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Pay your way: tax and the sharing economy

The desire to pay less for goods and services coupled with the convenience of being able to conduct such transactions online or via apps, has lead large numbers of people to use the “sharing economy”. Demand for greater flexibility in employment and the way we access services and purchase products collectively have contributed further to this boom. Unfortunately, however, none of this removes the need to pay tax!

 

It is reported that over two-thirds of Australians now earn and spend money via the sharing economy. We noted in an earlier article the ATO advice that tax law applies in the same way to sharing economy ventures as it does to more conventional business activities.

The ATO has recently sharpened its focus on this area, updating its information on the “sharing economy and tax”.

If you are a provider of any of the services detailed below, here is a brief refresher on the sharing economy and how tax applies.

 

Are you part of the sharing economy?
The sharing economy is usually defined by buyers (users) connecting with sellers (providers), but it is much broader than that. It extends to cover many direct access services, offered by way of websites and apps, which include the following:

-renting out all or part of your home (eg, Airbnb or Stayz);
-letting out a vehicle-parking space (eg, Parkhound and Spacer);
-‘ride-sourcing’ services in exchange for a fare (eg, Uber, SheSafe, Shebah and GoCatch);
-providing services for delivery (eg, Deliveroo, Mad Paws); or
-offering a personal service (such as graphic design or creating websites).

 

If you earn income in any of these ways, the chances are that you are already part of the sharing economy. Here is a quick summary of the latest updates from a tax perspective and what you should keep in mind, but if you are in any doubt please contact us to find out more.

 

Register your income

When you provide a service for a fee then you need to declare it in a tax return. This is no different in the sharing economy and income tax and goods service tax (GST) are due under the usual circumstances.

 

GST or no GST?
The threshold over which you need to pay GST, even within the sharing economy, is still $75,000. If you are uncertain whether you will reach this threshold you can register for GST to be on the safe side. See further details below on the requirement to register for a GST if your business is connected to ride-sourcing.

 

Are you an enterprise?
If you are carrying on an enterprise you will need to apply for an Australian Business Number (ABN), lodge activity statements and, potentially, to register for goods service tax (GST) especially if you are providing a ride-sourcing service. This gets a little more complicated depending on the type of goods or services you provide as some will include GST.

 

Keep a trail
You may not end up with an obvious paper trail for your income-earning activities in the sharing economy, but you still need to keep records of what you earn. Being able to account for income and expenses by keeping up-to-date records is vital so that you can declare it in your tax return and claim any relevant deductions.

 

Claiming deductions
You will be able to claim deductions for expenses you incur while conducting your business as part of the sharing economy. Such deductions must be apportioned according to whether they relate wholly to work purposes or in part to work and partly for personal use.

 

Renting out part or all of your home
If you plan to rent out a part of or your entire home via a website (such as Airbnb, Stayz or similar) you still need to declare income on your tax return; deductions for expenses incurred apply as well.

 

How does GST apply?Goods service tax (GST) does not apply on residential rent, but if you provide accommodation such as a hotel room, serviced apartment, a bed and breakfast, or even if you rent out a function room or office space (for commercial use), you will need to pay GST on income received.

 

How about CGT?

If you rent out a room in your home via the sharing economy (such as for Airbnb or similar) you may need to pay capital gains tax on a proportion of your income received when you sell your home or property. This applies even if the home you rent is your main residence; renting out even just a part of it can mean that you lose part of your CGT main residence exemption.

 

Ride-sourcing
Whether you call it ride-sourcing, ride-sharing, ride-hailing, or some other name, if you provide an ongoing service to charge passengers a fare, or make a car/vehicle available for public hire, you need to register for an ABN and pay GST from day one. If your business is classed as a ride-sourcing enterprise you need to declare and pay GST on the full amount of every fare and keep records of income and expenses. You will be able to claim GST credits if you are an enterprise.Avoid tax debt
Rather helpfully, the ATO provides tips on how to get ahead and avoid receiving a nasty tax bill. They suggest that if you think you will be close to the threshold to pay tax (over $18,200) you can make a pre-payment of tax; any pre-payment of tax made before any tax is due will stay on your account until such time as you, or your tax adviser, ask for a refund. You can also pay in instalments.

 

What next?
If you think you may be part of the sharing economy talk to us about how to avoid a surprise tax bill and pay the correct tax.

 

Tax Time Focus Areas For Individuals

Tax time has come around for another year, and this year the ATO is focusing on “other” work-related expense deductions and work-related car expenses.  It says taxpayer must remember that they are not automatically entitled to claim standard deductions and that all expenses need to be substantiated. Taxpayers need to be able to show that they spent the money themselves and were not reimbursed, the expense was directly related to earning their income, and they have a record to prove it.

