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5 Reasons Why Your Business Needs a Financial Audit

Financial audits can provide your business with a variety of benefits. Not only do they help to ensure that your financial records are accurate and up-to-date, but they also allow you to identify areas where you may be able to improve your processes and save money. Here are five reasons why your business needs a financial audit.

Compliance

As a business owner, it’s important to stay compliant with government regulations. One way to do this is to get a financial audit. This will help ensure that your financial records are accurate and up-to-date.

A financial audit can be conducted by an external auditor or by an internal auditor. Either way, the goal is to examine your financial records to see if they are accurate and in compliance with any applicable regulations.

The auditor will review your financial statements and supporting documentation. They will also test your internal controls to see if they are effective. After the audit is complete, you will receive a report that outlines any areas of concern.

Getting a financial audit is an important part of complying with government regulations. By having your financial records audited, you can ensure that you are in compliance with any regulations that apply to your business.

Fraud Detection

Audits can help to detect any fraudulent activity or discrepancies in your financial records. This is especially important for businesses that handle sensitive data or have a high level of financial transactions.

Tax Preparation

Audits can help to ensure that your business is in compliance with tax regulations and can help to ensure that you are taking advantage of any available tax deductions or credits. Overall, audits can be a valuable tool for businesses. They can help to ensure compliance with tax regulations and can uncover potential areas of improvement. If you’re facing an audit, stay calm and cooperate with the auditor. Be prepared to provide documentation and answer any questions that the auditor may have.

Efficiency

Audits can help to identify areas of inefficiency in your financial processes. This can help you to streamline your processes and save money over time. For example, if you are manually processing invoices, an audit can help you to identify ways to automate the process. This can save you time and money in the long run. Similarly, if you are using outdated software, an audit can help you to identify ways to update your system. This can also save you time and money in the long run.

Investor Confidence

Investors will often require a financial audit before investing in your business. Having an audit completed can help to instill confidence in potential investors and increase the likelihood of securing investment.

Conclusion

Overall, financial audits can provide a variety of benefits to your business. They can help to ensure compliance with government regulations, detect fraud, prepare for taxes, identify inefficiencies, and instill confidence in investors. If you have not had your financial records audited recently, now is the time to do so.

If you’re looking for help with the audit process, then you’ve come to the right place. SMB Accounting is fast becoming one of the leaders in Australia when it comes to providing accounting services. As an accounting firm serving Brisbane, Sunshine Coast, and Fraser Coast, we help clients by providing business advice, taxation, and XERO/MYOB/Quickbooks consulting. Whenever you need help managing your income tax returns or keeping your finances in check, SMB Accounting is the one to call. Contact us today to get started.

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Helpful Advice to Apply to Your Tax Return Preparation

It pays to put in a little time and effort to make sure you have every detail of your return correct and that you have avoided some of the more common traps that people tend to fall into. 

This is important, knowing that 84 per cent of taxpayers expect a refund and the average size of refunds last year reached close to $3,000.

Below are the best tips for doing your taxes correctly this year.

Make an Eligible Claim

Any expense you incurred in generating your income is eligible for a deduction. So don’t be afraid to claim an expense if you’ve incurred it for work-related reasons and have the supporting documentation.

Avoid Overstating Deductions

Only the amount you spent may be claimed. Therefore, only deduct expenses that you can show you paid for by providing an invoice, receipt, or bank statement, and avoid inflating deductions to get a higher refund.

Self-lodgers using the ATO’s myTax programme are watched by the ATO’s computer systems while preparing their returns to ensure they aren’t overclaiming. The ATO’s computer systems compare your claims to those of people with similar circumstances. 

If your claim raises red flags, myTax will issue a severe warning and encourage you to reconsider that deduction. If you disregard the warning, an audit may be coming your way.

If it turns out that your deduction claims were false, you’ll have to pay interest on top of the tax you could have avoided. The interest levied by the ATO is determined on a daily compounding basis and is based on the rate for 90-Day Bank Accepted Bills, but with a 3 per cent uplift factor. 

A penalty of 25 per cent to 95 per cent of the tax evaded may also be imposed if the ATO thinks you acted irresponsibly.

Use Caution When Using Pre-Filled Data from the ATO

You may pre-fill a lot of your income information directly from the ATO’s computers with the click of a button. However, be cautious and avoid assuming that income data is accurate or comprehensive. 

Always utilise your own data as the primary source. Some individuals believe that since the data is from the ATO, it must be accurate. That is a perilous supposition.

Even though you copied the data directly from the ATO’s pre-filled data, the legal responsibility will fall on you if you omit income and the ATO questions you.

Note the Basics

The ATO holds up a lot of tax returns because people make simple errors like this. Inform the ATO of any name or address changes before filing your return. 

