Source: Australian Taxation Office
Compiled and Edited by Tailored Accounts

Before lodging your 2021–22 tax return, have a look at these 10 tips on how to fill up your tax return accurately. Ensure that you are compliant with all of the ATO's requirements while claiming the tax deductions you are eligible for.

COVID-Related Relief Eligibility

• Check if your COVID-19 support payments and natural disaster payments need to be included in your 2021–22 tax return. There may be different tax treatments depending on the payment.
• If you are claiming a deduction for the cost of work-related COVID-19 tests, check their eligibility.
• If you are claiming work from home expenses, you can choose from either the temporary shortcut (all-inclusive), fixed-rate or actual cost methods, as long as they meet the eligibility and record-keeping requirements of the method chosen. When using the temporary shortcut or fixed rate methods, check that you haven’t added additional expenses that are already included. 

Record-Keeping

• Make sure to have correct records to substantiate deduction claims— no receipts, logbook or diary, means no deduction. You can use myDeductions in the ATO app to keep all your records in one place. Instructions on how to do this are available here. You can also email a copy of the record to your registered tax agent.
• From 1 July 2022, the ATO’s pre-fill service will display an indicator notifying you when your bank interest record is high-certainty data. If you make changes to any bank interest pre-fill information where there is a certainty indicator, you'll need to provide a reason for the adjustment.

Crypto Assets

• Disposals of crypto assets (coins, tokens and non-fungible tokens) during the 2021–22 financial year need to have capital gains or losses declared. If you received staking rewards or airdrops, make sure to include these as ordinary income. If you are in the business of trading crypto, income tax will also apply.

Rental Property

• If you received any income from your rental property throughout the year, this will need to be reported on your return. This includes income from short-term rental arrangements, insurance payouts and bond money that was retained.

Tax Offset & Prior-year Returns Overdue

• There is an increase in the low and middle-income tax offset for the 2021–22 income year. The offset can now be up to $1,500, depending on your taxable income.
• If you have one or more prior-year tax returns overdue as of 30 June 2022, your 2022 tax return due date is 31 October 2022. If all overdue prior-year tax returns are lodged by 31 October 2022, the 2022 tax return will be due according to your normal lodgment program.

Special Circumstances

• Support is available if exceptional or unforeseen situations prevent you from lodging your returns on time. Depending on the issues you're facing, you may be entitled to a lodgment program deferral or a supported lodgment program.

Other Resources

Here are some other tax-time resources to help you get your lodgements right this year:

Overview of Key Changes

Tax Time Toolkits

ATO Podcast – Tax inVoice

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Source: Australian Taxation Office

Please be aware that Early Stage Innovation Companies (ESIC) are required to complete an Early Stage Innovation Company report if they issued new shares to one or more investors during the financial year which could lead to an investor being entitled to access the early-stage investor tax incentives. This information must be reported to the ATO 31 days into the following financial year (which is generally 31 July).

It is not the responsibility of an accountant or tax agent to complete this report. Clients are expected to do this report themselves or engage a company secretary for help.

What do you need to report?

For each investment that you receive during the year that may give rise to an investor accessing early-stage investor tax incentives, you should keep the following information to report to the ATO:

• ABN, name, and address for the investor (plus the date of birth for investors that are individuals);
• Number of new shares issued to the investor;
• Amount paid for the new shares;
• Date the shares were issued;
• Percentage of shares in the company held by the investor immediately after the shares were issued.

When you submit the form, you declare that the company meets the requirements to be an ESIC for all reported investments. You will be asked to specify whether the 100-point innovation test or principles-based innovation test has been applied as well as whether you have received a ruling on your eligibility.

Submitting the form when you are aware that the company does not meet these requirements could result in penalties, including possible criminal penalties under the tax law.

The ATO will use this information to assess whether investors qualify for the tax incentives. Providing this information early on may help your investors demonstrate to the ATO that they are entitled to the early stage investor tax offset if they lodge their tax return early.

If you are aware that a particular investor is not entitled to access the early stage investor tax incentives, then you should not include that investor’s details on the form. For example, this will be the case if the investor is an affiliate of yours, or if the shares are provided through an employee share scheme.

How do you report?

Companies need to report this information electronically. The Early Stage Innovation Company report form is available in:

Online services for business – Log in and select Lodgments from the top menu then Reports and forms, or
Online services for agents –  Under Client forms in the left-hand menu.

Lodgment Tips:

• Users must have the correct permissions set by their Administrator in Access Manager to view and lodge the form.
• The report may timeout after five minutes of inactivity.
• Do not use copy and paste.
• If you continually get a system unavailable error message when attempting to lodge, email R&This email address is being protected from spambots. You need JavaScript enabled to view it. for assistance.
• If you are an Online Services for Business user and cannot see the ESIC report in your online forms and you have checked you have the correct access permissions, email R&This email address is being protected from spambots. You need JavaScript enabled to view it. to arrange access.

