How to avoid scams when completing your tax return

How to avoid scams when completing your tax return

Tax

CPA Australia Australians should always be wary of online scams, but we are particularly vulnerable at tax time. Cyber criminals use a mix of tried-and-tested and new methods to attempt to defraud taxpayers, which is why CPA Australia is urging Aussies to be extra vigilant and take some simple measures to help protect themselves. Speaking on CPA Australia’s With Interest podcast this week, the ATO’s Assistant Commissioner of Cyber Governance, Joda Walter, said that ATO-branded SMS and emails containing links to fake myGov web pages remain one of the most common types of scams. Mr Walter also warned Aussies to be wary of fake social media accounts using the ATO and myGov brands. Most prominent on Facebook and X, these fake accounts interact with users and try to trick people into clicking links. How to spot tax time scams Distinguishing between legitimate and scam messages from the ATO is becoming increasingly difficult, however there are signs. “Scammers take advantage of any situation, and at tax time that means targeting unsuspecting individuals through unsolicited messages claiming to be the ATO or another reputable organisation – known as ‘phishing’ scams,” says CPA Australia spokesperson Gavan Ord. “These messages trick individuals into acting quickly and letting their guard down on the promise of financial gain or by convincing them they have done something wrong and need to rectify the situation quickly to avoid penalties. These scams prey on our natural instincts, which is why we need to stop and think before we click any links or give over any personal information.” “If in doubt, always stop, think, and don’t share any personal information, including your tax file number or bank details.” Young Aussies being caught out The ATO says that young Aussies aged 25-34 have been most likely to inadvertently share personal information to ATO impersonation scammers, but everyone is a target. “It can be hard for anyone to spot tax time scams and the fact that young, tech savvy Aussies are most likely to be the victim of ATO impersonation scammers should be a wake-up call to everyone,” said Mr Ord. “It’s definitely a good idea to check in with elderly and vulnerable family and friends to make sure they are aware of common scam types, but also remain vigilant yourself. It only takes a momentary lapse in judgement to be a victim.” Source: CPA Australia The information provided in this article is general in nature only and does not constitute personal financial advice.  

Is your number up this tax time? Claims the ATO will scrutinise

Is your number up this tax time? Claims the ATO will scrutinise

Updated on Tax

CPA Australia No one likes being treated as just a number, but with millions of returns and tens of billions of dollars at stake, that’s the reality when it comes to how the Australian Taxation Office (ATO) assesses tax returns. The ATO uses data-driven profiles based on things like employment type and financial investments to identify where some people may be pushing the boundaries. If your claims are disproportionate to what the ATO would expect from someone in a similar job to you, or with similar financial investments, you may be asked to provide additional evidence to validate your claims. That’s why CPA Australia is urging Aussies to be thorough with their tax returns, including declaring all earnings and having evidence to back up any deductions. Anything that stands out from the crowd may attract the ATO’s attention. “It’s important that everyone pays the right amount of tax and claims what they are entitled to,” said CPA Australia spokesperson Gavan Ord. “The ATO uses highly sophisticated analytics to scrutinise all claims, including those relating to working from home and motor vehicle expenses, income from rental properties, as well as undeclared income from investments like cryptocurrency. “Your tax return is your personal responsibility, and you should be as thorough as possible when declaring your income and claiming deductions. Failure to properly declare all of your income, or over-the-top expense claims, may set off alarm bells and your claims could be rejected if you don’t have the evidence.” Work-related expenses  Work-related deductions are the biggest deduction in most Australians’ tax returns, and some individuals may be tempted to overstate their expense claims in this area. Others may put in claims without sufficient evidence to support them. The ATO is focused on ensuring the correct apportioning of expenses between work and private use, including when you work from home. Keeping a diary of all your work-related activity and having the corresponding receipts is crucial. Your record should include: There are two ways to calculate working from home deductions – the fixed rate method (when you can claim a set rate of 67 cents for every hour worked from home) and the actual cost method. Having records mean you can choose which works best based on your individual circumstances. Motor vehicle expenses There are two methods of claiming a tax deduction for motor vehicle use for work purposes, but whichever is used, you must ensure the claim is accurate and properly evidenced, whether it’s for fuel, servicing or lease payments. If you use a motor vehicle for both business and private use, you must be able to correctly identify and justify the percentage you are claiming as business use. The percentage that is for private use isn’t claimable. To claim accurately, you will need to use a logbook or diary to record private versus business travel. Travelling from home to work is considered private use, unless you are a home-based business and your trip was for business purposes. Income from rental properties For rental property claims, the ATO is focusing on owners who make claims for renovations as repairs. Repairs to the property because of wear and tear or damage from tenants are tax deductible. However, if the work results in an improvement rather than just repairing damage, or results in the replacement of an asset, the expenses will be capital in nature and you can only claim a depreciation expense, not for the entire cost in the year it was spent. Claiming mortgage interest in full when there were drawdowns for private purposes, as well as declaring net income after expenses from annual rental summary of real estate as gross income, will also be under the microscope. Undeclared income (e.g. crypto profits) The ATO is also focused on undeclared income, now including money made from cryptocurrency. The most common use of crypto is as an investment, in which case the crypto asset is subject to capital gains tax (CGT). If you acquire a crypto asset as an investment, transactions such as disposal, exchange or swaps are a CGT event, and you may make a capital gain. If you hold the crypto asset as an investment, it will not be exempt from CGT as a personal use asset. You will make a capital gain if the proceeds from the disposal of your crypto asset is more than its cost base. To work out if you made a capital gain or capital loss from each CGT event, keep your records for each crypto asset and your transactions. You may be able to reduce capital gains using the CGT discount if you hold your crypto asset for at least 12 months. Source: CPA Australia The information provided in this article is general in nature only and does not constitute personal financial advice.  

