2020 Tax Tips – by Gerard

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The coronavirus pandemic has had a significant effect into the way we live, including our personal finances. In this upcoming tax season, it may also change the way we claim our tax deductions.

Strict social distancing measures have forced millions of Australians to work from home in the later part of the financial year.

Here are some tax tips that you can use for the 2020 tax season:

I had to work from home since the pandemic started. What kind of tax deductions can I claim?

New: Shortcut rate for all costs, starting 2020

Initially for the period to 30 June 2020, claims for the period commencing 1 March 2020 can be calculated at the rate of 80 cents per hour.

The optional 80 cents rate method covers all costs associated with working from home, including heating and cooling, electricity, mobile phone, internet and depreciation of office equipment.

So opting to use the 80 cents method precludes any other home office costs being added to the claim.

By contrast the 52 cents per hour claim method covers electricity, gas and depreciation, requiring other costs to be separately claimed and verified.

Under the 80 cents method the only records required to be kept are time records, showing the hours worked from home, and there is no requirement for a dedicated work area.

52 cents per hour for the year to 30 June 2019 and for 2019-20.

If the diary basis of claim is used (i.e. the pattern of work-related usage has been established), the Tax Office accepts a fixed rate of 52 cents per hour to cover electricity and gas (for heating, lighting and cooling) and the depreciation of office furniture applicable for the year ending 30 June 2019.

The rate continues to be applicable for 2019-20 if the 80 cent short-cut method is not selected.

I have received payments from JobKeeper or JobSeeker scheme. How will this affect my tax return?

Both the $1500-a-fortnight JobKeeper wage subsidy and fortnightly $1100 JobSeeker payments are part of a person’s taxable income and need to be reported to the ATO.

For Australians on JobKeeper, their employer should have already noted those payments on their PAYG summary.

And Australians on JobSeeker should receive an income statement from Centrelink outlining how much they have received, which needs to be lodged when filling out their tax return.

My rental property income has reduced due to the pandemic. How does it affect my tax return?

Last year, the Australian Taxation Office singled out property investors for overzealous rent deductions, with roughly 90 per cent of rent reduction claims containing an error.

Landlords who retain tenants (regardless of the amount they pay) can claim expenses on loan interest and management fees, even if they incur a net rental loss.

According to the ATO, those property owners may claim the full amount of their expenses against your rental and other income – such as salary, wages or business income.

There should be an alarm for property owners who now live in their rental properties.

If you made your home your base in lockdown, you would not be able to claim deductions for that period, as it’s become a property for your own personal use.

Deceased Estates – by Aaron

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Guidance for managing the tax affairs of deceased estates:

When a person dies, their estate is considered as an asset and can pass directly to beneficiaries, directly to a legal representative such as an executor who will need to finalise the deceased tax obligations. The ATO will need to know if the deceased person had a Tax File Number (TFN), if they lodged a tax return and if they should have lodged a tax return.

Tax responsibilities for executors

Any tax liability that may be generated from your role as executor is separate from your own personal tax liability. As a result, as executor you may need to apply for a separate Tax File Number (TFN) to that of the deceased.

 As an executor, your tax responsibilities include:

  • Cancel GST and ABN registrations in regard to businesses;
  • Obtain tax file numbers for the estate or for the estate with a business, if it is to continue to be operated by the estate;
  • Notify the ATO of death, if there has not been a previous notification of ceasing of lodgement of tax return;
  • Lodge outstanding tax returns;
  • Lodge a date of death return;
  • Lodge an estate tax return for the years of the estate operating if same is required;
  • Pay tax liabilities, as and when they fall due;
  • Notify the ATO of any events coming to an Executor’s knowledge that would trigger a review of the deceased’s tax affairs by the ATO.

Failure to any of the above is to leave an Executor exposed to actions by the ATO going forward.

Estate Tax Returns

An Executor needs to decide whether they are required to lodge a return for the deceased estate. Where the Executor has applied for and obtained a tax file number for the deceased estate the return should be lodged.         

The return to be lodged by the Executor is a Trust Income Tax Return for the estate. Where the estate is administered completely in the same income year as the death of the deceased it may be that an income tax return is not required. This can apply where no person has received any of the estate’s income and the taxable income of the estate is below the tax-free threshold. That exemption only applies in those limited circumstances with all the events occurring within the income tax year.

