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Navigating Australian Tax Deadlines: Stay Ahead of Your Financial Obligations

Tax Time - Australia

Tax season is a time that can invoke mixed feelings for many individuals and businesses alike. In Australia, understanding and meeting tax deadlines is crucial to ensure compliance with the tax laws and avoid unnecessary penalties. Whether you’re a business owner, a sole trader, or an individual taxpayer, staying organized and informed about tax deadlines is essential. In this blog, we’ll explore the key tax deadlines in Australia and provide some useful tips to help you manage your tax obligations efficiently.

Income Tax Return Deadlines: For individuals, the income tax return deadline in Australia is typically on October 31st each year. However, if you’re using a registered tax agent like us at Impact Taxation, you may be eligible for an extended deadline, usually until May 15th of the following year. It’s important to note that lodging your tax return early can have its benefits, such as receiving your tax refund sooner and avoiding last-minute stress.

Business Activity Statement (BAS) Deadlines: Businesses in Australia are required to submit Business Activity Statements (BAS) on a regular basis. The frequency of lodgement depends on your business turnover and registration status. For small businesses with a turnover of more than $75k, it is required for them to lodge quarter BAS to report GST. The deadlines for lodging and paying the BAS are generally the 28th day of the month following the end of the relevant quarter (e.g., April 28th for the January to March quarter). If you have a registered tax agent, you will get further extensions for the lodgements. Please refer to this ATO link for more information: BAS agent lodgment program 2023–24.

Pay As You Go (PAYG) Withholding Deadlines: Employers are responsible for withholding and remitting PAYG taxes from their employees’ salaries. The deadlines for reporting and paying PAYG withholding obligations depend on the size of your business and the frequency of your pay runs. Generally, if your annual withholding is less than $25,000, you can lodge and pay on a quarterly basis. For larger employers, monthly PAYG obligations may apply. Ensure you meet the deadlines to avoid any late payment penalties.

Superannuation Contributions Deadlines: Employers in Australia must make regular superannuation contributions on behalf of their eligible employees. The deadline for making these contributions is generally within 28 days after the end of each quarter. Timely payment of superannuation contributions is crucial to fulfill your legal obligations and avoid penalties. Remember, contributions made after the deadline may not be tax-deductible, so it’s essential to stay on top of this requirement.

Goods and Services Tax (GST) Deadlines: If your business is registered for the Goods and Services Tax (GST), you will have specific reporting and payment obligations. Most businesses report and pay GST quarterly, with the same deadlines as the BAS lodgement mentioned earlier. It’s vital to keep accurate records of your sales and purchases to ensure accurate GST reporting.

Tips for Managing Tax Deadlines:

a. Use technology: Consider using accounting software or online tools that can help streamline your tax obligations. These tools can automate calculations, track deadlines, and generate reports, making the process more efficient.

b. Seek professional advice: Engaging a registered tax agent or accountant can provide valuable guidance and support. They can help you understand your specific tax obligations, assist with lodgement, and ensure compliance with the tax laws.

c. Stay organized: Maintain proper record-keeping practices throughout the year. Keep track of income, expenses, invoices, and receipts to make tax time less stressful and more manageable.

d. Plan ahead: Take the time to plan for upcoming tax obligations. Set reminders for key deadlines, estimate your tax liabilities, and ensure you have sufficient funds to meet your tax obligations when they arise.

In conclusion, understanding and meeting Australian tax deadlines is essential for individuals and businesses to stay compliant with tax laws and avoid penalties. By staying organized, seeking professional advice, and utilizing technology, you can effectively manage your tax obligations and stay ahead of your financial responsibilities. Whether it’s filing your income tax return, submitting Business Activity Statements (BAS), meeting PAYG withholding requirements, making superannuation contributions, or reporting GST, being aware of the specific deadlines and taking proactive measures can significantly reduce stress and ensure a smooth tax season. Remember, proper planning and record-keeping throughout the year are key to successfully navigating Australian tax deadlines. Stay proactive, stay informed, stay ahead of your financial obligations and ask us for help.

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    10 things you should consider before buying a property

    Are you considering buying a property? Do you know you could miss opportunities to save thousands, or tens of thousands of dollars if you don’t plan well before the purchase?

