Paramount Bookkeeping Services

New NFP Reporting Rules
The new financial year sees some rule changes affecting Not For Profit (NFP) organisations. NFPs including sporting clubs, community service groups, cultural organisations and more currently enjoy an income tax exemption. The changes impose obligations on certain NFPs in order to preserve their tax free status.

Bookkeepers often find themselves working for NFPs in both paid and sometimes unpaid capacities as part of their support for valuable local community organisations.
speak with our resident tax expert and answer some important questions about the new NFP regime:

Check on the ATO website for more information on what may effect you

Get ready for the Annual Wage Review
The Fair Work Commission is currently reviewing the National Minimum Wage and minimum award wages to decide if they should be increased.

This is known as the Annual Wage Review. Any changes to minimum wages will generally come into effect on 1 July.

Once the Commission has made their decision, we’ll work on updating our information, pay tools and resources. This includes updates to the Fair Work Information Statement to include the new national minimum wage from 1 July.

Make sure you’ve set your subscription preferences so we can keep you updated.

GST Registration
A question often posed by clients to their Tax Agent or BAS Agent when going into business for the first time is “Do I have to register for GST?”. The question is perhaps even more common when the client’s operations are still fledgling or “micro” in nature. The answer, as is often the case, is that it depends.

While the general threshold for GST registration is reasonably well-known, there are a number of lesser-known subtleties that go hand in hand with the registration rules.

In this edition of Getting Technical, we’ll do a refresher on the rules regarding GST registration and the related issues to look out for. We’ll also delve into the factors to be weighed up when a business is contemplating GST registration in circumstances where the decision to register is a voluntary one.

What is GST Registration?

Before we look at the technicalities of the GST registration requirements, let’s start with what GST registration actually is.

In simple terms, a GST registration is one of a number of different tax registrations that can attach to an Australian Business Number (ABN). Other registrations which, like GST, can attach to an ABN include PAYG Withholding, Fringe Benefits Tax, Luxury Car Tax, Fuel Tax Credits and Wine Equalisation Tax.

You must have an ABN before you can apply for a GST registration.

A GST registration can be sought at the same time that an ABN is applied for. This can be done either through the Australian Business Register (www.abr.gov.au) or Online Services for Agents (OSfA).

Alternatively, a GST registration can be tacked on to an existing ABN. This can be done through the Business Registration Service (https://register.business.gov.au/additional), Online Services for Agents (OSfa) or Online Services for Business (OSfB).

GST Registration Requirements

Broadly speaking, there are three scenarios that can lead to the requirement to register for GST.

Scenario 1 - You Wish to Claim Fuel Tax Credits

If a business wants to claim fuel tax credits, then a GST registration is essential, regardless of the business’ GST turnover.

Scenario 2 - You provide taxi or limousine travel for passengers (including ride-sourcing)

GST registration is a requirement - regardless of GST turnover – when a business provides taxi or limousine travel for passengers (including ride-sourcing). This applies to both owner-drivers and the leasing or rental of a taxi.

When the GST system was introduced in 2000, the then government chose to apply compulsory GST registration to taxi drivers for several reasons including:

to avoid the confusion created if some taxis did not charge GST, but others did
to avoid the added problem that would arise if a passenger were using a taxi for a business trip (creditable acquisition); in such a case, the passenger would want to be able to claim GST credits for all fares
meter rates are set by each State authority. After 1 July 2000, all meters were adjusted to reflect GST. If some drivers were registered but others were not, all would be collecting the higher rate. This would disadvantage drivers who had to be registered and therefore pass on 1/11th of their fare in GST.
In relation to ride-sourcing, the GST Act definition of ‘taxi travel’ was considered in the 2017 case of Uber B.V. v FCT . The Court held the relevant definition of ‘taxi travel’ extended to services provided by an Uber driver.

Scenario 3 – Your GST turnover exceeds the GST turnover threshold

When a business has a GST turnover which reaches the GST turnover threshold, a GST registration is compulsory. We will now examine these two key terms, starting with GST turnover threshold.

