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Myth Busters

Having been in the tax industry for many years, there are a number of myths that you hear from time to time. Let's put them to bed once and for all…

  • Car advertising– I can claim my car expenses if I advertise my business on it. No, you can’t. While you can claim the costs of the painting/advertising, car expenses will continue to be subject to the normal deduction rules (i.e. deductions only for work-related travel).
  • Super deductions– I can claim a tax deduction for my after-tax super contributions. No, you can’t, unless less than 10% of your income, reportable fringe benefits and reportable super contributions comes from employment activities (this rules out most employees).
  • FBT and Workhorse Vehicles– No FBT is payable on utes, dual cab utility vehicles, trucks and motor cycles etc. This is wrong. While it is true that the provision of a vehicle that is not a ‘car’ for FBT purposes will not give rise to a car benefit, it may give rise to a residual fringe benefit.
  • Higher Tax Bracket – If I do overtime or my salary goes up, it may move my tax rate to a higher level. The tax rates are incremental – your income is taxed at different rates, not one single rate. For example, if you had a base annual salary at just below the top income threshold of $180 000 for the year, and were offered overtime which would take your income over the $180 000 threshold, it is only the overtime (i.e. the amount over the $180 000 threshold) that would be taxed at the higher rate – not your entire income.

Share with us some tax “wives tales” you have heard, and let’s together work out whether they are fact or myth!

Article written by David Cowling

To find out more about ABN visit www.austbook.net

Category
ABN
Published
27 Mar 2014
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