Handy tips to help pay off your home sooner

1. Make extra payments

If you’re not in a fixed rate term, you could add extra to each loan payment, or deposit large amounts (such as tax return refunds, dividends or bonuses). By doing so, you could save on interest and pay off your loan sooner.

2. Consider setting up more frequent repayments

You may like to think about changing the frequency of your repayments. For example, if you make fortnightly repayments instead of monthly repayments, you’ll be reducing your total interest charges and paying off interest earlier.

3. Save on interest payable with an offset account

If you have an eligible loan, you may be able to link an offset account to it. The more money you have in your linked offset account, the less interest you’ll need to pay on your home loan.

4. Repay principal and interest

If you’re looking to pay off the total amount of your home loan rather than just the interest, then switching from interest only to principal and interest is something you could consider.

The above are just some general tips that many of our clients have utilised to build their wealth. If you need help in reviewing your loans, refinancing or organising new finance, please contact Financially Sorted immediately to organise a free no-obligation with our mortgage broker.

ATO opens up on what triggers an audit

(12 December 2018 – mybusiness.com.au)

Being audited is a dread or even fear common to virtually all businesses and taxpayers alike. Recently, the ATO have revealed what red flags usually trigger an audit, and whether the self-employed are more likely to be audited.

The ATO uses a range of tools and techniques to identify taxpayers that may warrant closer scrutiny. Reviews and audits are selected based on their assessment of the level of risk.

Business margins are looked at, different industries &/or occupations are grouped with those not within the averages, closely looked at. The ATO is also using technology to its advantage with many government departments now having the ability to share information. An example of this is where the State Revenue office discloses to the ATO the disposal value of properties.

Are the self-employed more at risk of an audit?

A common idea is that self-employed people are much more likely to be audited than employees, because of the fact that they do their own reporting, and often blend work and personal in order to simply get the job done.

But the tax office spokesperson told My Business that this is not true, with no discernible difference in audit rates among business owners and employees.

“Being self-employed is not a factor that will influence whether a taxpayer is more or less likely to be scrutinised. For example, for small businesses, the ATO uses small business benchmarks, data matching and other risk indicators to identify businesses that may be avoiding or having trouble meeting their tax and superannuation obligations.”

Likewise, an audit does not necessarily mean that one has done something wrong — merely that something is unusual and warrants a closer look.

If the ATO find a discrepancy, they accept that sometimes mistakes can be made and give the taxpayer the opportunity to provide extra information or context in terms of their situation and consider this (where the law allows us to) in determining if any penalties should apply.

You’ve been put on notice for an audit — now what?

If the ATO does issue notice that it plans to conduct an audit, either of you personally or for your business, the first thing to do is ensure that receipts for everything are to hand and that all documentation is correct.

“A review or audit usually involves looking at the taxpayer’s affairs to ensure the information provided is accurate and complies with their tax and superannuation obligations.”

The ATO prefers to work with taxpayers to obtain information cooperatively, which may require a range of interactions including meetings either by phone or in person.

When facing an audit or review, the ATO strongly recommends that you should be open and honest in your dealings with investigators, and to:

Tell the ATO about anything that could delay the audit or review,

Provide complete and accurate information when requested, and do so in a timely manner,

Allow investigators to take copies or extracts from receipts and documents if needed during face-to-face meetings, and

Give investigators unfettered access to premises, documents and records if requested.

The ATO (and other Government bodies, for example, CentreLink) have certainly increased audit activity. If questions arise, please do not hesitate to contact us immediately. The consequences for not doing so can be quite harsh.

Highly anticipated STP law secures passage

(Accountants Daily 05 December 2018)

Single touch payroll (STP) will now cover businesses of all sizes after legislation was passed by the Senate.

What is Single Touch Payroll?

Single Touch Payroll, also called STP or one touch payroll, is an ATO initiative that requires employers with 20 or more workers to report salaries and wages, PAYG withholding and superannuation to the ATO each time they pay their employees.

What does that mean for you?

Digital connectivity is becoming a necessary part of running a business in Australia. Instead of typically reporting payment once at the end of a financial year, certain employers will now be required to send information to the ATO with every pay run. STP takes effect from 1 July 2018, though many Xero users will have longer to make the switch.

The Senate has passed the Bill proposing to extend STP to employers with 19 or less employees from 1 July 2019.

The passage of legislation follows months of uncertainty for the small business sector after STP was officially rolled out for employers with 20 or more employees from 1 July 2018.

In preparation for the rollout across all businesses, the ATO began seeking expressions of interest from digital service providers to develop low-cost STP software for the micro business sector.

ATO Commissioner Chris Jordan has also pledged to ease micro businesses into the STP regime, stating that they will not be forced into purchasing payroll software, with a number of alternate options set to be available, including the option of allowing their registered tax or BAS agent to report quarterly, rather than each time they run their payroll.

Exemptions to STP reporting will also be available to businesses that have no internet or an unreliable connection.

The ATO have advised that there not going to force people to put in a business, accounting system and payroll software.  A lot of people will have basic accounting software but not the component that does the payroll.  Some of the software providers might be looking at that as an opportunity to get people in to maybe a more upgraded sort of accounting system.

STP will be a massive change for all small businesses out there. We will be advising our clients further as it gets clearer as to what is expected and as it gets closer.

For Your Calendar…

  • 21 Feb Lodge and pay January 2019 monthly business activity statement.

  • 28 Feb Lodge tax return for non-taxable large/medium entities as per the latest year lodged (except individuals

    Lodge and pay Self-managed superannuation fund annual return

    Lodge and pay quarter 2, 2018–19 activity statement for all lodgment methods.

    Pay quarter 2, 2018–19 instalment notice

    Annual GST return – lodge (and pay if applicable) if the taxpayer does not have a tax return lodgment obligation.

    If the taxpayer does have a tax return obligation, this return must be lodged by the due date of the tax return.

    Lodge and pay quarter 2, 2018–19 Superannuation guarantee charge statement – quarterly if the employer did not pay enough contributions on time.