 

It’s tax time again, as you gather your receipts and other assorted tax documents, you should also turn you mind to what the ATO is paying close attention to this year. This year, the ATO is focusing on taxpayers who claim “other” work-related expense deductions at label D5 on individual tax returns.

 

According to the ATO, taxpayers need to be able to show that they spent the money themselves and were not reimbursed, the expense was directly related to earning their income, and they have a record to prove it. Where the expense is for both work and private use, only the work-related portion can be claimed. The ATO urges taxpayers to remember that they are not automatically entitled to claim standard deductions and that all expenses need to be substantiated.

 

As a part of their focus on other work-related expense claims, the ATO will also be closely scrutinising work-related car expenses which around 3.75m individuals claimed in 2016-17 totalling $8.8bn. Assistant Commissioner Kath Anderson said:

 

“While most people want to do the right thing, we know the rules can be a bit tricky for some and we are seeing a lot of mistakes. We are particularly concerned about taxpayers claiming for things they are not entitled to, like private trips, trips they didn’t make, and car expenses that their employer paid for or reimbursed.”

 

There are two ways a deduction for car expenses can be calculated under tax law, the cents-per-kilometre method (which limits claims for work-related travel up to 5,000 km) and the log-book method in which a log book is kept for a continuous 12-week period to determine the work-related percentage of the actual expenses incurred.

 

Around 870,000 individuals claim the maximum amount under the cents-per-kilometre method each year, and the ATO is concerned that there is an erroneous belief among taxpayers that the maximum claim is a standard deduction that does not require evidence of any travel. While it notes that using the cents-per-kilometre method does not require a log book, taxpayers will still need to show evidence of the number of kilometres travelled by using a diary for example, if required.

 

This year, the ATO is using enhanced technology and data analytics to identify unusual claims, which includes comparing taxpayers to others in similar occupations earning similar incomes. It says its models are particularly useful in identifying individuals claiming things like home to work travel or trips not required as a part of their work.

 

The ATO is advising taxpayers that it may request proof that the travel for work was required, this is especially significant in circumstances where individuals may claim the transport of bulky tools or equipment as required by their work. It warns individuals this year, it’ll be on the lookout for false logbooks, claiming home to work travel, claiming for expenses paid for by the employer, incorrect claiming of home to work travel where bulky tools are not involved, and claiming expenses for a car which is under a novated lease.

 

Need help at tax time?

Bring in your receipts and associated tax documents, we can help you navigate the murky water of deductions and get you the maximum claim you are entitled to. If you’re thinking of claiming other work-related expenses or car expenses this year, let us look over your claim to make sure it’s all above board to avoid a future ATO investigation.

Tax Scams: Don’t be a victim

Tax scams are real and taxpayers need to be vigilant about bogus calls, text messages and emails from scammers. Some scammers go to great lengths to deceive taxpayers, including impersonating government representatives on the phone, sending fraudulent emails and even creating fake websites. It’s important to stay informed about what the latest scams look like, and know what questions to ask so you can avoid being scammed.

 

The ATO warns taxpayers to always watch out for scammers. Each year, the ATO receives a growing number of reports from the public of new phishing scams – it detected over 17,000 scams during the first half of 2017. Not only do scammers try to steal money, they also try to steal identities. The Government has identified several cases of misuse of stolen personal information that have led to fraudulent income tax returns, as well as GST, superannuation and welfare frauds.

 

Scammers are becoming more sophisticated in their attempts to defraud the public and trick people into handing over money, their tax file numbers and other personal information. A recent stratagem is to telephone people, displaying an official-looking ATO number as a caller ID so the victim feels confident enough to engage with the scammer and will provide personal information – this type of impersonation is known as “spoofing”. Sending emails containing links to bogus websites that mirror the official ATO website is also still a popular scamming method.

 

The typical story is that a fraudster contacts a taxpayer out of the blue claiming that the taxpayer has overpaid taxes and is entitled to a refund. The fraudster often asks the taxpayer to pay an “administration” or “transfer” fee to obtain the refund. They may also ask for the taxpayer’s personal details, including financial details such as bank account information so that the “refund” can be transferred. If the taxpayer hands over money, chances are that it is never seen again, and no transfer is forthcoming.

 

Another tactic is when fraudsters phone to demand that people pay allegedly unpaid taxes. The ATO is aware of one such aggressive scam where taxpayers are threatened with arrest if they do not pay a fake “tax debt” over the phone. Scammers may also demand payment in gift cards, such as iTunes or prepaid Visa cards.

