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Business Fundamentals: What You Need to Know About The Difference Between Employees And Contractors

In the eyes of the Australian Taxation Office (ATO), there is a vital difference between employees and contractors. This difference impacts your superannuation, worker’s compensation, and taxation obligations. Failure to correctly categorise employees and contractors could cause them to miss out on their entitlements. The ATO also imposes penalties and charges on employers who misclassify workers, so it’s well worth the effort to ensure you’re getting this step right.

What Is The Difference Between Employees And Contractors?

An employee works in your business and is part of your business. A contractor is running their own business and offering services to yours.

To understand the difference, you must look at the whole working arrangement. The most important questions to ask are:

  • Are you paying someone to perform a job?
  • Do you pay that worker an agreed amount based on a quote they provided?
  • Do you expect them to provide their own tools and equipment to do the job?
  • Is the worker legally responsible for their work and liable for fixing mistakes or defects?
  • Does the worker decide how they will do the job?
  • Is the work subject to specific terms or agreements in a contract?
  • Does your worker operate their own business independent of your needs?
employee contractor discussing

Are Apprentices and Trainees Employees Or Contractors?

Apprentices, trainees, labourers, and trades assistants are always employees, never contractors.

An apprentice or trainee is in the process of gaining a qualification, certificate, or diploma. They are full-time, part-time, or school-based and have a formal training agreement with the business they work for. They must register through a state or territory training authority or under relevant legislation and must receive the relevant award payment rate. You must meet the same tax and super obligations as you do for any other employees of your business.

Pro tax tip: If you previously hired a worker without correctly categorising them, you can review your decision now to make sure you got it right. For help with this, we recommend contacting your nearest ITP office so one of our highly skilled tax accountants can ensure you’ve classified everything correctly and met your obligations.

Six Factors: Determining Whether A Worker Is An Employee Or Contractor

There are six factors that, taken together, help to determine if a worker is an employee or a contractor. The following table gives you an easy way to review the factors and tell the difference between employees and contractors.

EmployeeContractor
Ability to subcontract/delegate: The worker can’t subcontract, delegate, or otherwise arrange for someone else to do the work.Basis of payment: The worker is paid either for the time worked, a fixed price or a commission.
Basis of payment: The worker is paid either for the time worked, a fixed price, or a commission.Basis of payment: The worker is paid for their result based on a quote they provided.
Equipment, tools and other assets: Your business provides the tools required to complete the work. Or, if the worker provides all or most of the tools to complete the work, but your business provides them with an allowance or reimburses them for the cost of the equipment, tools and other assets. Equipment, tools and other assets: The worker provides all of the tools required to complete the work. The worker does not receive an allowance or reimbursement for the cost of this equipment, tools and other assets. 
Commercial risks: The worker takes no commercial risks. Your business is legally responsible for the work and is liable for the cost of any mistakes.Commercial risks: The worker takes commercial risks, is legally responsible for their work, and is liable for the cost of any mistakes.
Control over the work: Your business tells the worker how to complete the work.Control over the work: Your business does not tell the worker how to complete the work.
Independence: The worker is part of your business.Independence: The worker operates their own business independently of yours. 

Download this article: Business Fundamentals: What You Need to Know About The Difference Between Employees And Contractors

Companies, Trusts, And Partnerships

Companies, trusts, and partnerships are considered contracting relationships for tax and super purposes. 

Labour Hire Or On-hire Arrangements

Do you hire workers through a labour hire or on-hire firm? If you pay that firm for the work undertaken, it’s a contractual relationship. The labour firm is responsible for the PAYG withholding, super, and fringe benefits tax (FBT) obligations.

Pro tax tip: Want to learn more about your FBT obligations as an employer in Australia? Take a look at our guide to reporting, lodging, and paying Fringe Benefits Tax.

Hiring Workers In Australia

If your business hires an individual, the details of the agreement determine if they are a contractor or employee. Note that this can be written or verbal. In other words, the absence of a written record won’t absolve you of your obligations if the person you hire meets the criteria of being an employee.

Do you need help determining your tax and super obligations for the workers you’ve hired? ITP’s Income Tax Professionals have been helping Australian business owners with these questions for more than 50 years. We can help you ensure you’re perfectly compliant, ensuring you never face any issues with the ATO. Our skilled accountants can do so much more for your business, taking the stress of bookkeeping off your shoulders and helping you minimise your tax bills. Speak with one of our friendly accountants today.

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myTax vs Accountant: Which Will Get You the Best Result?

Tax time rolls around, your tax return seems pretty simple – Why waste your hard-earned money on a boring, mandatory task, especially when it’s tax-related? You see an easy, no-cost government option, and you take it. After all, probably wouldn’t get much of a return anyway – or could you?

