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Friday, 28 October 2016 12:36

Correcting GST Errors

Correcting GST errors and making adjustments on your business activity statements

If you identify any error in identifying a goods and in a service tax for a previous period or on an already lodged business activity statement (BAS), there is always scope to make a correction.

The ATO has understood the necessities of these adjustments for businesses, which can easily come about because of change of circumstances or facts. These can include:

  • Modifying  the price of taxable sale or purchase
  • Cancellation of taxable sale or purchase
  • GST-free export supplies that are not exported within the required time (and therefore become taxable)
  • Changes in creditable purpose  and bad debits

If your business overstated its GST liability, then ATO imposes a four year time limit for making changes, which is considered down from when the error was made. For the mistakes on which not enough GST has been accounted for, then in that condition there is an added factor relating to business’s turnover. If the annual turnover for the business is less than $20 million, then in that scenario adjustment must be made within 18 months. If the annual turnover is more than $20 million then it must be paid within 12 months In General, it can be much easier to correct a GST error on a later activity statement rather than revising the earlier statement. But being able to make an adjustment can be important to avoid liability to any penalties or general interest charge.As adjustments relate to changed facts or circumstances, which will have an impact on the subsequent GST outcome of a transaction, the resulting change in need of an adjustment will generally have resulted in a business having either claimed too much GST, or not claimed enough.

Claiming too much GST

 How does business claim too much GST on a BAS? Whoever provides the information in order to include the BAS could have:

  • Missed to include a sales invoice
  • Coded a sale as GST free however it includes GST
  • Error has been made in coding transactions
  • A payment has been included in a purchase that is not claimable as a GST credit

Not calming enough GST

 There are some scenarios in which this might be the case include where a business:

  • The error was made in coding the transactions
  • Whoever filled out the BAS coded a GST sale as taxable but it was actually GST free

At Absolute Accounting Solutions we can elimimate all your errors in limited time and budget. So contact us at 1300 488 330 or visit www.absoluteaccountingsolutions.com.au

Published in Blog
Wednesday, 12 October 2016 10:01

GST for Overseas Businesses

GST for Overseas businesses and Small business company tax rate cut

For your 2016 tax return, the small business company tax rate has been reduced from 30% to 28.5%. This lower rate likewise applies to small businesses that are corporate unit trusts and public trading trusts. If you complete your own company tax return, use the new rate of 28.5% when working out the ‘Tax on taxable or net income’ (T1) in the ‘Calculation statement’

The franking credit top stays unaltered at 30% (even if you are eligible for the reduced company tax rate of 28.5%)

You are a small business if you are a sole trader, partnership, company or trust that has an aggregated turnover less than $2 million.

From 1 October 2016 there is good news for overseas business clients as they are no longer subject to GST. Overseas businesses supplying Australian businesses don't need to register for GST if they:

  • Only produce GST-free  supplies through an enterprise carried on outside Australia
  • Have a business presence in Australia of less than 184 days in a 12-month period
  • Have a GST turnover below the GST registration threshold of AUD $75,000 (because certain supplies will no longer be included in the GST turnover).

 So if you are in Epping and running a small business and looking for someone to discuss about GST and tax. Then look no further Absolute Accounting Solutions is there for you. We with the help of our expert team provide the best solution to all your queries.  Our dedicated team of specialists will take the stress out of your bookkeeping, accounting and taxation.

 At Absolute Accounting solutions we make accounting an absolute breeze.  So for more information Call us at 1300 488 330 or visit http://www.absoluteaccountingsolutions.com.au/

Published in Blog
Monday, 19 September 2016 09:45

Have a tax return to lodge?

Lodging Your Tax Return

For most of us lodgment of our income tax return is not the most favorite pass time, but as a wage earner we all have to take a little time out to organise ourselves to declare all of the income that we have earned over the financial year (you may need to lodge a return even if your income is below the tax free threshhold of $18200 and you paid income tax) less the expenses that can be deductable. 

 

            When do I have to lodge my return?

Tax returns need to be completed between the 1st of July and the 31st of October. Extentions are available for taxpayers if they are on an Australian Tax Office list belonging to a Registered Tax Agent, like Absolute Accounting Solutions.

 

            What do I declare as income?