 

Scams are most prevalent during tax time, but it’s important remain vigilant for them throughout the year.

 

If you receive an email, a text message (SMS) or an unexpected phone call from “the ATO” claiming that you are entitled to a refund, that you owe taxes or that you must confirm, update or disclose confidential details like your tax file number, delete the message (do not click any links or download any attachments) or hang up the phone.

From time to time, the ATO itself will send emails, text messages or official social media updates to advise you of new services. However, the ATO’s messages will never request personal or financial information by SMS or email, and its representatives will never ask you to pay money into a personal bank account.

 

If you receive a call, an email or an SMS and are concerned about providing personal information, you can call the ATO on 1800 008 540 (8 am to 6 pm, Monday to Friday), forward the suspicious email to ReportEmailFraud@ato.gov.au or check your myGov account for any message from the ATO. You can also contact our office for more information if you have concerns.

 

You should practise the same level of vigilance in relation to calls and emails from people who claim to be from other government bodies, such as state revenue authorities.

 

Document verification service for businesses
The Government has developed an electronic Document Verification Service (DVS) for business use. The DVS helps businesses to protect themselves against identity crime and makes it easier for businesses to meet their regulatory obligations to verify customers’ identities. The DVS allows businesses to verify information on Australian-issued driver licences, passports, visas and Medicare cards “in real time” directly with the issuing agencies. The system is not a database and does not store any personal information. All DVS checks must occur with the informed consent of the person involved. Further information is available on the DVS website at http://www.dvs.gov.au/.

 

5 Best Bookkeeping Practices and How Bookkeeping Services Can Help You

bookkeeping services
 

Bookkeeping is definitely one of the most important tasks for any entrepreneur. It’s no secret that professional bookkeeping services can help your business run like a well oiled machine. It might be a tedious task but its importance can never be overstated. If you run a small company, it is particularly important for you to maintain your accounts. After all, this will determine your income, profits, and your tax return for the year.

In addition to hiring professional accounting and bookkeeping services, here are some tips you can follow to make sure that your books are in perfect order.

 

  1. Do not put your bookkeeping till the end of the financial year- you might miss out on crucial details, because they slipped your mind.
  1. Take some time off every week, and put all the information into your books. This move will help you keep all your information in one single place. Moreover, this will enable regular reviews of your financial situation, so you can make immediate changes.
  1. Make sure you keep track of all official finances, with the bills and necessary documents. Put all of these away separately, so you’re not scrambling for the bills at the last minute. You will need bills, invoices for goods and services purchased, previous taxes paid, bank accounts, card statements and stock records, to name a few.
  1. Make sure you are aware of the taxation policies that apply to you. As an Australian business, if your annual turnover is above $75000, you will have to apply for GST registration. You will have to lodge Business Activity Statement (BAS) on a monthly or quarterly basis with ATO. All these rules will have to be complied with so you don’t get into trouble at the EOBY (end of business year).
  1. Get professional bookkeeping services assistance if possible- Australian tax laws can be quite complicated and losing track of your obligations will get you into a lot of difficulty.

 

Trusted bookkeeping services can help your business succeed, and give you great peace of mind. At DSV Partners, we are here to provide you whatever service your company needs. For more information, get in touch with us today.

 

 

 

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How To Trigger An ATO Audit?

financial audit - hire a tax accountant
 

An ATO audit or review can be taxing for any business, specially for small and medium size businesses, mainly due to lack of appropriate level of internal controls and accounting practice. An ATO audit may not only cause a financial hardship but business disruption as well. To manage the audit/review process, you will require the business to either deploy its resources or hire an external advisor, both will have significant cost implications.

 

 

Common reasons for ATO audit

Some of the common reasons that triggers ATO audit for private businesses are:

  • – Have financial performance that is out of sync compared with your industry;
  • – Variance between tax returns and business activity statements;
  • – Have poor record of lodging returns on time;
  • – Don’t pay the right amount of superannuation to your employees;
  • – Consistently show operating losses;
  • – Own motor vehicles, but don’t lodge FBT return;
  • – Big fluctuations between years;
  • – International transactions;
  • – Wrong disclosure in your tax return

 

Make sure you’re prepared for an audit

As a business owner, you don’t want to trigger an ATO audit for your business. Having a tax risk management process involving your business advisors is a good way forward. Have a good accounting system and periodical reconciliation process is in place, ensure that all supporting documents are available (for five years, some records may need to be kept longer).