Before we dive into the money you could be missing out on, an important thing to remember is that you are personally responsible for lodging your tax return. Anything you sign and deliver to the Australian Taxation Office (ATO) is seen as a binding legal declaration. The full responsibility for your tax return lies on your shoulders. So if you do unwittingly make a mistake, you might be up for fees and penalties that far outweigh any refund you manage to get.

The ATO will detect any discrepancies with their sophisticated data-matching program. The scary part is that they often let your return go through until tax season settles down. Only then will they contact you about the discrepancies and request receipts to verify your claims. In other words, don’t think you’re in the clear just because your refund came back within two weeks.

With so much on the line, we thought it would be a good idea to give you an overview of your two main options when filing your taxes in Australia: myTax and a certified accountant. One is free and provided by the government. The other comes at a cost, but that fee gets you a host of benefits that far outweigh the price you pay. Let’s take a look at both options in greater depth.

What Is myTax And Why Is It Free?

myTax is an online service provided by the ATO, giving individuals and sole traders an easy, no-cost way to prepare and lodge their own tax returns. It’s quick, safe, and secure, with most refunds processed within two weeks.

myTax might be a free service, but in terms of professional support, you are on your own. The myTax forms will lead you through a series of questions and prompts. The system will often prompt you where it considers your claims to be high. This certainly is helpful as it allows you to double-check and revise your claims. However, each time you check and revise a claim, the ATO’s software will note it. This may prompt them to look deeper into your return.

Once you submit your information, you’re on your own. So if the ATO does decide to dig deeper into your tax return, you’ll have no professional support. If you’re well-versed in Australian tax law, this may not be an issue. However, for most Australians, the idea of facing an ATO audit is fear-inducing, to say the least.

Pro tax tip: Want to learn more about the audit process in Australia? Read our complete guide to the ATO audit process.

Why Pay to Submit Your Tax Return Online?

ITP’s express online tax return service offers more than just an online submission portal. You also get a dedicated, fully trained Tax Accountant who will:

  • Go over your information
  • Raise any concerns that could get you in trouble with the ATO
  • Claim tax deductions, credits, offsets, and other elements you missed
  • Give everything the final tick of approval before lodging your tax refund to the ATO

You’ll pay a small fee for this service. However, most people find this fee more than covers itself with the boosted tax refund they receive. Add to that the peace of mind that comes with knowing your tax return is legit and mistake-free, and the service is truly priceless.

Is It Worth Seeing An Accountant In Person?

In a face-to-face appointment, you can gain even more value from your accountant. For example, ITP’s Tax Accountants offer free advice while working through the paperwork. So, in addition to ensuring all details are correct, you get valuable insights into your finances and how you can save more money each tax season.

Do you know there are specific tax offsets and government schemes offered to taxpayers? The Government regularly updates and changes the legislation around these schemes and offsets. So unless you have your ears to the ground, you might not know they even exist. ITP’s accountants are up-to-date on the latest tax law changes, so nothing will fall through the net. We can help you claim any government payments you may be entitled to, along with all legitimate tax deductions. If you’re entitled to receive a special subsidy or a tax offset, we’ll make sure you get it.

CLICK HERE TO MAKE AN APPOINTMENT

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The Experience: myTax vs. Accountant

Let’s take a look at a few examples of common tax return elements, comparing the myTax experience with the service you’ll receive from an accountant.

Home office costs

Claiming some home office costs, such as occupancy expenses (eg Council rates or mortgage interest), may lead to capital gains tax. So you need to know which claims are applicable to your situation. These calculations can get incredibly complicated. With myTax, you’re on your own with them. However, an accountant will correctly calculate any capital gains or losses you may have made. They’ll also advise you on how to avoid paying too much tax if you’re planning to sell your property.

Car expenses and depreciating assets

Claiming car expenses and depreciating assets can get tricky, as they entail more complex deductions. Car expenses, work-related travel expenses, and operational costs generally need to be backed by a logbook. You’ll also need to provide calculations on how you arrived at your tax deduction if you’re audited.

Depreciating assets can be complex, and claims need to be worked out over a certain time period. There are various methods and rates of depreciation depending on the asset, and you need to make sure you use the right one. myTax provides limited guidance on these choices. Instead, it expects you to know what you’re doing and make the right decisions every step of the way.

By contrast, tax accountants bring their expertise to the table, determining what you can claim and the right method to use at each step. They will advise of claims you might not know existed – something myTax just won’t do.

Planning for future tax savings

Your tax accountant can also help you plan for the future year, providing advice on things like recording your work-related usage of home running costs, mobile phone, and computer expenses to increase your tax refund. MyTax will not advise you on how to boost your tax refund this year and in the future because of course it won’t. It’s a bot. Not a human being.

Accountants Truly Pay For Themselves

By now, it should be pretty clear that accountants deliver far more value than the fee they charge. But did you know that it gets even better? Your tax accountant’s fees are 100% tax deductible on next year’s return. You can even claim the travel to and from your appointment! Not only do you get professional help, expert advice, and a bigger tax refund, but the fees are also fully claimable.