A business reaches the GST turnover threshold if either of the following limbs are met:

(a) projected GST turnover is $75,000 or more ($150,000 or more for non-profit organisations); or

(b) both:

current GST turnover is $75,000 or more ($150,000 or more for non-profit organisations); and
the Commissioner cannot be satisfied that projected GST turnover is below $75,000 ($150,000 for non-profit organisations)
Current GST turnover is GST turnover for the current month and the previous 11 months. Projected GST turnover is GST turnover for the current month and the next 11 months.

GST turnover is a business’ total income (as distinct from profit) excluding:

GST included in sales
sales to associates that aren't for payment and aren't taxable
sales not connected with an enterprise run by the business
sales that are not connected to Australia
input-taxed sales
When working out projected GST turnover, you can also exclude:

amounts received for the sale of a capital asset
any sale made, or likely to be made, solely as a consequence of ceasing to carry on an enterprise, or substantially and permanently reducing the size or scale of an enterprise.
Consequence of not registering when required to

There is a requirement for a business to register for GST within 21 days of their GST turnover reaching the GST turnover threshold.

If a business doesn’t register for GST when required to, it can be liable to pay GST on sales made since the date it was required to register. This is potentially a significant consequence as it effectively means 1/11th of the sales income is lost. Penalties and interest may also apply.

Backdating a GST registration

A GST registration is capable of being backdated. For tax periods commencing on or after 1 July 2012, backdating a GST registration is limited to 4 years. If a GST registration is backdated, this will spawn Business Activity Statements which will require completion for the tax periods affected by the backdate.

When registration is optional – to register or not to register?

Now that we have looked at the legislative requirements around when a business must register for GST, it is worth also considering the arguments for and against registration in situations where registration is optional. In other words, if a business does not meet the registration requirements, what are the pros and cons of voluntarily registering.

Ultimately, whether registering for GST is advantageous or disadvantageous depends on various factors, including the nature and scale of the business. Here are some general advantages and disadvantages to consider.

Advantages of registering for GST:

Input tax credits: The business can recover the GST paid on their capital purchases and expenses.
Business legitimacy: Being GST-registered can enhance the credibility and legitimacy of a business. It may also be a requirement for dealing with certain suppliers or participating in government tenders.
Market competitiveness: Some customers and businesses prefer to deal with GST-registered entities as it ensures transparency in tax compliance.
Cross-border transactions: If a business is involved in international trade, having a GST registration may facilitate smoother transactions and compliance with global trade regulations.
Disadvantages of Registering for GST:

Administrative burden: Managing GST compliance can be administratively burdensome. This includes keeping more detailed records that might otherwise be the case (especially the need to obtain complying tax invoices for expenses incurred above $82.50 GST inclusive) and preparing and lodging Business Activity Statements.
Competitive disadvantage when dealing with non-registered customers: Non-registered customers will find a business’ prices to be more competitive if they are not uplifted by GST. This is because a non-registered customer has no ability to claim GST charged to them.
Cash flow: Businesses need to collect GST on sales and remit it to the ATO. This can impact cash flow, especially for small businesses, as the funds collected need to be held (and not spent) until the next BAS is due for payment.
Complexity: GST regulations can be complex and subject to frequent changes. Keeping up with these changes and ensuring compliance may require additional time and resources.
Potential audits: Being GST-registered may increase the likelihood of being audited by the ATO. This could lead to additional scrutiny and potential penalties if errors or non-compliance are found.
Ultimately, the decision to register for GST (when it is a voluntary one) should be based on a careful consideration of the specific circumstances and requirements of a business. If a business does choose to register, generally it must stay registered for at least 12 months

Minimum Wage Increase | July 2022
Following the Fair Work Commission (FWC) Annual Wage Review 2021-22, from July 2022, the National Minimum Wage increased by $40 per week, an increase of 5.2%. Award minimum wages increased by 4.6%, which were subject to a minimum increase for adult award classifications of $40 per week and based on a 38-hour week for a full-time employee. Other award wages, including junior, apprentice and supported wages that are based on adult minimum wages, also received a proportionate increase.

There will also be some award rate increases starting in October, with the adult minimum wage in some aviation, tourism and hospitality sectors increasing from 1 October 2022. Learn more at 1 October 2022 minimum wage increase.

Superannuation Increase | July 2022
There were several changes to super legislation which started in the new year; for further information on each of the below, head to our 2022 Super Legislation Changes article.

