And why do I need to know them?

Have you been in the situation where you’re working at your job, and you start a business on the side, you make a loss in that business and your accountant tells you that you can’t claim it?

This may be because you don’t meet the non-commercial loss rules.

The rules were introduced to ensure that only genuine business operators benefit from any losses they incur, and provided a counter-act to the number of taxpayers who were operating “hobbies” but  trying to claim them as a business.

If you make a loss in your business operation (this is any business, not just a part time business as I referred to above), there are some questions that need answering in order to determine if the loss is claimable in the relevant year, or does it need to be carried forward.

Each of the questions to be asked must be applied to the specific circumstances, and so I won’t go into them here – safe to say, if you run a business and have incurred a loss for the year, get The Tax Chic to help you determine if the ATO will consider it a commercial or non-commercial loss!

Regards

From 1 July, 2015 (ie: the 2015/16 financial year just ended), an individual will be eligible to a 5% discount, as a non-refundable tax offset, for an income year when the individual is a small business entity sole trader or an individual’s income includes a share of the net income of a non-incorporated small business entity such as a partnership or trust.

This measure was introduced to match the reduction in the company tax rate, and of course there are some rules that go with it.

The sole trader or small business entity must have carried on a business during the year and have a turnover (sales) of less than $2 million (this amount will need to be annualised for any business that commences or ceases during the year – I can help you with this!)

There is a special calculation for calculating this discount (or offset, as is the more official terminology…) but I won’t bore you with that here…you just need to know that it is limited to $1,000 and cannot be applied against the tax payable on wages or investment income (including dividends received from a small business entity company).

If you think this might apply to you, make sure you get The Tax Chic to complete your tax return, simply Contact me on how to do so.

Regards

In broad terms the Medicare levy surcharge applies to individuals who do not have adequate private health hospital insurance to cover themselves and their dependents and their income exceeds the relevant thresholds.

But there are a few things to consider to ensure you meet your obligations and are in fact exempt from the surcharge:

• an adequate private health insurance policy must include cover for hospital and not just ancillary (or extras)
• any excess payable on hospital admission must not exceed $500 for a one-person policy, or more than $1,000 for all other policies
• if you are a Defence Force member and have dependents (including a spouse) you should review your circumstances as only a member can be entitled to full free medical treatment, and the exemption from the Medicare levy surcharge does not extend to the spouse
• spouses with separate finances should review their circumstances, particularly when one spouse has adequate private health hospital insurance and the other spouse does not
• taxpayers who separate or divorce may also find themselves under scrutiny in regards to the Medicare levy surcharge

Information can be found on the ATO website, or contact me to discuss.

Regards

It’s finally here, the Australian Taxation Office (ATO) have released a fact sheet titled “Online selling – hobby or business?”

The ATO, of course, are looking for taxpayers who may not be meeting their tax obligations in relation to their online selling activities and so the fact sheet aims to address some of the factors to be considered in making a determination about this.

These key factors include:

• whether the taxpayer has paid for an online presence
• whether the taxpayer’s main intention is to make a profit from online selling
• whether the taxpayer’s selling activities are repetitive
• whether the taxpayer manages their online selling activities as a business

It’s been suggested that the ATO may consider a taxpayer with an online sales value of $10,000 or more to be in business, unless the taxpayer can prove otherwise – so it pays to be sure!

To review these factors in more details and specifically address your personal circumstances, contact The Tax Chic for a 90 minute consultation – RRP $275, current investment just $220 (expires 31st August, 2016)

Regards