 

As an experienced tax accountant and advisor for small and medium size businesses, DSV Partners proactively assists its clients in reducing the risk of a tax audit. We ensure our client records are updated and reconciled on periodic basis; your business performance is compared to industry peers, where available. If a client is selected for an ATO audit, we assist our clients in handling the process.

 

Should you have any questions or need assistance wait a tax audit or review, get in touch with DSV partners today!

 

 

 

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The Importance of Finding the Right Business Adviser

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Chanakya (350 BCE – 275 BCE), a great Indian teacher, philosopher and economist, and the author of the ancient Indian political treatise, “Arthashastra”, said that a strong foundation is key to any successful business and listed seven pillars for an organization:

 

  • – The King or the Leader
  • – The Minister or the Manager
  • – The Country or the Market
  • – The Fortified city or Head office
  • – The Treasury
  • – The Army or your Team
  • – The Ally or your “Adviser”

 

The choices made by the leader will have a profound impact on the business- be it the choice of hiring a manager and team, market to operate in, or what business advisers to work with. Most businesses focus on hiring a good manager and team, but often forget the importance of a good adviser. Experienced advisers are generally well aware of the problems faced by small and medium size businesses, and they should be able to provide you expert guidance to resolve your business problems right away.

 

Most often, advisers are hired based on the price they quote rather than the value that they can add to the business. By choosing the wrong adviser, a business can face colossal impact on their finances. A recent example would be the case of Commonwealth Bank financial advisers or, in the past, the case of advisers in Enron Energy and Satyam Computers. In all the above cases the advisers/auditors were not acting towards the interests of their clients.

 

A good adviser should always be:

 

  1. Candid – willing to tell their clients “what they need to hear”, and not “what they want to hear”.
  2. Objective – able to hear the concerns of the business owners.
  3. Visionary – looking for new ideas to solve unique problems clients may face, rather than providing a “one size fits all” solutions.
  4. Informed – able to converse about the trends in your industry, latest developments, and share his knowledge for the benefit of your organization.

 

Remember, most importantly, a business adviser should be like a friend. He is the one whom you can depend on when problems arise. After all, a friend in need is a friend indeed.

 

DSV Partners is a suburban firm providing accounting solutions for small and medium size business across Sydney. We provide;

 

 

If you are looking for a trusted business adviser who is capable of taking holistic view of your business and provide an effective solution, please contact DSV Partners immediately! We eagerly look forward to working with you.

 

 

Tax Tips For 2016: Tax Deductions That You Are Entitled To

tax return - tax accountant

 

It is that time of the year again where tax payers would be thinking what deduction they are entitled to and what records they should keep to support those deductions. It is easy to overlook some of the applicable deductions. For tax payers who want to avail the benefits of all applicable deductions available to them, it would be a good move to talk to a reputable tax accountant, like DSV Partners.

 

Here is a list of expenses which are tax deductible:

  • – Gifts and donations: You can claim a tax deduction for gifts or donations made to organisations with deductible gift recipients (DGRs) status. The amount of money gifted must be at least $2 or more.
  • – Home office expenses: If you are an employee and you require the use of your computer, phone or other electronic device for work purposes, you may be able to claim the cost of running your home office. If you work entirely from your home, you can typically claim the occupancy cost of your home office space as a tax deduction, which includes a percentage of your rent/mortgage, equipment and furniture.
  • – Income protection insurance: If you pay premiums for insurance against the loss of your income, you can claim a tax deduction for such premiums paid. However, you can’t claim life, trauma or critical care insurance premiums or insurance premiums paid out of your superannuation fund.
  • – Professional membership: If you pay for a professional or trade association membership fees as part of your work, you can claim the cost of membership paid as a tax deduction. This includes union fees if you’re a member of a trade union. If you prepay the fees for next year before 30 June you can claim tax deduction in your current year tax return.
  • – Expense to manage your tax affairs: You can claim fees paid to registered tax agent to manage your tax affairs for the year that you pay them. You can also claim the cost of travel; to the extent it is associated with obtaining tax advice.
  • – Mobile phone expenses: If you use your personal mobile or internet for work purposes, you can claim cost of this expense as well. However, you can only claim business/work related calls/usage. You will need to keep a record of 4 week representative period in each income year to claim a deduction of more than $50.
  • – Work related car expenses: People who use their personal car for work-related reasons, apart from driving to and from work, can usually claim fuel and maintenance costs as a tax deduction. As of 2016, these claiming methods have changed – you can either use a 12 week logbook or the cents per kilometer method. To be eligible for this deduction, you must own the car or lease the car. Moving from one job site to another, driving between offices is included for tax deduction.

