The threshold will reduce to $1,000 from 1 July 2018. If you buy an asset for less than $20,000, you can immediately deduct the business portion in your tax return. Small businesses with an aggregated turnover of less than $10 million are eligible to claim the deduction if the asset was first used or installed ready for use in the income year they are claiming it in. If you have anticipated upcoming expenses for your small business, now could be a good time to make a purchase so that you can claim the deduction in the current financial year. 

What assets are included?

• Assets that cost less than $20,000
• Assets that are used for business purposes
• ‘Physical’ assets – e.g. computers, phones, vehicles, tools etc.
• New or second-hand assets

ATO Example: Immediate write-off*

On 18 May 2016 Fiona buys a new powerful computer for $6,800 that she uses 80% of the time for business purposes and 20% of the time for personal purposes. She also bought a new printer for $700 which she uses for 100% of the time for business purposes.

For the computer, Fiona calculates her instant asset write-off as 80% (the business use proportion) of $6,800, so she claims $5,440. For the printer, she claims the entire cost of $700.
 

If you are registered for GST, you exclude the GST amount you paid on the asset when you calculate your depreciation amounts (and your instant asset write-off threshold is $20,000 exclusive of any GST). If you are not registered for GST, you include the GST amount you paid on the asset in your depreciation calculations (and your instant asset write-off threshold is $20,000 inclusive of any GST).

For further information about the $20,000 instant asset write-off, contact countplus one on 1300 360 186 or email info@cp1.com.au

*Source: https://www.ato.gov.au/business/depreciation-and-capital-expenses-and-allowances/in-detail/depreciating-assets/simplified-depreciation---rules-and-calculations/?page=4

General advice warning:  The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

 

February 2018 | Sam Bhatia

In such a scenario it becomes important to understand what digital currency is, and how it is taxed. Digital currency is electronic money, which does not exist as coins or notes. However, it can still be used to make payments and receive money. Digital currency can be purchased from digital marketplace, which also monitors the market value of these currencies. The market value of these currencies depends on various factors may fluctuate astronomically. As digital currency can be used for personal or business transactions, any gain/loss made on such transaction has different tax treatment. Differentiation in nature of digital currency transaction becomes an important factor to determine its taxability. 

A guidance note* on tax treatment of crypto currency has been released by Australian Taxation Office (ATO) which provides an overview on how crypto currency transactions are taxed. 

Use of Bitcoin for personal transactions

Where a person not involved in any business or enterprise purchases bitcoin for investment, any gain from sale of such currency will be considered as a capital gain. Further, if bitcoins are held for more than 12 months, the 50% CGT discount may apply.

If bitcoin is used to buy goods or services for personal consumption then, as provided above, any gain from resale will be assessed as capital gain. However, if the original cost of purchase is less than $10,000, any gain will be disregarded (as a personal use asset). Below is an example:
 

Jamie bought $6,500 of Bitcoin on 1 March 2013 with an intention of purchasing goods or services for personal consumption.

With the appreciation in value, the original bitcoin are now worth $25,000.

Jamie used the bitcoin for purchasing personal goods, food and gym membership.

Jaime will pay no tax on the gain of $18,500.

Use of Bitcoin for business transactions 

If you receive bitcoin for goods and services you provide, as part of your business, you need to recognise the value in Australian dollars (AUD) as part of your ordinary income. The value in AUD will be the fair market value that can be obtained from bitcoin exchange.

Likewise, where good and services are purchased using bitcoin, you will be entitled to deduction based on arm’s length value of the product purchased. 

Paying salary or wages in bitcoins

In case where an employee has a salary sacrifice arrangement with their employer to receive bitcoins as part of remuneration instead of AUD, any such payment will deemed to be a fringe benefit and employer will be subject to the provisions of the Fringe Benefits Tax Assessment Act.

However, in absence of a salary sacrifice agreement, the remuneration is treated as normal salary or wages.

GST on bitcoin transactions

With effect from 1st July 2017, sale and purchase of digital currency is out of ambit of GST provisions. Therefore you do not charge GST on sale of bitcoins and similarly, you are not entitled to claim GST credit for any purchase.

However, in case where bitcoin is used to purchase goods and services, or you receive bitcoin as payment for sale of goods and services, normal GST rules apply. Example of business transaction using digital currency for exchanged of goods or services:

John owns a computer shop and is registered for GST. He sells a server for a GST-inclusive price of $7,700 to Boost Co, a building company registered for GST.

John accepts digital currency as payment and deals both with businesses that are registered for GST and consumers who are not. When John accepts digital currency as payment, there are no GST consequences for John in relation to that payment. However, normal GST consequences arise in relation to the sale made for which digital currency was payment.

When John lodges his activity statement, he includes $700 GST for the taxable sale of the server to Boost Co. When Boost Co lodges its activity statement, it claims a GST credit of $700 for the acquisition of the server, the fact that the payment was in digital currency does not impact the GST outcome of the transaction.

Obligation for record keeping 

As every parent knows, a quality education is one of the most important foundations you can provide for your child. But the costs of schooling can really add up over the years – and it’s not just fees; there are plenty of other extras you’ll need to cover as well. And of course, if you have more than one child, then all the expenses will be multiplied. So how much can you expect to shell out for each child’s education – and are there ways to plan ahead so you can reduce the strain on your household finances?

