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:
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:
Not calming enough GST
There are some scenarios in which this might be the case include where a business:
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:
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/
Australian residents are generally taxed on their worldwide income from all sources. Temporary residents of Australia and foreign residents are generally taxed only on their Australian-sourced income, such as money they earn working in Australia. To comprehend your tax situation you first need to work out if you are an Australian or foreign resident for tax purposes. This might be distinctive to your residency status for different purposes – for instance, you could be an Australian resident for tax purposes even if you're not an Australian citizen or permanent resident.
Coming to Australia
You might come to Australia to reside permanently, study or holiday.
If in any of the scenario you are earning the money here you have to pay the tax and need to lodge an Australian tax return. To work in Australia you need a work visa and a tax file number.
Working in Australia
To work in Australia you need a visa that allows you to work here. You should also have a tax file number (TFN). You visa is allocated by Department of immigration and Border protection and your TFN is your personal reference number in our tax system. You can apply for a TFN online once you have your work visa and have arrived in Australia.
Studying in Australia
If you are enrolled to study in Australia in a course that last for six months or more, you are generally considered as an Australian resident for tax purposes which implies that you have to pay tax on your earnings at the same rate as other resident and you are also entitled to the benefits of the Australian tax system.
Moving to Australia permanently
If you moved to Australia and intend to reside here permanently, you are an Australian resident for tax purpose which includes that you have to declare your income which you have earned from anywhere in the world in you r tax return and you can also claim the benefits of the Australian tax system.
Paying tax and lodging a tax return
After the end of the Australian income year (30 June), you lodge an annual tax return to tell us how much income you received and tax you paid. We then send you a notice of assessment and your tax refund if you're entitled to one.
For more information contact Absolute Accounting Solution 1300 488 330 and we can help you in lodging a tax return and paying a tax.
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
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?
The Sharing economy and tax
If you are involved in the sharing economy, you need to consider the following things:
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:
For further information about Sharing Economy and how to avoid tax debt you need to contact 1300 488 330
Guaranteeing the accomplishment of your business can be tricky, so an ideal approach to future evidence your accounts are to plan ahead.
But, what should you include when mapping the road ahead so your business doesn't waver when you hit an unforeseen pothole? To help you keep away from whatever number obstructions as could be expected under the circumstances, we have incorporated the accompanying convenient signposts to achievement.
Bank on your future
Having the right account – regardless of the fact that you have been trading for quite a while – is basic for your business. Internet banking, in-credit premium, low electronic exchange charges and a neighborhood office for those organisations taking care of a considerable measure of money and checks are only a portion of the alternatives banks offer. Likewise ensure you have a decent working relationship with your business bank manager, as they can have imperative influence in your business. An Account with the capacity to show real -time transactions will be significant with regards to making well-informed decisions and identify and distinguish any budgetary shortcomings in your business. Accordingly, on the off chance that you are as of now exchanging, it's is important regularly review to what your bank offers and change to one that meets your business needs. In the event that you are new to business or switch, you should intend to get, at least 18 months’ free banking, however a few banks may present to 24 months. While these might lure, ensure you know how much the account will cost you once the starting time frame closes. A few banks even offer a lifetime of free banking, yet ensure you examine the terms and conditions as there is generally a breaking point on the quantity of exchanges or their worth.
Make sure you have enough money – but not too much
Your estimated funding requirements should be as accurate as possible over borrowing may result in unnecessary ; on the other hand not obtaining enough could prompt more difficulties and higher charges if you need further financial aid from your bank.
If you need financial help to launch your business or kick –start another task, you will need to give the bank or loan specialist a cash flow forecast While a Profit and Loss Account will demonstrate the genuine results on a collections premise, a capital will demonstrate the estimated results on a money premise, and will check such things as advance reimbursements, withdrawals Your capital estimate should have the capacity to show that with your very own subsidising and fund from the bank, your business will have the capacity to meet its reimbursements and inevitably produce a benefit. Furthermore, income estimates are helpful devices for any new company, as they show whether the business proposition is fiscally feasible furthermore go about as benchmarks to contrast the genuine results and, once your business has started trading .
