Lidgerwoods merges with WA Gould & Associates

It with great pleasure and excitement that we today announce our merger with one of the oldest accounting firms in Wodonga – WA Gould & Associates.

This is a very exciting event for both of our practices as we share similar client values, a personal approach to accounting and an exceptional quality of work. Current Lidgerwoods clients will continue to see the same team members and work will be completed as it has always been done.

As such this should be a quite seamless transition and we welcome all past clients of WA Gould in the new year. On 20th December 2019, the offices of WA Gould & Associates in Beechworth Road will be closed, and from that date all clients will continue to be managed at our premises in Hume Street Wodonga.

Two new staff from WA Gould will be commencing with us soon, and we take this opportunity now to welcome them to our team.

Sharon Wallis (one of the two current Directors of WA Gould & Associates) is a fully qualified tax accountant with over 30 years of experience, and she will commence with our team in January 2020 after our usual office closure for Christmas.

Michelle Hampton has been the office manager and bookkeeper at WA Gould & Associates for the last 12 years and will commence with our team on 9th December 2019 as our internal bookkeeper and accounting assistant.

Ian Pearce (the other current Director of WA Gould & Associates) will be happily retiring after being a founding Partner of that firm over forty years ago.

Our merged businesses can now provide all clients an enhanced level of service with over forty years of experience coming to our firm.

This now takes the Lidgerwoods team to seven in our open office space, and we welcome all existing and new clients to our firm to drop in upstairs here anytime, say hello, have a coffee/tea and meet our new team members.

As usual, we attach a few articles that may interest you surrounding recent happenings in the tax world.

We look forward to seeing you all at the Kitchen Bench.

The Lidgerwoods Team
Marc, Sophie, Louise, David, Kylie – and now Sharon and Michelle…..

The team at Lidgerwoods would like to wish you a very Merry Christmas and a Prosperous New Year. 
We advise our office will close at Midday Friday 20th December 2019 and will reopen at 9am on Monday 13th January 2020.

ATO "puts the brakes" on dodgy car claims

The ATO is making work-related car expenses a key focus again during Tax Time 2019.

Assistant Commissioner Karen Foat said over 3.6 million people made a work-related car expense claim in 2017/18, totalling more than $7.2 billion.

“We are still concerned that some taxpayers aren’t getting the message that over-claiming will be detected and if it is deliberate, penalties will apply,” she said.

“While some people do make legitimate mistakes, we are concerned that many people are deliberately making dodgy claims in order to get a bigger refund. We see taxpayers claiming for things like private trips, trips they didn’t make, and car expenses their employer paid for or reimbursed them for.”

One in five car claims are exactly at the maximum limit that doesn’t require receipts.

Under the cents per kilometre method, taxpayers don’t need to keep receipts, but they do need to be able to demonstrate how they worked out the number of kilometres they travelled for work purposes.

The ATO’s sophisticated analytics compares taxpayer claims with others earning similar amounts in similar jobs.

Where the ATO identifies questionable claims, they will contact taxpayers and ask them to show how they have calculated their claim, and in some cases the ATO may even contact employers to confirm whether a taxpayer was required to use their own car for work-related travel.

Case studies

The ATO’s sophisticated data analytics found a range of unsupported claims in 2018, including:

• When the ATO asked a taxpayer to provide the logbook to support a claim of $4,800, they found the taxpayer was referring to a car service logbook rather than a logbook kept for calculating their work use car percentage (the taxpayer had not undertaken any work-related car travel during the year).
• Another claim was flagged by the ATO's analytics indicating a taxpayer, a retail worker, had incorrectly claimed $350 for the cost of public transport to and from work.
• The ATO also identified an office worker claiming $3,300 for 5000 kilometres of work-related travel using the cents per kilometre method, but it turned out the taxpayer's claim was based on trips he made from home to work.

Editor: Our advice (as always) is that you should expect your employer will be contacted in the event of an ATO audit – if these questions asked by them may cost you your job, you really should reconsider the basis of your tax deductions. Ask the team here at Lidgerwoods if you have any doubt at all. 