On the administration of the estate, completed in a year outside the year of death an income tax return would be required for each year the estate is administered and where the following may occur:

  • The estate has a net income greater than the individual tax-free threshold;
  • The estate received income from franked dividends and from capital gain;
  • Income was received from sources where tax was withheld;
  • The estate carried on a business;
  • A beneficiary (such as a minor) was presently entitled to a share of the income of the estate.

Normally the Commissioner assesses the income for an estate in those circumstances under Section 99 of the ‘Income Tax Assessment Act’ 1936. This will continue to be the position for an estate for a period of three years from the deceased’s date of death. Should an estate remain unfinalised and earning income for a period greater than three years after the date of death, then the estate will lose the tax-free threshold and will pay tax on all income.

First three income years

For the first three income years, the deceased estate income is taxed at the individual income tax rates, with the benefit of the full tax-free threshold, but without the tax offsets (concessional rebates), such as the low-income tax offset. No Medicare levy is payable.

Fourth income year and later

For deceased estates that continue to be administered beyond the third year, the following tax rates apply

Deceased estate taxable income (no present entitlement)Tax rates
$0 – $416Nil
$417 – $67050% of the excess over $416
$671 – $37,000$127.30 plus 19% of the excess over $670 If the deceased estate taxable income exceeds $670, the entire amount from $0 will be taxed at the rate of 19%
$37,001 – $90,000$7,030 plus 32.5% of the excess over $37,000
$90,001 – $180,000$24,255 plus 37% of the excess over $90,000
$180,001 and over$57,555 plus 45% of the excess over $180,000

Capital gains tax (CGT) implications

When the assets of a deceased estate are distributed, a special rule applies that allows any capital gain or loss made on a CGT asset to be disregarded if the asset passes:

  • to the executor
    • to a beneficiary, or
    • from the executor to a beneficiary.

However, if an executor sells an asset of the deceased estate and then distributes the proceeds to the beneficiaries, the sale is subject to the normal rules and CGT applies.

Basically this means, in most cases, the transfer of CGT assets into a deceased estate and then out to their beneficiaries will not incur an income tax liability.

There are many tax implications of deceased estates. Our professional tax agents are well-versed in working with deceased estates. We can help you with the information you’ll need or can handle the process for you if it’s too much. We will also work with the legal representatives of the deceased estate to help ease the process through such trying times. Please do contact us at 0481 309 696 or admin@simprotax.com.au for any enquiries or to book an appointment with us for consultation.

Capital Gains Tax for Foreign Residents – by Sam

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As a foreign resident, you must lodge a tax return in Australia. You must pay tax on all Australian-sourced income, except for income that has already been correctly taxed (such as interest, unfranked dividends and royalties).

Australia has tax treaties with other countries and this may affect the amount of tax you need to pay. Ensure your Australian financial institutions have your updated overseas address and residency status so they deduct the correct amount of tax. This will reduce follow-up actions by Australia or a treaty country when discrepancies are found.

Non-tax residents are only subject to CGT on Taxable Australian Properties (TAP). Generally, you must include capital gains you make on assets that are considered taxable Australian property in your Australian tax return and pay tax on that amount.

TAP includes:

  • A direct interest in real property situated in Australia
  • A mining, quarrying or prospecting right to minerals, petroleum or quarry materials situated in Australia
  • A CGT asset that has been used for carrying on a business through a permanent establishment in Australia
  • Holding 10% or more of an entity

No tax on franked dividends

Non-tax residents who are authorised to franked dividends will not be able to utilise franking credits as it is intended to eliminate double taxation for Australian tax residents.

Non-resident withholding tax

Unfranked dividends paid out by Australian shares are subject to a non-resident withholding tax of 15% – 30%, depending on your country of residence.

No capital gains tax

Non-tax residents are not subject to CGT on Australian share investments. However, if you hold more than 10% of shares for the company or the company invested in principally invests in property, then CGT will apply.

Once you acquire Australian residency for tax purpose, the shares held will be considered to have been obtained at the market on that date.

Tax return obligations

One perk of being a non-tax resident is there is no obligation to lodge a tax return IF you only receive interest, franked dividends, or royalties where the withholding tax has already been withheld. Similarly, if you receive unfranked dividends and non-resident withholding tax has been withheld, then they won’t be required to be included in your tax return.

