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Now is a great time to take stock of your financial affairs, look to the year ahead and put a plan in place to improve your budgeting and financial planning.
Taking a look at the tax system is an important part of that, so what do you need to know about the year ahead in tax that you can use to your advantage?
It might seem a little early to worry about tax time just yet, but now is the time to be ensuring that your tax records are up to date. If you drive your car for work, cover more than 5,000km’s and want to claim a tax deduction, you need to ensure you have a logbook in place to record your journeys. If you don’t have one, now is a good time to start. The logbook need to cover a 12 week period so starting now will ensure the logbook is complete well before the end of the tax year.
In addition, make a concerted effort over the next six months to keep all tax records (including invoices and receipts) in a safe place. If you’re well organised now, it will pay dividends at tax time.
If you earn more than $180,000 per year, you need to know that the 2% budget repair levy introduced back in 2014 expires on 30 June 2017. Assuming it isn’t extended, that amounts to a 2% tax cut on all your income earned over the $180,000 threshold from 1 July 2017. So, if you’re able to influence the timing of your income receipts, you might want to look to defer income until the new tax year and – hopefully – enjoy the tax cut.
If you run a small business, there a couple of key changes you need to be aware of.
First of all, if you employ working holiday-makers in your business, from 1 January this year you need to deduct a new rate of tax on the wages you pay, namely the 15% rate legislated just before Christmas. In order to know which employees qualify for the new rate, you’ll have to be proactive in seeking visa information from your staff; if they are on 417 or 462 visas, the new rate applies. You must also register with the ATO (via their website) that you are an employer of working holiday-makers – they have set a deadline of 31 January for all affected businesses to do this.
Later in the year, the highly popular $20,000 instant asset write-off scheme end on 30 June. This allows small businesses to purchase items of capital equipment and claim an immediate tax deduction if the cost of the item is less than $20,000. With no indication as yet as to whether this will be amended, extended or simply allowed to lapse, it makes sense to make any qualifying capital purchases between now and 30 June, just in case.
Towards the end of last year, the taxman announced a crackdown on tax non-compliance amongst drivers in the ride-sharing industry. The ATO is obtaining information on over 60,000 drivers from banks and other financial institutions and will be matching this with taxpayer records to sniff out non-compliance. So, if you’re an Uber driver, it’s essential to get your income tax and GST position up to date as soon as possible before the ATO come knocking.
A host of changes to superannuation rules are coming into force from 1 July 2017. From that date, the concessional contributions cap will fall to $25,000 for all age groups (it’s currently $30,000 for those 48 years old and under and $35,000 for those 49 years and over). In addition, the non-concessional contributions cap will fall to $100,000 (it’s currently $180,000). So, if you’re able to afford it, it makes sense to make payments into your super fund before the end of the tax year to take advantage of the current, more generous, regime.
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