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13/07/15 Net medical expenses tax offset (making it clear) - an audio guide transcript

Audio guide transcript Jenny Welcome to your audio guide on Net medical expenses tax offset – an overview from the Australian Taxation Office (ATO). This recording lasts approximately five minutes We’re here today to talk about changes to the net medical expenses tax offset that may impact some taxpayers this tax time. Click here to view the transcript.

Jenny: Welcome David.
David: Thanks Jenny
Jenny: What are net medical expenses?
David: Net medical expenses are your total medical expenses minus any payment from Medicare and private health insurers. The net medical expenses tax offset is being phased out and not all taxpayers will be eligible to claim the offset this year. So which taxpayers are eligible?
To be eligible to claim, you must have either received the offset in your 2013–14 income tax assessment, or paid for medical expenses for disability aids, attendant care or aged care.

Jenny: Anyone who received the offset last year can claim it again this year, is that right?
David: That’s right. If you received the offset in 2013–14, you can claim again this year and there is no change to the types of net medical expenses that you can claim.
If you are not sure if you received the offset, check your 2013-14 notice of assessment. Any offset you received for that year will be listed there.

Jenny: What if you didn’t receive the net medical expenses tax offset last year?
David: If you didn’t receive the offset last year, then you can only claim for out-of-pocket medical expenses relating to disability aids, attendant care or aged care.
These expenses can continue to be claimed each year until 30 June 2019.

Jenny: Can you tell us more about the eligible expenses starting with disability aids?
David: Sure, disability aids include items generally recognised to be, an aid to the function or capacity of a person with a disability. They generally do not include ordinary household or commercial appliances.
For example, the purchase of a wheelchair or the maintenance of a guide dog are eligible disability aids as they help a person’s daily living activities or provide assistance to alleviate the effect of the disability.
However, the purchase of a home air conditioner, although it may relieve discomfort, is not an eligible medical expense as it is not specifically manufactured as an aid for a person with a disability.

Jenny: Thanks for that. What about attendant care?
David: Attendant care expenses relate to services and care provided to a person with a disability who needs personal assistance for daily living but who is still able to manage living in the community and either lives in their own home or in rental accommodation.
Care includes personal assistance, home nursing, home maintenance, and domestic services.
For example, if a person with an acquired brain injury pays for an attendant to come to their home to assist with grooming, clothing and feeding activities during the day that would be considered attendant care and eligible for the net medical expenses tax offset.

Jenny: Finally, can you tell us more about aged care expenses?
David: Aged care expenses relate to services, or accommodation and services, provided by an approved aged care provider to a person who cannot maintain himself or herself independently.
Jenny: Thank you David for the update. What if someone wanted more information?
David: More information on the changes to the net medical expenses tax offset can be found at https://www.ato.gov.au/individuals/income-and-deductions/offsets-and-rebates/. Or for advice on your specific circumstances, call the ATO on 13 28 61 during business hours.

This information was provided to you by the Australian Taxation Office. We are committed to providing you with advice and information you can rely on. The information in this recording was current at June 2015. Your narrators were David Tradinic and Jenny Seedsman.

This concludes the recording.

 

10/07/15 Company tax rate cut only for small companies which are carrying on a business

Some of the media reporting of the Federal Budget may be giving clients the impression that the new 28.5% rate will apply to all small companies. Click here to read more

CA ANZ checked with Treasury officials and we received confirmation that only those companies which satisfy a small business definition qualify. A family company which merely holds passive investments does not qualify and will continue to pay tax at 30%.

Although we have yet to see the enabling legislation, it appears that existing guidance and legislative concepts (e.g. what is meant by carrying on a business, aggregation rules for determining turnover etc) will apply. See for example, guidance on the CGT small business relief. There may also be problems arising with small multi-purpose companies.

 

1/07/15 Holiday homes

Holiday homes that you do not rent out: If you own a holiday home and do not rent out the property, you do not include anything in your tax return until you sell it. Holiday homes that you rent out: If you rent out your holiday home, you can claim expenses for the property based on the proportion of the income year it was rented out or was genuinely available for rent. Click here to read more

Holiday homes that you do not rent out

If you own a holiday home and do not rent out the property, you do not include anything in your tax return until you sell it.

You will have to keep records from the time you purchase the property until the time you sell it to be able to work out the capital gain or loss when you sell.

