Setting yourself up for Success



As any successful person will honestly admit, failure happens, and we've all had our fair share of it. Yet from each failure, we can learn two equally valuable lessons. One that there was at least one reason we failed; and two is that we can rebound from that failure.

So, why do we fail? And how do we fix it?

According to Shiv Khera, author of You Can Win, failures most often occur for one of seven reasons. And Harvey Mackay, best-selling author and business speaker, says each one can teach us something valuable, can show us how to avoid falling back into the same hole.

Here are the most common failure-causing problems and their solutions:

1. Lack of Persistence

More people fail not because they lack knowledge or talent but because they just quit. It's important to remember two words: persistence and resistance. Persist in what must be done and resist what ought not to be done.

Try new approaches. Persistence is important, but repeating the same actions over and over again, hoping that this time you'll succeed, probably won't get you any closer to your objective. Look at your previous unsuccessful efforts and decide what to change. Keep making adjustments and midcourse corrections, using your experience as a guide.

2. Lack of Conviction

People who lack conviction take the middle of the road. But what happens in the middle of the road? You get run over. People without conviction go along to get along because they lack confidence and courage. They conform in order to get accepted, even when they know that what they are doing is wrong.

Decide what is important to you. If something is worth doing, it's worth doing right and doing well. Let your passion show even in mundane tasks. It's OK to collaborate and cooperate for success, but it's not OK to compromise your values-ever.

3. Rationalization

Winners might analyze, but they never rationalize. Losers rationalize and have a book full of excuses to tell you why they couldn't succeed.

Change your perspective. Don't think of every unsuccessful attempt as a failure. Few people succeed at everything the first time. Most of us attain our goals only through repeated effort. Do your best to learn everything you can about what happened and why.

4. Dismissal of Past Mistakes

Some people live and learn, and some only live. Failure is a teacher if we have the right attitude. Wise people learn from their mistakes-experience is the name they give to slipups.

Define the problem better. Analyse the situation-what you want to achieve, what your strategy is, why it didn't work. Are you really viewing the problem correctly? If you need money, you have more options than increasing revenue. You could also cut expenses. Think about what you're really trying to do.

5. Lack of Discipline

Anyone who has accomplished anything worthwhile has never done it without discipline. Discipline takes self-control, sacrifice and avoiding distractions and temptations. It means staying focused.

Don't be a perfectionist. You might have an idealized vision of what success will look and feel like. Although that can be motivational, it might not be realistic. Succeeding at one goal won't eliminate all your problems. Be clear on what will satisfy your objectives and don't obsess about superficial details.

6. Poor Self-Esteem

Poor self-esteem is a lack of self-respect and self-worth. People with low self-confidence are constantly trying to find themselves rather than creating the person they want to be.

Don't label yourself. You might have failed, but you're not a failure until you stop trying. Think of yourself as someone still striving toward a goal, and you'll be better able to maintain your patience and perseverance for the long haul.

7. Fatalistic Attitude

A fatalistic attitude prevents people from accepting responsibility for their position in life. They attribute success and failure to luck. They resign themselves to their fate, regardless of their efforts, that whatever has to happen will happen anyway.

Look in the mirror every day and say, I am in charge. You might not have control over every phase of your life, but you have more control than you realize, and you are responsible for your own happiness and success. Your attitude determines your altitude, and you can turn "down and out" into "up and at 'em."

Editor's note: The above is intended to be a helpful guide in the absence of other contributing factors such as mental illness, severe disability, cognitive dysfunction.

 

Confusion over personal income tax changes



So, what are you really entitled to?

The recent income tax cuts that passed through Parliament do not mean everyone automatically gets $1,080 back from the Government as soon as they lodge their income tax return. The Australian Taxation Office (ATO) has been inundated with calls from taxpayers wanting to know where their money is and how they can access the $1,080 they now believe is owing to them.

The first thing to remember is that this is a tax offset; you need to owe tax to offset the tax.

And, if you owe tax, the offset will be first used to reduce the tax you owe. It is not a cash back – a point the ATO is at pains to point out stating on its website that, "It doesn't mean that you will get an extra $1,080 in your tax return."

From 1 July 2018, a low and middle income tax offset (LMITO), first introduced in the 2018-19 Federal Budget, provides a tax benefit to those with taxable incomes below $125,333. Recent changes increase the LMITO from a maximum of $530 to $1,080 and the base amount from $200 to $255, and make it applicable to a greater number of taxpayers by increasing the threshold from $125,333 to $126,000.