In saying that, if you are a non-resident working in Australia, then the Australian sourced income will most likely be subject to income tax at the end of the financial year.


At Simpro Taxation Services, we understand the challenges and complexity being faced in Australia. If you are considering on making tax-free capital gains on Australian shares whilst working as a non-tax resident, please contact us today for more information!

CGT Implications on Inherited Dwellings – by Gerard

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Inherited dwellings

If you inherit a dwelling and later sell or otherwise dispose of it, you may be exempt from capital gains tax (CGT), depending on:

  • when the deceased acquired the property
  • when they died
  • whether the property has been used to produce income (such as rent)
  • whether the deceased was an Australian resident at the time of death.

If you’re not exempt, or only partly exempt, you need to know the cost base of the dwelling to work out your capital gain. The cost base may be the value of the dwelling when the deceased acquired it or the value when they died, depending on the circumstances above.

The same exemptions apply if a CGT event happens to a deceased estate of which you’re the trustee.

These rules don’t apply to land or a structure you sell separately from the dwelling – they are subject to CGT.

Cost base of an inherited dwelling

If you inherit a dwelling there are special rules for calculating your cost base.

The first element of the cost base or reduced cost base of a dwelling – its acquisition cost – is its market value at the date of death if any of the following apply:

  • the dwelling was acquired by the deceased before 20 September 1985
  • the dwelling passed to you after 20 August 1996 (but not as a joint tenant), and just before the deceased died it was their main residence and was not being used to produce income, or
  • the dwelling passed to you as the trustee of a special disability trust.

In any other case, the acquisition cost is the deceased’s cost base or reduced cost base on the day they died. You may need to contact the trustee or the deceased’s tax adviser to obtain the details. If that cost base includes indexation, you must recalculate it to exclude the indexation component if you prefer to use the discount method to work out your capital gain from the property.

If you’re a beneficiary, the cost base or reduced cost base also includes amounts that the trustee of the deceased’s estate would have been able to include in the cost base or reduced cost base.

CGT exemptions for inherited dwellings

If you inherit a dwelling and later sell or otherwise dispose of it, you may be fully or partly exempt from capital gains tax (CGT).

Deceased died before 20 September 1985

If you inherited the dwelling before 20 September 1985, any capital gain you make when you dispose of it is exempt.

Any major capital improvements you make to the dwelling on or after 20 September 1985 may be taxable.

Deceased acquired the dwelling before 20 September 1985 and died on or after 20 September 1985

In this situation, the dwelling need not have been the main residence (home) of the deceased person.

CGT does not apply to the dwelling if either of the following conditions is met:

  1. Condition 1 (disposal within two years):

You dispose of your ownership interest within two years of the person’s death – that is, if the dwelling is sold under a contract and settlement occurs within two years. This exemption applies whether or not you use the dwelling as your main residence or to produce income during the two-year period.

  • Condition 2 (main residence while you own it)

From the deceased’s death until you dispose of your ownership interest, the dwelling is not used to produce income and is the main residence of one or more of:    

  • a person who was the spouse of the deceased immediately before the deceased’s death (but not a spouse who was permanently separated from the deceased)
  • an individual who had a right to occupy the dwelling under the deceased’s will
  • you, as a beneficiary, if you dispose of the dwelling as a beneficiary.

The dwelling can be the main residence of one of the above people, even though they may have stopped living in it, if they choose to continue treating it as their main residence.

A dwelling is considered to be your main residence from the time you acquire your ownership interest in it if you move in as soon as practicable after that time.

Deceased acquired the dwelling on or after 20 September 1985

You disregard any capital gain or loss you make when a CGT event happens to the dwelling (such as selling it) if either of the following applies:

  • the dwelling passed to you on or before 20 August 1996, and:    
    • Condition 2 (main residence while you own it) above is met, and
    • the deceased used the dwelling as their main residence from the date they acquired it until their death and did not use it to produce income
  • the dwelling passed to you after 20 August 1996, and:    
    • Condition 1 (disposal within two years) or Condition 2 (main residence while you own it) above is met, and
    • just before the deceased died it was their main residence and was not being used to produce income.

