teamsmallCHAMBER BUSINESS AWARDS - Finalist in Two Categories. 

 We are very proud of our business and all that we have achieved in such a short space of time, and to hopefully achieve some third party recognition and feedback, we nominated ourselves for the 2012 Albury Wodonga Chamber Business Awards. There were two categories we thought would be most relevant to our business and to our delight we were successful in being named finalists for both of the submissions lodged in each of the following categories: 

  1. Excellence in Professional Services, and
  2. Best New Business

Although we did not ultimately win either of these awards, we were very humbled to be finalists in such esteemed company, and thoroughly recommend any business in the Albury Wodonga region to consider nominating themselves In future years for these awards.



In almost 20 tax years in the accounting profession, never had we formerly encountered a tax audit - until now.  We had a handful of clients selected by the ATO for review due to the size of their deductions when compared to similar clients and occupations. We met an ATO officer in our office for a few hours to review five client files, and we were very relieved that the ATO were satisfied that these deduction claims were on the whole correct and no adjustments were made to any of these taxpayer’s returns by the ATO.  It was a very healthy experience to undertake this process (for both the clients and ourselves), and I can assure you that ATO audit officers are not as daunting or strict as many perceive them to be, and they were quite helpful and informative.


xmastreexmasdecPlease Note: We will be closed for Christmas 2012 from 12:00pm Friday 21st Dec 2012
and reopen on Thursday 3rd January 2013

The team at Lidgerwoods Accountants wishes you a

Merry Christmas and a Happy and Safe New Year!


occupations2Occupations in the spotlight this tax time

The ATO has stated that, this year, they will be paying close attention to deductions claimed by people employed as:

  • plumbers;
  • information technology managers; and
  • defence force non-commissioned officers.

They have found people in these groups are at higher risk of making mistakes with their work-related expenses due to the types of deductions they are entitled to claim.
They will write to around 90,000 people employed in these occupations about assistance that the ATO can provide (including new guides developed specifically for these occupations to help people maintain accurate records throughout the year).


constructNew building industry taxable payments reporting system

Businesses in the building and construction industry now need to report to the ATO (from the 2012/13 income year) the total payments they make each year to each contractor for building and construction services.

The aim of the system is to improve voluntary compliance with tax obligations by those contractors who are currently not doing the right thing.
Businesses will only need to report if all of the following apply:

  • they are primarily in the building and construction industry;
  • they make payments to contractors for building and construction services; and
  • they have an Australian business number (ABN).

Businesses are only required to report the total of the payments made (i.e., on a cash basis) to each contractor during the year, not the individual amounts.
Where the invoice from the contractor includes both labour and materials, whether itemised or combined, it is the total amount of the payment that needs to be reported.
The first annual report is due by 21 July 2013 for payments made in the 2012/13 financial year, although if businesses lodge their BASs quarterly, for this first year they may lodge by 28 July 2013.

Please contact Lidgerwoods if you think these new reporting rules may affect you and you'd like more information.


solarPayments for electricity generated from solar panels

More and more homeowners are installing solar panel systems in their homes. In some cases, the solar panel system may produce more electricity than they consume. If this is the case, the homeowner can often “sell” the excess electricity back to their electricity company, which will be released into the electricity grid.

This obviously begs the question: will the payments they receive from the electricity company be included in their assessable income?

The ATO has basically confirmed that, in typical situations where payments are received from electricity retailers by homeowners for the power generated by their solar panels that is exported to the grid, the payments would generally not be classed as assessable income, as they would be private or domestic in nature. This conclusion takes into account the amount of equipment used to generate the electricity, the current pricing structure, and the fact the homeowner produces the electricity for a domestic purpose only.

In addition, since the payments are not assessable income and are private or domestic in nature, a homeowner in the above situation would not be able to claim a deduction for the costs associated with the solar system, such as interest and depreciation.

Note, however, that if the characteristics of the activity change (including the motivation for undertaking that activity, how the activity is undertaken and whether there is a real prospect of profit from the activity), the receipts or credits from the activity may become assessable income.

Please contact Lidgerwoods if you would like to discuss your personal situtaion


evscATO tackles 'employee or contractor' question

The Tax Commissioner has announced the release of the ATO's new 'Employee or Contractor' homepage, which has been developed to help address areas of confusion and "highlight common reasons businesses get the employee or contractor decision wrong".