  

The offset applies for a limited time. In this case, the offset applies to the 2018-19, 2019-20, 2020-21 and 2021-22 income years. So, if you are eligible to receive the offset, it applies to the taxable income you earned last financial year (2018-19) and you will receive any offset owing once you have lodged your tax return.

 

Taxable income*

Offset minimum

Offset maximum

<$37,000

$255

$255

>$37,000 - <$48,000**

$255

$1,080

>$48,000 - <$90,000

 

$1,080

>$90,000 - <$126,000***

 

$1,080

$126,000+

$0

$0

 * Your taxable income is the income you earn less any deductions you claim - not your salary.

** offset entitlement is $255, plus 7.5% of the excess to a maximum of $1,080.

*** offset entitlement is $1,080, less 3% of the excess on taxable income above $90,000.

 

If you earned taxable income in 2018-19 of: 

  •   Less than $21,885, while you have an entitlement to LMITO of $255, you do not pay personal income tax and therefore cannot utilise the offset.
  •   $45,000, you will receive a tax reduction of $855 ($255 plus 7.5% on every dollar between $37,000 and $45,000, in this case $8,000). You may also be eligible for the low income   tax offset (LITO), see below.
  •  $85,000, you will receive a tax reduction of $1,080.

 

The LMITO is in addition to the existing low income tax offset (LITO). The LITO is available to those with taxable income of less than $66,667. The maximum offset is $445 for those with taxable incomes of $37,000 or less. Any amount you earn above $37,000 up to the threshold of $66,667 reduces the offset by 1.5%. Once again, the LITO is a tax offset to reduce the amount of tax you pay. If you do not pay personal income tax, you do not receive the offset as a cash refund.

Still need more information?  See our article http://www.clarkemcewan.com.au/clarke_mcewan_articles/tax-cuts-pass-in-parliament

#taxcuts #clarkemcewan #incometaxoffset #taxableincome #taxrefund #notataxrefund

Scammers use commonly available software to trap unwary taxpayers



On the second morning of school holidays, principal Michelle Wilson was just starting to wind down after a busy term when she received a phone call that would lead to a "nightmare" two hours.

Ms Wilson, from Buninyong in central Victoria, had been due to meet her accountant to sort out this year's tax return, and the caller told her he was from the Australian Taxation Office (ATO). 

The man said an audit had shown she was $8,000 in arrears, and the tax office had been trying to contact her by registered mail, which he said she had ignored. He knew her name, occupation and tax file number and she had seen media reporting that the tax office would be targeting her profession this year.

"He started to say that in recent years I had over-claimed on my tax refund and that in an audit of tax refunds, mine had come out and I owed the ATO money," Ms Wilson said.

But she was still sceptical, so she told the caller her accountant - who she named - had not raised any issues with her.

"He rang the accountant and there was a three-way conference," she said.

A person claiming to be a staff member from the accountant's office came onto the line and the real number for Ms Wilson's accountant was displayed on her phone during the call.

"From then on I wasn't allowed to hang up the phone and I had to go and access a partial payment," she said.

"They said: 'You're a government employee, do you want this in the media?'."

The phone call lasted for two hours, before she paid them a requested $1,500 in the form of a Google Play card.

"I pulled over on the road at one stage and they said: 'What are you doing? We can see where you are on Google maps'," she said.   "It took me too long to twig. I think if there'd been another adult in the house I probably would have twigged.  I just got consumed."

Ms Wilson is one of hundreds of Australians taken in by dodgy phone calls demanding payment for bogus tax debts, with a record number of more than 800 Australians fleeced of a total of $3 million in 2018 alone.

Internal tax office documents, obtained using Freedom of Information laws, noted that a "holistic" approach to tackling the problem was needed, but said authorities were hamstrung because call centres were based overseas.  But they also acknowledged there had been a significant rise in calls to Australia, after India and Canada worked together to shut down call centres targeting Canadians in October last year.

According to consumer watchdog the ACCC, notifications of the ATO impersonation scam "rose by 900 per cent in late 2018".

ATO assistant commissioner Karen Foat said the spike was temporary:  "We have seen it reduced back down again, but we still had over 16,000 reports of scams this year, and people have paid out more than $400,000 to scammers this year since January."