The ATO won’t be able to connect it with your Tax File Number if you lodge under different details. There will be delays.

You must include your bank information on your return since the ATO no longer mails refund checks. Also, your return may disappear into thin air as the ATO manually matches your information if you accidentally typed an extra letter into a crucial field like your name.

Conclusion

Taxes are complicated, which is why 74 per cent of Australians use a tax professional to complete their tax returns. If you file your tax return incorrectly, you could face penalties from the ATO or a smaller refund.

The majority of consumers find it much less stressful to simply provide their tax agent with all the information they need, trusting that the agency will complete their return accurately and completely. 

A seasoned agent will typically be adept at spotting those elusive tax deductions you didn’t know you could claim, so they can frequently more than pay for themselves.

SMB Accounting is here if you need help with tax returns in Sunshine Coast. We can do your individual tax returns, small business accounting with various small business accounting packages available, SMSF audits, and more. Call us today to get started.

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Your Tax Return – Is it Correct?

Given that 84% of Australian taxpayers anticipate receiving a refund and the average size of returns exceeded $3,000 the previous year, it is in your best interest to double-check that your tax return is correct in every way.

Read on to discover more about tax returns and how to (finally) do it right this time around.

Assess Your Claim to What Is Legitimately Yours

Any expenditure that generates a profit can be deducted as a business expense. You should file a claim for any work-related expenses for which you have documentation. Most taxpayers are permitted to deduct expenses related to automobiles, travel expenses for work, and costs of equipment and work tools.

By speaking with an experienced tax accountant, you can lessen your chances of getting audited by learning which deductions are legal and which are not.

Skip the Dramatics, and Don’t Exaggerate

Only expenses are allowable deductions from taxable income. In order to earn a higher return, do not inflate your deductions; instead, ensure that any charges you claim can be proved by an invoice, a receipt, or a bank statement.

Self-declarants who use myTax are scrutinised by ATO computer systems to ensure they are not filing an excessive number of claims. If your deduction generates a warning, myTax will prompt you to reconsider accepting it. If you choose to disregard the notification, you risk being subjected to an audit.

If the deductions you claimed were incorrect, you must repay the tax as well as any relevant interest. The ATO calculates daily compounded interest at a rate equal to the 90-Day Bank Accepted Bill rate plus three percentage points. If the Australian Taxation Office (ATO) deems that your acts were negligent, it may levy a penalty ranging from 25% to 95% of the tax evaded.

Avoid Using ATO-Prefilled Data

At the moment, ATO’s computers can pre-populate a substantial amount of information regarding income. However, don’t assume that income data is correct or complete. Always rely on your own knowledge and firsthand information. Some people believe ATO data is reliable, but this is simply a dangerous assumption to make.

Even if you utilised pre-filled information on your tax return, you could face legal consequences if you disguised income and were later questioned about it by the ATO.

Focus On Everything, Especially the Essentials

The Internal Revenue Service can delay the processing of many tax returns due to trivial errors.

For example, if you’ve lately relocated or changed your legal name, make sure that before filing, you notify the Internal Revenue Service. If you use distinct information, the ATO will be unable to match your tax filing number.

Another example is if you have not provided bank account information. Because the ATO is unable to ship refund cheques at this time, make sure you give your bank account information. Otherwise, you don’t get the refund.

Furthermore, let’s talk about typos. If you add a letter to a required field, such as your name, the ATO will manually match your information. For example, if you add a letter to the “address” field, it will be automatically disregarded or ignored.

Do It Right with a Professional

Giving their information to a tax professional who will prepare their return in an accurate and comprehensive manner relieves the great majority of clients’ stress. When you hire a good agent, they should be able to identify hidden tax deductions that you were not aware of, resulting in the agent more than paying for themselves. Tax preparation fees are tax deductible!

Conclusion

It’s true that the Australian tax system is so convoluted that many people get confused. Thankfully, we can hire the services of a trusted professional tax agent. By learning with a professional, you can do your taxes right again and again!

Are you in need of a tax professional’s guidance? SMB Accounting is here to manage your finances, including your taxes. Work with us today!

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What Can You Invest Your Self-Managed Super Fund in?

An SMSF is a retirement savings account that allows Australians to invest in a broader range of assets than a traditional superannuation fund. The benefits of an SMSF include controlling your retirement savings and investing in a mix of assets that align with your financial goals.

1. Properties

If you’re looking to invest in real estate through your self-managed super fund (SMSF), there are a few things you need to know. SMSFs can invest in commercial and residential property, but some rules and restrictions apply. 

For example, an SMSF cannot purchase a residential property from a related party of an SMSF member, and the property cannot be lived in or rented by a fund member. Additionally, your SMSF can only purchase your business premises if you pay rent to your SMSF at the market rate. 