5 ways to boost your super (with contributions) before EOFY

5 ways to boost your super (with contributions) before EOFY

Updated on Superannuation, Tax

Looking to give your super a boost before the end of the financial year? Look no further! Follow these five strategies to maximise your contributions and make the most of your superannuation savings: 1.Consider additional Concessional Contributions (Pre-Tax Contributions) Why? Because these contributions are taxed at just 15%, potentially lowering your taxable income. It’s like giving less to the taxman and more to future you! You’re allowed up to $27,500 annually, including your employer’s 11% contribution. However, there is one exception to this… 2.Catch-up on Unused Concessional Contributions If you haven’t maxed out your concessional contributions from previous years, legislation now allows you to make ‘catch-up’ contributions if your super balance is under $500,000. Look back up to five years to see if you’ve got unused caps you can access. 3.Take Advantage of Non-Concessional Contributions (After-Tax Contributions) If you’re a low- or middle-income earner, the government co-contribution scheme is a great way for you to contribute to superannuation personally AND get a little bonus top up from the government. It’s also a great way to add larger amounts to super, because you’re allowed to contribute up to $110,000 per year (or $330,000 if you are eligible to ‘bring forward’ future contributions). 4.Sharing the Super love with Spouse Contributions If your partner’s income is on the lower side, contributing to their super could earn you a tax offset of up to $540. It’s a win-win: you help increase your family’s total super savings while scoring a tax perk for yourself. 5.Or consider Contribution Splitting with your Significant Other You may be able to split up to 85% of your concessional super contributions with your spouse. This strategy can help even out your super balances, potentially reducing the tax paid on super pensions in the future. It’s a smart move, especially if one of you is taking a career break or working part-time. With the end of the financial year fast approaching, now is the perfect time to reach out to your Financial Adviser and take action to grow your retirement nest egg and boost your super. The information provided in this article is general in nature only and does not constitute personal financial advice.  