Author: Harry Hoang

In comparison to many of your priority tasks, compliance likely ranks fairly low in terms of importance. Most businesses complete the bare minimum level of compliance necessary to keep themselves out of jail. But did you know that a clean and tidy set of books can also increase your eligibility for many forms of government entitlements and support?

We are fortunate to be in Australia, a country where the government offers livesaving packages like the government subsidies during the height of the pandemic. But oftentimes, there are businesses who miss out of these government support because of their lack of compliance with the tax office.

Some mistakes that Tailored Accounts have witnessed in the past include: 

1. Late Lodgement of Tax Returns & BAS

We have witnessed at least 5 businesses who were not entitled to the Cashflow Boost because of their late lodgement of tax returns or BAS in previous financial years. This late lodgement meant that they missed the active ABN test for the Cashflow Boost.

Late lodgement of tax returns and BAS is one of the most common compliance mistakes in Australia. Normally, the punishment for this is a penalty and interest from ATO. But in this case, missing $100,000 of support from the Cashflow Boost, especially in a time when most businesses were in dire need of it, was horrible. The $100,000 cash support was tax free, being equivalent to at least $130,000 in gross earnings.

While there are some circumstances where we could argue with the ATO to prove that the client has an ABN, the ATO is rarely lenient of businesses who fail to meet basic compliance requirements.

2. STP Compliance

No STP compliance meant no JobKeeper for many businesses. In some industries like Retail or F&B, small businesses still pay their staff in cash, choosing to let the accountant organise super and payroll later. 

This may seem fine normally, but during the pandemic, the ATO rejected many JobKeeper applications because of poor payroll record keeping. Employees who couldn’t provide the necessary documentations by the cut off date were not eligible.

3. Incomplete Turnover Records 

Even today, some businesses fail to keep adequate records of their sales. Many businesses who sell goods in the open market mostly use cash, keeping no record of sales.

While these businesses may not be registered for GST, adequate records are still necessary for tax returns. Even if we’re just looking to reconstruct the turnover for the current testing period, the turnover test requires us to go back 12 months, which is almost impossible without any evidence.

Although the JobKeeper and Cashflow Boost schemes have ended, the Australian government still continues to have a multitude of support schemes available for small businesses. This is why it is essential for businesses to continually uphold compliance practices. It doesn’t cost you much to adhere to these compliance practices now but these simple task can have a large impact on your eligibility for government support and entitlements in a time when you really need the aid.

Author: Tailored Accounts

As some of you may be aware, the ATO has announced some changes to the eligibility criteria and rate for superannuation. Applicable on pay runs with a payment date of 1 July 2022 onwards, these changes include:

Changes To Super Guarantee Eligibility Threshold
The $450 monthly minimum income threshold for super contributions will be automatically removed, which means that employers will need to pay super for their employees regardless of how much they are paid.

Other eligibility requirements for super guarantee will not be impacted by this change. Workers under 18 will still need to work over 30 hours in a week to be eligible.

The Base Super Contribution Rate is Increasing 
On 1 July 2022, the super guarantee rate will increase from 10% to 10.5%. The Norfolk Island transitional SG rate will increase from 6% to 7%.

The SG rate is scheduled to progressively increase to 12% by July 2025. Please be aware that if you do not pay an employee’s minimum super guarantee amount on time and to the right fund, you will have to pay the super guarantee charge (SGC) and lodge an SGC statement to the ATO. 

If Tailored Accounts is currently handling your payroll, there is nothing for you to worry about as we’ll make the necessary arrangements to guide you through this process and ensure that these new changes are accounted for. 

Otherwise, here is some more information and resources on how to ensure that your business is complying with these changes:

1. Eligibility for SG is determined according to when an employee is paid, not when they earn the income. 
If an eligible employee is paid on or after 1 July 2022, these new rules will apply to the full amount, regardless of whether some or all of the pay period it relates to is before 1 July.  

If you are unsure if an employee is eligible for super, please have a look at this article provided by the ATO.

2. Check that your payroll and accounting systems are updated from 1 July to ensure that you are paying the right amount of super to all eligible employees. 
For businesses using Xero, the new rate will be automatically applied in pay runs with a payment date of 1 July 2022 onwards for all your employees with the Statutory Rate option selected. If your employee doesn’t have the Statutory Rate option selected, you can review this in their Pay Template and manually update the rate if needed.

More information on how to update super guarantee contributions on Xero is available here.

3. If these changes mean you'll be paying SG for an employee for the first time, you'll need to follow the choice of super fund rules. 
More information on these rules is available here.

If all the preparations for EOFY and the new financial year are starting to feel overwhelming, our CEO, Harry, is always happy to have a quick chat with you to discuss how Tailored Accounts can help!