The Commissioner stated that the "Employee or Contractor" homepage has all the information businesses need in one place to help them determine if their workers are employees or contractors, including:
the basics – things every business needs to know;

  • common reasons businesses get the decision wrong;
  • industry specific information;
  • an Employee/Contractor decision tool which will guide businesses in making their decisions; and
  • a summary of the obligations businesses need to meet for their employee or contractor.

Clients may wish to visit the ATO's website and if you have any queries please contact our office.


wheatWhen is a business a business?

There has recently been a surge in the number of AAT cases involving the issue of whether a taxpayer is carrying on a business.
In this case, the taxpayer was unable to demonstrate that he carried on a primary production business.

Facts of the case

The taxpayer owned a 500-acre property located in Queensland. Between 2004 and 2009, he claimed deductions in relation to improvements to the property and other expenses on the basis he was carrying on a primary production business.

He had undertaken 14 different primary production-based activities over the years in question, including free-range pigs, timber growing, storing and breeding cattle, and growing an orchard.

Unfortunately, none of the activities actually generated any income and nor had they involved much more than planning for the commencement of the business.

It was not in dispute that the taxpayer had a genuine intent and belief that he was carrying on a business; evidenced by research associated with the various businesses and the preparation of various business plans.
In this case, the ATO argued that the activities of the taxpayer had not reached the point to be accurately characterised as a business and that the taxpayer was still in the process of preparing to carry on a business.

AAT decision

The AAT confirmed the ATO’s conclusion that the activities of the taxpayer did not amount to carrying on a business and concluded that although the taxpayer had a genuine intent and desire to carry on a business, at best it could be said that he was in the gestation stages of carrying on a business.

This case has major ramifications for some farming clients - especially those incurring tax losses.


shockScams, scams and more scams

The ATO has again warned taxpayers about scams including fake job advertisements, emails and bogus phone calls.  Lidgerwoods have had one taxpayer's Tax File Number compromised due to the client providing too much information to a dummy prospective employer.

This year there have been over 6,000 reports from the community about bogus emails using the ATO brand, and over 4,000 reports of attempted phone scams.

Only certain people and organisations can ask for a taxpayer's TFN, the most common being:

  • the ATO;
  • their employer, but only after they start work;
  • their bank or other financial institutions;
  • Centrelink; and
  • their superannuation fund.

The key seems to be: Don't click on emails purporting to be from the ATO – contact them separately by phone or by logging into the Portal.


interestATO Interest Rates for December 2012 quarter

The GIC (General Interest Charge) rate for the December 2012 quarter is:
GIC rate 10.62% (this is what the ATO charges you)
GIC daily compounding rate 0.02901639%

In addition, the Interest on Overpayments, Interest on Early Payments and Delayed Refunds Interest rate is 3.62%. (This is what the ATO will pay you if it delays paying amounts owing to you)


workATO's new Contractor Payments data matching program

The ATO is requesting and collecting information in relation to payments made to approximately 75,000 contractors for the 2010 to 2013 income years.

The information they collect will be electronically matched with ATO data holdings to identify non-compliance with lodgment and reporting obligations under taxation law, and will enable the ATO to:

  • identify and address the compliance behaviour of contractors who may not be correctly meeting their taxation obligations;
  • be more strategic in its approach to determine appropriate educational and compliance strategies to encourage voluntary compliance for contractors.

The ATO has an excellent 'decision tool' on their website to help taxpayers work out the status of employees/contractors.


carATO's motor vehicle data matching program

The ATO has obtained, or will obtain, data identifying all motor vehicles sold, transferred or newly registered in the 2011/12 and 2012/13 income years, where the transfer and/or market value is $10,000 or greater, from all of the State and Territory motor vehicle registering bodies.

Data relating to approximately 2.8 million individuals will be matched against taxpayer records to identify those participating in the cash economy, and/or those who may not be declaring all their income or deliberately avoiding their tax obligations.

The ATO recommends that those identified as being at risk of potentially skimming some or all of their cash takings, running part of their business 'off-the-books', or in other ways not reporting all their income, contact them to make a voluntary disclosure of any under-reported amounts.

Of course, we recommend you contact Lidgerwoods if you have any concerns


Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.