But Ms Foat said the ATO had recently referred the issue to the Serious Financial Crime Taskforce (SFCT) to investigate.

"Having the issue referred … is a real opportunity to work right across government to bring a whole range of fields of expertise together to more effectively combat scams into the future," she said.

"The taskforce looks at a range of threats to the Australian tax and superannuation system and so … they have determined that this is a priority area, that scams are an important and significant threat to the Australian tax and super system.

"You only need to have a look at the amount of people that were affected by this last year and the amount of money."

The conference call that makes you believe

After making the partial payment of $1,500 to the scammers, Ms Wilson walked into her accountant's office. The caller was still insisting she could not hang up.

"That's when I realised," she said.

The next day, she could not believe that she - a professional woman used to running a school - had been fooled by the scammers.

"The next morning I thought, 'I cannot believe what that last 24 hours was like'," she said.  "Was that a nightmare?

Ms Wilson said the caller slowly overcame her doubts with the bits of information he knew, before she was finally convinced when her accountant's number showed on her phone screen.

It is a tactic known as "spoofing", which the ATO identified as a serious issue it was trying to address by having thousands of calls blocked.

The scammers use commonly available software to falsely project legitimate Australian numbers on caller ID and call logs, so they can pretend to be ATO officers or third parties.

The scammers warn the recipient they have to pay a fake tax debt or face arrest, deportation or the freezing of assets, just as they did to Ms Wilson.

"If the recipient doubts authenticity, they offer to conference call in their tax agent or law enforcement agent (LEA) to substantiate the debt or arrest warrant," the documents said.

"A second scammer will be conferenced in and a second spoofed number will be projected on caller ID of either the agent or local LEA.

"Intelligence indicates the client discloses the name of their agent to the scammer rather than the scammer proactively holding this."

Stories like the one above are one of the reasons we provide strong network security at Clarke McEwan.  If you are ever in doubt of a call or email from us, please contact us immediately via a different means to have the matter clarified.  

Clarke McEwan staff will always clearly identify themselves by announcing their name. We are a small team and most likely you will know our names and have heard from us before.

If you are still in doubt, please confirm the name and the position held and explain you will now hang up and ring the office yourself instead
.
 

                                                     

Carving up your GST

Apportioning your GST obligations

For many small businesses, reporting the GST you collect after issuing tax invoices to customers can be a monthly or quarterly grind.  However if you meet the ATO's eligibility criteria, there is a way to save time and headaches by making that bookkeeping process easier.  

Splitting your expenses for GST

Many common business expenses claimed by small business owners have a private component that isn't tax deductible – like your home telephone and internet, computer and other electronic devices, vehicle purchase and running costs, and home power use.

The requirement to claim only the business use portion of an expense  in your tax returns means small business taxpayers regularly face the fiddly task of splitting their expenditure between business and private use.

And when it comes to filling in the GST section on your BAS the same goes: you can only claim GST credits for expenses used for business.

So each cost needs to be divided into their business and private components and the GST applying to each component calculated.

This can be tedious if there are lots of small monthly expenses to claim in your quarterly BAS.

Making an annual GST election

If these calculations are too time consuming, the ATO allows smaller businesses to make an 'annual private apportionment': a mouthful of a name but actually an easy process which can help streamline your BAS preparation.

By using this option where eligible, the ATO permits small businesses to simplify their accounting for business and private expenses by making an annual election to claim the full amount of GST on payments you make in your quarterly BAS and adjust it in a future activity statement.

For instance: if you pay $220 for your telephone service, $20 of the cost is GST. If your usage of the phone is 30 per cent business and 70 per cent private, you are only entitled to a GST credit of $6 (30 per cent of $20) in your BAS.

If you elect to use annual private apportionment, however, you can claim a $20 GST credit for the purchase in your next BAS. When you lodge your business's annual income tax return after the end of the financial year, you adjust your GST credit amount. This can either increase the amount of GST you pay or reduce your GST refund for the financial year.


So who's eligible for annual apportionment?

The ATO recognises how time-consuming accounting can be for small and micro business taxpayers, so eligibility for annual private apportionment focuses on them. 

To be eligible, you need:
1.  to be a small business with an annual turnover of less than $10 million, or
2.  a non-business enterprise with a GST turnover of $2 million or less.
3.  You also need to be lodging your GST reports quarterly or monthly.

Eligible businesses can choose the annual apportionment option at any time and can start at the beginning of the next tax period for which their BAS is due.

