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The Government recently passed legislation to extend the $20,000.00 instant asset write-off for small businesses by 12 months to 30 June 2026...
Keeping a car logbook may be required to accurately calculate the business-use percentage of vehicle expenses...
The Government recently passed legislation to extend the $20,000.00 instant asset write-off for small businesses by 12 months to 30 June 2026.
Taxpayers should note that if their business has an aggregated annual turnover of less than $10 million, they may be able to use the instant asset write-off (IAWO) to immediately deduct the business portion of the cost of eligible assets which cost less than $20,000.00.
Eligible assets must basically have been first used (or installed ready for use) between 1 July 2025 and 30 June 2026. The $20,000.00 limit applies on a per asset basis, so taxpayers can instantly write-off multiple assets.
The IAWO can be used for both new and second-hand assets (but some exclusions and limits apply).
Please contact our office if you require assistance regarding the above, including in relation to also claiming deductions for improvement costs for certain assets.
The ATO is ‘cracking down’ on businesses that use cash to avoid meeting their tax, employer and business obligations. Businesses that do this may:
● fail to report all sales transactions and fail to issue receipts;
● avoid paying GST, income tax, PAYG withholding, super guarantee, insurance and work cover protection;
● report their income below the $75,000.00 threshold to avoid registering for GST;
● exploit workers by not meeting award conditions and work cover protections; or
● undercut honest businesses by offering cheaper prices for cash.
The ATO warns that workers who are paid cash-in-hand or working ‘off the books’ are often disadvantaged. Apart from not receiving the entitlements they should be, if they are injured at work, they may not be protected.
Through data matching, the ATO is seeing some contractors incorrectly reporting or omitting contractor income. Contractors need to report all their income in their tax return, including payments made by businesses for their contracting work.
Note that, as part of the taxable payments reporting system (TPRS), certain businesses must lodge a ‘Taxable payments annual report’ (TPAR) to report payments made to contractors for providing the following services:
● building and construction;
● courier;
● cleaning;
● information technology;
● road freight; and
● security, investigation or surveillance.
For taxpayers who work as a contractor and provide any of these services, the business they contract to should be reporting those payments to the ATO on their TPAR. Contractors obviously then need to include this income on their tax return.
If the ATO suspects a contractor may have omitted TPRS income on their tax return, it may contact them to request they amend their tax return. If the contractor does not take action, the ATO may conduct a review and audit of their business, and penalties and interest may apply.
The ATO is reminding taxpayers that receive government payments for delivering services under a Commonwealth program, such as healthcare, disability support or child care, that they have an obligation to:
● keep accurate records; and
● report any such income they receive in their tax return.
The ATO recently advised that it would be contacting taxpayers and tax agents in February by email to ensure that income received from government agencies (such as the Aged Care Subsidy or under the National Disability Insurance Scheme) is reported correctly in their tax returns.
The ATO has updated its Government Payments Program data-matching program protocol to better detect non-compliance, and work more effectively with other government entities.
When completing their next BAS, the ATO is asking taxpayers to remember that they cannot claim GST credits for purchases:
● where they do not have a tax invoice;
● that were cancelled or reversed; or
● that do not have GST in the price (such as bank fees).
Taxpayers that have nothing to report still need to lodge a ‘nil’ BAS by the due date.
The Administrative Review Tribunal (ART) recently disallowed a taxpayer’s claims for many different types of work-related expenses.
The taxpayer was employed full-time as an engineer, working from home two days a week. For the 2023 income year, he claimed deductions totalling over $61,000.00, in relation to (among other things) car expenses, travel expenses, clothing expenses, and home office expenses, all of which he claimed were work-related.
The ATO largely disallowed these deductions, and the ART affirmed the ATO’s decision, primarily due to problems with substantiating these claims.
For example, in relation to the car expenses, the ART noted that none of the log books were contemporaneous, and the log book entries were inconsistent with independent records (e.g., car service records).
In relation to travel expenses (taxi and Uber fares), the ART noted that the taxpayer did not provide evidence clearly identifying which travel expenses had been reimbursed by his employer, and the ride share documentation did not include the date, time or destination of travel.
In relation to home office utility expenses, the ART noted that the taxpayer only provided calculations estimating the business use proportion of those expenses, without providing any documentary evidence to substantiate the expenses themselves. In any case, the ART was not satisfied that the taxpayer’s apportionment of those expenses was fair and reasonable.
Please note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
If you require any further information, please do not hesitate to contact us should you need any assistance.
Keeping a car logbook may be required to accurately calculate the business-use percentage of vehicle expenses (e.g., fuel, registration, insurance and depreciation) for tax deductions.
Taxpayers can keep the same logbook for their car for five years, but there are circumstances where they may need a new one during that period.
Relying on a logbook that no longer represents a client’s work-related travel may result in them claiming more, or less, than they are entitled to.
A new logbook may be required when a taxpayer:
● moves to a new house or workplace – updating their residential or work address may then be necessary;
● has changes to their pattern of use of the car for work purposes – checking that they are still doing the same role and routine may then be necessary.
