2010/11 Claims for deductions
Receipts for deductions
Individual Tax Return Car claims and log books
Car record keeping
Checklist Please review the information below
and contact our office if you need
Tax saving strategies prior to 1 July 2011
WARNING: Accelerating tax claims
A good strategy to reduce tax payable is normally to accelerate any income tax deductions into the current
income year. However, clients should remember that tax rates are effectively being increased for the next
income year due to the imposition of the flood levy on individuals earning more than $50,000.
The tax rates for resident individual taxpayers for the 2010/2011 income year are as follows:
Income threshold Tax payable
0 – $6,000 Nil
$6,001 – $37,000 Nil + 15% of excess over $6,000
$37,001 – $80,000 $4,650 + 30% of excess over $37,000
$80,001 – $180,000 $17,550 + 37% of excess over $80,000
$180,001 and over $54,550 + 45% of excess over $180,000
Note: The Medicare levy is in addition to these rates.
In the 2011/12 income year, the Flood levy will impose an additional 0.5% levy on taxable incomes from
$50,001 to $100,000 and 1% above $100,000.
Common work-related claims books and trade journals;
made by individuals briefcases/luggage or suitcases;
The following outlines common types of calculators, electronic organisers;
deductible expenses claimed by individual
taxpayers, such as employees and rental
property owners, plus some strategies that stationery;
can be adopted to increase deductions for the tools of trade.
2010/2011 income year.
2. Clothing expenses
1. Depreciable plant, etc, costing $300 or less
Purchase or pay for work-related clothing expenses
Salary and wage earners and rental property
prior to the end of the income year, such as:
owners will generally be entitled to an immediate
deduction if plant costing $300 or less is purchased q compulsory (or non-compulsory and
before 1 July 2011. registered) uniforms, and occupation
Some purchases you may consider include: specific and protective clothing;
fax machines; q other expenses associated with such
work-related clothing such as dry cleaning,
beepers and pagers; laundry and repair expenses.
2011 Individual Tax Return Checklist
3. Self education expenses Deductions (in addition to those mentioned
Consider pre-paying the following self education
items before the end of the income year: u award transport allowance claims;
u bank and government charges on deposits
u course fees (but not HECS-HELP fees),
of income, and deductible expenditure;
student union fees, and tutorial fees;
u bridge/road tolls (travelling on business);
u interest on borrowings used to pay for any
u parking (when travelling on business);
deductible self education expenses.
u conventions, conferences and seminars;
Also bring forward purchases of stationery and
text books (i.e., those which are not required to u depreciation of library, tools, business
be depreciated). equipment, incl. portion of home computer;
u gifts or donations;
4. Other work-related expenses
u home office running expenses:
Employees can prepay any of the following cleaning
expenses prior to 1 July 2011:
cooling and heating
union fees; depreciation of office furniture
subscriptions to trade, professional or lighting
business associations; telephone;
magazine and newspaper subscriptions; u interest and dividend deductions:
account keeping fees
seminars and conferences;
ongoing management fees
income protection insurance (excluding
interest on borrowings to acquire shares
death and total/permanent disability).
advice relating to changing investments
Note: When prepaying any of the expenses above (but not setting them up);
before 1 July 2011, ensure that any services are
to be provided within a 12 month period that ends u interest on loans to purchase equipment or
before 1 July 2012. Otherwise, the deductions must income earning investments;
be claimed over the period of the prepayment. u motor vehicle expenses (business/work
Information Required u overtime meal allowances;
We will need you to bring information to assist us u rental property expenses – including:
in preparing your income tax return. advertising expenses
Please check the following and bring along payment council/water rates
summaries, statements, accounts, receipts, etc., insurance
to help us prepare the return:
Income/Receipts land tax
q payment summaries for salary and wages; legal expenses/management fees
genuine repairs and maintenance
q lump sum and termination payments;
q government pensions and allowances;
travelling to inspect property;
q other pensions and/or annuities;
u superannuation contributions by sole traders
q allowances (e.g., entertainment, car, tools); or substantially unsupported taxpayers;
q interest, rent and dividends; u sun protection items;
q distributions from partnerships or trusts; u agent fees;
q details of any assets sold that were either u telephone expenses (business);
used for income earning purposes or which
may be caught by capital gains tax. u tools of trade.
2010/2011 Year-end Checklist
Many of our business clients like to review their tax position at the end of the financial year and evaluate
any year-end strategies that may be available to legitimately reduce their tax. Traditionally, year-end tax
planning for small businesses is based around two simple concepts – i.e., accelerating business deductions
and deferring income.
However, Small Business Entities (SBEs) have greater access to year-end tax planning due to particular
concessions that only apply to them. The SBE system replaced the previous Simplified Tax System ("STS")
on 1 July 2007. Taxpayers that qualify as an SBE can pick and choose which of the concessions they
wish to use each year (although restrictions still remain in relation to the SBE depreciation rules). The
basic requirement to be eligible for the SBE concessions is that the business taxpayer's annual turnover
(including that of some related entities) is less than $2 million.