ATO Data Matching Program: HELP, VSL and/or TSL debts

The ATO is conducting a data matching program for the 2019/20, 2020/21 and 2021/22 financial years to identify individuals with an existing Higher Education Loan Program ('HELP'), Vocational Education and Training Student Loan ('VSL') and/or Trade Support Loans ('TSL') debt who may not be meeting their registration, lodgment and/or payment obligations.

This data collection is expected to involve approximately 3 million individuals each year.

Editor: The ATO is actively pursuing students who in the past accumulated these debts (considered government subsidised education)

Reporting asset disposals for CGT

As the ATO's data-matching capabilities increase, they are paying close attention to capital gains made on shares, property and cryptocurrency.

Editor: Therefore, it's important to let us know about any asset disposals (which can include an asset's sale, loss or destruction) and to keep records relating to CGT events, including asset disposals, for at least five years after the year in which the event occurred (and maybe longer if you make a capital loss).  Good records will also help to work out a capital gain or loss correctly.

 Accountancy Insurance service was recently sent to all existing clients inviting them to be covered for professional fees to defend or assist in cases found by the ATO or other government departments, for various audits or matching situations such as these above.  If you’d like to be covered, you can simply pay the client acceptance form we recently sent you, or if you’d like to know more about this policy and how it works, please contact Kylie at our office.

"Outrageous" deductions rejected

The ATO has published some of the most unusual claims that they disallowed last financial year.

Nearly 700,000 taxpayers claimed almost $2 billion of ‘other’ expenses, but the ATO's systematic review of claims had found, and disallowed, some very unusual expenses, including:

• claims for Lego sets bought as gifts for children, and sporting equipment or membership fees for their child athletes;
• claims for dental expenses ("believing a nice smile was essential to finding a job");
• some taxpayers tried to claim the purchase of a brand new car (in excess of $20,000 each!), with one "particularly charitable" taxpayer trying to claim for a car purchased as a gift for their mother;
• one taxpayer made a claim for "the cost of raising twins", while another claimed for the "cost of raising three children" (and another taxpayer was obviously shocked at the cost of having children, simply stating "Newborn baby expensive" when making their claim);
• other taxpayers claimed child support payments, private school fees, school uniforms, before school care and other school expenses, as well as health insurance costs and medical expenses; and
• one taxpayer decided to claim the cost of their wedding reception.

The ‘other’ deductions section of the tax return is for expenses incurred in earning income that don’t appear elsewhere on the return — such as income protection and sickness insurance premiums.

The ATO is reminding taxpayers that, in order to claim an ‘other’ deduction, the expenses must be directly related to earning income and they need to have a receipt or record of the expense.

Editor: We think the above cases speak for themselves!

$30,000 instant asset write-off

The ATO is reminding businesses that are looking to expand or improve their business and thinking of buying new or second hand assets, that small to medium sized businesses with a turnover up to $50 million are eligible for the instant asset write-off.

This now applies to assets that cost up to $30,000 and which were purchased and first used or installed ready for use from 7:30pm (AEDT) on 2 April 2019 to 30 June 2020.  Small to Medium sized businesses may purchase and claim a deduction for each asset that costs less than the $30,000 threshold. For assets over $30,000 the general depreciation rules apply (which may depend on the entity).

Editor: The $30K asset limit for immediate write-off remains in place until 30th June 2020, and remember that this claim is only useful to you if your business has sufficient profits to warrant claiming any asset purchases 100% in the first year.

Auskey’s OUT – myGovID IN

From 1 April 2020 myGovID and RAM will replace AUSkey and Manage ABN Connections (your ABN connected to your myGov account) providing secure, simple and flexible access to government online services.

To continue using the ATO business portal you will need to download the myGovID app from the App Store or Google Play on a smart device.

Editor: If you use an AUSkey now to access the ATO online systems or lodge your own Activity Statements, you will need to register for a myGovID soon.
For more detail see the following link: https://www.ato.gov.au/General/Gen/myGovID/

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.

Lastly we welcome your feedback.  If you found this E-Newsletter very useful (or not?),
we’d appreciate your feedback either way.

'The Team' at Lidgerwoods Accountants