Holiday homes that you rent out

The principles that apply to a rental property also apply to a holiday home if it is rented out.
If you rent out your holiday home, you can claim expenses for the property based on the proportion of the income year it was rented out or was genuinely available for rent.
You have to apportion your expenses if the property is – used:

  • for private purposes for part of the year – such as when you use it yourself, or allow your family, relatives or friends to use it free of charge
  • by family or friends for part of the year and you charge them less than market rent.

Holiday homes that are not genuinely available for rent

Factors that may indicate a property is not genuinely available for rent include:

  • it is advertised in ways that limit its exposure to potential tenants – for example, the property is only advertised
    • at your workplace
    • by word of mouth
    • outside annual holiday periods when the likelihood of it being rented out is very low
  • the location, condition of the property, or accessibility to the property, mean that it is unlikely tenants will seek to rent it
  • you place unreasonable or stringent conditions on renting out the property that restrict the likelihood of the property being rented out – such as
    • setting the rent above the rate of comparable properties in the area
    • placing a combination of restrictions on renting out the property – such as requiring prospective tenants to provide references for short holiday stays and having conditions like "no children" and "no pets".
  • you refuse to rent out the property to interested people without adequate reasons.
    These factors generally indicate the owner does not have a genuine intention to make income from the property and may be reserving it for private use.

Further information and examples are available here

 

5/05/2015 Did you know?

For most high- net-worth individuals, tax arrangements relating to capital gains, negative gearing and the family home are likely to have more impact on the achievement and maintenance of wealth than superannuation tax concessions. Click here to read more

Mythbusting superannuation tax concessions

This paper busts some of the key myths regarding superannuation tax concessions.

Source: ASFA’s Mythbusting superannuation tax concessions - March 2015

 

27/04/2015 ATO's Data matching protocols

Matching external data with their own helps ATO to ensure that people and businesses comply with their tax and super tax obligations. It also helps ATO to detect fraud against the Commonwealth. Click here to read more

ATO are required to comply with strict laws to protect your privacy when they collect data from other agencies and organisations for their data matching programs. These laws include the Privacy Act 1988, the secrecy provisions of the Income Tax Assessment Act 1936, the Taxation Administration Act 1953 and other tax laws.

ATO also adhere to the Privacy Commissioner's Guidelines on Data Matching in Australian Government Administration by preparing and publishing a protocol for each of their data matching programs. In broad terms, each protocol explains the purpose of the program, what data is collected, which agencies or organisations will be providing the data and how the data will be used.

To view the ATO's current data matching protocols click here.

 

9/04/2015 Small business benchmarks updated with 2012–13 data

The small business benchmarks with 2012–13 income and activity statement data are now available. Click here to read more

Benchmarks can help you by:

  • comparing how you are performing against similar businesses in your industry
  • identifying where adjustments can be made to costs and expenses to improve business performance
  • acting as a guide for new businesses when they are starting up

Get it done

If you fall outside your benchmark, check that your business is correctly registered and you are not grouping multiple businesses. To correct this:

Find out more

 

30/02/2015 Eligibility for net medical expenses tax offset

The net medical expenses tax offset (NMETO) is being phased out. To be eligible for the NMETO for 2014–15, you must have received an amount of the tax offset in both 2012–13 and 2013–14 income tax assessments. Click here to read more

The eligibility rule for the NMETO does not apply to those with out-of-pocket medical expenses relating to disability aids, attendant care and aged care. These expenses can continue to be claimed until 30 June 2019 in the Total net medical expenses label.

Meaning of 'received'

‘Received’ means that your must have had an amount of NMETO greater than zero shown on your notice of assessment, refer to subsection 159P(1C) of the Income Tax Assessment Act 1936.

Zero NMETO

If your 2012–13 notice of assessment shows an amount of zero for NMETO you wouldn't have received this offset in your income tax assessment and so are not eligible to make a claim in 2013–14 or 2014–15.

Example

Section 63-10 of the Income Tax Assessment Act 1997 requires tax offsets against gross tax to be applied in a priority order. This means that tax offsets including the seniors and pensioners tax offset and the low-income tax offset must be applied before NMETO or other non-refundable tax offsets are considered.

