Business Tax Tip – Home Office Expenses allowable by the ATO for you to claim

 Wanting to know what home office expenses allowable by the ATO are there for you to claim for your small home-based business?

There is great information on the ATO website, and links for more info and a cool expense calculator, and we reproduce some of it here (note also the link to PSI – Professional Services Income – it may affect you!).

If you are a sole trader and your home is also your place of business you can claim tax deductions for a portion of the costs of owning, maintaining and using your home for this purpose. When you sell your home you may be liable for capital gains tax.

If you operate a business at or from your home, you may be able to claim a deduction for some of the expenses relating to the area you use for business purposes.

These expenses can be divided into two broad categories:

• occupancy expenses (such as mortgage interest or rent, council rates, land taxes, house insurance premiums)
• running expenses (such as gas and electricity, phone, decline in value of plant and equipment, decline in value and cost of repairs to furniture and furnishings, cleaning)

As for motor vehicles, if you are carrying on a home-based business you can claim the cost of trips between your home and other places if the travel is for business purposes.

Generally, you can ignore a capital gain or loss you make when you sell your home, unless you have used any part of it for business purposes.

Next step:

• Home office expenses calculator

The Home office expenses calculator helps you work out the amount you can claim as a tax deduction for home office expenses for the current year and the three previous income years.

You will need

    - receipts for

• home office equipment used for work purposes
• repairs to the home office or furniture and equipment used for work purposes
• cleaning expenses of home office
• any other day-to-day running expenses for the home office

    - records of home expenses.

See also:

• Home-based business
• TR 93/30 Income tax: deductions for home office expenses
• Claiming deductions when receiving PSI

Need help? Not sure?

Call for FREE30min advice / strategy session today! Aus +61 407 361 596

and also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

Call for FREE 30min advice 0407 361 596

or click for the list of our articles.

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Business Financials – Financial Literacy Levels and 4 ways to send your business broke

An OECD report showed a very high correlation between financial knowledge and success in wealth creation – in summary, the less you know about managing money the more likely one is to go broke! Even more disturbing, are several recent studies where, countries with apparent high levels of wealth have ‘forgotten’ the basics of Financial Management, and budgeting and money management levels are falling.

Financial literacy is a combination of financial knowledge, attitudes and behaviours necessary to make sound financial decisions, based on personal circumstances, to improve financial wellbeing It is considered a complex phenomenon. – see further at page 54 - OECD

Aussie research found that only about half of Australians set a budget, what’s more only 38 per cent budget for leisure activities and these stats are also mirrored in the US, Ireland, Norway, Peru, Czech Republic and the UK.

So running your business – Four ways to send your business broke:

1.     Have no plan: No business plan, marketing plan, nor understanding of your competition, customer needs, or even your business needs – no big picture/strategic direction is sighted by insolvency administrators as the number one reason businesses go broke;

2.     Take Credit as your Friend: Always offer credit to your customers and then ignore debt collection processes (and don’t charge interest on overdue accounts), and start with insufficient seed-money. Don’t analyse cash flow - high cash use was the second highest cause of business insolvency;

3.     Think nothing about spending: Increase your stores of stock (especially stock that can’t be sold), spend up big on office or shop fit-outs, the very latest in software and equipment, and employ too many staff.

4.     Guess your prices to charge: To speed up going broke don’t ever think about how you set prices, simply ‘price everything to sell irrespective of what it costs to produce and deliver in your business.

Need help? Not sure? Call for FREE30min advice / strategy session today!

Call 0407 361 596 Aust

Call for FREE30min advice 0407 361 596 or click for the list of our articles.

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MYOB – Super stopped calculating when changed from hourly to salary in Account Right v19

Client called – A new trainee staff had changed the Payroll Category from Hourly to Salary – and I noticed that Super had not been calculating since. Why?

Answer – The regular Super category (SG) supplied, works on the Gross Wages amount – it works fine when using Base Hourly, but doesn’t work if using Base Salary (versions 19 and earlier). If you turn staff back to Base Hourly, you can easily get MYOB to “catch-up” the missing super for a month – the software works on monthly sections for super – so it always checks the total against the (now 9.5% from July 2014) month to date.

HOW - Simply run a pay-run, but zero out the hours and the pay should all come to zero. If super is not correct for the month (can do dates in/of the full month prior, to check also in another pay-run with zero hours) MYOB will put an amount in the super below, to balance the month. Make sure the pay amount is still zero, record, say yes to “VOID” the cheque.

For Salary, you need a new category with a set amount that is a 9.5% of the weekly Gross the staff is earning, then tick that category ON for that staff - ** ensure the SG is not ALSO ticked on – otherwise 2 lots of super will generate!

Need help? Not sure? Call for FREE 30min advice / strategy session today! Aus +61 407 361 596

and also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

Call for FREE 30min advice or click for the list for MORE articles.

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