Most accountants also offer flexible payment terms. For example, you can pay upfront to claim the fee back on your next year’s appointment. Or you can have the fee taken out of your tax refund so you won’t even notice it.

ITP’s Tax Accountants are motivated to maximise your tax deductions. After all, we’ve dedicated our careers to doing just that! The goal of using an ITP Tax Accountant is to maximise your tax deductions in an easy, stress-free environment and in a way that you are fully supported and advised.

Don’t forget: The ATO has no motivation to maximise your tax deductions. It collects revenue. ITP’s Tax Accountants know how to reduce your tax, and as our client, we’re motivated to get you the best result. It’s your money. We’re with you on believing it should end up in your pocket.

What Is An ITP Tax Appointment Like?

An average individual appointment is usually only around 30 minutes. It can even be done over the phone, via Zoom, via email, or through our online express portal. Whichever way you decide to contact our professionals, you’re guaranteed expert help and your best tax refund yet.

CLICK TO START YOUR ONLINE TAX REFUND

Download this article: MyTax vs using an ITP Tax Accountant

Here’s What People Say About Our Service:

Grant – 5 stars
Awesome, as is the case every year.

Grace – 5 stars
Would highly recommend. The team are always extremely professional and helpful. My consultant has been doing my tax for the past 6 years. Every year I get a reminder to do my tax (which is great because being busy these things can slip your mind) they are always so flexible and go out of their way to fit me in at short notice.

Chell – 5 stars
I highly recommend this place. I have been a returning customer for over 10 years.

Natalie – 5 stars
Absolutely awesome, super friendly and thorough on what was needed. Highly recommended. Will return.

Lee – 5 stars
Friendly, good service. Got me a really good refund.

Hayden – 5 stars
Fast turn-around. Great value for money. Will be sure to return next year. Thanks to my consultant’s work I was able to buy an extra slab of beer with my tax return.

Michael – 5 stars
I have been going to my consultant for at least 5 years. He is knowledgeable and kind. Any questions or concerns I have raised he has always explained in detail making my yearly tax return a pleasure rather than a chore. He always has suggestions for deductions I may not have thought of and has never failed to get me a fair tax return.

Jackie – 5 stars
My professional has been incredibly supportive in helping resolve some issues with my tax return. Being quite new to business, I made a lot of mistakes which he helped calmly rectify, and educated me on how to move forward. He’s very easy to get along with and I would highly recommend.

How To Make A Tax Appointment

Booking is easy. Simply use our online portal to find your nearest office and book an appointment. You can also phone us on 1800 367 487. Our sophisticated automated service will find your closest branch and direct you there. A consultant will be in touch to confirm the date and time of your appointment. If you want to know what to bring to make the most out of your appointment, click here for a downloadable tax checklist.

Call 1800 367 487, or book online at www.itp.com.au and your tax agent will be in touch to help.

avoid paying CGT

How To Avoid Paying CGT When Selling An Investment Property

When you sell capital assets such as real estate, shares, licenses, personal property and even cryptocurrency for a profit, you incur Capital Gains Tax (CGT). Zooming in on property sales, depending on how much you’ve made and how long you owned the property, you might be subject to significant CGT charges.

Thankfully, all is not lost. There are some perfectly legal strategies you can use to reduce the amount of tax you’ll have to pay.

The first thing to understand is that CGT only applies to gains made from the sale of assets acquired after 20 September 1985. This was when CGT became active. When you lodge your annual income tax return, you’ll need to declare any capital gains or losses as these are assessable income. Gains may increase your tax liability, while losses can reduce any other capital gains you’ve made that financial year.

Pro Tax Tip: Your main residence, car, and belongings are exempt from CGT.

Capital Gains Tax in Australian

Capital Gains Tax (CGT) is applied to the profit made when you sell your property. You’ll need to report this profit – or capital gain – in your income tax return. To reduce the tax payable, you can subtract any costs associated with buying and selling the asset.

In Australia, CGT is calculated by treating the net capital gains as taxable income in the year the asset was sold. If you held the asset for more than 12 months, the gain is first discounted by 50% for individual taxpayers or by 33.3% for super funds. The gain is then added to your assessable income, and you will be taxed at the individual tax rate based on the amount you’ve earned.

How Is Capital Gains Tax Calculated?

For every CGT event triggered, the net capital gain or loss will need to be worked out. There are three methods for calculating capital gains and only one to calculate a capital loss.

Pro Tax Tip: Individuals and small businesses (excluding companies) can generally discount a capital gain by 50% if they hold the asset for more than one year. For more details on precisely what triggers a CGT event, visit our broader guide to Capital Gains Tax events.

