Prepare now for your taxable payments annual report (TPAR) lodgement. Whether you lodge your own report directly with the ATO or if you use our lodgement services, this form is due by the 28th August.

There are a number of supplier details required in the TPAR. If you have not kept up-to-date supplier records throughout the year, start updating your records now to ensure timely TPAR lodgement.

Things to review before finalising your TPAR:

  • Make sure you are clear about which suppliers have to be reported on the TPAR and which (if any) can be excluded.
  • Check that you have current details for relevant suppliers: ABN, business name and business address.
  • Check your supplier reports for the gross amount paid in the financial year and the amount of GST included.
  • If you are not already in the habit of checking the ABN and GST registration of all suppliers, now can be a good time to do some checking. Have your suppliers quoted the correct ABN and GST registration status on their invoices?
  • Do you have tax invoices for all supplier business-related transactions?

Most accounting software programs allow for the easy setup and maintenance of TPAR relevant supplier groups, making the annual report preparation quick and easy. Talk to us about setting up taxable payments reporting in your software for the lodgement of your TPAR.

Timely and accurate lodgment of the TPAR holds significant importance.

If you are in the process of preparing your initial TPAR or uncertain about the proper procedure, we encourage you to reach out to us for assistance.

Announced as part of the 2023–24 Federal budget, increased funding has been provided to the ATO to scrutinise taxpayers who have high-value outstanding debts of over $100,000 and aged debts older than two years where those taxpayers are:

  • public and multinational groups with an aggregate turnover of over $10 million, or
  • privately owned groups or individuals controlling net wealth of over $5 million.

Increased penalty rates

After a recent increase in January 2023 from $222 to $275, Commonwealth penalty unit rate has witnessed yet another hike from 1 July 2023 and currently sits at $313 per unit. This means that if you fall behind on your tax lodgements you can expect the financial penalties to increase substantially.

Penalties may be levied on late lodgments of returns and reports that include but are not limited to:

  • Activity statements
  • Income tax returns
  • FBT returns
  • PAYG withholding annual reports
  • Single touch payroll reports
  • Annual GST returns and information reports
  • Taxable payment annual reports.

With the increased rates now in effect, a small business can expect to pay base penalties for failure-to-lodge returns ranging anywhere between $313 (1 penalty units) to $1,565 (5 penalty units), one unit for every 28 days the lodgment is overdue.

Small business lodgment penalty amnesty

The ATO is encouraging small businesses that have overdue income tax returns, fringe benefits tax returns or business activity statements etc. to take advantage of a lodgment amnesty that will run until 31 December 2023.

Announced in the 2023–24 Budget, the amnesty applies to tax obligations that were originally due between 1 December 2019 and 28 February 2022 and has been available since 1 June 2023.

To be eligible for the amnesty, the small business must be an entity with an aggregated turnover of less than $10 million at the time the original lodgment was due.

Next steps

To avoid being penalised at the revised higher rates for failing to lodge returns and reports, ensure you collate and send us all necessary information well before the lodgment due date so we can complete your lodgments on time.

If you anticipate delays, best practice is to engage with the ATO and tell them your situation. We can assist you with requesting an extension in lodgment due date, applying for remissions or if necessary, taking out a payment plan to pay off your tax debts.

Small businesses can avail the lodgment penalty amnesty and lodge eligible overdue forms before 31 December 2023 and the ATO will automatically remit any associated failure-to-lodge penalties.

Other matters

Should you have any queries in relation to this matter, please feel free to contact our office.

Every year, doctors and medical professionals incur a significant amount of expenses for work or business purposes. Some of these expenses can easily be overlooked or forgotten. To assist with this, we have summarised a recent case and provided a list of the top 5 most commonly forgotten tax deductions for doctors.

Mfula and Commissioner of Taxation (Taxation) [2021] AATA 3067 (30 August 2021)

This recent case looked at travel deductions claimed by Mr. Mfula in the 2016 financial year. Mr. Mfula worked as a medical doctor in Victoria and New South Wales during the period under review. He provided his services as an employee of various NSW Health Service Local Health Districts (LHDs) and worked at 5 different hospitals in NSW. His locum placement was arranged through a medical locum agency. Additionally, he worked as an assistant surgeon (sole trader) in Victoria, where he resides with his family.