What to expect

The cost of a child’s schooling in Australia varies widely between metropolitan and regional areas, and depends on whether you opt for a private or public education. But even if you send your child to a government school, there are still plenty of expenses that you’ll need to be ready for – like uniforms, books, supplies and after-school activities. In a major capital like Melbourne or Sydney, the cost to educate a child born in 2018 from preschool to Year 12 could cost anywhere from around $72,000 to almost $550,000. That means a family with two children attending private school could end up spending well above $1 million for their kids’ primary and secondary education. And while cites like Adelaide and Perth are substantially cheaper, the projected costs still range from around $55,000 up to more than $400,000.(1)

How to prepare

As with any investment, you should plan carefully for your child’s education. Everyone’s circumstances and choices are different, so take the time to research and calculate how much you’re likely to be paid over the course of your child’s school years. That way you can start budgeting as soon as possible. If you’re lucky, you might have parents who are willing to chip in for their grandchildren’s education – but if not, don’t worry. Here are three things you can do now to cover your family’s education costs without sacrificing your lifestyle.

1. Create a savings plan

By putting aside a little bit of money on a regular basis, you can grow your savings so you’ll have money to put towards your child’s schooling. A simple way to do this is to set up an automatic transfer from your everyday account into a highinterest savings account. Once you get started, you’ll notice the interest compounding over time. As you get into the habit of saving, you’ll find it becomes easier to manage your short term expenses like school fees and uniforms.

2. Invest your savings

While a savings plan is great, it’s important to know that education costs may rise faster than inflation. This means your cash savings might not grow enough over time to meet your child’s future education costs, and you might want to consider non-cash investments as well. By investing part of your savings in an investment bond or managed fund, you may find it easier to cover education costs over the longer term, based on the anticipated growth and earnings from these investments. So it’s worth speaking to your adviser about the best investment vehicle for your situation.

3. Pay down your mortgage

It can be tough keeping up with school fees and other costs when you still have a major financial burden hanging over you. That’s why it’s a good idea to prioritise paying off as much as your home loan as possible before you child starts school, so you’re in a better financial position to manage their ongoing education costs when the time comes. Even if your child is already in school, it’s never too late for your adviser to help you get your finances on track and plan for the remainder of their education.

If you would like to know more about financial planning, call countplus one to book an appointment today on 1300 360 186 or email us at info@cp1.com.au  

1 Australian Scholarships Group, ASG Planning for Education Index, 2018

Important information

This document contains general advice. It does not take account of your objectives, financial situation or needs. You should consider talking to a Financial Adviser before making a financial decision. This document has been prepared by Count Financial Limited ABN 19 001 974 625, AFSL 227232, (Count) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. ‘Count’ and Count Wealth Accountants® are trading names of Count. Count Financial Advisers are authorised representatives of Count. Information in this document is based on current regulatory requirements and laws, as at 30 January 2018, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document.

 

This new legislation applies to overseas retailers who make more than AUD $75,000 per year and sell goods to Australian consumers. They will be required to register for and impose GST on sales under $1,000. 

For goods imported in a consignment over A$1,000, any GST, customs duty and clearance charges will be charged to the importer at the border under existing processes.

The Government has implemented this new taxation law in order to level the playing field for domestic businesses. The current GST exemption that applies to the import of law value goods is seen as an unfair disadvantage, particularly for small retailers. The introduction of the new law will ensure that low value goods imported by consumers in Australia are treated in an equal manner to goods that are sourced domestically. 

Whilst this sounds great for Australian businesses, economists have argued it will raise little revenue and will also be quite expensive and complex to administer. There is also concern that the legislation will reduce price competition between suppliers and minimise choice for Australians who shop online.

Will your business be affected?

• ♣ ensure you are registered for GST
• ♣ charge GST to customers on low value imported goods
• ♣ lodge a return to the ATO.

Sales of low value imported goods to Australian GST-registered businesses 

GST only applies to sales of low value imported goods to consumers in Australia. Your customer is not a consumer if they are a GST-registered business who purchases the goods for use in their business in Australia.

If your business is the recipient of low value goods, you should notify suppliers of your GST registration to ensure you are not being charged GST twice. 

Quick Tips

Make sure you are not charged GST twice by providing a copy of your receipt that shows GST has already been paid if you were charged GST when you bought the goods; and the goods are low value goods.

If you do not provide this receipt before GST is charged at the border, you will have to pay GST again and will need to seek a refund of GST from the supplier, by declaring or providing evidence that you paid GST when the goods were imported.

Speak to Ian George at countplus one to find out how you can better manage the impact of these new obligations on your business. Call countplus one on 1300 360 186 or email info@cp1.com.au

Through STP employers will report information such as salary/wages, pay as you go (PAYG) withholding and super to the ATO at the same time they pay to their employees.

Applicability

From 1st July 2018 STP will be applicable to all the employers with 20 employees or more, based on headcount as at 1st April 2018. Employers with 19 or less employees may adopt this scheme voluntarily, although it is not compulsory for them. 

Changes while adopting STP

Following are the changes we need to look while adopting STP:

1. a)     Information like salary/ wages and PAYG withholding will be reported to ATO in real time when payroll is processed;
2. b)     Superannuation contributions will be reported to ATO at the time of their payment;
3. c)     The payroll software to be used my employer should be STP/SBR enabled;
4. d)     Employers will no longer be required to submit annual PAYG report to ATO;

However, the employer may continue with their weekly, fortnightly or monthly pay cycle.

Points to be taken into consideration

1. a)     Reporting through STP during first 12 months will be exempt for administrative penalties for failure to report on time;
2. b)     If an employer is not ready to report from 1st July 2018, a deferral request needs to be submitted through the respective tax agents;

Disclaimer: We intend to share general information about Single Touch Payroll through above article. However, applicability of STP with regard to your business needs to be assessed separately. Please get in touch with our consultants for any further discussion. 

Article written by: Sam Bhatia email: samb@cp1.com.au 

If you would like to know more about single touch payroll, call countplus one to book an appointment today on 1300 360 186 or email us at info@cp1.com.au