It’s been a couple of years now since the government introduced new laws regarding trusts, and the streaming of franked dividends and capital gains.
Dan Butler says if you haven’t organised to have beneficiaries named specifically in your trust, this needs to be organised as soon as possible.
“The ATO is getting stricter on things like resolutions, so your ability to stream a capital gain or franked dividend becomes quite important.”
“For instance, if you don’t have that streaming ability set out, if you don’t have the right of resolutions specified for an individual who could receive the discount, that money could end up being taxed at 30%.”
The answer is paperwork. Make sure you have your beneficiaries specifically entitled to capital gains or franked dividends sourced by the trust.
Do you have any interest income? Then you’ll want to be sure to declare that on your tax return.
Many taxpayers might think they’ve only earned a small amount of money purely from interest, but the ATO sources data from banks and knows exactly how much you’re making. While the Tax Office isn’t going to start a court case over a lost $100, it’s better to declare it straight away rather than hide it.
Do you own an investment property? Then you should be aware there are plenty of deductions you can claim, but also plenty of work to be done. If you haven’t been getting your forms and documents in order, now is the time you need to do so.
Things like income sheets and depreciation schedules are critical. An income summary is something your tax expert will want to see as well. Spend some time getting this together in order to minimise the hassle.
Although there has been some concern about the government’s planned loss carry-back scheme, as it hasn’t passed through Parliament yet and there are fears it could be scrapped, Tristan Webb, the tax director at Crowe Horwath, says you should prepare for it anyway.
“I would be recommending to anyone in business that you really keep an eye on that, particularly if you do have carry-forward losses this year,” he says.
“It’s one of those things that could be changed post-election to apply to the day of the media release in which it was announced.”
The scheme works by allowing businesses to claim losses of up to $1 million based on tax they had paid in the previous two years. The plan will apply to businesses that paid tax in the 2011-12 income year, and then recorded a loss in the next financial year.
Webb says businesses need to speak with their tax advisers about the best course of action for their business, given the measure hasn’t come into effect yet.
Got any bad debts you haven’t been able to chase up? Then you need to have these written down and detailed before June 30 in order to write them off. If you haven’t done the work before June 30 and try to write them off anyway, you could be in for some trouble.
However, you need to be careful – documentation is key. These tax experts say you need to gather some documentation about how you’ve tried tracking down these lost debts. You can’t just say you’ve tried to recover them but actually haven’t done anything in reality.
Remember when the government promised to introduce a standard deduction for everyone? That’s been put on the back-burner for a long time, and if we have a new government in September the plan may disappear entirely. For now we’re stuck with the old system.
If you want to write off work-related deductions, you can claim up to $300 without receipts. You can also claim an additional $150 for laundry expenses without receipts as well.
Anything else and you’ll need documentation. Make sure you have it filed away somewhere.
Story continues on page 3. Please click below.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