A dwelling passes to you when you became its owner or, if you became absolutely entitled to it before or without becoming its owner, at that time. (The trustee or executor should be able to tell you whether or not you became absolutely entitled to it and, if so, when).

*source from ATO

Tips for Property Investor – by Jing

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  • Always remember to keep your records.

Make sure you have the supporting documents of your income and expenses if you wish to claim everything you are entitled to.

  • Claim your repairs and maintenance expenses right
  • Repairs that relate directly to damages that happened as a result of you renting out the property can be claimed in full in the same income year when you incurred the expense. Be aware that the initial repairs that already existed when you have purchased the property are not immediately deductible. Instead, the initial repair expenses are deductible on your profit when you sell the property.
  • Replacing a damaged item that is more than $300 and is detachable from the property must be depreciated over number of years.
  • Improvement of the property, such as replacing or renovating an entire structure are not immediately deductible. These are building costs that can be claimed at 2.5% each year for 40 years from the date of completion.
  • Claim your borrowing expenses

Borrowing expenses include loan establishment fees, title search fees, and costs of preparing and filling mortgage documents.

If your borrowing expenses are:

  • Less than or equal to $100, you can claim the full amount in the same income year that you incurred your expenses.
  • More than $100, the deduction is divided into 5 years.
  • Claim your interest loan

The part of the Interest on your rental property loan can be claimed as a deduction, only in the condition of when the interest is related to the rental property. Interest on any other personal use of some of the loan money cannot be claimed on that part of loan.

  • Claim your construction costs right

Certain building costs, such as extensions, alterations and structural improvements can be claimed as capital work deduction at 2.5% of the construction cost for 40 years from the date the construction was completed.

Be aware that the previous owners are required to provide you the information they used to calculate the costs if they claimed a capital works deduction.

  • Claim your expenses in the right portion

If you rent your property to family and friends below market rate, expenses can only be claimed as a deduction for that period up to the amount of rent you received.

You cannot claim your expenses when your family or friends stay at your property free of charge, or for the period of personal use of the property.

  • Claim your property manager’s fees

If you use a property manager, fees such as property agent fees and commission can be claimed as deductible expenses. In general, an organised property manager will provide you the relevant paperwork for ATO reporting.

  • Claim your offsetting costs

If you manage your investment property yourself, some expenses may be able to claim, such as:

  • Utilities including electricity, gas and water bills
  • Office stationery
  • Telephone and internet costs

*Source from ATO.

Our professional accountants are here to help you to identify expenses that you can claim and can’t claim. Please do contact us at 0481309696 or admin@simprotax.com.au for any enquiries or to book an appointment with us for consultation.

Do you need to lodge a tax return if your taxable income is under the tax free threshold?- by Brenda

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Conditions which require you to lodge a tax return

• Your PAYG (pay as you go) has been withheld from payments received during the year.
• There is a reportable fringe benefits amount or employer superannuation contributions on your PAYG payment summary.
• You are entitled to the private health insurance refund but did not claim what you are entitled to.
• You are an Australian resident for tax purposes and had exempt foreign employment income and $1 or more of other income.
• You made or can claim a loss made in a preceding year.
• You are a liable or recipient parent under a child support assessment, except if both of the following conditions are applied:
• You are a recipient of one or more Australian Government allowances, pensions or payments for the whole year.

Source from ATO.

What are the common business expenses I can claim? – by Grace

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The 3 Golden Rules

To claim for a business deduction:

  • it must be a business expense (not for private use)
  • claim only portion related to business if it is of mixed use (for both business and personal use)
  • keep receipt as record and evidence to prove.

What can be claimed?

The following lists the allowable deductions for businesses expenses:

  1. Business travel expenses

Airfares, train, bus or taxi fares when travelling for business or paying for employee travel can be claimed.

To claim expenses for overnight travel:

  • one night or more – keep written evidence of all expenses
  • six or more consecutive nights – keep a travel diary recording all the information of business activities.
  1. Motor vehicle expenses

The motor vehicle expenses you can claim and how to calculate the deductions depend on:

  • your business structure i.e. sole trader, company, partnership or trust;
  • the type of vehicle i.e. car, motor bike;
  • how the vehicle is used.

Motor vehicle expenses from employee use are business related expenses for the employer. If the vehicle is for private use, fringe benefit tax (FBT) may apply to the employer.

