MHP News

September 2020

Covid-19 continues to keep us on our toes, in and out of the accounting world. We hope you are all remaining safe and well, and send our wishes to any family and friends you may have in Victoria or less fortunate states. 

The latest Covid-19 stimulus has seen the release of JobKeeper 2.0. We are getting our heads around the new information and continuing to administer JobKeeper 1.0, assisting and attending to client, ensuring they are being assisted where possible. 

We have seen lots of changes emerge through the Corona pandemic. From an office stand point we have had to adapt to remote working, encouraging us to move to more of an electronic office environment. This in turn has opened up more opportunities for flexible working arrangements. We are able to work from home or in a remote location while continuing to work like we are sitting at our desks. Rest assure through all these changes we are making sure clients are not inconvenienced and are serviced as usual with minimal impact.

Along with remote working, we have had some changes in the office. We said goodbye to Dianne and welcomed Ashleigh to our administration team. You will see her in our front reception area with Jill. We also added to our accounting team with the arrival of Sarah, our trainee. 

As we draw a close on the first quarter of the 2021 tax year, we have been busy processing clients income tax returns for last financial year and supporting clients through this turbulent time. If you are still to gather your tax records, see below for our handy checklists on what we require to complete your tax returns. Did you know it's not always necessary to book an appointment to get your tax complete? You can email your tax information, upload it to your MHP Client Portal or drop it into our office. We can start processing your income tax return and call you should we need any further information or have any queries we wish to address. However, appointments are always welcome!  

With the end of a quarter also comes tax obligations. Remember to pay superannuation to your employees by the 28th of October and be sure to pay your WorkCover premium by the 30th September if you haven't already. Quarter one BAS' are due on 25 November (if you lodge electronically, due earlier if you still lodge by paper). Please note; STP finalisations are now overdue as are any Taxable payments Annual Reports. You can find a link at the end of the newsletter that will take you to all the latest and upcoming tax due dates.

Read on for the latest news in the tax and accounting world. Our September Tax Time newsletter will cover;

  • Tax Checklists
  • Treatment of JobKeeper Payments
  • JobKeeper 1.0 vs JobKeeper 2.0
  • Claiming Deductions for Personal Super Contributions
  • Covid Information for Small Business- Samll Business Hub


Tax Time 2020/2021

What we need from you to prepare your tax

Are your records ready to go? Need help on what we require to complete your return?

Find below our Individual Checklist and Rental Property Checklist. Use these as guides to assist you in ascertaining what records we require to complete your return.

 Individual Checklist.pdf

 Rental Property Checklist.pdf

Have a Business? Be sure you include;

  • Cash, online, EFTPOS, bank statements, credit or debit card transactions covering both the sales and other business income AND any expenses you can claim as a business deduction such as contractor expenses, operating expenses and business travel expenses

Sole Trader?

  • Even if your income is below the threshold you still need to lodge a tax return!

Still unsure? Feel free to contact us for further information or clarification.

Tax Treatment of JobKeeper Payments

Did you know you need to include JobKeeper Payments in your tax return?

All JobKeeper payments are assessable as ordinary income of the business that is eligible to receive the payments.

JobKeeper payment is not subject to GST.

If you have been receiving JobKeeper payments then the following relates to you;

  • Sole Trader? You need to include payments as business income in your individual tax return.
  • Company? Report it as income in your company tax return.
  • Employee receiving JobKeeper? You need to include as salary or wages.
  • Partnership or Trust? You do not need to include payments as assessable income in your individual tax return. It will be business income in your partnership or trust tax return.

JobKeeper 2.0

2020 has been all about Corona Virus and as we approach the end of September, Corona is still on the tip of everyone's tongue! As you have most likely heard in recent media releases, JobKeeper Payment has been extended until 28 March 2021. There are new turnover tests for eligible businesses and two rates for eligible employees based on average hours worked.

The first JobKeeper stimulus is about to end (on 27th September) and the second JobKeeper stimulus is about to start (on September 28th).

There are quite a few changes from version 1.0 to version 2.0. If you are already receiving JobKeeper, you will need to reassess your eligibility and meet an extended decline in turnover test based on actual GST turnover. Those businesses enrolling for the first time, need to meet the basic eligibility test and the decline in turnover test/s for the relevant period.

In version 2.0 of JobKeeper the payment rate will be reduced and split into a higher and lower rate based on the number of hours an employee works in a specific 28 day period to 1 March 2020 or 1 July 2020.