In his income tax return, he claimed deductions for car-related expenses, travel expenses, and meal costs. Initially, these deductions were denied by the Commissioner of Taxation and then upheld by the AAT.

Car-related Expenses 

Mr. Mfula stated that he used his car to travel from home to the surgery, from the surgery to another workplace, or to the airport for locum jobs in NSW. He argued that his home is his primary place of business, where he performed administrative duties for his employment and his sole trader business.

The Commissioner of Taxation disputed that the travel undertaken was not for work purposes but rather to work or conduct business, and therefore considered private in nature.

The AAT found that Mr. Mfula’s duties did not begin until he arrived at the relevant surgery or hospitals, and the travel between these locations was not considered work time as they involved different employers. The AAT also determined that performing administrative duties alone was not sufficient to demonstrate that he ran his business from home, leading to the denial of the deduction. The AAT suggested that Mr. Mfula would need to provide evidence of other activities, such as seeing patients or performing surgical duties from home, which may be challenging for an assistant surgeon.

Unfortunately, Mr. Mfula was unable to provide adequate documentation to support his claim under the cents per kilometer method because he only estimated the number of kilometers traveled on the days he was away and the days he used the car.

His flights and accommodation costs are paid for by the Medical Locum Agency and therefore no other travel expenses were required to be considered.

Meal Expenses

Part of Mr. Mfula’s hourly rate or wages, which were negotiated with each NSW Health Service LHD, includes a meal allowance. However, this allowance is not separately identified.

In his tax return, Mr. Mfula claimed a deduction for meal and incidental costs incurred while he was away from his home in Victoria at the 5 NSW hospitals. He claimed up to the reasonable meal allowance as determined by the ATO in the relevant year. He was away for 247 days during the year and has a travel diary to support the days he was away.

Generally, food and drink expenses are considered private in nature and not deductible unless they have a close connection to the performance of employment duties.

The deduction for meal and incidental expenses was denied because Mr. Mfula was employed by various LHDs and was not traveling away from his home overnight for work purposes.

The expenses he incurred for food and drink were a result of his personal circumstances, specifically living far away from his place of employment. Therefore, they are considered private in nature and not deductible.

Additionally, the Commissioner emphasised that the reasonable amounts published by the ATO are not automatic deductions. Substantiation is still required and the exception for this may be applied if he was to have received a specific travel allowance to cover those expenses.

When are these deductions allowable?

Locum doctors can claim car expenses when travelling between two separate workplaces. Additionally, a deduction is allowed if you travel from your regular workplace to an alternative workplace. Both of the above assume the workplace is not your home. Generally, it is very difficult as a doctor to argue that your home is your primary place of business.

The tax law views the trip from home to work as a private expense and is therefore not deductible, as this occurs before you start earning assessable income. If you are travelling for a personal reason in conjunction with your work, you may only claim a deduction on the work portion of your travel.

To claim accommodation expenses the following conditions must be met:

  • The location of your permanent home must be significantly away from your workplace;
  • The expenses cannot be incurred as a result of you choosing to reside in a location that is different from your work location;
  • You must be away for only short stints of time; and
  • Your employment duties must require you to be at that specific location.

Top 5 most commonly forgotten tax deductions for doctors

1. Self Education Expenses

Deduction for self-education will be allowable if the study maintains or improves a skill or specific knowledge required in current employment or business activities (e.g. CPD courses), or is likely to result in an increase in income from your current employment or business activities (e.g. fellowship or a specialist accreditation course).

Examples of self-education expenses for doctors include:

  • Course/Exam fee, conferences and seminar fees, textbooks, professional library subscriptions
  • Travel, overnight accommodation and meals, parking costs
  • Phone, internet and other running expenses associated with study
  • Cost of equipment to the extent used for study purposes (must be depreciated if over $300)

2. Medical Indemnity Insurance

All practising medical practitioners must be insured or otherwise indemnified for their scope of practice. Having an appropriate level of medical indemnity Insurance is also a requirement for maintaining registration with AHPRA. 