The ATO doesn't require notification that you have decided to use annual private apportionment, but the onus is on the small business to keep a record of the date it decided to commence using this option.  

Adjustment is via your BAS

The rules applying to annual private apportionment are fairly straightforward. You can use the option on all business expenses that have both a business and private component, unless the business portion of the expense relates solely to making input-taxed supplies.

When it comes to making the annual adjustment for your GST credits, this is normally done in the BAS covering the same quarterly time period as your annual income tax return is due. For example, if you claim a full GST credit in your 1 July to 30 September 2019 quarterly BAS, you make the annual adjustment in the BAS covering the tax period for the December 2020 quarter. This is because the due date for your annual income tax return for the 2019-20 financial year is 31 October 2020.

As you can see, it's complicated. If you would like help with your GST reporting requirements, call us today.



 

We live in an interesting world, don't we? Particularly if you're an investor. 

Every time the world's economic woes seem to have sorted themselves out, or we think Australia's economy is on the move again or we feel Australia's property markets seem to be steaming along nicely, a new set of challenges pop up for us as investors.

 

Some of them come from overseas – things like trade wars, terrorism and financial woes.

And some are new problems – back home.  Things like concerns about what the future holds for Australia's economy, talk of impending recession, unemployment, banks' tighter lending criteria and our property markets gyrations.  All this means is there is a heightened level of uncertainty about what the future holds.

 

After 2 years of falling property values around Australia, it looks like our markets are bottoming out – but that doesn't mean there's a property boom around the corner.

 

There's the likelihood of uncertainty ahead for some time yet, so I'd like to share 7 tips for building wealth in the current "interesting" economic times. You see, in my experience, times of economic change always create opportunities.

 

So what should an investor do? 

 

 1. Risk comes from not knowing what you're doing, so pay the price to learn what you're doing!

 

Sounds obvious I know, but many investors commit hundreds of thousands of dollars to buy a property yet have gained their property investment knowledge from attending a one day seminar or reading a book.

  

The first step for most investors should be to invest in themselves.

 

Invest in their knowledge. Get a mentor ... BUT  be careful who you learn from.  Just like in previous property cycles, currently there is a swag of new property gurus willing to take your money to teach you their new found knowledge.  Instead find a teacher who has achieved what you want to achieve, has invested through a number of cycles and has kept their wealth.

If your property investment mentor hasn't had some challenges and failures along the way, they probably haven't tried hard enough. 

 2. Adhere to a proven strategy

 

Most property investors don't have a plan or a proven strategy to adhere to.

 

In fact they spend more time planning where they're going to holiday than they do planning their financial future.

 

If you don't have an investment strategy to keep you focused, how can you hope to develop financial independence?

 

Adhering to a proven investment system will give you more predictable results, and will help you make more consistent and less emotional decisions.

 

Let's face it…it's too easy to get distracted by all the "opportunities" that keep cropping up.

 

Unfortunately many of these supposed opportunities don't work out as expected.

 

Look at many of the investors who bought off the plan or in the next "hot spot" or in mining towns, only to see the value of their properties under perform.

 

3. If you're the smartest person in your team, you're in trouble.

 

Successful investors surround themselves with a good team. This may consist of a property accountant, a proficient finance broker, a lawyer and a property strategist.

 

However, you must become your own most trusted investment advisor-no one can do it all for you.

 

Too many investors make the monumental mistake of thinking that success is a matter of choosing the right investment advisor to handle their wealth.

 

It costs them dearly!

 

No one-no one-will be able to manage your wealth like you can.

 

Yes, you need good advisors, but you need to have the sophistication to filter and use the best of your advisors.

 

This means you've got to invest the time, energy and money to master the skill of managing your own net worth.

 

4. Have Financial Buffers in Place

 

Smart investors don't only buy properties; they buy time to help them ride through the ups and downs of the property cycle. Recession Australia note money economy squeeze tighten save saving budget cut

 

After all…one thing that is certain about the times ahead is that there will be uncertainty.

 

Over the next few years we'll have some good times and some bad.

 

Some further periods of low interest rates and then they'll rise (possibly considerably).

 

We'll have some boom times and we'll probably have another recession one day.

 

Savvy investors will protect themselves by having financial buffers in place to see themselves through the difficult times.