Like Employer eligibility,  the eligibility for Employees has also changed. 

The below table is a broad overview of Decline in Turnover Test and new the new JobKeeper payment rates.

 

30 March to 27 September 2020

28 September to 3 January 2021

4 January 2021 to 28 March 2021

Decline in turnover test

Projected GST turnover for a relevant month or quarter is expected to fall by at least 30% (15% for ACNC-registered charities, 50% for large businesses) compared to the same period in 2019.*

Actual GST turnover in the September 2020 quarter (July, August & September) fell by at least 30% (15% for ACNC-registered charities, 50% for large businesses) compared to the same period in 2019.*

 

Actual GST turnover in the December 2020 quarter (October, November & December) fell by at least 30% (15% for ACNC-registered charities, 50% for large businesses) compared to the same period in 2019.*


JobKeeper payment

30 March to 27 September 2020

28 September to 3 January 2021

4 January 2021 to 28 March 2021

Worked 80 hours or more in the reference period

· $1,500 per fortnight per employee

· $1,200 per fortnight per employee or business participant

· $1,000 per fortnight per employee or business participant

Worked less than 80 hours in the reference period

· $750 per fortnight per employee or business participant

· $650 per fortnight per employee or business participant

      

PLEASE NOTE; Your accountant is busy assessing and/or reassessing your eligibility for the next round of JobKeeper and will contact you to discuss. If you have any questions or queries prior to us contacting you please don't hesitate to contact us.

Claiming Deductions for Personal Super Contributions

Did you know you may be able to claim a tax deduction for personal super contributions that you made to your superannuation fund? 

While you can't claim a deduction for contributions paid to your superannuation fund by your employer in the form of super guarantee or salary sacrifice amounts, if you made a contributions to your super fund from your after tax income ie from your bank account directly to your superfund, you may be able to claim a deduction for your personal contribution.

Before you claim, you must give your superfund a notice of intent to claim or vary a deduction for personal contributions from the ATO (link below)

https://www.ato.gov.au/forms/notice-of-intent-to-claim-or-vary-a-deduction-for-personal-super-contributions/

To be eligible you must get your income from;

- Salary and wages

- A personal business (ie self employed contractors)

- Investments

- Government pensions or allowances

- Super

- Partnership or trust distribution

- a foreign source

It's important to note that any personal super contributions you claim as a tax deduction will count towards your concessional contributions cap. This is capped at $25,000. If you exceed this cap you will be liable to pay extra tax and any concessional contributions  will count towards your non-concessional contributions cap.

If you think you want to claim a tax deduction for your personal contributions, talk to your accountant for clarification.

Covid-19 Information for Small Business- Small Business Hub

The ATO have developed a Safe Work Australia COVID-19 Small Business Hub to assist businesses operate and manage work health and safety risks from Covid-19. Covid-19 is a tricky environment to operate in and this hub has a plethora of resources to assist you return to your usual operations as restrictions ease and how to stay open safely.

The resources include a small business planning tool, guidance on work health and safety duties and practical resources like posters and checklists. There is also risk assessment  to help you assess the risks associated with exposure to COVID-19 and implement control measures to manage those risks. There is also a mental health component.

Check out the link below and see if there is something that might help you.

https://www.safeworkaustralia.gov.au/covid-19-information-small-business

ATO Quick Bits

Whether you lease your investment property on a long term basis, or rent out your holiday home on weekends when you can't enjoy it yourself, you may have a capital gain or loss when it's time to sell.

Keeping records will make your gain or loss easier to calculate down the track. The ATO prefilling service will also remind you of any property you have sold during the year.

For more info, go to www.ato.gov.au/…/You…/Sale-of-property-and-other-CGT-events/

Australian Taxation Office - Home

True or False: You can claim a standard $300 deduction in your tax return for work-related expenses?

False! There is no such thing as an 'automatic' or 'standard deduction'.

There are limited circumstances where receipts may not be required. You still need to calculate your claim on a reasonable basis, have spent the money and show the expense was related to earning your income.

Australian Taxation Office - Home

Pay as you go (PAYG) instalments help you manage your tax obligations over the financial year. The ATO apply them if income you earned from your business and/or investment is expected to result in tax owing (over a certain amount) at the end of the year.