Medical indemnity insurance premiums can be paid monthly or annually. Your medical indemnity insurance is tax deductible in the year it is paid. 

3. Income Protection Insurance

You can claim the cost of premiums you pay for income protection insurance during financial year as a tax deduction. The premiums are tax deductible where the cover is designed to replace your income in case you are unable to work in case of an accident, illness or major trauma. 

4. Equipment

You can claim deduction for cost of equipment to the extent it is used for work or business related purposes.

Common examples of work-related equipment purchased by doctors include:

  • Smartphone, laptops, tablets and other electronic devices
  • Medical equipment (e.g. stethoscope, ultrasound machines, ECG machines)
  • Purchase of software licences for electronic devices and medical equipment
  • Protective items and safety equipment
  • Work bags, briefcases, laptop bags

For employed medical professionals, purchases of items costing $300 or over must be depreciated over their effective life period. Items costing less than $300 are tax deductible immediately.

5. Clothing and laundry expenses (including footwear)

You can claim the cost to buy, hire, repair or clean clothing if it is:

  • protective – clothing which has protective features or functions that you wear to protect you from specific risks of injury or illness at work. For example, lab coats or surgical caps a compulsory uniform – you are explicitly required to wear it by a workplace agreement or policy, which is strictly and consistently enforced, and is sufficiently distinctive to your organisation.

Although none of these concepts or principles are new, this case has shown how the Commissioner of Taxation and AAT can take a very narrow and strict view of what is deductible expenditure for locum doctors. 

You can reach out to us for more information on the above at any time.

We are excited to share the news that we are opening a new office!

Feel free to pop in and say “Hi”.

We are delighted to announce that Fiskl Advisory has been selected as Finalists in the 2023 Australian Accounting Awards.

This accomplishment is highly significant to our team, as it shows that we are doing our utmost to support our clients and give them peace of mind. It also demonstrates that we are staying true to our values of being courageous stewards of our community, which is an essential part of our mission.

The ATO has announced the commencement of a data-matching program for property investors to acquire residential investment property loan data from authorised financial institutions.

Sample audits conducted under the ATO random enquiry program indicate a net tax gap of $9 billion for the 2019–20 income year attributable to incorrect reporting of rental property income and expenses.

A significant driver of the gap was incorrect apportioning of loan interest costs where the loan was refinanced or redrawn for private purposes.

Data matching and tax compliance

The ATO will use the data to ascertain information about rental property loans including information such as repayments, interest charged, and borrowing expenses. This information will be used to identify, assess and treat several tax compliance matters including:

Lodgment – confirming that taxpayers with rental properties are lodging tax returns and the relevant rental property schedule on or before the relevant due date;

Income tax – confirming taxpayers with a rental property are correctly reporting interest on loan and borrowing expense deductions in their rental property schedules and associated income tax return labels;

Capital gains tax (CGT) – confirming the calculation of cost base elements used to determine the net capital gain or loss on a rental property used to generate income.

After a return is lodged, the ATO will use the data collected to identify relevant cases for action including compliance activities and education strategies.

If a discrepancy is identified, taxpayers will be contacted by phone, letter or email. Taxpayers will then have 28 days to respond before the ATO takes any action in relation to the discrepancy.

Other matters

ATO’s residential investment property loan data matching program will run from 2021–22 to the 2025–26 income years.

The data collected by the ATO will be made available to tax professionals through pre-filling reports in Online services for agents and practitioner lodgment service (PLS) through standard business reporting (SBR) enabled software.

Individual self-preparers may also access the data collected by the ATO through myTax, specifically the rental property schedule interest on loans or borrowing expense labels and rental income tax return labels.

Should you have any queries in relation to this program and its operation, please feel free to contact our office.

Cashflow and profit are two of the most important financial metrics for any business. But while they’re both related to the financial performance of a company, they measure different things.

Knowing the difference – and how cash and profit contribute to your success story – is a vital skill if you want your business to have the best possible financial health.

The difference between cashflow and profit

Understanding the technicalities of financial reporting can be daunting as a new entrepreneur. And even seasoned business owners can find it hard work resonating with the various financial reports that today’s cloud accounting software can produce.

But getting your head around the differences between cashflow and profit can be a gamechanger – especially when it comes to managing your working capital.