To calculate your net capital gain, you’ll first need to subtract costs such as:

  • Transfer costs
  • Stamp duty
  • Unclaimed borrowing expenses
  • Mortgage discharge fee
  • Advertising costs
  • Termination fees
  • Professional services
  • Legal fees associated with purchase and sale

The CGT Discount Method (Not Available For Companies)

If you’re an Australian resident for tax purposes and you’ve held your property for 12 months or more, you may be eligible to use this method. The CGT discount method involves subtracting the cost base from the capital proceeds, deducting the capital losses, and then applying the relevant discount percentage.

As an individual Australian resident, this reduces your capital gain by 50%. For eligible super funds and life insurance companies, this step reduces it by 33.33%.

The CGT Indexation Method

To use this method, you apply the relevant indexation factor and then subtract the indexed cost base from the capital proceeds. You can only apply the indexation method for assets acquired before 21 September 1999.

Pro tax tip: If you’re eligible for the indexation method, you’re likely also eligible for the CGT discount method. So your best bet is to calculate both and see which one gives you the best result. If you’re feeling a bit overwhelmed by all the calculations, ITP’s certified accountants can help. Find your nearest branch today, and set up an appointment to ensure you get this vital tax step right.

The “Other” Method

If you’re selling a property you’ve owned for less than 12 months, the ATO recommends a calculation strategy they simply call the “other” method. This involves subtracting the cost base from the capital proceeds.

Pro Tax Tip: Owning your property short or long-term will determine which method is used. An ITP Accounting Professional can determine which method will give you the best result – i.e. the smallest capital gain.

How To Avoid Paying CGT In Australia

There are several other strategies you can to minimise CGT paid on property in Australia. Living in a property for at least six months from the date of purchase may exempt you from paying CGT. However, you must be able to prove that the property is your main residence.

You can prove that a property is your main residence if:

  • You and your family live there
  • Your personal belongings are there
  • The address matches your electoral role address
  • Utility services are connected

The six-year rule might also help you out. Also known as Temporary Absence, this rule states that if you purchased a property to live in but you had to move from the property for a job or a holiday, you may be exempt from CGT. This applies indefinitely if you don’t rent out the property. Even if you lease the property to others during that time, you can claim the six-year rule so long as you:

  1. Don’t own another principal residence
  2. Don’t rent it out for longer than six years

Pro Tax Tip: You can only claim the six-year rule if the property was once your main residence. If you move back into the same property again, the six-year exemption period resets.


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Can You Avoid CGT When Selling An Investment Property?

If you sell your home, you’re normally exempt from paying CGT. If you’ve bought an investment property, however, there is almost no way out of incurring CGT. The cost of buying the property can be added to other costs related to the purchase. You can also claim a reduction in the value of the property over time, known as depreciation, as well as costs related to improvements you’ve made to the property.

Purchasing A New Family Home

As only main residences escape CGT, a second home can be temporarily treated as a second main residence under Section 118-140 of the Income Tax Assessment Act 1997 (ITAA 1997). This can help you avoid CGT. If a taxpayer purchases a new main residence before selling their existing home, both residences can be treated as the taxpayer’s CGT-exempt main residence for a maximum period of up to six months.

Just note that you’ll need to meet some conditions:

  1. The six-month period needs to be immediately before selling the existing home, or
  2. The period of time between the purchase of the new home and the sale of the existing home should not exceed six months.

If you buy a new home and sell your old one within six months, both can be considered your main home for tax purposes, so you won’t have to pay Capital Gains Tax (CGT).

If there’s a gap of six months between selling your old home and buying the new one, you get a six-month grace period where both homes are considered your main residence. However, if it takes longer than six months, you might have to pay some CGT. The amount depends on how much longer than six months it takes.

Note that your old home must have been your main home for at least a year, and you shouldn’t have rented it out or used it for business during that time.

This rule also applies if you buy a vacant lot or a partially built house to make it your main home.

Pro Tax Tip: A portion of the capital gain may be taxable if you’ve used the property to produce an income. This can get tricky to calculate, so once again, we recommend contacting one of ITP’s qualified accountants for help.

Investing In Superannuation

You can also reduce CGT by contributing to your superannuation. The ATO taxes these contributions at a lower rate. They can also reduce your taxable income, which lowers your tax rate. This can be especially helpful if you make a profit from selling an asset and contribute to your super in the same financial year.

Safely And Legally Avoiding Capital Gains Tax

As you can see, there are plenty of strategies you can use to reduce CGT or avoid it altogether. However, this is a complex area of tax law. For this reason, it’s best to seek professional advice from a qualified tax accountant. ITP’s Accounting Professionals are CGT experts and have helped many Australian individuals and businesses reduce their tax liabilities. So, if you want to achieve the best outcome for your specific situation, phone 1800 367 487 and chat with a friendly professional today.