    Below are a few key considerations:

    1. How should you set up your loan structure? If you don’t have a loan offset account for a rental property, after you make extra payments directly to the loan account, you can only claim interest deduction on the remaining balance of the loan. For tax purposes, this deductible balance can’t be changed even if you redraw the overpaid amount later. A good loan structure could also help you to stabilize interest rate and speed up loan repayment by combining a standard variable loan (with an offset account) and a fix rates account.

    2. Timing of renovation. You might want to do a renovation right after you have bought the rental property. But do you know for any genuine repair & maintenance included in the renovation, you can claim an outright deduction against the rental income when the property is available for rental? If the work is done before the date when the property is available for rental, you can only claim the deduction against future capital gain when the property is sold. Depend on when you are going to sell, it could take years or up to decades before you can claim the deduction.

    3. How should you split ownership? You might want to share the property ownership with a family member. For tax purposes, the percentage of ownership is based on the legal title, regardless of who is paying more on the mortgage. If the property will give you a tax profit, you might want to allocate more
    ownership to the low-income earner to utilize the lower marginal tax rate. If it is giving you a tax loss, you might want to allocate more ownership to the high-income earner to utilize the loss. The goal is for the family to pay minimum tax together.

    4. Should you use a family trust to purchase the property? There are many pros and cons related to a family trust. The advantages include tax savings on rental profit or capital gain, asset protection and succession planning on family wealth. However, family trust can’t distribute losses. All losses are trapped in the trust to be used to offset future trust profit. Therefore, you can’t utilize any rental loss in a trust to offset other income such as salary & wages. Family trusts also attract high accounting fees on initial setup and annual fees on financial statements and tax returns. State governments also charge much higher land tax on family trusts.

    5. Will the income level change in future years for different owners? You might want to forecast the possible income for different owners to understand total tax payment / savings related to the property. This could also impact on your decision making on point 3 and 4 above.

    6. Understand when you can treat your property as main residence to receive an exemption on capital gains tax. When eligible, even if you have received rental income, you could still treat your rental property as main residence and receive the exemption. To be eligible, you will need to treat it as your main residence at the beginning. Please check out this ATO link: Treating former home as main residence.

    7. Decide whether you need to purchase a depreciation report. Most taxpayers don’t know that the depreciation on the building will need to be added back to calculate capital gains tax when the property is sold. When the property is held for more than 12 months, after applying the capital gains tax discount of 50%, it will effectively cut the tax rate by half at the time of sales. This makes depreciation deductions desirable for high income earners. However, for low-income earners it might not be ideal to claim depreciation as a rental deduction since they could be paying more on capital gains tax in the future. It could get more complicated if the property is under joint ownership between high and low income earners.

    8. You might want to consider Centrelink payments for future or existing owners. Most Centrelink payments are income and asset tested. Before attaching a rental property to a family member who is receiving, or plan to receive government benefits, you might want to check the testing thresholds first to see if the Centrelink payment will be impacted. This is also applicable when you are making distributions from a family trust to different family members.

    9. Have you considered using your SMSF (selfmanaged super fund) to make the purchase of a rental property? There are a lot of tax saving opportunities with a SMSF since the income tax rate is only 15%. And the capital gains tax rate is effectively only 10% after factoring in the 1/3 discount. The major downside with a SMSF is normally you can’t get the money out until you retire or on compassionate grounds (SMSF does have more flexibilities compared to normal retail super fund. But the choices are still very limited). It could be expensive to set up and operate a SMSF too. There are also strict legal requirements on the trustees. Penalties on incompliance could be severe. Tax law around SMSF is very complicated too. You will need to find a good tax accountant specialized in SMSF to help you to understand the structure, also do a cost-benefit analysis before setting it up.

    10. Consider internal ownership changes. For your existing rental properties, you can also consider whether you should transfer the ownership between family members, or between different business structures (this is not applicable for SMSF). You might want to do this when the income level changes with family members, or rental property changes between tax profit and loss. Before the change, you need to consider the cost of transfer including capital gains tax, stamp duty, conveyancer fees, etc. Again, a cost-benefit analysis is a must before the change.

    Last but not the least, did you combine all the above strategies and compare your choices? If you haven’t yet, how would you know that you have picked the best strategy to minimize your taxes? We can help you to factor in all considerations, compare different scenarios, also present you with a Property Prepurchase Report with all our findings to help you to make a decision. Contact us today to book in a consultation with an experienced tax accountant!

    IMPORTANT INFORMATION
    This is general advice only and does not consider your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from your financial adviser and seek tax advice from your accountant.

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