Income is all of the money that you earned with an employer, payments from centrelink, the interest your bank accounts earned, rent earned from and investment property - this includes the shared economy (for example - Air BnB), dividends on shares that you may have. This list is not exhaustive but gives you a good start.

 

         What are my deductable claims?

Deductions can be specific, and highly dependent on your individual circumstances. Receipts will need to be kept and you can only claim what you are entitled to, if you need help call us on 1300 488 330.

 

Tax return fees are tax deductable and start from $120.00

 

Absolute Accounting Solutions, also offer a range of services to help small business owners with tax, bookkeeping/accounting services and virtual assistants.

 For more information regarding your tax returns call us on: 1300 488 330

Published in Blog
Wednesday, 14 September 2016 11:57

The Sharing Economy and Tax

The Sharing Economy and Tax

There are various sharing economy websites and applications working in Australia. The general populations who give merchandise or services through any of them have to consider how GST and wage charge applies to their income.

What is the Sharing Economy?

The Sharing economy connects users and suppliers through a facilitator who usually operates an app or website.

Generally Sharing Economy includes?

  • Leasing a room or an entire house or unit for a short timeframe premise
  • Giving taxi travel Services (called 'ride-sourcing') for a charge
  • Giving individual Services, for example, such as creative or professional services like graphic design, creating websites, or odd jobs like deliveries and furniture assembly
  • Leasing an auto parking spot.

The Sharing economy and tax

 If you are involved in the sharing economy, you need to consider the following things:

  • If you are carrying on an enterprise whether you need an ABN or you need to register for GST and lodge activity statements
  • If the price of the goods and services you are providing includes GST
  • If and when you are supposed to provide tax invoices for your sales
  • Whether you are Supposed to declare your income in your income tax return or not
  • How your sharing economy activities effect your GST  and tax obligations

Providing taxi travel services: If you are a part of organisation providing ride-sourcing services then according to law you need an ABN and you need to be registered for GST and you need to account for GST on the full amount of every fare regardless of how much you earn.

Leasing out a room or all of your house: If you are renting out a room or a whole house then GST wouldn’t be the part of that as GST doesn’t apply to residential rents,so you are not liable for GST on the rent you charge and you cannot claim any GST credits for associated costs.

Renting goods and services: If you are already registered for GST, and you are earning extra money providing services through a sharing economy app or website, you need to account for GST on that extra money through your existing ABN and GST registration.

Leasing an auto parking spot: If you rent out a car parking space it can mean that you are running an enterprise. You will need to get an ABN and register for GST if either:

  • You earn, or are likely to earn, $75,000 or more per year renting out the car parking space(s)
  • You have an existing enterprise for which you are registered for GST
  • Your turnover is, or is likely to be, $75,000 or more a year for all of the goods and services you provide while carrying on a number of enterprises.

For further information about Sharing Economy and how to avoid tax debt you need to contact 1300 488 330

 

Published in Blog

Tactics for Tax planning for an individual.

The current financial year is nearly about to end, and with a political election to be held in a month’s time eventually the recently introduced government budget measures will, of course, have no opportunity to work until sometime in the next financial year, if at all.

But meanwhile, you may still find numerous methods you might be able to put in perform to make sure you spend not just one penny more tax than is essential for the 2015-16 year.

Tip! The finest taxation planning techniques are implemented in July, not June.  That's, as soon as possible in any financial year, not right close to the end of it. And it's also wise to understand that appropriate tax planning is more than just finding bigger and better deductions — the best tips are those that set your tax affairs in better order for not just the current financial year but also for future income years.

Not all of the subsequent suggestions will fit your situations, but as a list of possibilities they might enable you to get thinking along the appropriate track, and also have you asking us the appropriate questions.  Obviously, seek advice from this workplace if you want more information.

Investment property

Several expenses stemming from having a rental property or home are claimable, so it may be beneficial to provide ahead any costs prior to June 30 and claim them in the existing financial year. If you already know that the investment property needs some maintenance or needs attention regarding, say, pest control, see if you can incur these expenses prior to an end of a year.

Prepay investment loan interest

In a similar way, see if you are able to work out together with your finance provider to produce upfront interest repayments for several investments, for example, a margin mortgage on stock shares.