Everything You Need To Know About Ponzi Schemes

Are you considering taking on a side hustle or a second job? Perhaps you’re researching ways to make passive income? Although we all secretly wish we could make quick and easy money, it’s important to remember this golden rule: If an opportunity appears too good to be true, it probably is.

The problem is that scammers have caught onto this golden rule too. As a result, many of them have gotten quite good at making their “opportunities” look legit. This leaves us in a situation where many fraudulent schemes look like perfectly reputable businesses at first glance. One of the worst offenders is the Ponzi scheme.

People tend to be sucked into these schemes through desperation or hope. They’re either scrambling for cash or seeking financial freedom, and these strong emotions can make them unsuspecting prey for devious people who are out to strip the unaware of their money.

With so much on the line, let’s clarify all the details you need to know about Ponzi schemes, including what they are, how they work, and how to spot them.

What Is A Ponzi Scheme?

A Ponzi scheme is a fraudulent investment scheme where profits are paid to current investors using money obtained from new investors. Those who organize Ponzi schemes often claim they will invest your money and produce substantial returns with minimal or no risk. In many cases, the fraudsters do not invest the funds. Instead, they use them to compensate earlier investors while keeping a portion for themselves.

Since Ponzi schemes generate little to no genuine income, they rely on a continuous stream of fresh funds to stay afloat. This gives them a fatal flaw they share with pyramid schemes – bringing in new recruits will become increasingly difficult and, eventually, impossible. When this flaw reduces the scheme’s ability to pay out existing investors, collapse is inevitable. Collapses can also occur at any time if a large number of existing investors seek to withdraw their funds.

The term “Ponzi scheme” is derived from Charles Ponzi, who conned investors in the 1920s with a scam related to postage stamp speculation.

How Does a Ponzi Scheme Work?

There’s no better way to describe the Ponzi scheme than by telling the story of its namesake. In 1920, Charles Ponzi established Securities Exchange Co., where he offered stock or promissory notes promising a 50% return on investment after 90 days. The money invested by shareholders was supposed to earn them International Reply Coupons (IRCs), which could be redeemed in the United States.

However, Ponzi did not use the funds to buy IRCs as promised. Instead, he used the money obtained from new investors to pay returns to old investors.

Ponzi justified his actions by blaming the Universal Postal Union for suspending the sale of IRCs once they discovered his coupon redemption scheme. After attempting to circumvent the suspension, he resorted to his “Rob Peter to pay Paul” approach. The scheme worked for a while, and in the first eight months of 1920, he amassed $15 million (equivalent to more than $230 million in 2024).

To keep the scheme going, Ponzi informed investors that he had developed an intricate network of agents purchasing IRCs overseas, which he could redeem in the US for a substantial profit. In reality, there was no such network, and he relied on new investments to pay off old investors.

Unfortunately, Ponzi schemes are not relegated to the dusty pages of history.


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Recent Ponzi Schemes

Bernie Madoff

Over several decades, Bernard Madoff provided his investors with consistent and stable annual returns using falsified account statements and other fabricated documentation. The idea was to persuade them that their funds had been invested in legitimate ventures. The investments appeared to be sound, especially to those receiving payments. However, there were no actual investments or returns. Madoff paid the initial investors “returns” with money given to him by a steady stream of new investors.

As the global economy plunged into the infamous 2008 decline, many of Madoff’s investors found themselves in desperate need of money. So, they began clamoring to cash in their investments. This was when Madoff’s Ponzi scheme fell apart. He did not have enough money to cover his investors’ demands, and finding new investor money was next to impossible in the economic downturn.

Tom Petters

Tom Petters – CEO and chairman of Petters Group Worldwide – was responsible for a Ponzi scheme totaling $3.7 billion.

Investors were under the impression that their investments were being used to purchase retail goods, primarily electronic products, which would then be sold to discount stores at a profit. In reality, Petters was not investing any of the money in retail merchandise. Instead, he used a portion of the funds to finance his extravagant lifestyle. The rest went to paying off old investors. He was convicted and sentenced to 50 years in prison in 2010.

What Is The Difference Between A Ponzi Scheme and a Pyramid Scheme?

Ponzi schemes and pyramid schemes are both types of investment fraud that involve recruiting new investors to pay off earlier ones. However, there are some significant differences between the two.

A Ponzi scheme typically involves a single person or entity promising high returns to investors and then using the funds obtained from new investors to pay earlier ones. Meanwhile, a pyramid scheme involves multiple levels of participants who recruit others beneath them to invest and receive a percentage of the money earned by those recruits.

Neither scheme is sustainable in the long term, as they rely on a constant flow of new investors to pay off earlier ones. Additionally, both are illegal, although pyramid schemes are sometimes disguised as legitimate multi-level marketing programs.