 

5. Sometimes it's best to do nothing.

 

A great quote from Warren Buffett is:

 

 "The trick is, when there is nothing to do – do nothing."

 

Yet many investors get itchy feet and want to do more, put another deal together or buy another property.

 

There are stages in the property cycle and times in your investment journey when it is best to sit back and wait for the right opportunities because wealth is the transfer of money from the impatient to the patient.

 

6. Become an expert

 

Successful investors specialise. That's how they become successful.

 

They find something they are good at and do it over and over again, rather than moving on to the "next shiny toy".

 

Do you know a specific area and have a network of contacts that gives you information advantages?

 

Of course if you are investing in publicly traded securities you have to be wary of trading on "insider information", that is information that is not publicly available.

 

Which is one of the reasons I like investing in property; since not only do I get paid for my "insider information", but it is totally ethical and legal to trade on this privileged information!

 

Seek out your advantages?

 

What contacts, expertise, and experience do you have that you can leverage?

 

7. Treat your property investments like a business

Investing is a serious business and if done correctly can, over time, replace your personal exertion income.

 

I've seen some property investors, those who treat their investments like a business, become very, very rich by growing a multi-million dollar investment property portfolio.

 

They do this understanding "the system" and getting the right type of finance, setting up the correct ownership and asset protection structures and knowing how to legally use the taxation system to their advantage.

 

They also hold themselves accountable for their own success.

 

Here's a bonus tip…

 

If history repeats itself, and it most likely will, most people who get involved in property investment will not become financially independent.

 

Many will buy the wrong property or at the wrong time or in the wrong location.

 

Even as the property cycle moves into the next phase, most properties will not be investment grade.

 

However if you have a system, a great team of advisors, your finances organised and the right knowledge, now could be a great opportunity to buy good properties that will appreciate in value over the long term.  


In fact, now is the best time to buy counter cyclically in a decade or more.

You only get a chance to buy Sydney property 15% below what it used to cost, once or twice in your lifetime!

You only get a chance to buy Melbourne property 10% below what it used to cost, once or twice in your lifetime!

So I hope you put these 7 tips to great use in your financial life.

 

Key differences between sole traders and companies



At times we welcome new clients to Clarke McEwan who bring along their existing company that was recommended by their former accountant, yet the key differences between sole traders and companies were not fully explained to them at the time of incorporation.

Before jumping into the purchase and use of any business structure it is worth doing your research to familiarise yourself with the benefits and the responsibilities that come with adding this new entity into your business life.

This checklist will guide you through some of the key differences between starting and operating as a sole trader or a company. It covers points that people commonly misunderstand, which can affect how you run your business. 

This checklist will be most helpful if you're looking to change between a sole trader and a company business structure, or if you're a company director looking to refresh your knowledge on your legal obligations.  

To use the checklist, read the questions below. If you're aware of and understand the information, you can tick and move to the next question.

 

The points below can be ticked as you understand and move through each question. 

 

1.       Sole traders are personally liable for all financial aspects associated with their business. But do you know as a company director you may also have potential personal liabilities for the tax withheld on employee wages and super payments?

 

2.       Do you know that different tax rates apply for a sole trader compared to a company?

 

3.       Do you know that as a company director you need to lodge two income tax returns – your individual tax return and a company tax return?

 

4.       Do you know that you don't have to become a company to employ people – you can employ staff under either structure?

 

5.       Do you know that sole trader business structures have the fewest compliance costs and lowest volume of paperwork? Other structures, such as a company, have more paperwork and ongoing costs.

 

6.       Do you know that as a company director, even if you're not hands-on (e.g. a silent director) and/or you later leave the company, you're still responsible and liable for the period you were a director?

 

7.       As a company director, do you know what your obligations are to the company, its members (owners) and any creditors?

 

8.       Do you know that a company must have at least one person who is over the age of 18 and resides in Australia to act as a director?

 

9.       Do you know your legal obligations and the difference between being a company director and a company member?

 

10.   If you're running a company, do you know what to do if things go wrong, such as getting into financial difficulties?

 

11.   Do you know how to update ASIC when certain details regarding the running of your company change?

 

12.   If you want to resign as a company director, do you know what you need to do?

 

Seek professional advice from a tax professional or business adviser when choosing or changing your business structure, or becoming a company director.  We can help you make the right decision based on your individual circumstances. Clarke McEwan will carefully explain whether your business or personal circumstances warrant establishment of a company and at what stage of business growth a corporate entity might be introduced. 