Most taxpayers can claim deductions for approximately Twelve months ahead. But be sure you review how you and your loan provider have allotted funds guaranteed upon your property properly, as a tax deduction is generally only permitted against the finance expenses sustained with regards to earning assessable earnings from investments.

Deductions might not be available on money you redraw from this loan put to other reasons.

Bring ahead costs

Try to bring forward any other deductions (just like the charges mentioned previously) into the 2015-16 year.

Once you know that next financial 12 months you will end up generating significantly less (for example going on maternity leave, going part-time etc), deductible costs that may be brought ahead into the existing financial year will give you much more financial advantage.

An exception for some fortunate individuals will arise if you expect you'll earn more next financial year. In that situation, it might be to your benefit to obstruct any tax-deductible repayments until the subsequent financial year, when the financial advantage of deductions can be higher. Your individual circumstances will determine whether these measures are acceptable and we can help with this.

Make use of the CGT guidelines to your benefit

For those who have created clear and crystallised any capital profit from your investment funds this financial year (which is included with your assessable earnings), consider selling any investments that are presently sitting on a loss of revenue prior to year-end. Doing this means the capital gains you created in your productive investments could be offset against the capital losses from the less successful ones, lowering your overall taxable earnings.

An identical strategy may be implemented for those who have to carry forward capital losses and desire to understand some gains at year end.

Remember that for CGT reasons a funds gain typically happens on the date you sign a contract, not when you settle on a property purchased. When you're making huge funds gain toward the end of an income year, such as selling a good investment property, realising which financial year the gain is going to be attributed to is a great tax planning advantage.

Certainly, with all the previously mentioned, tread very carefully and don’t let mere tax generate your investment judgments – check with this office staff to determine whether your approach will suit your circumstances.

Final reminders

No-one understands your matters much better than yourself, so you'll identify if any of these tax tips relates to your circumstances.

Every individual is required to lodge their return before October 31, but tax agents are generally given more time to lodge, which can be a handy extension to a payment deadline. Of course, if you’re sure you are going to get a refund it’s no use delaying, so in these cases, it is worth getting all of your information to this office as soon as you can after July 1.

To discuss it further, give us a call at 1300 488 330 and talk to our experts at Absolute Accounting Solutions!!

Published in Blog
Friday, 27 May 2016 10:15

Tips for Dealing with Non Payers

Non-payers can cause significant cash flow issues for any small business. Having said that, non-payer is also an inevitable liability for most small organizations. Several small business operators really feel baffled and bewildered when dealing with problems of non-payment or particularly if a non-payer is a recurring offender or if the sum of money owed is considerable.

How do you cope with non-payers in your organization?

Absolute Accounting Solutions recommendations:

1. Partial payment up front for products or services. A customer can’t take their groceries home without paying. When you supply products or services with an invoice period, you essentially become a creditor. You’re doing your client a favour by giving them something before they remunerate you. A minimum deposit is fair and it also minimizes risk of non-payment.

2. Avoid doing business with large companies who don’t care about you or respect you in interactions and negotiations. Basically, you can't effortlessly bargain with a business on completely different foot-hold. Size sometimes equals leverage, and it’s in your best interests to conduct business with like-sized companies — except if the big company offers something that you can’t get anywhere else.

3. Do not do too much business with a single company. Always have a back-up or Plan B in case projects ever go wrong. Of course, when you are first starting out, it can be difficult to avoid exclusive dealings. But it’s worth having something — or someone — else up your sleeve at all times.

4. Understanding contracts. A quote or service agreement document are both examples of contracts. Unless you’re a business of considerable size having a complex contract drawn up by a solicitor usually represents an unnecessary expense. An engagement letter, on the other hand, is always a good idea. An engagement letter outlines what is expected of each party over the course of a project.

5. Don't send generic, template statements. They can be frustrating, and are very easily disregarded by intentional non-payers. We have found that an invoicing time period of 14 days is ideal. We also recommend that you wait around right up until 45 days following the due date before chasing after payment. Follow up the letter or e-mail with a phone call once the client has had enough time to receive the message. Ask the client when they think that they will be able to pay the invoice. Record the day/date. If the client does not pay within the promised time-frame, remind them that they communicated this date as the cut-off. Ask them to confirm another date of payment. Repeat as necessary.