So, let’s look at the differences:

  • Profit refers to the amount of money your business has left after subtracting all expenses from your revenue. It’s a measure of your company’s financial success over a given period, whether that’s a month, quarter or a full 12-months.
  • Cashflow is a process that measures the inflow and outflow of cash in your business. This includes both your operating and investment activities. Maintaining a ‘positive cashflow position’ is vital for meeting your financial obligations.

Why is it important to make a profit?

Profit is a measure of the financial success of your business. It’s also a key factor in your growth as an organisation. Healthy profits mean you have the surplus cash needed to reinvest in the business, and to pay yourself and your fellow shareholders healthy dividends.

However, you can only make a profit if you have enough liquid cash to keep operating – and this is where the importance of cashflow becomes paramount.

Why is positive cashflow so essential?

Poor cashflow is one of the biggest factors in most business failures. As the lifeblood of the company, cash is an essential ingredient in the financial mix. To operate effectively, you need more cash inflows than cash outflows. If not, you don’t have the cash to purchase raw materials, pay your workforce or buy the services that keep you operating.

Positive cashflow is all about ensuring that there’s more cash coming in than expenses going out. In this harmonious place of being in a ‘positive cashflow position’ you have liquid cash available exactly when you need it – and that’s vital for keeping the lights on in the business.

Talk to us about getting in control of your cashflow

Profit is an excellent measure of your financial success. But positive cashflow is the electricity that powers your business and keeps the wheels turning day in, day out.

Positive cashflow helps you:

  • Stay operational, with enough cash in the kitty
  • Meet your financial obligations as a company
  • Invest in your expansion, growth and scale-up strategy
  • Sustain your long-term success as an ambitious business.

Even a profitable business can face liquidity issues, so getting in control of your cashflow really should be top of your financial to-do list this year.

Get in touch to talk about your cashflow position.

Excess stock is predicted to be one of the big challenges of 2023 for retailers around the world. It’s been a stock rollercoaster for the past few years: supply chain problems made it hard to get deliveries, then as stock started rolling in, customers started tightening their purse strings.

If you have surplus inventory from 2022, here are 6 smart ways to maximise its use in your business:

  1. Run sales and specials – A strategic sale on excess stock could be a way to win new customers. A lower price cuts into your profits, so make sure you deliver a superb shopper experience so you have the best chance of converting one-off bargain hunters into repeat customers. A flash sales event can be another way to boost interest in your brand.
  2. Refresh, reposition and remarket – Repositioning a product can give it a second chance to catch a customer’s eye. Can you move the product’s position in your store and freshen up the display? If it’s online, could new photography or SEO copy help give it a second chance?
  3. Bundle it up – Bundles can be a great deal for customers, and an excellent way to shift excess inventory. Match up overstocked products with in-demand items and sell them together at a lower price – you maintain a reasonable profit and shoppers appreciate the value. You can also offer multi-buy discounts on items, such as 10% off if you buy two, 20% off if you buy three or more.
  4. Try a promotional giveaway – Use surplus stock to create promotional giveaways on social media and in-store. You can use a giveaway to attract new shoppers, grow your promotional database, and raise your profile. For instance, it could be ‘go in the draw to win this prize pack’, or ‘get this free gift when you spend X’.
  5. Make a donation – Depending on the type of stock you have in oversupply, it might be possible to donate it to a charity – your free products support those in need and your business can get a PR boost.
  6. Liquidate – If you really can’t shift your excess stock to shoppers, you may be able to find a corporate buyer. Local surplus stores, liquidators and auction houses may be willing to buy your overstocked inventory. Buyers will expect a hefty discount off the retail price, but it can be a fast way for you to shift excess product and free up space for new merchandise.

We can help you manage your inventory more effectively

We can talk to you about stock management, surplus inventory and any tax advantages that come with donating or writing off stock.

Do get in touch, we’d love to hear from you.

Benefits provided to employees or their associates in addition to salary or wages are known as fringe benefits. These benefits are paid for by the employer from pre-tax earnings, making the provision of benefits attractive to employees as it may reduce their taxable income while receiving payment in other forms.