Tax cuts pass in Parliament

Government's income tax cuts have been passed by the Senate

Modest tax cuts are available to millions of Australians almost immediately.  Eligible taxpayers will receive between $255 and $1,080 in tax cuts for the 2018-19 financial year, which will appear automatically in their bank accounts as part of their refund after they lodge their 2018-19 tax return. The ATO have already begun processing 2018–19 tax returns, so taxpayers eligible for the offset can expect to see the additional credits from 16 July 2019, the official date that the ATO expects to start paying refunds.

On 5 July 2019, the ATO advised that its systems will be updated once the Bill receives Royal Assent and that they will automatically include any new offset amounts taxpayers are entitled to when tax returns are processed.

Below is an ATO summary of the individual tax cuts that passed through Parliament on 4 July 2019.  

From the 2018–19 income year:

  • Increase the low and middle income tax offset from a maximum amount of $530 to $1,080 per annum and increase the base amount from $200 to $255 per annum
  • Taxpayers with a taxable income that does not exceed $37,000 will receive a low and middle income tax offset of up to $255
  • Taxpayers with a taxable income that exceeds $37,000 but is not more than $48,000 will receive $255, plus an amount equal to 7.5 per cent to the maximum offset of $1,080
  • Taxpayers with a taxable income that exceeds $48,000 but is not more than $90,000 will be eligible for the maximum low and middle income tax offset of $1,080
  • Taxpayers with a taxable income that exceeds $90,000 but is not more than $126,000 will be eligible for a low and middle income tax offset of $1,080, less an amount equal to 3 per cent of the excess.

From the 2022–23 income year:

  • The top threshold of the 19 per cent personal income tax bracket will increase from $41,000 to $45,000 such that the rate of tax on the amount of the taxable income of a resident individual that:    
    • exceeds $18,200 but is not more than $45,000 is 19 per cent
    • exceeds $45,000 but is not more than $120,000 is 32.5 per cent
    • exceeds $120,000 but is not more than $180,000 is 37 per cent
    • exceeds $180,000 is 45 per cent
  • Increase the low income tax offset (LITO) from a maximum amount of $645 to $700 per annum
  • Taxpayers with a taxable income that does not exceed $37,500 will receive a LITO of $700
  • Taxpayers with a taxable income that exceeds $37,500 but is not more than $45,000 will receive a LITO of $700, less an amount equal to 5 per cent of the excess
  • Taxpayers with a taxable income that exceeds $45,000 but is not more than $66,667 will receive a LITO of $325, less an amount equal to 1.5 per cent of the excess.

From the 2024–25 income year:

  • The 32.5 per cent marginal tax rate will reduce to 30 per cent such that for a resident individual the rate of tax on the amount of their taxable income that:    
SOURCE: 

https://www.bdo.com.au/en-au/insights/tax/technical-updates/personal-tax-cuts-pass-parliament

 

    Taxtime Tips for Small Business



    To lend a 'helping hand' to small businesses to get their tax right this Tax Time, the ATO has identified the top 3 issues they see when small businesses lodge their tax returns:

    These errors are: (1) failing to report all of their income; (2) not having the necessary records to prove small business expenses claims; and (3) claiming private expenses as business expenses (such as travel expenses).

    If you are uncertain about record keeping requirements or what qualifies as a business expense be sure you seek professional advice to avoid costly penalties at tax time.

    #travelexpenses #smallbusinessexpenses #taxclaims #taxdeductions #clarkemcewan #privatetravelexpenses

    ‘Wait a few weeks’: ATO advises clients to hold off returns



    Clients knocking on tax agents' doors for a tax return from today may be better off  waiting a few weeks, says the ATO.

     

    With around 160,000 employers now reporting through STP or "single touch payroll", covering close to 9 million taxpayers, the ATO has now recommended that taxpayers wait until their employers have finalised their income statements before filing their tax returns.

     

    STP will mean that employers are exempt from providing end-of-year payment summaries, with income statements replacing them and being made accessible through a taxpayer's myGov account or their tax agent.

     

    Employers will have until 31 July 2019 to make a finalisation declaration for the 2018–19 financial year, with that date to change to 14 July each year subsequently.

     

    "Most employers have until 31 July 2019 to finalise their employees' income statements so, we strongly encourage taxpayers to wait a few weeks before lodging their tax return," said ATO assistant commissioner Karen Foat.