How To Avoid Ponzi Schemes

Most people would love to invest their money in a guaranteed deal that promises high returns. But be cautious if a broker or anyone else tries to sell you on such an offer. Investing always comes with some level of risk. So, if you’re promised guaranteed returns, that’s a huge red flag that you’re looking at a Ponzi scheme.

Pro tax tip: The best way to avoid Ponzi schemes is to educate yourself on the realities of investing. As a bonus, this will help you make informed decisions about legitimate investments that can improve your financial future. To get started, visit our investment guide for young Australians.

In a typical Ponzi scheme, scammers promise great and consistent returns. And they often deliver – but only for a while. In reality, they’re not investing in anything. Instead, they’re using money from new investors to pay off their old obligations, including the exaggerated returns promised to early birds. Know that the scheme will eventually crumble when it fails to attract enough new investors to keep it going. At that point, you will likely lose everything you’ve invested in it.

The Red Flags of a Ponzi Scheme

Ponzi schemes have some tell-tale signs you should watch out for. Here are some red flags to keep in mind:

  • High returns with little or no risk: Be wary of investment opportunities that promise guaranteed high returns. Every investment involves some degree of risk, and higher returns often mean higher risks.
  • Overly consistent returns: Investment returns tend to fluctuate over time. Be cautious of investments that generate steady positive returns regardless of market conditions.
  • Unregistered investments: Ponzi schemes involve investments that are not registered with government or official regulators. Registration is important because it provides investors with information about the company’s management, finances, and services.
  • Unlicensed sellers: Investment professionals and firms are required to be licensed or registered by federal and state securities laws. Most Ponzi schemes involve unlicensed individuals or unregistered firms.
  • Secretive, complex strategies: Avoid any investment you don’t understand, especially if you can’t get complete and easy-to-interpret information about it.
  • Issues with paperwork: Account statement errors could be a sign that your funds are not being invested as promised.
  • Difficulty receiving payments: If you have trouble receiving payments or cashing out, be suspicious. Ponzi scheme promoters sometimes offer higher returns to participants who stay put to prevent them from cashing out.

How To Report A Ponzi Scheme

The Australian Government is taking steps to reduce the risk, occurrence, and impact of fraud. They’re encouraging Australians to come forward and report any suspicions of fraud. In return, they promise to assess and investigate such reports promptly and fairly in accordance with the Australian Government Investigation Standards (AGIS).

To report suspected fraud or unethical behaviour, you can contact the government’s Fraud Reporting Team via email at reportafraud@ag.gov.au or by phone at 02 6141 6666. If the suspected fraud involves other Australian Government agencies or payment of Commonwealth benefits, you should report to the relevant agencies or use the Australian Government Services Fraud Tip-Off Line.

You can choose to remain anonymous when providing information. Just note that the more details you can provide about the people involved, the actions or activities suspected to be fraudulent, and the time and place of occurrence, the better equipped the department will be to investigate the matter.

By following the tips provided, you can learn how to avoid falling prey to Ponzi schemes and recognize the warning signs. It’s important to keep in mind that investing is not a foolproof method of generating extra income, and anyone claiming otherwise may be attempting to defraud you. Always be vigilant and on the lookout for key red flags when considering any investment opportunity.

ITP’s skilled accountants are always happy to field questions on these matters. And you can call your nearest ITP Tax Accountant if you think you’re a victim of a Ponzi scheme.

Business Woman Tea

Staying Compliant: Every Tax Deadline You Need to Know About

As a business owner, it’s vital that you know all the tax deadlines the Australian Taxation Office (ATO) sets throughout the year. From when to lodge your Business Activity Statements (BAS) and pay your Fringe Benefits Tax (FBT) to when you lodge your income tax return, knowing these deadlines will help you remain compliant and avoid late fees and penalties.

Whether you use a skilled bookkeeper or handle your accounting needs yourself, there are tasks that must be done by these dates. So mark them in your calendar to ensure you never miss one. There are quite a few, so let’s dive in!

Business Activity Statements

You need to lodge your BAS forms either monthly, quarterly, or annually. Depending on the size of your business and your annual turnover, the ATO will let you know when your statements will be due.

Monthly BASQuarterly Activity Statements lodged electronicallyAll other quarterly Activity Statements lodged in paper formAll quarterly Activity Statements lodged through a Tax or BAS Agent
Due on the 21 of the following monthJuly, August, September – due 28 October
October, November, December – due 28 February
January, February, March – due 28 April
April, May, June – due 28 July
Quarter 1 (July–September) – due 28 October
Quarter 2 (October–December) – due 28 February
Quarter 3 (January-March) – due 28 April
Quarter 4 (April–June) – due 28 July
Quarter 1 (July – September) – due 25 November
Quarter 2 (October – December) – due 28 February
Quarter 3 (January – March) – due 26 May
Quarter 4 (April –June) – due 25 August

Fringe Benefits Tax (FBT)

FBT is a tax employers pay on certain benefits they provide to staff. FBT can include provisions for employees’ families or other associates. These amounts may form part of their usual salary or wage. Alternatively, they may be considered an extra payment on top of the usual wage or salary. Either way, the ATO sees them as income and requires reporting on these amounts.

