GST Refresher For Your Business

GST is paid at each step in the supply chain, and registered businesses charge GST in the price of goods, services or anything else they supply. GST collected on the sale of goods and services made by registered businesses must be remitted to the ATO via the business’s Business Activity Statement. The end consumer merely pays the GST at time of purchase to the supplier, and the supplier is responsible for paying it back to the ATO. If an entity is registered for GST, it can claim input tax credits from the ATO for any GST included in the price paid for goods, services or anything else bought for the business.

GST issues to keep in mind

You may want to keep some of these GST issues in mind:

Second Hand Goods

Buying second-hand can often be cheaper. However, in most cases they are purchased from a non-GST registered seller. Unless the seller is registered for GST you will not be able to claim the GST on the purchase. If you are registered for GST, don’t forget to charge GST when you sell your business assets regardless of whether the purchaser is registered for GST or not.

Deposits

The purchase of a significant asset often requires a deposit to be paid. Suppose you report GST on a cash basis. In that case, you will not be entitled to claim a GST input tax credit on the deposit at the time of paying. If you haven’t claimed GST when paying the deposit, make sure to claim GST on the total purchase price, including the deposit, when the deposit is later applied towards the asset’s cost (which may occur in a later BAS reporting period).

Purchasing a car for more than the car limit

Your GST input tax credit will be limited if you purchase a car with a cost that exceeds the tax car cost limit for depreciation. The car cost depreciation limit is the maximum you can claim as depreciation deductions for income tax purposes ($69,674 in 2024-25). Where the cost of your car exceeds this value, your GST claim is limited to 1/11th of the car limit.

Small but not insignificant

Bank Fees

Ordinary monthly bank account charges won’t include GST, but merchant fees do, so check your accounting system is set up to capture the GST on those merchant fees.

Insurance Policies

Insurance policies often include a small stamp duty component, which does not attract GST. You may be overclaiming GST if your accounting software is set up to claim a full 10% GST (or 1/11th of the premium cost).

Registrations

In Victoria, the vehicle registration is broken up into 3 parts: Registration Fee, TAC Charge and Duty Insurance. Only the TAC Charge includes GST; the other 2 components are GST Free.

Remember, the best way to maximise your GST claims is by checking your tax invoices for GST paid (you have four years to claim the GST) and then keeping those and other GST records for five years.

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Stay Alert: How to Spot and Avoid ATO Scams

By Cogger Gurry • December 13, 2024

Scams via email and SMS are on the rise, and what’s more concerning is how convincing they’ve become. In our industry, many of these scams come in the form of messages purporting to be the ATO and seeking additional information from you as a taxpayer. Here are key things to remember if you receive a suspicious email or SMS: Watch out for messages with links that prompt you to log in to government services like myGov/myID. The ATO has recently stopped including hyperlinks in unsolicited SMS messages. So, if you receive a message claiming to be from the ATO but it contains a link, it’s almost certainly a scam. Always access ATO services directly by typing the web address yourself: ato.gov.au or my.gov.au, or via the ATO app. Be cautious of emails asking for personal or financial information , especially if they claim to be urgent. The ATO will never request sensitive information such as passwords, account numbers, or personal details via email, SMS, or unsolicited phone calls. Be wary of downloading attachments or clicking on links in emails, as they may contain malware that can steal your personal information. If you’re ever in doubt, contact our office on 03 5571 0111. As your tax agent, we can verify whether any communication you’ve received from the ATO is legitimate and advise you if you think your security has been compromised.

Proposed changes to HELP loans could mean lower repayments in 2025

By Cogger Gurry • December 11, 2024

If you're one of the millions of Australians with a Higher Education Loan Program (HELP) debt, you might be wondering how the government's proposed changes to HELP loans could affect you. While these changes are subject to the passage of legislation, they are proposed to take effect by 1 June 2025. One of the most significant aspects of the proposed changes is a one-off 20% reduction in all HELP debts. This reduction would be automatically applied by the ATO before the annual indexation on 1 June 2025. For example, if you have a HELP balance of $27,600, you could expect a reduction of approximately $5,520 in your debt. From 1 July 2025, the minimum income threshold for making compulsory HELP repayments is proposed to increase from $54,435 to $67,000. This means you’ll only start repaying your HELP debt once your income exceeds $67,000. The new repayments will be calculated only on the income above this threshold, but the rates will be higher compared to the current system. Here are the proposed new marginal repayment rates: income below $67,000: no repayment required. income between $67,001 and $124,999: 15 cents for each dollar over $67,000 income above $125,000: $8,700, plus 17 cents for each dollar over $125,000. Another crucial change is the proposed capping of the HELP indexation rate. Once the legislation is passed, the indexation rate will be set at the lower of either the consumer price index (CPI) or the wage price index (WPI). This adjustment will be backdated on all existing HELP, VET student loans, and other similar accounts from 1 June 2023. As a result, if your HELP balance was indexed based on the CPI in 2023 and 2024, the ATO will adjust your account to reflect the lower indexation, potentially providing a refund if your balance falls below zero. If you would like more information on this topic, please contact our office on 03 5571 0111.

FBT and Tax Considerations for End-of-Year Parties and Gifts

By Cogger Gurry • December 10, 2024

FBT and Tax Considerations for End-of-Year Parties and Gifts As the end-of-year season approaches, it's a great time to celebrate with your employees and show appreciation for their hard work throughout the year. However, it's essential to understand the potential tax implications, particularly concerning fringe benefits tax (FBT), when planning holiday entertainment or gifts for employees. FBT is a tax employers pay on certain benefits provided to their employees or employees' associates (like family members). When planning a festive gathering, such as a Christmas party, it's crucial to determine if your event might attract FBT. Here are some key points to consider: • Location and attendees: If your party is held on business premises during a working day and is only for current employees, you generally won't have to pay FBT on food and drinks. However, if the event is off-site or includes employees' associates, you might need to consider FBT, unless the cost per person is under $300 and deemed a minor benefit. • Entertainment and gifts: If you provide gifts alongside the party, remember that gifts under $300 per person can also qualify as minor benefits, exempting them from FBT. However, if gifts exceed this amount, FBT may apply. • Including your clients: Costs related to clients attending your event are not subject to FBT. This means you can invite clients without worrying about FBT implications for their expenses. When it comes to calculating FBT on entertainment-related benefits, you have a few options: • Actual value method: This method involves calculating the actual cost of the entertainment provided to employees and their associates. If non-employees are involved, you need to apportion the costs accordingly. For example, if you host a dinner where employees and clients are present, only the portion related to employees is considered for FBT. • 50:50 split method: If you hire or lease entertainment facilities (such as a corporate box or function room, this method allows you to allocate 50% of the total entertainment leasing expenses to FBT, regardless of whether it's for employees, clients or others. This can simplify calculations but might not always be the most cost-effective approach. • Meal entertainment valuation: If the entertainment involves meals without recreational activities, you can use meal entertainment valuation methods. Options include the 50:50 split or the 12-week method, where you track meal costs over a period and determine the taxable portion related to employees. Both of these options are based on your expenditure on all meal entertainment for all people during the FBT year. *Important considerations* • Recordkeeping : It's essential to maintain accurate records of all entertainment expenses, including costs, recipients and the calculation methods you’ve used. • Tax deductions and GST credits : Generally, if your event is exempt from FBT, you cannot claim income tax deductions or GST credits for the associated costs. • Gifts to clients: If you’re giving gifts to clients, it's important to note that these are typically not subject to FBT. However, you may be able to claim a tax deduction for such gifts, provided they aren’t classified as entertainment.