Superannuation Guarantee Set to Increase
$450 Super Guarantee threshold to be abolished
Increase to the releasable amount for the First Home Super Saver Scheme
Reduction in age for Downsizer Contributions (from 65 to 60 years)
Work Test abolished for retirees in the 67-74 age bracket
Bring-Forward Rule Age Increase
NOTE: Your first quarterly superannuation payment at the new rate will be due in October 2022.

Tax Tables
While most tax tables remain the same for the 2022-23 financial year, the annual indexing of the study and training support loans have been applied. For current withholding rates, check the ATO's study and training support loans and working holiday makers' tax tables.

If you use online payroll software, the updates will be taken care of already. But if you process payroll manually, you’ll need to factor in the new rates for these tax types

Claiming home office expenses as a tax deduction is not only your right, but also an avenue for reducing taxable income. We’ll show you how to claim home office expenses on taxes, so you can free up income and cash to grow your small business.

The Australian Tax Office (ATO) is progressively cracking down on ‘stretched’ tax claims such as uniforms, cars, and home office expenses. So, while you should be taking advantage of claims you’re entitled to as a tax payer, you should also be sure you’re inside the acceptable and honest parameters.

Tax offsets are there for a legitimate reason so let’s discover how much can you claim for a home office.

The 3 modes of working from home
Before we jump into claiming home office expenses, do you know which category you’re in? The three classifications will dictate the types of home office tax deductions you can make and will apply certain limitations and allowances – so be sure to know where you fall.

According to the ATO the three types are:

Home is your principal place of work and you have a dedicated work area that’s unlikely to be suitable for domestic use.
Home is not your principal place of work but you have a dedicated work area – for example a study.
You work at home but you don’t have a dedicated work area – for example, you use a room with a dual purpose such as a lounge room.
What expenses can you claim for a home office?
Almost anything you use in your home office that directly relates to your work and income can be claimed as a deduction.

1) Tax deduction for home office furniture
Claiming a tax deduction on home office furniture is your right and you should take full advantage of it, without bending the truth.

Take stock of what you might use in your home-based office:

shelves
chairs
filing cabinets
desks
lamps
Make sure to claim not only new items, but also remember to depreciate ageing items every year.

You can do this depreciation year on year as well, to keep the benefit flowing. These tax deductions can likely keep occurring until the item has been fully written off after its ‘effective life’ is depleted.

Equipment
On top of your furniture, all your work-related equipment can also be claimed as a deduction. Remember to keep in mind the depreciation avenue mentioned above for your equipment as well.

Think about:

computers
phones and devices
mouse/keyboard/monitors
2) Lighting, heating, phone, and internet bills
In claiming home office expenses, you can easily write off your phone and internet bills. Be sure to only claim the portion you use for work as opposed to personal.

Sometimes people also forget they can deduct lighting and heating as well. After determining what portion of the week you’re lighting, cooling, or heating your home office, you can then claim this too.

After all, you need light to work and a comfortable temperature so there’s every reason to claim a deduction here. Just be sure you correctly parse out any ‘home’ time and don’t run the risk of exaggerating your tax deductions.

3) Low cost items
If you purchase any equipment or items for your home office under $300, you’re in luck in terms of some simple tax deductions.

Any work-related item under $300 can be instantly written off – in full – without having to depreciate the item first. So, if you’ve bought a cheaper end tablet, printer, or a Bluetooth mouse, just write that off immediately.

4) Memberships and subscriptions
When claiming home office expenses, don’t forget about memberships and subscriptions. While this can apply to those not working from home, it’s still often overlooked when working out how to deduct home office expenses.

Are you a member of a professional organisation related to your work? Perhaps you’re part of a union or work body? You can claim these membership fees.

What about subscriptions? Do you subscribe to work related magazines or websites? Claim them too. Some professions, say journalism or media types, may even be able to claim for newspapers, streaming, and pay TV – if it relates to their field of work.

How much can you claim for a home office?
There’s no limit on how much you can claim for a home office. As long as your expenses, equipment, and furniture are all used for your role or business, then you can claim it in your tax return.

If you use a portion for work and a portion for personal use (such as internet) then you can only claim the work-related portion.

Where do you put home office expenses in your tax return?
If you’re going it alone and doing your own taxes, simply calculate your home office deductions and input the amount into the ‘other work-related expenses’ section in your tax return.