The Fringe Benefits year is different from the calendar and financial year. It runs annually between 1 April and 31 March. As a business owner, you must lodge and pay your FBT liability by the 21st of May.  From 2021, the due date for FBT payments moved to the 25th of June for business owners who have a registered tax agent lodge their return electronically. If your tax agent lodges your return by paper, the due date for lodgement and payment is still the 21st of May.

Goods and Services Tax (GST)

The Goods and Services Tax (GST) is a tax of 10% on most goods and services sold within Australia. If your business earns over $75,000 annually, you must register for and collect the GST from your customers. You’ll need to pay the amount you’ve collected minus any GST credits you claim in your reporting period via your BAS.

To learn more about claiming GST credits, please visit our guide to GST credits for business owners. Otherwise, these are the key dates on which you’ll need to lodge and pay your GST:

Date Reporting
28 JulFinal date for GST quarter 4 (April- June) payment. If varying the instalment amount, this is also your lodgement due.
21 AugFinal date for eligible monthly GST reporters to elect to report GST annually.
28 OctFinal date for GST quarter 1 (July – September) payment. If varying the instalment amount, this is also your lodgement due. Final date for eligible quarterly GST reporters to elect to report GST annually.
31 OctAnnual GST return or Annual GST information report – lodgement and payment is due when your income tax return is due.
28 FebFinal date for GST quarter 2 (October – December) payment. If varying the instalment amount, this is also your lodgement due. This is also the final date for lodgement and payment, if required, of your annual GST or Annual GST Information Report.
28 AprFinal date for GST quarter 3 (January – March) payment. If varying the instalment amount, this is also your lodgement due.
What Are The ATO’s Key Dates?

Pay As You Go (PAYG) withholding and instalments

As an employer, you’ll need to withhold a portion of the wage or salary of your employees, contractors, and company directors. You then pay this income tax to the ATO on their behalf. This is known as PAYG withholding. You may also need to withhold it from payments to other businesses if they don’t quote their Australian business number (ABN) to you.

You’ll need to report your PAYG on your BAS. Here are the dates to know about:

DateReporting
28 JulFinal date for payment. If varying the instalment amount, this is also your lodgement deadline for Quarter 4 (April – June). You’ll need to finalise all your PAYG instalments before you lodge your tax return to receive the correct credit in your income tax assessment.
21 OctAnnual PAYG instalment notice final date for payment.
28 OctQuarter 1 (July – September) instalment notices for payment. If varying the instalment amount, this is also your lodgement deadline.
28 FebQuarter 2 (October – December) instalment notices for payment. If varying the instalment amount, this is also your lodgement deadline.
28 AprQuarter 3 (January – March) instalment notices for payment. If varying the instalment amount, this is also your lodgement deadline.

Super Guarantee

As an employer, you must pay into every employee’s superannuation account. The minimum you need to pay is known as the super guarantee (SG). As of 2024, the SG is 11% of an employee’s ordinary time earnings. You’ll need to report your super guarantee contributions every quarter.

DateReporting
Quarter 1Due 28 October. If you do not pay the minimum super contributions, you must pay the SG charge and lodge a Superannuation Guarantee Charge Statement – Quarterly by 28 November.
Quarter 2Due 28 January. If you do not pay the minimum super contributions, you must pay the SG charge and lodge a Superannuation Guarantee Charge Statement – Quarterly by 28 February.
Quarter 3Due 28 April. If you do not pay the minimum super contributions, you must pay the SG charge and lodge a Superannuation Guarantee Charge Statement – Quarterly by 28 May.
Quarter 4Due 28 July. If you do not pay the minimum super contributions, you must pay the SG charge and lodge a Superannuation Guarantee Charge Statement – Quarterly by 28 August.

Taxable Payments Annual Report (TPAR)

A TPAR is an industry-specific report for companies that need to let the ATO know about payments made to contractors. You’ll need:

  • The contractor’s ABN
  • Their business name and address
  • The gross amount paid (including GST) over the financial year
  • The total GST included in the gross amount

This report is due by the 28th of August each year.

You’ll generally need to file TPARs if your company uses:

  • Building and construction services
  • Cleaning services
  • Courier or road freight services
  • IT services
  • Security, investigation or surveillance services
  • Government entities

Tax deadlines for closely held trusts

If you’re the trustee of a closely held trust, you must use a TFN report to inform the ATO of the tax file numbers (TFNs) and other personal details quoted by beneficiaries of the trust.