Ignore advice at your own expenses
It is constantly prudent to look for expert advice. One of the advantages of an accountant is that they can control you through what entity you should settle on (sole exchange, restricted organisation or association and so on.), what costs you can assert and the paperwork you'll have to keep up. A particularly complicated area to master is motor expenses and how vehicle ownership should be structured. Similarly, as with most other expenses, an accountant can explore you through your numerous motoring alternatives accessible so you can choose which one is a good fit for you.
Stay one step ahead
In order to stay one step ahead of your local competition, make sure you do your homework by using a search engine such as Google or Bing. By examining your search results and visiting your competitors’ shops, you will be able to determine their prices are and when they’re running any special offers, and alter yours accordingly.
Act now and be ready for tomorrow
Try not to hold up until tomorrow to future verification your business; we are accessible right now to help you get ready for your expense and other money related necessities. Contact Absolute Accounting Solutions to be put in touch with your local Tax Assist Accountant, who will be only too pleased to discuss any of the pointers we have provided in this article and more.
Call us at 1300 488 330 to talk to our professionals and let us deal with the rest!!
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!!
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.
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:
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.)
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Salary packaging is an excellent method for an organisation to boost the take-home pay of its staff — and if executed effectively, at no extra cost to the business however with a tax benefit to the employee.
What’s salary packaging?
Basically, an employee agrees with their employer to forego part of their future salary or wages in return for the employer providing benefits of a equivalent value. By paying for items out of pre-tax salary the employee can reduce taxable income. Benefits typically provided include cars by way of novated lease, provision of property (such as a computer) or payment or reimbursement of expenses.
For the employer, salary packaging has some benefits, for example the ability to attract employees, and it may also act as a motivation or incentive for employees. Benefits that employees can bundle could be determined by the type of organisation as well as the items the employer is willing to consider. There can however be additional administration costs to the employer in making sure that it is all processed correctly.
Consider Fringe Benefits Tax
The ATO says employers need to be very aware of fringe benefits tax (FBT) when working out what can be provided to replace the income in a typical salary sacrifice arrangement. Sometimes it can cost employers more in remuneration if salary packaging is done incorrectly because of FBT being levied.
For an employer, if an FBT liability is generated through a salary sacrifice agreement, that cost could be passed on to the employee by reducing their total remuneration by the same amount. There may be extra paperwork, but an employer should be no worse off once they provide taxable benefits under a salary sacrifice arrangement.
Benefits provided that would typically be subject to FBT include property (such as goods) and expense payments such as loan repayments, school fees etc.
So for example if an employee salary packages golf club membership worth $2,000 (including GST), the amount sacrificed from their salary will generally be that amount plus any FBT liability.
Superannuation a common choice
Salary sacrificed super contributions are treated as employer contributions, and if made to a “complying super fund” the sacrificed amount is not considered a fringe benefit for tax purposes — which means employers will not be liable to pay FBT on the super contributions. Further, these will not be included as a reportable fringe benefit amount on the employee’s payment summary.
However salary sacrificed super contributions in excess of mandated contribution caps must be reported on the employee’s payment summary as reportable employer super contributions. Note however that salary sacrificed super contributions made to a non-complying super fund will be a fringe benefit.
Can a deduction be claimed by the employer?
If the employee is younger than age 75, you can claim a deduction on all employer super contributions, including salary sacrificed contributions, you make to their super fund. After age 75, only mandated employer contributions can be accepted by the super fund and a deduction claimed.
Also note that while reportable employer superannuation contributions are not included in the employee’s assessable income, the amount can be included in the income tests applicable for some benefits and obligations, such as:
Salary sacrificed contributions to a super fund form part of the employee’s “concessional contributions” for the financial year, on top of superannuation guarantee (SG) payments. There is a cap on the amount of concessional contributions that an individual can make each financial year before paying extra tax. For the 2016-17 financial year, this is $30,000, or $35,000 if the employee is aged 49 or over on June 30, 2016.
Note that the employer SG obligation amount of 9.5% is based on the reduced salary (that is, post the amount sacrificed). Also note that some awards or agreements may stipulate the amounts of super, so the salary sacrificing arrangement will not affect SG obligations.
Call Absolute Accounting Solutions at 1300 488 330 if you want to get all your questions answered in regards to Accounting. Our professionals will be happy to offer your accurate financial advice according to your personal circumstances.