 

If you need help with your tax return and deductibles, consider DSV Partners. We are a reputable accounting solutions firm based in Sydney that offers great tax and accounting services for our clients. Call us at 02 9633 4893 for more information about your income tax.

 

 

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Keep Your Accounts in Perfect Order with the Best Tax Accountants in Sydney

tax accountants Sydney

 

Business ventures typically need to keep a proper record of every financial transaction. This involves recording details of every sale, purchase, earning or expense meticulously. But, these records will not come about by themselves. You will need to hire an accountant for maintaining accurate books. Many small business owners do not have the capacity to hire accountants full-time. To get the best value for their money, they will often hire professional agencies for providing accounting services or bookkeeping services. These professional outfits typically offer a myriad of accounting solutions. For instance, they could take care of all your requirements concerning financial accounting, managerial accounting and tax accounting as well.

 

 

Why Businesses Typically Require the Services of Tax Accountants in Sydney and Other Cities

Preparing an income tax return can leave many people feeling intimidated. However, it is worth highlighting that the returns of individuals are hardly as complex as those of businesses. As a result, many business owners either spend more time poring over their financial statements and books, without ever feeling assured about the accuracy of their books. Or, they end up neglecting various measures that could reduce their tax liability. This is why many businesses prefer hiring professional tax accountants in Sydney and other cities.

 

Tax accountants are usually responsible for financial planning, managerial advisories and litigation consulting. In addition, they offer various tax-related services that are invaluable to many business firms across the country. These services could typically include tax planning, tax consulting and tax compliance services. Professional tax agents in Sydney and elsewhere possess ample expertise on tax-related matters. As such, they can scrutinise your financial records and ensure that everything is accurate. In addition, they can compute your tax liability, while ensuring that you maximise your deductions. As a result, you will be able to pay the right amount of tax, while enhancing your profitability as well. Above all though, the peace of mind that these professional agencies provide remains priceless for any business owner.

 

 

Are You Looking for the Best Tax Agent in Sydney?

At DSV Partners, we specialise in offering various accounting and bookkeeping services to commercial establishments. We focus on understanding your business and personal financial needs. This enables us to provide services tailored exclusively to your requirements. We can give you high-quality accounts in a timely manner. We can offer you various consulting services across a spectrum of businesses. In terms of audits, we can give you audited financial statements. And, if you need meaningful tax planning solutions, we can help you enhance your profitability too. This is why our clients consider us the most efficient and cost effective firm of Sydney accountants. To view our range of services, click here.

 

 

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Why Many Businesses in Australia Prefer Using Professional Providers of Accounting Services

accounting services

 

Commercial establishments operate to generate revenue and profits. However, just as individuals need to pay income tax, commercial establishments need to pay the appropriate taxes as well. For this, they will require accurate and meticulous records of their earnings and expenses. Unfortunately, many small business owners have little time to spend on keeping their books up-to-date. Many business owners have little understanding of accounting as well. Even worse, some businesses do not even employ professional accountants. As a result, when they need to file their tax return, they usually find themselves tied up in knots. The best way for eliminating these issues lies in hiring firms that offer cost effective accounting services.

 

 

How Business Enterprises Can Benefit by Hiring Providers of Accounting and Bookkeeping Services

As mentioned earlier, maintaining accurate books is a necessity for any commercial venture. Without this, the business owner will hardly have any idea about how well or poorly the business is faring. Moreover, the lack of proper accounts could trip up the business owner at the time of filing the tax return. This is why businesses need to record all financial transactions such as sales, purchases, income and payments accurately.

Having an in-house accountant could be costly. But, a professional outfit could provide the best bookkeeping services at prices within your budget. In addition, they could offer effective accounting solutions as well. Professional accounting firms are experts when it comes to

  • – Understanding your business and keeping your best interests at heart
  • – Offering tailored financial accounting solutions that meet your specific requirements
  • – Providing expert, friendly and personalised services in all financial matters ranging from accounting to tax-related matters
  • – Preparing and maintaining accurate and detailed financial statements concerning your business and,
  • – Providing various business advisory and auditing services to keep you compliant

 

 

DSV Partners – The Sydney Accountants Who Specialise in Offering Personalised, Accurate and Cost Effective Accounting Services

Whether you need the services of a tax agent in Sydney or assistance during a financial audit, you need the services of a top accountant. This is why it pays to engage a professional accounting firm for managing your accounting requirements. At DSV Partners, we specialise in managing accounts and preparing tax returns for businesses. Our team of experts can keep your accounts accurate and tax efficient. We can deliver the best tax planning solutions for enhancing your profits too. And, if you need audited financial statements, we can assist with this as well. To see how you could benefit by partnering with us, click here.

 

 

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