6. Be honest with a client about the impact of non-payment. As a small business, reliable payment for products or services delivered is very important for retaining cash flow. Point out to your client that their business is valuable to you but that you might not be able to work with them again or any more if you do not receive payment.

7. Factor non-payment into your rate — hopefully, this will come to no more than 2% of your total gross sales. Over the course of a financial year, most small businesses have to write off some projects as debts. You’re planning needs to take this into account.

Normally if a client has paid a few times, you will not have trouble with them paying in the future. However, this is not always the case. Be consistent with chasing your debtors, no matter who they are. Yes, it takes time — but this is another reason to factor non-payment into your rates.

At some point, we all hope that our businesses will expand to include a client base that allows us the position of picking and choosing only supportive, attentive clients.

Developing the skills of assertiveness, negotiation, and tenacity are important when dealing with non-payment in your small business. But learning when to let go is just as crucial.

Contact us if you want to discuss this further or for any others Accounting Solutions!! Talk to our Experts!!

Published in Blog
Wednesday, 18 May 2016 11:36

Amending Your Activity Statement

As soon as we have filed your latest activity statement, you might realise that something has been left out or else you have forgot to include a particular item. The Australian tax system is based on “self-assessment”, meaning the ATO usually takes your word, under our guidance, and bases its assessment around the information it's been provided. But this isn't to say that the ATO might not look into the information it's been provided if, for instance, its data matching activity flags an issue. If the inadvertent error slides past the keeper, you will find alternatives to make it right.

Making changes

It is not all that unusual for businesses to need to make an alteration to a business activity statement (BAS) that has already been lodged — often there may be an unclaimed credit which simply slipped your mind, or you remember that you received some other type of income.

For instance, a quite normal situation arises when a business owner has already claimed fuel tax credits in line with the intention to make use of the fuel in in certain manner, but consequently uses it in another way. An error could be either on the credit or debit side. Again using fuel tax credits for example, a credit error means you claimed less fuel tax credits than you were entitled to — for example, you used a lower rate than you had been entitled to.

A debit error indicates you claimed more tax credits than you had been entitled to. This will occur if you:

  • Made clerical errors, for example, double counting some fuel purchases
  • Over calculated your eligible quantity of fuel
  • Used a higher fuel tax credit rate than you were entitled to
  • Claimed fuel tax credits for all fuel you acquired, not just the fuel meant for use in an eligible activity.

If you did not make an adjustment in the BAS period in which you become aware an adjustment was required, it becomes an error. In the event you made multiple errors in a BAS period, you have to treat each error individually when determining if it can be corrected and the way to correct it. Apart from these specific circumstances, there's also those straight-out mistakes that we all make every so often, or you might have forgotten to tell us something about your tax affairs at our appointment.

How we can help

We can use your current activity statement to improve many previous GST and fuel tax credit errors, to make claims for previous periods or to vary a PAYG instalment. 4 year time limit applies to claiming refunds and credits, and this “period of review” commences from the day you were required to lodge the activity statement.

If you can’t make such corrections on your current activity statement, we may have to revise the original BAS for you. Note that the process for correcting mistakes and making claims for previous periods can depend on the specific tax or type of credit involved, so you may need to check with us.

If you need to correct information you provided on a BAS and are not eligible to correct it on a later statement, you may need us to complete a revised activity statement. The important thing is to make sure that as soon as you realise that the information you have reported to the ATO is incorrect or incomplete, that you ask us to take actions to correct it.

And the way we can do this is to revise a BAS or apply to make an amendment (in fact the ATO generally treats a revised activity statement as an application to amend an assessment).

If the ATO accepts your revised amount in full and also the amendment is made within the period of review, the revised statement will be taken to be a notice of amended assessment. The date of after effect of the amended assessment is the day it is adjusted in your running balance account. However if the ATO does not accept the revised amounts entirely, it'll issue a notice of amended assessment.

In case your revision increases the tax you owe or reduces your credit, the ATO will generally treat your revised activity statement as a voluntary disclosure of unpaid tax or over-claimed credits. What this means is you’re likely to receive concessional treatment for any penalties and interest charges which may apply. (You will still have to pay any outstanding tax or overpaid credits, and we might have to request for a reduction in interest charges for you.)

Call us for all your Accounting needs!! Let us take care of the rest!!

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