Accountant Sydney | The Ultimate Guide to Australian Tax 2019

Accountants are normally the first person to be hired and last to be fired in a company. Why is that? Accounting and bookkeeping have been around for centuries. They have existed for almost as long as humans started engaging in trade and commerce.

Samip Katuwal - Business Manager at MJWebs

Samip Katuwal

Jul 12, 2019

Accountants are normally the first person to be hired and last to be fired in a company. Why is that? Accounting and bookkeeping have been around for centuries. They have existed for almost as long as humans started engaging in trade and commerce. This accountant Sydney guide for doing tax will discuss the important points and tips that you need to survive tax season.

Accounting and bookkeeping are organised systems that help in keeping track of all the transactions and exchanges that have occurred. When a company starts, they need to be able to keep track of their initial capital, the expenses that come with the construction of the building, and other expenses along the way. This is why a company needs accounting and business services early in the business.

When a company shuts down, all the financial books and records should be closed. This gives the owners an idea of what went right and where things went wrong. These records are also needed in the case that a company declares bankruptcy. This is the reason why, ideally, accountants are the first to be hired an last to be fired in a company.

Accounting and Business Services Offered by Australian CPAs

Whether you are an individual struggling with doing your taxes or a business owner who is having some difficulties in managing your financial records, there is nothing a professional accounting and business service provider cannot do for you.

If you are wondering what kind of services a Certified Public Accountant can offer in Australia, then read on.

Audit and Assurance Services

Certified Public Accountants can do the following for you or your business under their Audit and Assurance Services:

  • CPAs can review your engagements and transactions
  • They can help you with compliance engagements
  • They can assist with assurance engagements

Why do you need these services? Auditing the financial report of an individual or a company allows the auditor from an accounting and business service provider to analyse and express an opinion as to whether the financial report is prepared, in all material respects, in accordance with an applicable financial reporting framework.

Meanwhile, the assurance services provide reasonable or limited assurance on certain engagement. To be able to give an opinion on an engagement, the auditor should review the engagement records. This will allow them to express a conclusion whether, on the basis of the review, the financial report is prepared in accordance with an applicable financial reporting framework.

Bookkeeping Services

Bookkeeping services involve maintaining and evaluation financial transaction records in books of account such as sales, purchase, cash journals, ledgers or computerised accounting systems, preparing budget or income expenditure report, profit and loss statements and trial balances, and the making of statutory returns as permitted by law, not the making of any subjective decisions in relation thereto. Examples include:

  • CPAs can also offer payroll services
  • They handle the data entry of revenue and expenses
  • They can do basic depreciation calculations

Consumer and Commercial Credit Services

This service involves offering advice and accounting services relating to credit which an individual gets when acting in a private capacity, which is to be used primarily for domestic, household or family purposes and credit which an individual or a business entity, like a sole trader or a partner, obtains for business purposes. Some examples of consumer credit products include:

  • home loans
  • personal loans
  • credit cards
  • consumer leases
  • overdrafts
  • line of credit accounts.

Apart from that, these services also include the provision of credit to purchase, renovate, improve or refinance a residential investment property. Commercial credit includes the following:

  • lines of credit
  • bills of exchange
  • promissory notes
  • letters of credit.

Consumer credit is regulated by the National Consumer Credit Protection Act 2009 and associated regulations.

Financial Planning Services

Services related to financial planning involves giving advice in respect of a client’s personal financial affairs, specifically related to wealth management, retirement planning, estate planning, risk management and related product advice. This includes:

  • investment advice
  • superannuation advice
  • estate planning
  • insurance
  • financial counselling

Financial Reporting Services

Financial reporting services include the following:

  • compilation
  • preparation of financial statements
  • disclosures and notes to accounts
  • other calculations required by accounting standards
  • corporate secretarial services

The compilation engagement task involves compiling the financial information of an engagement. Compiled financial information is a presentation of historical or prospective financial information. This also includes financial statements. Financial statements are a structured representation of historical or prospective financial information which includes related notes. These records are intended to communicate an entity’s economic resources or obligations at a certain point in time or the changes for a period of time in accordance with a financial reporting framework. These related notes also include a summary of significant accounting policies and other explanatory information.