Here are the tax deadlines you need to know about:

DateReporting
Quarter 4April – June TFN report due 31 July
Quarter 1July – September TFN report due 31 October
Quarter 2October – December TFN report due 31 January
Quarter 3January – March TFN report due 30 April
30 SeptemberAnnual TFN withholding report due
28 OctoberAnnual activity statement for the previous financial year due

Income Tax Deadlines

Here are the key lodgement and payment dates for businesses and entities that balance on 30 June.  They do not apply to entities that use a substituted accounting period.

DateReporting
31 OctoberIncome tax lodgement due date for non-full assessment of company entities. Income tax payment date for companies that were taxable medium to large taxpayers in the immediate prior year and required to lodge by 31 October
1 DecemberLodgement due date for income tax returns for companies and trusts that were taxable medium to large business clients in the prior year and are not required to lodge earlier.
15 JanuaryLodgement due date for income tax returns for companies, and trusts that were taxable medium to large business clients in the prior year and are not required to lodge earlier.
28 FebruaryDue date for tax medium to large trusts that were non-taxable in the latest year

Staying Compliant with the ATO

Hopefully, this gives you clarity on the key tax deadlines you need to remember when reporting to the ATO. If you’re too busy to remember these dates, help is at hand. ITP’s business accountants can tailor their service to meet your needs. Whether you’re looking for one-off assistance or a bookkeeper to help you from one to five days a week, ITP can keep your business perfectly ATO-compliant. Phone 1800 367 487 or book online today.

Home Business

The Most Valuable Tax Deductions For Your Small Business

Along with the daily demands of their enterprise, small business owners are responsible for staying on top of their personal and business taxes. Remaining tax compliant is vital if you want to avoid problems with the Australian Taxation Office (ATO). And being able to correctly apply small business tax deductions is crucial if you want to avoid paying excess tax.

Of course, striking this balance between compliance and tax debt minimisation is far easier said than done. Indeed, depending on your business structure, it can be horrifically complicated. The good news is that you’re not on your own. ITP’s certified tax accountants are dedicated to making life easier for Australia’s small business community. One of the ways we do this is by providing free information to help you make informed decisions about your taxes.

To help you find your footing in the complex world of small business tax deductions, we’ve broken them down into their respective categories. Below, you’ll find a broad overview of the deduction types you may be able to claim.

Work-Related Travel Expenses

If you travel for business, there are several small business tax deductions you can claim, including the use of trains, buses, and taxis. You may also claim accommodation costs and meal expenses. However, there are rules for claiming overnight travel. You must:

  • Keep written evidence of all expenses when travelling away from home for one night or more
  • Keep a travel diary that records all the expenses and specifics of your business activities when you are away from home for six or more consecutive nights
Tax Deductions for Small Businesses in Australia

Repairs and Maintenance Tax Deductions

If you have a car used strictly for business, you may be able to claim back some of your expenses on your tax return. However, the calculations can be complicated, and the way you go about them will depend on your business structure as well as how the vehicle is used. For this reason, we recommend making an appointment with one of ITP’s business tax accountants, who can advise you on the expenses you can claim. Expert guidance is important here as mistakes can put you at odds with the ATO or see you paying far more tax than you would have if you’d worked with an accountant.

You can also claim deductions for repairing and maintaining other business assets, including machinery, tools, and appliances. You don’t have to own the asset to be able to make a claim. However, you do have to be able to prove that you paid for the repairs or maintenance. There are also some subtle rules that you must adhere to. For example, you cannot claim repairs carried out immediately after purchasing an asset because, according to the ATO, the price you paid for the item must have reflected its condition of needing some repairs. Given these complications, this is, once again, an aspect of your taxes that’s best handled with the help of a professional.

READ 6 TOP TAX DEDUCTIONS FOR  CONSTRUCTION WORKERS AND TRADIES

Home Office Tax Deductions

If you work from home, you can claim quite a few related small business tax deductions. These include:

  • Occupancy Expenses – including council rates, home insurance, land taxes, mortgage interest, or rent.
  • Running Expenses – including gas, electricity, and your phone line. You can also claim any decline in value of plant and equipment and the decline in value and cost of repairs to furniture.

Pro tax tip: If you sell your home, you may need to pay capital gains tax on the business part of your home if you were eligible to claim occupancy expenses on your tax return. To learn more about this, visit our guide to what triggers a capital gains tax event.

DOWNLOAD THIS ARTICLE: The Most Valuable Tax Deductions For Your Small Business

Small Business Tax Returns Made Easy

It’s always a good idea to broaden your understanding of the tax system and the deductions to which you’re entitled. However, you don’t have to struggle alone with the stress and endless paperwork. ITP’s small business tax accountants can ensure your tax returns always deliver the best refund possible. Our professional tax agents can guide you through the lodgement process and help you maximise your small business tax refund. We’ll make sure you’re perfectly compliant, meaning you won’t have to stress about having issues with the ATO. Drop by your nearest ITP office today or use our office locator to make a booking online.