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Calculators Comments Off on Calculators

Calculators

The following are samples of calculators that may provide rough guidance in financial and taxation matters.   Simple Tax Calculator The ATO’s calculator estimates the tax payable on your taxable income Stamp Duty/Land Transfer Calculator The State Revenue Office’s calculator will estimate stamp duty payable Tax Depreciation Calculator BMT’s calculator will estimate depreciation on property   These produce rough estimates only and are not meant to be used for official calculations. KT Associates does not accept any responsibility for tax returns lodged with calculations based on this article. For further assistance please contact us on 03 9331 6855 or info@ktassociates.com.au to speak to one of our...

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Subcontractor VS Employee Comments Off on Subcontractor VS Employee

Subcontractor VS Employee

To employ or subcontract, that is the question.  This article covers some, but not all, issues regarding employees vs subcontractors.   After toiling away as an apprentice stonemason and getting a few years under your belt fully qualified, you decide that you want to start your own business. After selecting the most suitable business structure for yourself, you get out there and cut some stone.  After a solid 18 months of working by yourself, you decide that it is time to take on someone. Many hands make light work and when you are working with something as heavy as stone, the lighter the better.   There are many ways to go about paying someone for their work, though paying someone with pilchards generally only works for the stars at certain water based attractions. So in this article we will discuss paying someone as either an employee or subcontractor.   Employee:  An employee is someone that is hired to work for you; you pay them a salary or a wage for their services. An employee can be a casual, part time or full time, they can be employed for one week or for their entire working lives. An employee has the following rights and entitlements, that you as the employer...

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Are Low Interest Rates The New Normal? Comments Off on Are Low Interest Rates The New Normal?

Are Low Interest Rates The New Normal?

With the Reserve Bank of Australia’s (RBA) February 2015 decision to reduce interest rates to 2.25% the question becomes how long do we expect low interest rates to last? The best way to look at interest rates is to use real interest rates. Real interest rates are calculated by taking the actual interest rate and taking away inflation. For example if interest rates were 10.00% but inflation was 11.00% then effectively you are receiving -1.00% in interest. In contrast if interest rates are 2.25% but inflation is 1.70% (as at the time of writing) then the real interest rate would be 0.55%. Even though the nominal interest rate is lower (2.25% vs 10.00%) the real interest rate that you are receiving is higher and therefore better for you. If we take a brief look at history, we can see that interest rates were a lot higher than they are currently. In 2008 interest rates got up to 7.25%, and before that it was not until 1991 where interest rates reduced to below 10% after being extremely high for years. However as discussed before, the nominal interest rate isn’t important, it’s the real interest rate that is important. If we have a look at the last 14 years, the real...

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Depreciation As A Tax Deduction Comments Off on Depreciation As A Tax Deduction

Depreciation As A Tax Deduction

When claiming an asset as a tax deduction, it must be depreciated over a number of years. But how do you know how much depreciation to claim each year? The following article will give you a rough guide to claiming depreciation as a tax deduction An asset may be depreciated individually using either the prime cost or diminishing value method. Once a depreciation method has been chosen for the asset, the same method must continue to be used for the remainder of the assets life. Assets may also be grouped into asset pools (subject to certain rules) and the pool will be depreciated as a whole.   Methods for Depreciating Assets Individually   Prime Cost The prime cost method, also referred to as the straight line method, will depreciate an asset by equal amounts each year. To calculate how much depreciation to claim each year, divide the cost of the asset by its effective life.  For example, an asset costing $5,000 with an effective life of five years will be depreciated at $1,000 each year ($5,000 / 5yrs). Please note: To depreciate software you must use the prime cost method of depreciation.   Diminishing value The diminishing value method calculates depreciation based on a percentage, and results in more...

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Tax Deductions for Repairs on Rental Properties Comments Off on Tax Deductions for Repairs on Rental Properties

Tax Deductions for Repairs on Rental Properties

Ever wondered if you should be claiming your rental repairs and replacement expenses as a tax deduction or if they should be depreciated as assets on your tax return?  The following will provide a rough guide and a few examples of when repairs and replacements are treated as expenses or assets (capital expenses), and whether they can be claimed on your tax return. How will the difference between repairs and capital expenses affect your tax return? 100% of the cost of repairs can be claimed as a rental deduction on your tax return in the year that the expense was incurred. However, capital expenses will need to be depreciated on your tax return, meaning that the cost will be claimed over a number of years depending on the effective life of the asset. For example, a hot water system has an effective life of 15 years which means it will be depreciated at 13.33% (200/15) if using the diminishing value method. This means that in the year of purchase for a hot water system costing $1,500, you will only claim $200 ($1,500 x 13.33%) depreciation as a rental deduction on your tax return. Then in the following year you will claim  $173 ($1,300 x 13.33%) depreciation on your tax return....

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Net Medical Expense Tax Offset 0

Net Medical Expense Tax Offset

If you have net medical expenses over $2,162* you may be eligible to receive the Net Medical Expense Tax Offset (NMETO).   However, the conditions for receiving the NMETO have been adjusted as part of the ATO’s plan to phase out the NMETO.   To be eligible to claim the NMETO on your 2014 tax return you must Have claimed the NMETO on your 2013 tax return Or paid for medical expenses relating to disability aids, attendant care or aged care   To be eligible to claim the NMETO on your 2015 tax return you must Have claimed the NMETO on your 2014 tax return Or paid for medical expenses relating to disability aids, attendant care or aged care   On your 2016, 2017, 2018, & 2019 tax returns, you will NOT be able to claim the NMETO unless you have Paid for medical expenses relating to disability aids, attendant care or aged care   In 2020, the NMETO will NOT be available.   *For further information about thresholds please visit...

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