Fringe benefits tax (FBT) may apply based on the type of benefit provided.

Tax is payable because the benefits are a different form of payment by an employer instead of salary and wages. The tax is calculated on the taxable value of the benefit, which reflects the grossed-up salary the employee would have had to earn to pay for the benefits from post-tax earnings.

Employers can generally claim a tax deduction for the benefits and related FBT payable.

Types of Benefits

There are many different types of fringe benefits employers may provide to employees. These include:

  • Vehicle owned by the business provided for private use
  • Vehicle lease arrangements
  • Car parking
  • Entertainment, such as golf club membership or tickets to major events
  • Expense payments, such as credit cards or health insurance
  • Other types include debt waiver, living away from home allowance, or property benefits.

Some benefits provided to employees don’t attract FBT. If you pay for expenses that an employee would otherwise have been able to claim as a work-related tax deduction, FBT won’t apply. For example, if you pay for employees to attend a professional development course, there won’t be any FBT liability on this benefit. COVID-19 tests required for employment are also exempt from FBT.

FBT Administration

The fringe benefits tax year runs from 1 April to 31 March. You must then include the reportable amount for each employee on their Single Touch Payroll finalisation by 14 July, so it flows through to their annual income statement.

As with all business transactions, keeping accurate records is essential to determining whether FBT applies or not and how much needs to be included on the employee’s income statement, if any.

If you’re interested in seeing how fringe benefits might apply to your business, talk to us about FBT registration and administration. We can advise on the types of benefits available, how much tax is payable or how to reduce the FBT liability. We’ll also get your bookkeeping software set up to make record keeping easy.

The chances are that you’ve heard ChatGPT being mentioned heavily in your social feeds and in business articles in recent months. But what exactly is ChatGPT? In essence, it’s an artificial intelligence (AI) tool that promises to automate a lot of tasks, including write your content for you.

But do these AI content-writing tools live up to the hype? And what’s the best way to balance using a solution like ChatGPT with the core skills of good human-powered writing?

What does ChatGPT do?

ChatGPT is an AI chatbot model from OpenAI that can produce complex, well-written responses to any prompt you give it. It uses a huge database of sources to provide you with complete blog posts, articles, email – in fact, it will write whatever you ask it to.

Is AI content writing the answer to your business prayers?

If you believe what technologists and business leaders are saying, these AI tools have the potential to replace a lot of the human work involved in writing. This could mean writing your blog posts, sales emails, or even looking after your internal comms. (There will be a lot of other functions the tools will be applied to, but we are focussing on writing here)

But does a solution like ChatGPT live up to this promise? Yes and no. Here are a couple of things that you’ll want to bear in mind when you use these tools.

1. Creating content that stands out

ChatGPT can certainly provide you with business content – but it can be quite generic and bland. This generic nature of AI content may be a problem. You want your brand content to stand out and be unique – but this is more difficult when using the same AI tools as every other small business. As Tom Fishburne puts it, the issue is that ‘much of what is created is already a sea of sameness, written more to appease Google’s search algorithms than actual people.’

A human, like you and me, has opinions, personality and can deliver unique insights. AI cannot do this. It’s limited to the source data and models it’s been provided with. So, if you want your business content to stand out, you need an experienced human writer who writes for humans not just the bots.

Content writing is as much about having good ideas as it is about writing well. So, what you input as your prompt to the AI is just as important as the text that the software spits out.

2. Content accuracy

When Chat GPT’s rival, Bard was first launched it wrongly attributed the discovery of an exoplanet to a telescope that didn’t exist at the time of the discovery. The problem is that the internet has become increasingly cluttered with fake news, spam links and content that’s designed purely for SEO. So it’s no wonder that the AI will sometimes provide you with content that is inaccurate.

As a business owner you’ll want to make sure that a human is involved – to create a unique and original brief and then to review the output for accuracy and relevance for your brand and your audience.

What’s the best balance between AI and human writing?

AI tools are useful. But, at present, you still need a human in the equation. Someone to come up with the ideas, write intelligent prompts for the AI and edit the output so it sounds more human and personalised.

Working with both AI tools AND a content professional is the best way to ensure you’re getting the eye-catching content you deserve.

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