Why Your Tax Refund May Be Lower This Year?

Why Your Tax Refund May Be Lower This Year?

Tax season can be a stressful time for many people especially these year where the Government has dropped low and middle income tax offset (LMITO).  Therefore, if you were expecting a large refund to cover some of the cost of living increases you may be in for a surprise as the LMITO accounted for up to $1080 for individuals earning between $48,000 and $90,000.  Without this offset, many Australians will see a reduction in their tax refund.

INFLATION

Another factor that could impact your tax refund is inflation.  With inflation still very high, the value of your refund may not go as far as it did in previous years.  According to recent reports, taxpayers who had their refunds processed got refunds that were on average 9.3% less than last year.

WHAT CAN YOU DO?

Whilst there’s not much you can do with regards to the changes to the LMITO and Inflation, you can still take steps to maximise you Refund by claiming all the available deductions that you’re entitled to.

Deduction expenses that relate to earning your income, such as work-related expenses or charitable donations.  Keep track of all your receipts and enter them into personal accounting software such as Xero or MYOB.  You can also make contributions to superannuation which are taxed at a lower rate than your regular income.

Finally, consider using a registered tax agent. Tax agents are professionals who are trained in preparing and lodging tax returns and can provide valuable adivce on how to maximise your Tax Refund often offsetting their costs.

 

Single Touch Payroll Phase 2

Single Touch Payroll Phase 2

Single Touch Payroll (STP) is a government initiative that requires employers to report their employees’ payroll information to the Australian Taxation Office (ATO) each time they pay their employees. STP Phase 2 is an expansion of the STP initiative that aims to reduce the reporting burden on employers who need to report information about their employees to multiple government agencies.

 

Reporting

STP Phase 2 will streamline reporting information about employees to government agencies. The expansion of STP, also known as STP Phase 2, will include additional information such as employment type, gross income, and country codes. The changes will also aid the administration of Services Australia.

 

Deadline

The mandatory start date of STP Phase 2 reporting was 1st January 2022. However, the ATO has taken a flexible approach based on business readiness and individual circumstances.  Employers who need more time to transition to STP Phase 2 reporting can apply for a delayed transition through ATO Online services.

Extension to Asset Writeoff for small business

Extension to Asset Writeoff for small business

New laws have passed that allow small businesses to claim an immediate deduction for assets they start to use – or have installed ready for use – provided each item costs less than $20,000. This will temporarily replace the previous instant asset write-off threshold of $1,000.

If you maintain a general small business pool, this can be immediately written-off if the balance is less than $20,000.

Assets that cost $20,000 or more (which can’t be immediately deducted under other provisions) are deducted over time using the general small business pool. Under the pooling mechanism a deduction for 15 per cent of the cost is allowed in the first income year with a diminishing value rate of 30 per cent deduction on the opening pool balance allowed for each income year thereafter.

This measure starts 7.30pm (AEST) 12 May 2015 and will end on 30 June 2017.

Come and talk to us on how to tax effectively purchase and make investments in your small business.