  1. Repairs and maintenance

The expenses spent on repairs and maintenance on your business assets can be claimed. This includes:

  • painting;
  • mending leaks
  • conditioning gutters;
  • plumbing maintenance;
  • repairing electrical appliances;
  • repairing machinery.
  1. Running business from home

For home-based business, or home offices, you can claim:

  • occupancy expenses i.e. rent, council rates, land taxes, house insurance premiums
  • running expenses i.e. gas, electricity, water, phone, cleaning and depreciation of plant and equipment, furniture and furnishings.
  1. Salary, wages and super

Deductions for salaries and wages are calculated based on the business structure:

  • For a company or trust, any salaries and wages the company or trust pays to you or other workers can be claimed by the business.
  • For a sole trader or partnership, any nominal payment of a salary or wages to yourself or a partner is often considered as distribution of profit.

You can claim a deduction for super contributions you make for your employees.

For sole traders, you can claim a deduction for your own super contributions in your individual tax return. It cannot be claimed if you earned more than 10% of your total annual income from salary or wages.

If you hired a contractor, you can claim the amount you pay them.

  1. Other expenses

All other common expenses that can be claimed include:

  • Expenses on advertising and sponsorship;
  • Bank fees and charges;
  • Insurance premiums, i.e. accident, fire, burglary, motor vehicle, or workers’ compensation;
  • Stationery expenses;
  • Parking fees (but not parking fines);
  • Transport and freight expenses;
  • Clothing expenses (uniforms and protective or occupation-specific clothing);
  • Subscription costs for business or professional journals, information services, newspapers and magazines;
  • Costs for sunglasses, hats and sunscreen for outdoor work;
  • Registered tax agent and accountant fees;
  • Tax-related expenses.

To find out more about what deductions are claimable for your business speak to one of our accountants at Simpro Taxation Services or visit the ATO website.

Reasons to Hire an Accountant – by Grace

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An accountant can help you in the various stages of your business’s growth from setting it up to providing financial advice. For instance, if your work pay rate is $50 and you use 20 hours to do your taxes. Then, doing your taxes will cost you $1000 with the possibility of making errors. Is it a good use of time? If you get an accountant to do it, you have more time to earn. Moreover, you do not have to worry because it will cost less to let the expert deal with it.

Why & When to Hire an Accountant?

1. Advice on Business Structure, Business Plan & Setup

If you’re planning to start a new business, you want to start on the right foot.  To avoid the all the hassle and dilemma on business decisions, an accountant can help ease your life. Hire an accountant so they can assist you with:

  • Determining the best business structure for you;
  • Determining whether you need to register for GST;
  • Estimating the business start-up costs, operating costs and revenue forecast;
  • Providing advice on the accounting procedures and software that suits your business;
  • Providing advice and assistance on opening business bank account;
  • Creating a realistic and professional business plan for your business success;
  • Providing payroll solutions.

2. Deal with Tax-Related Matters

Accountants will be able to help you with preparation of your business activity statement and GST reports. They keep up with changes in tax regulations to ensure your business complies to all tax obligations and help save cost by minimising tax liabilities.

3. Help with Financial Tasks

You can maximise your profits by having an accountant analyse your business data. Often, business owners do not realise that their business has a large overhead, are over-staffed or has an excess inventory. They have great potential in gaining more profits but lose out their opportunity due to the lack of insight. They can help you understand your business better through analysing your financial statements.

Accountants prevent you from being audited. However, if your business does get audited, they are able to provide you guidance to get you out of it.

Small businesses want to save cost and think that they can’t afford an accountant. However, you don’t always need to hire a full-time or part-time accountant because you only need a couple of hours of their time. You can contact us at Simpro Taxation Services if you require any advice or help.

Why bookkeeping is important? – by Brenda

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What is bookkeeping?

Bookkeeping is the process of recording, organising and reporting financial transactions of an organisation on a daily basis. It may be your least favourite business matter to handle, however, it plays an important role. It is the initial step in alleviating the growth of your business by showing your business performance and financial status.

The Importance

1. Financial Management & Analysis

Good bookkeeping ensures that you able to manage and evaluate your cash flow through an organised system. It also allows you to keep track on invoices owed to you and make timely payments. Delaying your invoices or payments may lead to business failure thus proper bookkeeping is necessary for the smooth running of the business.