 

11/02/2015 GST – avoiding common errors

In this factsheet we outline how to avoid common errors that may occur when completing your activity statement, accounting for GST and claiming GST credits. Our research shows that the majority of errors are made by small to medium businesses. Click here to read more

Avoid common errors when completing your activity statement

Errors sometimes occur when you fill out your activity statement. To complete your activity statement correctly and ensure any refund due is processed quickly, remember to:

  • check that your purchases and sales are reported in the correct tax period
    • if you report on a non-cash basis, you account for the GST payable on the sales you make in the tax period in which you issue a tax invoice or receive full or part payment (including deposits), whichever happens first
  • reconcile the figures on your activity statements with your accounting records prepared for your income tax return
  • report all of your relevant transactions at the appropriate label on your activity statement
  • lodge your activity statement even if you have nothing to report, you can phone 13 72 26 and use ATO automated service to lodge a nil return
  • leave boxes blank if they do not apply to you, but if a box does apply and you have nothing to report use a zero
  • lodge your activity statement through our Business Portal as you will be prompted to correct many simple errors and you may get an extra two weeks to lodge, see Lodge and transact using the Business Portal
  • check that you are using the correct accounting method
  • only complete the boxes that are relevant to you
  • if you are paying your GST by instalments and want to vary your instalment amount provide your estimated net GST for the year and the varied amount payable for the quarter and show the correct reason code for varying your instalments, see How do you vary your instalment amount?
  • review your activity statement before lodging and check the amount calculated equals what you expect to pay or receive
  • If you lodge a paper activity statement:
    • lodge your original activity statement with us, as we will not accept copies of your statement
    • only use a black pen and provide a contact name, daytime phone number, sign and date your activity statement before you lodge it
    • round down to whole dollars and leave the cents out.

 

9/02/2015 Payments to businesses that do not quote an ABN

If you have withheld from supplier businesses that did not quote their ABN to you, you need to report these amounts. You must lodge this report by 31 October each year. You don't have to send ATO copies of payment summaries you give to suppliers, but you must keep copies for your records. Click here to read more

You must provide the supplier businesses with a PAYG payment summary when the payment is made, or as soon as practicable after the payment is made. Refer to PAYG payment summary - withholding where ABN not quoted guidelines.

How to lodge

Online

You can lodge online through the Business Portal or directly from your software if it is Standard Business Reporting (SBR) enabled.
To lodge via the Business Portal, you need:

  • an AUSkey
  • accounting software that meets our specifications.

To lodge online using SBR you need:

  • an AUSkey
  • SBR-enabled software.

Electronic media

You can lodge on electronic storage media (such as a CD-ROM, DVD or USB drive) that you mail to the ATO

Mail the form PAYG withholding where ABN not quoted - annual report.

Building and construction industry

If you're in the building and construction industry and you paid contractors for building and construction services, any amounts you withheld because a contractor did not quote an ABN can be reported in the Taxable payments annual report instead of the PAYG withholding where ABN not quoted - annual report. The Taxable payments annual report is due by 28 August.

 

4/02/2015 Tips to start your business journey

Did you resolve to start a business this year? Starting a business is an exciting time and with the right preparation your start can be a smooth one. Click here to read more

Before deciding which business structure to use, we recommend you seek advice from a professional business adviser – for example, a lawyer or an accountant.

Tip: Registering a company creates a new legal entity that has the same rights as a natural person, including the ability to incur debt, sue and be sued.

Tip: Running a business as a sole trader, partnership or trust is simpler, but means any debts the business might accrue will be incurred by the business holder.

 

2/02/2015 STOP PRESS: Prime Minister’s address to the National Press Club

Tony Abbott delivered his first address as Prime Minister to the National Press Club on the 2nd February 2015.
Click here to read more

The following tax-related measures were announced as part of the Prime Minister’s speech:

  1. Paid Parental Leave Scheme
    The more generous Paid Parental Leave (PPL) scheme will not proceed. The proposed PPL will be scaled back and re-targeted in a Families package focused on childcare. Small company tax rate cut
  2. A small business company tax rate cut
    From 1 July 2015 of at least the 1.5% cut already announced will be a central measure of the small business and jobs package.
  3. Goods and Services Tax (GST)
    The base and rate of GST will not and cannot change this term or next unless all of the States and Territories agree. There must also be political consensus at the federal level. The Tax Reform White paper process will provide a platform for GST changes to be debated.

 

 

 

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