We hope you had a wonderful and relaxing break over the Christmas and New Year period!
Both our Beenleigh and Nerang offices will be back on deck from 08:30am 06 January.
Our BAS client can expect to receive their reminders during that week with their cut off dates for information and if that reality check of getting back into the swing of things has been tough, the ATO has been kind enough to grant everyone an extension on their December BAS so everyone who reports quarterly has until 28 February to lodge and pay 😊
Messages from the ATO
New taxpayer alert on early-stage investor tax offset scheme
A new scam that investors need to be cautions of
Read more
ATO Focus Areas
Risky business behaviour to avoid that attracts attention from the ATO.
Find out how to stay on track and off the ATO’s radar here.
Read more
Good Business Habits
Deputy Commissioner, Will Day’s tips for small businesses on how to get it right here.
Read more
Employee vs Contractor:
Getting it right the first time
Are you considering hiring additional workers for your business? Not sure whether they should be treated as an employee or as a contractor? Knowing the difference between an employee and a contractor is very important as making the mistake of treating your workers incorrectly can have significant effects on your business and its cash flow.
When determining whether a person you have hired is an employee or an independent contractor will be solely based on the relationship between your business and that person based on the contract between them and your business. Contracts can be determined either orally or as a written agreement, or even a hybrid of both and it is the contract which determines the legal rights and obligations between the business and the worker.
The determination will can come down to numerous factors, with the main factor of the relationship being the level of control established in the contract. If the business has the right to determine when and where the worker starts and finishes as well as how, then the relationship will most likely be determined as an employer-employee relationship. However, on the flip side, if the worker can determine these crucial details and there is only limited direction by the business, then it is more likely the relationship will be more of a contractor relationship.
Other important factors which come into consideration are as follows:
- The representation of the worker to the business – is the worker representing your business or themselves, do they wear clothing with your business logo, or is the worker furthering their own business rather than yours?
- How the worker is paid? – Are they paid per hour, commission or price per item or activity or do they get paid on completion of work regardless of how much time it has taken?
- Can the delegate work to another person? – Are they able to pass the work onto someone else or is it restricted to only themselves?
- Who is providing the necessary tools to complete the job? – Is the worker responsible for providing most or all of the tools needed or is the business providing all tools required?
- Who bares the risk for the work? – Is the business taking on the risk if something goes wrong or is the worker responsible?
- Who benefits from the job completed? – Is it your business who receives the benefits of goodwill from completion of work or is it the worker?
Whilst control is one of the determining factors and an important one, it is not the be all end all factor. All factors mentioned above should be considered when deciding hiring a worker as an employee or a subcontractor, because getting it wrong can lead your business into hot water and result in penalties for non-compliance to PAYG withholding tax and superannuation obligations.
For more assistance with this, please contact us so we may help you make the right decision come tax time.
Changes to the HECS/HELP Loan Indexation
Last month the Australian Government announced their intentions to change the student loan repayment system to make it fairer for every Australian.
Do you have a HECS/HELP loan? These are the proposed changes:
- HELP repayments will be calculated based on marginal rates from 1 July 2025, with the minimum repayment threshold increasing from $54,435 in 2024-2025 to $67,000 in 2025-2026 and the repayment calculated using marginal rates of payment. With the current method, repayment rates are set as a proportion of total income. However, under this new system, repayments will be required based on the portion of a person’s income above the $67,000 threshold.
Proposed repayment thresholds with effect from 1 July 2025
Income Thresholds Marginal rate of repayment Below $67,000 Nil Income above $67,000 to $124,999 15c for each dollar over $67,000 Income above $125,000 $8,700 plus 17c for each dollar over $125,000 - One off reduction of 20%: the government will apply a one-off 20% reduction on all student loan debts with effect from before 1 June 2025. This will be automatically applied by the ATO just before indexation is applied.
These changes will apply to all HELP debts and other income contingent loan (ICL) student loan schemes including VET Student Loans (VSL), VET FEE-HELP, Student Financial Supplement Scheme (SFSS), Australian Apprenticeship Support Loans (AASL, formerly Trade Support Loans), Student Start-up Loan (SSL), and ABSTUDY Student Start-up Loan (ABSTUDY SSL).
Changes are subject to the passage of legislation and if approved, will take effect from 1 July 2025.
- Indexation rate calculation change: The indexation rate for study and training loans is now based on the Consumer Price Index (CPI) or Wage Price Index (WPI) – whichever is lower. This change will be backdated from 1 June 2023, with the following changes:
- 3.2% for 1 June 2023 (reduced from 7.1%)
- 4% for 1 June 2024 (reduced from 4.7%).
This process will be completed on the upcoming months and if you had a study loan that was indexed between 1 June 2023 or 1 June 2024, the recredits will be automatically applied by the ATO. You will be notified by SMS when the recredits have been processed to your loan account. If the loan is in credit after the adjustment, the excess amount will be refunded to you if you have no outstanding tax or Commonwealth debts.
Capital Gains for Rental Properties
What if you live there too?
Living in your property, while renting out part of it, brings unique tax considerations when it comes time to sell. While your primary residence is generally exempt from capital gains tax (CGT), renting out part of your home can reduce this exemption.
When renting out a part of your home, such as a room and shared living space, the Australian Taxation Office (ATO) considers that portion of the property as producing income. When you sell, the rental portion is subject to CGT, while the portion used as your primary residence, such as your bedroom or office, remains exempt. The taxable gain is calculated based on the floor area rented out and the period it was rented. For example, if you rented out 50% of the floor area for 5 out of 10 years of owning the property, CGT would apply to 25% of the capital gain upon sale.
If you’ve owned the property for more than 12 months, you may qualify for a 50% CGT discount, reducing the taxable portion of the gain. Keeping precise records of how much of your home was rented and for how long is essential to calculate your CGT correctly. If required we can help you maximise exemptions in line with the ATO, retaining more of your profits when selling.
Talk To You Soon!
☕ ☕ ☕ ☕ ☕ ☕
That’s it from us this month!
Welcome to 2025!
May your coffees be strong and your Mondays be short
If you need us:
P: (07) 5596 5758
E: Adminstaff@plantandassociates.com.au
*Emails will not be monitored over our Christmas closure but we’ll get back to you as soon as we’re back in the office