Forensic Accounting Services

Forensic accounting involves an accounting and business service provider dealing with engagements to perform, advise on or assist with an investigation. This may be in the context of legal proceedings or in connection with allegations of, or concerns regarding conduct that many be illegal, unethical or otherwise improper. This is in respect of which the member has a reasonable expectation that the matter will be brought before a court. This includes:

  • expert witness services
  • lay witness services
  • consulting expert services
  • investigation services

Insolvency and Corporate Reconstruction Services

Insolvency services are provided by a professional who is a member of public practice to an entity under appointment. The meaning of “appointment” in this context is the appointment of a member in public practice as a trustee or as a liquidator or provisional controller, or a scheme manager under Chapter 5 of the Corporations Act 2001 or an appointment to provide insolvency services under any other legislation. This includes:

  • debt counselling
  • debt arrangements
  • liquidations
  • bankruptcy
  • administrations and receiverships

Management Accounting Services

This accounting service involves the provision of financial and non-financial data and advice to a company for use in the organisation and development of its business. This process of preparing management reports and accounts is important since it provides accurate and timely financial and statistical information required by managers to make daily and short-term decisions. This includes:

  • business planning
  • forecasting
  • cash flow
  • budgeting
  • management accounts
  • cost accounting

Management Consultancy Services

The management consultancy service involves an engagement of specific performance which requires the accounting professional with specialised experience, to interpret, evaluate, analyse and report on commercial activities that enable management to make decisions. This may include, but is not limited to:

  • budgeting
  • forecasting
  • internal controls
  • efficiency management
  • systems selection and implementation
  • resource management
  • strategy development and evaluation

Taxation Services

Taxation services involve any services provided by an accountant in Sydney that is relating to establish a client’s or employer’s tax liabilities or entitlements. Taxation services may also involve satisfying the client’s obligations under a taxation law, especially in cases where the client can reasonably expect to rely on the services. This includes:

  • preparation of a return, notice, statement, application or other document for lodgement with a revenue authority. This also includes responding on behalf of a client or employer to requests for further information from a revenue authority
  • preparation of tax calculations to be used as the basis for the accounting entries in the financial statements
  • provision of tax planning and other tax advisory services and assisting a client or employer in the resolution of tax disputes

Transactional Accounting

Transactional accounting engagements involve establishing or applying changes in structures that is applicable to corporate entities. This includes:

  • due diligence
  • mergers and acquisitions
  • preparation of prospectus
  • corporate finance
  • initial public offers (IPO)
  • venture capital

Valuation Services

Valuation services involves engaging to perform a valuation and give a valuation procedure that a reasonable and informed third party accounting and business service provider would perform while taking into consideration all the specific facts and circumstances of the engagement or assignment available to the member at that time. This includes:

  • valuation reports
  • valuation engagements
  • limited scope valuation engagements
  • calculation engagements.

Accountant Sydney | What is Taxation?

Now that you know what services an accountant in Sydney can provide for you and your company, let us get into the details of taxation. Your company needs a professional to manage your transaction records and give you financial advice that would help your company grow. One of the things that you need to keep in mind when running a business is your tax.

Taxation by definition is a term used for when a taxing authority or the government imposes a tax. The term “taxation” is applicable to all types of involuntary levies, from income to capital gains to estate taxes. The resulting revenue of taxation is usually referred to as “taxes.”

What Makes Taxation Different from Other Payments?

Market exchanges normally requires the exchange of goods for an amount of money. Generally, people only make an exchange for items that they need. Taxation is different from other forms of payment since it does not require consent and it is not tied to any products or services rendered. Taxation is required by the government or a taxing authority who implements it through an implicit or explicit threat of force.

The system of tax have changed and varied considerably across jurisdictions and time. In the most modern tax systems, taxation occurs on both physical assets, such as property and specific events, such as a sales transaction. One of the most critical and contentious issues in the modern-time politics is the formulation of tax policies. Since the computation of tax tends to be complicated and confusing, reaching out to an accounting and business service provider would be beneficial to you and your company.

What are the Purposes and Justifications for Taxation?

There are different justification and explanation as to why there is a need for taxes. The most basic function and reason for taxation is to fund any expenditures that the government may have planned. Throughout different points of time in the history of tax, its purpose is to mainly support the ruling classes, raise armies and build defenses.

This changed later on as the new justifications have been offered across utilitarian, economic or moral considerations. It is believed by proponents of progressive levels of taxation on high-income earners that taxes encourage a more equitable society.

Nowadays, you may notice that the taxes are higher on specific products and services including tobacco or gasoline. This is justified as a form of deterrent on consumption. Some advocates of public goods theory believe that taxes are necessary in cases wherein the private provision of public goods is considered sub optimal, such as with lighthouses or national defense.

Accountant Sydney | Different Types of Taxation

There are different types of taxation. This may be common knowledge to an accountant in Sydney, but as a taxpayer– you, too, should know about the different types of levies.

The types of taxation includes the following:

  • Income tax- This tax is a government-imposed tax on the financial income generated by all entities within their jurisdiction, including individuals and businesses.
  • Corporate tax- This type of tax is imposed on the profit of a business.
  • Capital gains- This type of tax is imposed on any capital gains or profits made by people or businesses from the sale of certain assets which includes stocks, bonds, or real estate.
  • Property tax- This tax is assessed by a local government and paid for by the owner of a property. This tax is calculated based on the property and land values.
  • Inheritance- This type of tax is imposed on individuals who inherit the estate of a deceased person.
  • Sales tax- This kind of tax is imposed by a government on the sale of goods and services. This may take form as a value-added tax (VAT), a goods and services tax (GST), a state or provincial sales tax or an excise tax.

