may still be subject to another penalty provision) or the statement of the taxpayer is in accordance with the ATO’s advice, published statements or general administrative practices […]

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What Is A Retirement Planning Scheme?

Posted on April 21, 2021 by KAW Accounting

With a significant number of Australians approaching retirement and looking at the best ways to maximise their retirement assets and income from their super for it, retirement planning makes sense. Unfortunately, there are those who want to target people approaching and planning for their retirement with schemes designed to ‘help’ retirees and prospective retirees avoid paying tax by channelling their income through a self-managed super fund. Retirement planning schemes are designed to help people avoid paying tax on the income earned through their assets (often in an illegal manner). Those schemes may seem like a simple get-rich-quick solution in maximising assets and income for retirement but can put people’s entire retirement savings at risk. Anyone can fall prey to a retirement planning scheme. Anyone who is looking to put significant amounts of money into superannuation can be at risk of being ensnared, particularly those who are over 50, and who are: SMSF trustees Self-funded retirees Small business owners Professional service providers Individuals who are involved in property investment Checking for standard features of retirement planning schemes can be an excellent way to avoid becoming tangled in one. Retirement planning schemes usually: Are artificially contrived and complex, with SMSF members often […]

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The Sharing Economy And Your Tax Return – How You Could Be Affected

Posted on April 19, 2021 by KAW Accounting

In Australia any income earned by a job may be considered to be taxable income. Those who receive their income via the sharing economy are no exception to the rule. In fact, there can be further complications that result from incorrect understandings of how the income tax and goods & services tax  may apply to those individuals. The sharing economy is a socio-economic system built around sharing resources, often through a digital platform like a website or an app that others can purchase the right to use for a fee. Popular sharing economy services and activities that could be subject to income tax include Being a Driver for popular ride-sharing/ride-sourcing services and obtaining fares for those services Renting out a room, whole house or a unit on a short term basis Sharing assets (such as cars, parking spaces, storage space or personal belongings) through platforms such as Camplify, Car Next Door, Spacer, Toolmates or Quipmo. Creative or professional services provided by individuals through online platforms to fill a need of others (also known as the gig economy) Here are some of the things you need to bear in mind about the income and goods & services tax for these popular […]

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Super Co-Contributions Boost On Behalf of A Spouse

Posted on April 14, 2021 by KAW Accounting

Marriage and de facto relationships come with a number of perks – but did you know that if your partner earns less than you or is not currently working, you could contribute to their super fund savings? Many households in Australia, either as a result of unemployment, maternity/paternity leave or by choice, have single income households. As a result, the retirement savings held in super for one member of these households may not be increasing as exponentially fast as the working member. The good news is that, when in a relationship, a spouse can boost their non-working partner’s super fund with their own contributions. The best part? It could be a tax write-off for the working spouse. Under Australian superannuation law, a spouse can be a legally married partner with whom you live or your de facto partner. That gives additional benefits to those in de facto relationships, who can choose (if one member of the relationship isn’t working or earns less) to boost their partner’s super fund. A spouse must also be younger than their preservation age or between 65 and their preservation age and not retired. There are two ways that someone can help their partner’s superannuation grow: […]

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Interest On Your Home Loan Could Be Tax-Deductible

Posted on April 12, 2021 by KAW Accounting

It’s a simple, step-by-step process used by many Australians to increase their income. Borrow money from a financial institution, invest in a second property and pay off the loan with the profit accrued from the investment property (ie. rent from tenants).  But did you know that the interest on a home loan for the purchase of an investment property can be claimed as tax-deductible? To clarify – claiming a tax deduction on the interest of a loan can only be used on the loan that was used to purchase the investment property. It also must be used to earn income, because a property that is solely residential isn’t eligible for any tax deductions (except in certain situations where the residence may be used to produce income, like home business or office).  Here are a few examples of when tax deduction claims on your property are not allowed: If the secured property is being used for living as a primary residence, and no income is made from it. Refinancing your investment loan for some other purpose (like buying another property). Using the loan for a private purchase, other than the purchase of a home. If the investment property is a holiday […]

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What to do with your Lost Super

Posted on March 18, 2021 by KAW Accounting

After COVID 19’s impact on the world, an influx of employees who had lost their jobs fell into the job market. Many of these came from companies that couldn’t afford to continue their employment. As a result, many individuals had to seek alternative employment, or draw from their super. Some individuals took on multiple jobs to pay bills, and others drew from the super that they had accumulated in the government’s early release scheme specifically for coronavirus related income loss. Super is held by superannuation funds, and accumulates as a result of how much super an employer pays to the employees’ funds. Many Australians may find that they actually possess multiple super accounts as a result of having “lost” their super accounts during changeovers. It can also happen as a result of changing names, moving addresses, living overseas or changing jobs. Australians can use the ATO’s online tools to: View details of all of their super accounts, including lost or unclaimed amounts Consolidate eligible multiple accounts (including any super held by the ATO) Withdraw your super held by the ATO when certain conditions are met. As superannuation funds often have fees associated with their upkeep, as well as insurances that […]

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