COVID-19 has had an impact on income for many Australians, so the ATO have taken steps to ensure you've got the flexibility to manage your PAYG instalments to suit your circumstances. Find out how at www.ato.gov.au/…/Varying-your-PAYG-instalments-due-to-COVI…/

 

Australian Taxation Office - Home

Running your business from home? Whether it's a unique part of your 2020 experience or the way you've always worked, you may be able to claim a deduction for expenses like:

  • Electricity
  • Cleaning Costs
  • Internet
  • Cost of repairs to your business equipment
  • Mortgage interest or rent

In this video, Assistant Commissioner Andrew Watson runs you through the essentials of home-based business expenses. You can also read up on the finer details at https://www.ato.gov.au/…/Deductions-for-home-based-busines…/

Australian Taxation Office - Home

Attention rental property owners: Reminder that you can no longer claim deductions for the cost of travel to and from your property, unless you're carrying on a business.

Made a mistake and claimed rental travel this tax time? Don't stress, you can request an amendment by contacting us .

Find out more at www.ato.gov.au/…/Resi…/Rental-properties-and-travel-expenses

 

Australian Taxation Office - Home

If you've been financially affected as a result of COVID-19, you now have more time to access some of your super.

Applications for COVID-19 early release of super have now been extended to 31 December 2020.

Remember, you can still only apply once in this financial year. Check if you're eligible at...
www.ato.gov.au/…/Withdrawi…/COVID-19-early-release-of-super/

 

Australian Taxation Office - Home

SCAM ALERT: We're seeing a growing number of people making large payments for fake tax debts. Don't get caught! These phone calls will tell you that you owe money and need to pay it straight away or you'll be arrested. The scammer will try to keep you on the line until you pay, often by unusual methods such as bitcoin, pre-paid credit cards or gift cards.

If you get a call like this, hang up and don't provide any info. The ATO will never:

- threaten you with immediate arrest

- send unsolicited pre-recorded messages to your phone

- keep you on the line until a payment is made

- request payment of debts via bitcoin, gift cards or other vouchers.

Warn your family and friends to stay alert and visit our scams page to learn more: www.ato.gov.au/…/online-services/i…/verify-or-report-a-scam/


Harvard Reference Generator Study Tool: Referencing a Web Page for a Student's Essay, Dissertation or Thesis | Neil's Toolbox

 


Australian Taxation Office. (2020). Various. Available: https://www.facebook.com/atogovau/?epa=SEARCH_BOX. Last accessed 22/09/2020

 


Out Of Interest

Life event: Helpful tips to save for a home deposit

The national averages# for the time it takes an average-income couple* to save a 20% home deposit ($111,080) on a median priced house ($555,402) is 4.6 years. In contrast, it takes 4.2 years to save a 20% home deposit for a median priced apartment.

*An average combined salary of $116,789, and setting aside 20% of their combined pre-tax income annually into a high-interest savings account. 

With this in mind, we offer some helpful tips. Admittedly, they are predominantly directed at first homebuyers; however, those looking to purchase an investment property or their next home may find some of them useful as well.

Click on the link below to read the full article as issued by MHP Private Wealth's Financial Knowledge Centre to find out how understanding the following can assist you save for your first home.

  • Understanding your borrowing power
  • Doing your housing market research
  • Assessing your personal finances
  • Putting your savings to work.

https://financialknowledgecentre.com.au/kcactivities.php?id=152

Life's journey and Maslow's hierarchy of needs

Maslow's hierarchy of needs is commonly known as the five-tier model of human needs. However, what is lesser known is that Maslow proposed amendments to his original model nearing the end of his life. Namely, the inclusion of an extra motivational level, and clarification that you don't need to fulfil a need 100% before you can reach the next level. Here is an amended version of Maslow's hierarchy of needs:

-physiological needs (obtain basic necessities of life)

-safety needs (security through order/law)

-belongingness/love needs (affiliation with a group)

-esteem needs (esteem via recognition/achievement)

-self-actualisation (fulfilment of personal potential)

-self-transcendence (further a cause beyond self)      

With the above in mind, in this highly emotive TED Talk, Jonathan Gravenor shares his life's journey – confronting his own mortality, and in doing so, launching himself on a pilgrimage to become a better man.

MHP Private Wealth's Financial Knowledge Centre has the full video below. Click to watch the TED talk.

https://financialknowledgecentre.com.au/kcvideos.php?id=1095

Please contact us for any clarification on any tax matters or issues pertaining to your individual circumstances. 

Be sure to check out the links below and keep up to date with the due dates for your tax obligations.

See you in December 2020

Kind Regards

The Team
McDonnell Hume Partners



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