ATO flags 3 key focus areas for this tax time

ATO flags 3 key focus areas for this tax time

Tax

Australian Taxation Office As ‘tax time’ approaches, the Australian Taxation Office (ATO) has announced it will be taking a close look at 3 common errors being made by taxpayers: • Incorrectly claiming work-related expenses• Inflating claims for rental properties• Failing to include all income when lodging ATO Assistant Commissioner Rob Thomson said the ATO is focused on supporting taxpayers to get their lodgment right the first time. ‘These are the areas that people are most likely to get wrong, and while these mistakes are often genuine, sometimes they are deliberate. Take the time to get your return right.’ Work related expenses In 2023 more than 8 million people claimed a work-related deduction, and around half of those claimed a deduction related to working from home. Last year, the ATO revised the fixed rate method of calculating a working from home deduction to broaden what is included, increase the rate, and adjust the records you need to keep. These changes are now in full effect this financial year, meaning you must have comprehensive records to substantiate your claims as you would for any other deduction. To use this method, you need records that show the actual number of hours you worked from home (like a calendar, diary or spreadsheet), and the additional running costs you incurred to claim a deduction (like a copy of your electricity or internet bill). ‘Deductions for working from home expenses can be calculated using the actual cost or the fixed rate method, and keeping good records gives you the flexibility to use the method that works for you, and claim the expenses you are entitled to.’ ‘Copying and pasting your working from home claim from last year may be tempting, but this will likely mean we will be contacting you for a ‘please explain’. Your deductions will be disallowed if you’re not eligible or you don’t keep the right records.’ Mr Thomson said. Remember, there are 3 golden rules for claiming a deduction for any work-related expense: Rental properties Rental properties continue to remain in the ATO’s sights. Our data shows 9 out of 10 rental property owners are getting their income tax returns wrong. ‘We often see landlords making mistakes when it comes to repairs and maintenance deductions on rental properties, so we’re keeping a close eye on this.’ ‘This year, we’re particularly focused on claims that may have been inflated to offset increases in rental income to get a greater tax benefit,’ Mr Thomson said. Performing general repairs and maintenance on your rental property can be claimed as an immediate deduction. However, expenses which are capital in nature (like initial repairs on a newly purchased property and any improvements during the time you hold the property) are not deductible as repairs or maintenance. ‘You can claim an immediate deduction for general repairs like replacing damaged carpet or a broken window. But if you rip out an old kitchen and put in a new and improved one, this is a capital improvement and is only deductible over time as capital works.’ ’We encourage rental property owners to carefully review their records before lodging their return and take care to ensure they are claiming deductions correctly,’ Mr Thomson said. As reporting rental income and deductions can be complex, many individual rental owners choose to use a registered tax agent to help them prepare their income tax returns. ‘Ensuring you provide full and complete records to your registered tax agent allows them to prepare your tax return correctly, so you claim everything you’re entitled to and nothing that you’re not,’ Mr Thomson said. Get it right – Wait to lodge The ATO is also warning against rushing to lodge your tax return on 1 July. If you have received income from multiple sources, you need to wait until this is pre-filled in your tax return before lodging. ‘We see lots of mistakes in July where people have forgotten to include interest from banks, dividend income, payments from other government agencies and private health insurers,’ said Mr Thomson. For most people, this information will be automatically pre-filled in their tax return by the end of July. This will make the tax return process smoother, save you time, and help you get your tax return right. ‘By lodging in early July, you are doubling your chances of having your tax return flagged as incorrect by the ATO.’ ‘We know some prefer to tick their tax return off the to-do list early and not have to think about it for another 12 months, but the best way to ensure you get it right is to wait for just a few weeks to lodge.’ ‘You can check if your employer has marked your income statement as ‘tax ready’ as well as if your pre-fill is available in myTax before you lodge. That way, an amendment doesn’t need to be made later, which could result in unnecessary delays,’ Mr Thomson said. Source: Australian Taxation Office The information provided in this article is general in nature only and does not constitute personal financial advice.  