Accountant Sydney | Understanding Australian Taxes

The Australian Tax Office or the ATO collects most major business taxes, like income tax, for the Australian Government. There may be cases wherein state-based taxes are applicable– this is especially common for payroll tax. Australia has formed a number of tax treaties with other nations to ensure that double taxation would be avoided for foreign entities operating in Australia.

Different Types of Taxes in Australia

  • Australian business taxes – Involves information on company tax, Capital Gains Tax (CGT), Goods and Services Tax (GST), and other business taxes in Australia.
  • Personal income tax in Australia – The personal income tax is usually paid by their employer. The employer would subtract the required level of tax out of an employee’s salary before it is given. The employer would remit this amount to the Australian Taxation Office.

Note: Temporary residents are also required to pay income taxes but at a different rate from Australian residents.

  • Australian business taxes- The key taxes affecting businesses are Company (income) Tax, Capital Gains Tax (CGT) and the Goods and Services Tax (GST). These taxes are all set by the Australian Government. Businesses may choose to make tax payments monthly, quarterly or annually.
  • Company tax – This involves tax at a rate set by the Australian Government.
  • Capital Gains Tax – Capital Gains Tax (CGT) affects any capital gain made through the disposal of assets. It is paid as part of income tax.
  • Goods and Services Tax – The GST is a national, broad-based consumer tax on most goods and services sold or consumed in Australia. If you are a business that has paid for business supplies inclusive of GST, then you are entitled to claim an equivalent input tax credit.
  • Payroll Tax – This tax is a state tax on the wages you pay to employees. The payroll tax exemption threshold and the payroll tax rate varies between states and territories. This is why it would be best if you let an accountant in Sydney handle the computations as they know the ins and outs of the system.

Accountant Sydney | Paying Taxes

The Australian income year ends on every 30th of June. You will need to lodge an annual income tax return which will include how much income you received and tax you paid. This will be assessed so you will know whether you are entitled to a tax refund.

It is possible to reduce the amount of tax you pay by claiming deductions that are directly related to earning your income.

How do I pay tax?

If you are an employee, your employer is required to automatically withhold tax from your wages and send it to the ATO. This system is called pay as you go (PAYG) withholding.

Your employer would give you a Tax file number declaration form to complete. Your employer will use the information that you have provided in this form to work out how much tax to deduct from your pay.

If you are a business, there are many ways to lodge your tax return. You can either get in touch with a professional from an accounting and business service provider, do it yourself through an online portal or get a professional do it for you through an online platform.

Accountant Sydney | Tips for Doing Your Taxes

The easiest way to get through the tax season is, of course, getting a professional accountant handle all the work. Since they are experienced and knowledgeable about the accounting and tax system in the country, they would have no problems in adjusting to what you and/or your company needs.

However, if you want to be a self-preparer or if you simply just want to know more about saving money and reducing your tax liabilities, then here are some tips for you:

Claim all your work-related deductions.

This includes employment-related mobile phone, internet usage, computer repairs, union fees and professional subscriptions that you, the employee, paid yourself and for which you were not reimbursed.

Keep in mind that there are some criteria for an expense to qualify:

  • The money that has been spent on the expense must be yours
  • The expense should be directly related to your job or business
  • The amount that you have spent must not have been reimbursed
  • You should you must have the relevant records to prove it

Claim self-education expenses

If you have spent your own money for education which is related to maintaining or improving your current occupational skills or is likely to increase your income from your current employment, then you should claim it. However, if you obtain new qualifications in a different field through study, the expenses incurred are not tax deductible.

Claim depreciation

You should know that immediate deductions can be claimed for any assets that cost under $300 if the asset is used to generate income.This asset may include tools for tradespeople, calculators, briefcases, computer equipment and technical books purchased by an employee, or minor items of plant purchased by a landlord.

Claim and maximise motor vehicle deductions

If you have a vehicle that you use for work-related transport and travel then you should maximise your vehicle deductions. If your annual travel claim does not exceed 5000 kilometres, you can claim a deduction for your vehicle expenses on the cents-per-kilometre basis. The allowable rate for such claims changes every year, so it is crucial that you obtain this year’s rate from the ATO or your accountant in Sydney or a registered tax agent.

Claim rental property deductions

If you are an owner of a rental property, you can claim immediate deductions for various expenses such as:

  • interest on investment loans
  • land tax
  • Council and water rates
  • body corporate charges
  • insurance
  • repairs and maintenance
  • agent’s commission
  • gardening
  • pest control
  • leases
  • advertising for tenants

You are also entitled to claim annual deductions for the declining value of depreciable assets and capital-works such as structural improvements like re-modelling.

Accountant Sydney | Bottom Line

Now that you have a better understanding of how accounting and taxation works in Australia, you should be able to make informed decisions for you and/or your company. When in doubt, it is always best to ask a professional for advice.