● Taxpayers using the logbook method for two or more cars need to keep a logbook for each car and make sure they cover the same period.
● Clients who purchase a new car during the income year and want to continue relying on their previous car’s logbook must make a nomination in writing. The nomination must be made before they lodge their tax return and state:
● they are replacing their original car with a new car; and
● the date that nomination takes effect.
Taxpayers should remember that, if their employer provides them with a car or they salary sacrifice a car using a novated lease, they are not entitled to claim work-related car expenses using the logbook or cents per kilometre method, as they do not own the car.
When claiming car expenses using the logbook method, taxpayers also need to keep various types of other records, including (among other things) odometer records for the start and end of the period they own the car, proof of purchase price, decline in value calculations, and fuel and oil receipts (or records of a reasonable estimate of these expenses based on odometer readings).
Employers are reminded that employee super contributions for the quarter ending 31 March 2026 must be received by the relevant super funds by Tuesday, 28 April 2026.
If the correct amount of SG is not paid by an employer on time, they will be liable to pay the SG charge, which includes a penalty and interest component.
The SG rate is 12% for the 2026 income year (increased from 11.5% for the 2025 income year).
Taxpayers may not think they are running a business from their hobby or ‘side hustle’ activities. However, if they start to earn money from doing these activities regularly, they may be carrying on a business without realising it.
Generally, carrying on a business involves ongoing and repeated activities with the intention of making a profit. These activities can include:
● regularly providing goods or services;
● obtaining and maintaining any necessary licences or permits; and/or
● keeping records of their work.
However, a taxpayer’s activities may indicate that they are not operating a business where:
● their transactions are one-off;
● they do not intend to make a profit; and/or
● they work solely as an employee rather than independently.
Please keep us informed of all your income earning and side hustle activities so we can help with this distinction.
Businesses that pay contractors for ‘Taxable payments reporting system services’ may need to lodge a ‘Taxable payments annual report’ (‘TPAR’) by 28 August each year.
This includes businesses paying contractors in the building and construction, cleaning and IT industries (among others).
The ATO will apply penalties to businesses that have not lodged their TPAR from 2025 or previous years, and/or that have been issued three reminder letters about their overdue TPAR.
Businesses that do not need to lodge a TPAR can submit a ‘non-lodgment advice (‘NLA’) form’. Businesses that no longer pay contractors can also use this form to let the ATO know that they will not need to lodge a TPAR in the future.
Employers that provide plug-in hybrid electric vehicles (‘PHEVs’) to employees (or associates) for personal use should remember the following.
Home-Charging Expenses – New Shortcut Method
The ATO has updated its guidelines to include a new method to make it easier to calculate PHEV electricity costs when a vehicle is charged at an employee’s home.
To use the shortcut home-charging rate, employers and other individual taxpayers must meet the relevant eligibility requirements (or they can still choose to calculate the actual electricity costs instead of using this optional method).
Eligibility for FBT exemption
Since 1 April 2025, PHEVs are not considered a zero or low emissions vehicle under FBT law and no longer qualify as exempt. Employers that provide PHEVs to their employees for private use, or that have PHEVs that are available for private use, may now have FBT obligations for the 2025/26 FBT year (subject to transitional arrangements).
Businesses that pay contractors for ‘Taxable payments reporting system services’ may need to lodge a ‘Taxable payments annual report’ (‘TPAR’) by 28 August each year.
This includes businesses paying contractors in the building and construction, cleaning and IT industries (among others).
The ATO will apply penalties to businesses that have not lodged their TPAR from 2025 or previous years, and/or that have been issued three reminder letters about their overdue TPAR.
Businesses that do not need to lodge a TPAR can submit a ‘non-lodgment advice (‘NLA’) form’. Businesses that no longer pay contractors can also use this form to let the ATO know that they will not need to lodge a TPAR in the future.
The Administrative Review Tribunal (‘ART’) recently held that medical expenses incurred by a taxpayer to obtain (or regain) employment were not deductible as they were not incurred in gaining or producing his assessable income.
The taxpayer was an airplane pilot. In July 2021, the Civil Aviation Safety Authority advised the taxpayer of the steps that he needed to take to regain the medical certificates that were a prerequisite to him holding a licence to work as a pilot.
The taxpayer incurred expenses relating to this between July 2021 and May 2022, and he claimed a deduction for these expenses in his tax return for the 2022 income year.
The ATO disallowed these deductions, and the ART affirmed the ATO’s decision.
The ART noted that the medical expenses incurred by the taxpayer “merely put him in a position to undertake employment as a pilot, and as such are not deductible.”
That is, the expenses were not deductible because they were incurred to put the taxpayer in a position to earn income (i.e., to regain his certification), rather than in the course of earning that income, and they were therefore incurred “too soon” (despite some being incurred after his employment commenced in March 2022).
Please note: Many of the comments in this publication are general in nature. Anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
If you require any further information, please do not hesitate to contact us should you need any assistance.
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