Calculator at the ready: Local tax accountant Alan Boyd is preparing for his busiest time of the year. 20270
By Glen Atwell
FOR Berwick tax accountant Alan Boyd, the months of July, August and September often seem over before they begin.
Armed with a wad of tax receipts in his left hand, and a trusty tax calculator in his right, Mr Boyd spends his days, and a lot of nights, crunching numbers in the hope of obtaining the best possible return for his clients.
While most workers look forward to the Christmas and Easter breaks, Mr Boyd’s year revolves around 1 July, the beginning of the new financial year, when the Australian Taxation Office (ATO) throws open its doors to allow all working Australians to prepare and lodge their tax return.
“The tax months certainly do whiz by,” Mr Boyd said. “July through to September is our peak period. It’s extremely hectic and busy.”
Mr Boyd said the ATO kept a close eye on certain industry groups every year.
“More than 380,000 letters were sent to selected taxpayers in June advising them that they would be under increased scrutiny when they lodge their 2008 tax returns,” he said. “The occupations being targeted this year are tourism, travel, fitness, sport, construction, security and mining.
“People working in these industries will be closely looked at,” Mr Boyd said.
This Federal Budget allocated an extra $256.9 million to the ATO over four years for compliance programs.
Mr Boyd said the ATO expected $1980 million in extra revenue to be generated from the initiative.
Mr Boyd offered the following tax-time tips for News readers:
Rental Properties
The Tax Office is particularly targeting rental property claims in 2008 and the following are some hot spots:
• Claiming deductions for periods the property was not genuinely available for rent (i.e. holiday home occasionally rented);
• Claiming full deductions for a property available for rent for only part of the year;
• Claiming initial repair and renovation costs as repairs and maintenance costs rather than attributing these costs to the cost base;
• Incorrectly apportioning deductions related to private borrowings or travel;
• Incorrectly claiming expenses such as legal costs associated with buying or selling a property.
Medical Expenses Rebate
Many taxpayers do not know that they are able to claim a rebate where they have large medical costs during the financial year.
Medical expenses in excess of $1500 out of pocket are subject to a 20 per cent tax rebate.
Out-of-pocket expenses are the costs after any Medicare or private health insurance rebates.
This includes medical costs (doctors, specialists, surgeons, hospitals, etc) as well as dental (including orthodontics), optical, pharmacy, therapeutic aids costs, etc. It does not include cosmetic treatments, health insurance premiums, non-referred physiotherapy, ambulance subscriptions, etc.
Tax Deductible Donations
Donations of $2 or more to registered charities can be claimed as a tax deduction. A receipt clearly stating that the contribution was a donation is required.
The fact that it is tax deductible is also usually shown on the receipt. A register of Deductible Gift Recipients is available on the ATO website (www.ato.gov.au).
Money put in collection tins (i.e. at traffic light collections) does not technically qualify because no receipt is obtained as proof. Purchases of raffle tickets, gifts, Christmas cards, etc., are also ineligible.
Coles Shareholders
Shareholders in Coles Group Ltd (formerly Coles Myer Ltd) who had their shares acquired by Wesfarmers Ltd will need to account for any capital gains made through the takeover in their 2008 tax return.
Many mum and dad investors bought at least 500 Coles Myer shares many years ago to access the generous shareholder discount scheme they offered.
Over time this shareholding may have grown with the addition of dividend reinvestment and bonus shares.
Details of all share purchases and additions, including date of acquisition, number of shares and cost is needed to establish the total cost base of any shareholding to enable any capital gain to be calculated.
The ATO has a calculator on its website to assist taxpayers to calculate their net capital gains position.
