Income In, Deductions Out: A Junior Accountant’s Guide to Mastering Assessable Income and Deductions – 5 program on-demand webinar series

Program 1: Personal Services Income Unpacked: How it’s Taxed and What you Need to Know

When completing an individual, partnership, company or trust income tax return, one question that will need to be addressed is whether the income derived included any “personal services income”. This session looks into why this question needs to be asked, how to answer it and the tax implications if the answer is yes or no, including:

• Distinguishing between the personal services income rules and the allocation of profits within professional firms (PCG 2021/4)
• When the personal services income rules apply
• How you satisfy:
  • the results test
  • the 80% test
• How you “attribute” income if it is considered to be personal services income
• The tax implications if income is considered to be personal services income, including:
  • the small business income tax offset entitlement
  • small business depreciation eligibility
• The PAYG withholding requirements for personal services income
• The tax treatment of a personal services income loss
• Practical worked examples of how to answer the personal services income labels in an income tax return for:
  • an individual
  • a partnership
  • a company or trust

Program 2: To Claim or Not to Claim: Navigating Deductions with Sections 8-1 and 8-5

A clear understanding of the rules relating to income tax deductions is a prerequisite to competently completing client income tax return obligations. This session delves into the rules around deduction requirements, along with practical examples, including:

• A review of sections 8-1 and 8-5 ITAA 1997
• Drawing the distinction between capital and revenue expenditure and why it matters
• The meaning of “incurred” and how it impacts on the timing of deductions (TR 97/7)
• Tax treatment for the trickier expense categories, including:
  • legal expenses
  • repairs
  • interest and borrowing costs
  • travel
  • self-education
• Apportionment methods and records required when a deduction also includes a private use component
• What is “blackhole expenditure” and when is it deductible?
• How the non-commercial loss rules affect deductibility
• Worked examples highlighting the impact of GST on deductions

Program 3: Interest-ing Deductions: Maximising Tax Benefits on Interest Payments

An increase in interest rates in recent times means the tax benefits of claiming interest as a tax deduction have also increased. So, when is interest an allowed tax deduction and how is the claim calculated when a loan may have a balance that intermingles a variety of purposes? This session explores the answers, including:

• The rules to apply to determine if interest is tax deductible
  • general principles
  • is the deduction “too soon”?
  • deducting interest after commercial activity has ended
• Does the security on the loan impact on the tax treatment?
• Can you continue to claim interest once an income producing activity that the loan funded, has since ceased? (TR 2004/4)
• Worked examples highlighting the tax treatment for interest incurred:
  • on a holiday home
  • on vacant land with the intention of constructing an investment property
  • to the ATO

• Issues to consider if:
  • interest is incurred on a loan for an investment property tenanted by a family member or related person
  • a loan is in joint names and the income producing asset is in the name of one spouse only
• How to calculate the interest deduction on a loan from redraw and line of credit facilities (TR 2000/2)
• The tax implications for interest when the loan arrangement involves an offset account

Program 4: Repair v Improvement: How to Get Your Tax Deductions Right
 

A hot topic on the ATO’s radar is the tax treatment of repairs. So, why does this particular expense category attract so much attention? This session explains why, including:

• How to meet the deductibility test for repairs
• How the capital versus revenue distinction can be required to be made for repair work
• When a cost is considered to be an “initial repair” and if so, the tax treatment that follows
• How to distinguish between a “repair”” and an “improvement” and the differing tax treatment for each
• How understanding the term “entirety” could lead to higher deductions (TR 97/23)
• The trickier distinctions when it comes to investment properties, including:

• window replacements
• roof replacements
• replacing carpets with polished floorboards (ID 2002/330)
• undertaking renovations that include repair work

• When body corporation fees and special levies may require closer scrutiny if repair costs are involved
• Practical worked examples

Program 5: Depreciation Demystified: The Rulebook for Junior Accountants

The depreciation rules definitely do not follow a one size fits all approach, with numerous options available for claiming depreciation dependant on a number of factors. This session is designed to assist with providing a better understanding of the depreciation provisions, including:

• The difference between the depreciation provisions and the capital works deductions
• Items that are included and excluded from the depreciation provisions
• Using the effective life calculation options
• Who can use the $300 or less method or the low-value pool method and how they are applied
• The simplified depreciation method for small business
• Depreciation and motor vehicles, including:
  • accounting for a trade in with the purchase
  • the car cost price limit
  • the treatment of registration, government charges and extras included in the purchase cost
  • the GST impact
• How “balancing adjustment events” apply to the various depreciation methods
• Practical examples of calculations