     

    "If you lodge your tax return before your income statement is tax ready, your employer might make changes, and you may need to lodge an amendment. In some cases, additional tax and interest may be payable."

     

    Taxpayers who have linked their myGov accounts to ATO online services will receive a message when their income statement is tax ready; for agents this information will be available in pre-fill reports.

     

    "We know from previous years that the early birds who lodge in the first weeks of July are far more likely to make mistakes or submit incomplete data. That's why we suggest waiting and letting the ATO do most of the work pre-filling your tax return," Ms Foat said.

     

    While clients can still lodge early this year, several industry experts have also previously warned against doing so, noting the STP changes as well as the government's proposed tax cuts.

     

    Treasury Laws Amendment (Tax Relief So Working Australians Keep More of Their Money) Bill has been tabled for introduction into the Senate this week, and if it passes, will see the end-of-year rebate for low and middle-income earners double from $530 to $1,080.

     

    The ATO has previously said they will automatically amend assessments to add additional credits should the bill be passed after they process taxpayers' 2018–19 tax returns.

     

    "Our advice is that unless you have certainty and completeness around the information used to finalise your return, we are encouraging all taxpayers to rethink lodging returns early this year especially in light of the above changes," said the Institute of Public Accountants general manager of technical policy, Tony Greco.

     

    "Consistent with prior years, third-party data such as dividends, interest, share disposals etc is progressively uploaded onto the ATO systems during the month, so it normally takes some time for the pre-fill information to be finalised.

     

    "The ATO has the right to auto-amend a return, which it has been doing for discrepancies, but interest and penalties can be applied by the ATO."

    Tax cuts on the way soon

    Tax cuts on the way soon, but it's only the tip of the iceberg

    Feared tax reform failed to eventuate when Labor lost this month's election, and money minds now turn to tax cuts. Some will arrive in July but much bigger cuts are also in the pipeline.

    The Morrison Government's surprise election victory sparked a sigh of relief last week from investors and retirees across Australia, and public attention now turns to tax cuts.

    In just over a month, more than 10 million workers will be eligible to receive up to $1080 of tax rebates when they file their annual tax return.

    It's the first stage of the Morrison Government's massive income tax reduction program, and there have been calls for it to bring forward future stages by several years.

    Labor's election policies to change capital gains tax, negative gearing and franking credit refunds are now a memory. However, it and minor parties can still block future tax announcements in the Senate.

    In the meantime, the only tax news is good news.

    H&R Block director of tax communications Mark Chapman said the only significant tax-related election proposal remaining was the tax cuts.

    "All those things Labor was proposing are off the table now," he said. "Everything stays as it was, and for the segment of people who were going to lose their franking credits there's a lot of relief.

    "There aren't going to be any unpleasant changes coming to the tax system any time soon.

    "As we head toward the end of financial year the election takes a back seat and people need to get ready to lodge their tax return, get receipts together, talk to their accountant and get ready for July 1 as they do every year."

    BetaShares chief economist David Bassanese said this year's tax cuts alone were unlikely to be enough to spur a sluggish economy, and the next round of planned tax cuts in three years was "too long to wait".

    The Coalition's long-term tax plan removes the 37 per cent tax bracket completely and all taxpayers earning between $45,000 and $200,000 will be on the 30 per cent tax rate. Stage two - in July 2022 - lifts the top threshold of the 32.5 per cent tax bracket from $90,000 to $120,000, while the final stage in 2024 flattens tax brackets further - delivering higher income earners thousands of extra dollars each year.

    "It would be helpful if the newly elected Morrison Government seriously considered a bring forward of additional tax cuts that have been promised to take effect over the next few years," Mr Bassanese said.

    "The sooner the better, it seems to me. If they are planning on sending legislation to parliament soon, why not amend it and bring in some other tax cuts now? It can be justified due to the weakening growth outlook."

    Budget surpluses and rising income from a higher-than-forecast iron ore price could help pay for the cuts, he said.

    WHAT YOU'LL GET FROM JULY 

    • If you earn below $37,000 you'll receive up to $255.

     

    • If you earn between $37,001 and $47,999 you receive between $255 and $1080.

     

    • People earning between $48,000 and $90,000 get the full $1080 tax cut

     

    • Tax relief then gradually reduces to zero for people earning above $126,000.

     

    (Tax cuts will be paid through people's annual tax refunds)