The following are a number of areas that may be considered for all business taxpayers.
Maximising deductions for Accelerating expenditure – non-SBE
non-SBE taxpayers This is where a business taxpayer brings forward
Non-SBE business taxpayers should endeavour the expenditure on regular, on-going deductible
to maximise deductions by adopting one or more items. Business taxpayers are generally entitled
of the following strategies: to deductions on an "incurred basis".
Prepayment strategies; Therefore, there is no requirement for the expense
to be paid by 30 June 2011. As long as the expense
Accelerating expenditure; and has genuinely been incurred, it will generally be
Accrued expenditure. deductible.
Prepayment strategies – non-SBE The following may act as a checklist of possible
Any part of the prepayment relating to the period accelerated expenditure:
up to 30 June is deductible in full. q Depreciating assets costing $100 or less can
In addition, non-SBE taxpayers may generally claim be written off in the year of purchase.
the following prepayments in full: Depreciating assets costing less than $1,000
can be allocated to a low value pool and de-
– expenditure under $1,000; preciated at 18.75% (which is half of the full
– salary and wages; or rate of 37.5%) in their first year regardless of
the date of purchase.
– expenditure required to be incurred under
law. q Repairs – repairs to office premises, equip-
ment, cars or other business items.
Editor: Prepayments can be a little confusing, so
q Consumables/spare parts.
before you commit to making a payment please
feel free to call us with any queries or assistance q Client gifts.
if required. q Donations.
2011 Year-end Checklist for Business
q Advertising. Accelerating expenditure – SBE
q Fringe benefits – any benefits to be provided, Former STS taxpayers who have continued to use
such as property benefits, could be purchased the STS cash method since before 1 July 2005 and
and provided prior to 30 June 2011. who qualify as an SBE are generally only entitled
q Superannuation – contributions to a to deductions if they have paid the amount by 30
complying superannuation fund, to the extent June. This includes general deductions, tax-related
contributions are actually made (i.e., they expenses, and repairs.
cannot be accrued).
All SBE taxpayers can choose to write-off
Note that, since 1 July 2007, no limit applies depreciable assets costing less than $1,000 in the
to the amount of tax-deductible contributions year of purchase. Also, assets costing $1,000 or
an employer can make for an employee. more with an effective life of less than 25 years can
However, an employee who receives be depreciated at 15% (which is half the full rate
employer contributions in excess of their own of 30%) in their first year (note that, if such assets
concessional contributions cap may have to were acquired between 13 December 2008 and
pay more tax. 31 December 2009 and then installed ready for
use between 1 July 2010 and 31 December 2010,
Accrued expenditure – non-SBE the SBE may also be entitled to an additional 50%
Non-SBE taxpayers (and some SBE taxpayers) deduction in the 2010/11 income year).
are entitled to a deduction for expenses incurred Therefore, where appropriate, SBE business
as at 30 June 2011, even if they have not yet been taxpayers should consider purchasing/installing
paid. these items by 30 June 2011.
The following expenses may be accrued: Note: SBE taxpayers choosing to use the SBE
u Salary or wages and bonuses – the accrued depreciation rules are effectively 'locked in' to using
expense for the days that employees have those rules for all of their depreciable assets.
worked but have not been paid as at 30 June
Prepayment strategies – SBE
SBE taxpayers making prepayments before 1 July
u Interest – any accrued interest outstanding 2011 can choose to claim a full deduction in the
on a business loan that has not been paid as year of payment where they cover a period of no
at 30 June 2011. more than 12 months (ending before 1 July 2012).
u Commercial bills – the discount applicable Otherwise, the prepayment rules are the same as
to the period up to 30 June, where the term for non-SBE taxpayers.
of the bill extends past 30 June 2011. The kinds of expenses that may be prepaid
u Commissions – where employees or other
external parties are owed commission q Rent on business premises or equipment.
payments. q Lease payments on business items such as
cars and office equipment.
u Fringe benefits tax – if an FBT instalment is
due for the June 2011 quarter for example, but q Interest – check with your financier to
not payable until July, it can be accrued and determine if it’s possible to prepay up to 12
claimed as a tax deduction in the 2011 income months interest in advance.
year. q Business trips.
u Directors’ fees – where a company is q Training courses that run on or after 1 July
definitively committed to the payment of a 2011.
director’s fee as at 30 June 2011, it can be q Business subscriptions.
claimed as a tax deduction.
Maximising deductions for
We will need you to bring the following information
Deductions can be maximised for SBE business
to help us prepare your income tax return:
taxpayers by accelerating expenditure and
prepaying deductible business expenses. Former q Stocktake details as at 30 June.
STS taxpayers who have continued to use the q Debtors listing (including a list of bad debts
STS cash method since before 1 July 2005 cannot written off) as at 30 June. Note: In order to
accrue expenses, but other SBE taxpayers on an claim a deduction, the debt must be written
accruals basis can accrue expenses (see above off on or before 30 June.
for accruing expenditure). q Creditors listing as at 30 June.