A Self-Employed Superannuation Guide

A Self-Employed Superannuation Guide

Superannuation, Tax

When you’re at the helm of your own business, it’s easy to get caught up in the whirlwind of the present – chasing sales, generating leads, and growing your business. Often, self-employed people prefer reinvesting back into their businesses, hesitant to stash money away in superannuation. Yet, there’s a compelling case for setting aside a slice of your earnings. The facts don’t lie At present, self-employed Australians are not required to contribute to superannuation. According to the Australian Tax Office’s (ATO) data, while self-employed people make up about 10% of the workforce, their super contributions account for just 5% of the retirement pie in 2014-15. Dive deeper into the numbers, and fewer than 1 in 10 self-employed Australians opted to make tax-deductible super contributions that same year. What is ‘self-employed’? The ATO has clear guidelines on what a self-employed person is: For more information see the ATO website. Why contribute to superannuation? While it’s tempting to pour every hard-earned dollar back into your business, the reality is that not all businesses come with a pot of gold at the end. Some self-employed people and businesses rely solely on their own labour, with no substantial business assets to lean on. That’s where superannuation can come in, providing a great way to plan for your retirement. A nest egg for retirement By contributing to super, you are building a nest egg that will provide you with financial security and income in retirement. Putting a small amount of money into superannuation regularly can provide financial stability over time, allowing you to focus on growing your business knowing that you have another income stream building in the background. Tax benefits Here’s a big one: self-employed people may be entitled to a full tax deduction for contributions made to super. If you’re self-employed, you can make personal contributions up to the annual cap, which is $27,500 per year for the 2023-24 financial year. These contributions are taxed concessionally at 15 per cent, rather than marginal tax rates. So not only are the contributions taxed at a lower rate, self-employed people can also claim a tax deduction on those contributions. To claim a deduction for personal contributions it’s important to note that: Compounding Superannuation remains one of the most tax-effective ways to grow wealth. Over time, your contributions can benefit from compounding growth, as your investments earn returns on both your initial contributions and any earnings generated. Starting early and contributing consistently, even with small amounts, can significantly boost your retirement savings. Diversification Many self-employed people see their business as their retirement strategy. But by putting money away into the tax-effective superannuation environment, with investment strategies that can be tweaked over time, you can diversify your investment, reduce risk, AND plan for retirement. How do I contribute to super if I’m self-employed? Just because you’re self-employed doesn’t mean super has to be complicated! With various tax benefits, flexibility of contribution size and frequency, and having another source of income for your retirement, if you’re self-employed why wouldn’t you be contributing to super?! If you’d like to get started, talk to your adviser today. The information provided in this article is general in nature only and does not constitute personal financial advice.  

Unlocking the mysteries of your super statement

Unlocking the mysteries of your super statement

Updated on Superannuation

Superannuation statements. Boring, right? But if, like many people, you toss your annual super statement in a drawer or hit delete, you could be depriving yourself of many thousands of dollars just when you need it. So, it’s worth the small effort to take a closer look at your superannuation statement. A quick check of your statement may reveal some of the common problems that occur with super; and the sooner these are fixed the quicker your savings can increase. What to look for The layouts of statements vary between super funds, but there is standard information that must be provided. Some items may appear in summary form, with a detailed breakdown shown elsewhere. Here are the key things to look for: Contributions or funds in This will cover employer and personal contributions, government contributions and rebates, plus any rollovers. If you’re an employee earning more than $450 per month, your employer should be paying 10% of your ordinary time earnings to your super fund. Payments can be made either quarterly or monthly. Funds out Most commonly this comprises administration and investment management fees, and any insurance premiums. Excessive fees can place a real drag on the performance of your savings, so check that they are competitive with other funds. Investment earnings This covers interest and share dividends, along with any capital growth in the value of your investments. Be aware that depending on your specific investment mix and the performance of markets, this figure may sometimes be negative. Insurance cover Your super fund may provide death and/or disability insurance. If so, check that it is appropriate and adequate for your needs. Maybe you are paying for insurance cover you don’t need or are inadequately insured. Investment options This will show what your money is invested in, and in many cases the performance of each investment. Your investment choices will be one of the main influences on the ultimate value of your retirement savings. Professional advice in this area is strongly recommended. Other things to check Have you provided your tax file number? If not, the fund will be deducting too much tax from your contributions and earnings. Have you made a binding death benefit nomination? This allows you to choose, within applicable rules, who your superannuation is paid to upon your death. Is your name and address up to date? Is it possible you have ‘lost super’? This occurs when a super fund can no longer contact you. The Australian Tax Office can help you find lost super. Start here https://www.ato.gov.au/forms/searching-for-lost-super/ More than one statement? Ideally, you should consolidate all your superannuation into one fund. This will avoid duplication of fees and insurance premiums and make your super much easier to manage. Invaluable advice Super is one area in life where professional advice can really pay off. If you need help with understanding investment options, consolidating multiple super funds, finding lost super, or ensuring you have the right insurance cover, talk to your financial adviser. The sooner you do, the sooner you’ll be on track to growing your super pot of gold.   The information provided in this article is general in nature only and does not constitute personal financial advice.

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