2. Tax Obligations

You can easily file your tax returns if you do proper bookkeeping. You do not need to go through the trouble of looking for bills and documents of expenses because they are properly recorded in the financial statement. When you visit your tax advisor next time, you can use the time to obtain better tax advice instead of fixing the incorrect entries in your financial statements.

3. Easier Reporting to Investors

In order to attract more investment into your business, you need to attract the investors. You can present to the investors the development your business and its current and prospective position by accurate bookkeeping. Infographics, charts and graphs can be easily presented by obtaining all information from the book of accounts. The investors are able to able to understand your plans and increase the likelihood of receiving more investment by clearly stating where expenses are required to boost the business. Bookkeeping also helps ease your annual report to current business investors.

4. Business Planning

The Balance Sheet and Profit & Loss statements keeps your business’s finance in check that it is on the right track so that business planning is easier and more effective. Based on evaluation of your business’s current position, you can make sound decisions for your business’s future. It helps the business secure funds and save it from unexpected circumstances such as heavy tax payment or future investments.

5. Audit Protection

Bookkeeping helps you keep track on your business financial transactions. You can easily retrieve information easily during auditing with a well organised system. Moreover, the Australian Government requires you to keep proper records to ensure that everyone is honest.

6. Saves Time and Money

Proper bookkeeping allows you to easily identify the expenses that the business has been spent on. When doing your tax return, you can avoid the hassle and easily claim the amount you are entitled to. Consequently, you will save time and money to help your business grow.

Therefore, bookkeeping helps in leading the success and smooth running of your business.  Proper bookkeeping saves your time and money by easing your way through tasks such as reporting to investors, business planning, filing your tax return and providing evidence during auditing.

If you require any advice or need to hire an accountant, don’t hesitate to contact us at Simpro Taxation Services.

If I just started a new business, do I need a software to keep track of records? – by Brenda

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Generally, it is not a must to use a software for record keeping. In the following text, the importance on record keeping and features of record keeping manually and electronically will be discussed.

Importance of Record Keeping

According to the Australian taxation ruling, your business records must be kept or you can incur penalties. They must:

  • be kept for a minimum of five years or longer.
  • be in English or in a form that can be easily translated.

Some other advantages of good record keeping includes:

  • being able to analyse your business and make good business decisions;
  • providing information for future business planning;
  • demonstrate the financial position of your business to banks, lenders, and potential buyers;
  • protect your business from disputes or any legal issues;
  • to complete and lodge your tax returns;
  • keeping up with tax and legal compliances.

Tips on Record Keeping

  1. Gather all your receipts and bills.
  2. Sort and group into types of expenses.
  3. File them according to the order of paid date.
  4. Separate the paid and unpaid bills.
  5. Keep these records in proper folders. If you want to store them electronically, scan the bill or receipt and arrange them by year, then by alphabets.
  6. Ensure the tax invoices contain all the information required by ATO.
  7. Cross reference your records by noting down invoice number on cheques and vice versa or the date and method of payment for electronic payments.

Record Keeping by Paper

These records can be kept on paper so it is not necessary to have a software to store them. Paper or hard copies of records are often the original copies which are used as evidence to support electronic records when a legal matter arises.

Business owners often opt for manually keeping records as it:

  • saves cost;
  • avoids problems such as having multiple copies of the same records;
  • is easier to handle documents as you do not require knowledge on software.

The drawbacks of manually keeping records are that they:

  • are often misfiled;
  • are often damaged to exposure to water or sunlight;
  • require a lot space to store these paper records.

Electronic Storage of Records

However, it is definitely more beneficial to store them electronically. The right software will be able to help you ease your tasks by:

  • making calculations and tally amounts automatically;
  • producing necessary reports, invoices and summaries for taxing purposes;
  • serving as back-up in case of flood, fire or theft;
  • saving physical storage space;
  • allowing easy duplication, organisation and search of files;
  • linking to lodgement systems to save time when reporting to ATO.

The disadvantages are:

  • the possibility of losing data or data corruption if the records are stored in a hard drive or USB device.
  • requiring additional security to ensure all information are protected from computer viruses or unauthorised access.

If you require any advice about the setting up or finding a system that best suits you, don’t hesitate to contact our accountants at Simpro Taxation Services.