When borrowing to purchase property, lenders usually allow self-managed super funds to borrow up to 70-80 per cent of the property’s value. However, they generally require the SMSF to have a company as a trustee rather than individuals.

2. Shares

Your SMSF can invest in a wide range of assets, including shares, property, managed funds, term deposits, and cash. The earnings on these investments stay within your SMSF and go back into accumulating more wealth. For example, the rent from your property is deposited into your SMSF bank account along with interest on your term deposit and dividends from your shares. This allows you to grow your wealth without paying taxes on the earnings. 

Making money through investing in the stock market can be very profitable, but it is important to always research before investing. A good way to start is by investing in various market sectors, such as banks and resource companies. This will help to spread the risk. 

Another good option is to invest in blue-chip stocks, which are stocks of larger, more established companies. This can provide a solid foundation before diversifying further with international shares or exchange-traded funds (EFTs).

3. Cash and Term Deposits

A term deposit is a way to invest your money for a fixed period and earn interest on that investment. Most banks offer term deposits specifically for self-managed super funds, a low-risk way to earn more interest than you would in a savings account. However, you can only withdraw your money from the term deposit at the end. A high-interest savings account is still useful for easily accessible funds.

4. Collectables

Collectables are valued for their rarity, historical significance, or aesthetic appeal. This includes artwork, jewellery, antiques, cars, coins, and memorabilia. In 2016, more restrictive rules were introduced for investing in collectables through an SMSF. This means that fewer SMSFs are investing in collectables now. Understand the rules if you’re considering adding collectables to your SMSF portfolio.

Conclusion

A self-managed super fund can be a great way to invest for retirement. Various investment options are available, and the best option will depend on each individual’s circumstances. However, all self-managed super funds should be diversified to minimise risk.

SMB Accounting does Individual tax returns, small business accounting with various small business accounting packages available, SMSF audits (self-managed super funds) as well as a Xero accounting software-based accounting business. We are your trusted partner when it comes to tax returns and superannuation. If you want to know more about SMSF tax benefits, get in touch with us today! Let us know how we can help.

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What is a Profit & Loss Statement

The profit and loss statement (P&L) is a financial statement that shows your company’s income and expenses over a given period of time. It’s also known as the income statement or the income & expense report. The P&L compares how much money you brought in with how much money you spent during a specific period of time, usually one month or quarter.

Profit and Loss statement

A profit and loss statement, or P&L, is a financial statement that summarizes a company’s revenues, expenses and net income for a given period of time. It’s also called an income statement.

The P&L summary shows you how much money your business made or lost through sales revenue (revenue) minus expenses (costs). The bottom line is the net profit, which can be positive or negative depending on whether your total revenue outweighed your total costs.

Profit & Loss Statement Example:

Income

Income is the money that comes in to a business. Income can come from sales of products or services, and may include interest, dividends and other types of income.

It’s important for you to be able to identify where your income comes from so you can make sure you’re getting as much revenue as possible out of each sale. You can break down your income by category (for example: product A sold X units; product B sold Y units), by period (for example: Q1 versus Q2), or even by customer (for example: John Doe purchased X number of products).

Sales

Sales are the total amount of money your company brings in from customers. Sales are the result of your company’s marketing efforts, pricing strategy and product or service offerings.

Sales can be broken down into four main categories:

  • Gross sales – The amount of money that comes in before any discounts have been applied to it. For example, if you sell something for $1,000 but give a 20% discount; gross sales would be $1,000 (not $800).
  • Net sales – The amount of money that comes in after all discounts have been applied but before taxes have been paid. For example if you sell something for $1,000 which has a 20% discount; net sales would be $800 after tax (not $840).

Financing

Financing is the money you borrow to start or grow your business. Financing can be in the form of a loan or a line of credit.

Financing allows you to buy inventory and pay for other expenses. Financing is usually paid back over a period of time, though it may be paid back immediately if it’s an unsecured line of credit.

Other Income

Other Income is any income that is not part of the normal operations of your business. Examples of other income include interest earned from a savings account, rent received, or money you receive for selling an item on eBay.

To report other income on your P&L, you can use one of two options:

  • The Accrual Method – This method records all revenues when they are earned and deducts expenses when they are paid (or accrued). You can learn more about the accrual method here.
  • The Cash Method – This method records revenues when cash is received and deducts expenses as soon as they occur (when you pay them). You can learn more about the cash method here.

Expenses

An expense is a cost that is incurred in order to generate revenue. You can broadly categorize business expenses into two types: direct and indirect. Direct costs are those that can be specifically identified with a product or service, while indirect costs cannot be so easily attributed.

Direct expenses include things like the cost of raw materials used in the production process and salaries paid to employees who work directly on a project or product. On the other hand, indirect expenses are related to overhead costs such as rent, utilities and office supplies; they’re associated with operating your business but aren’t directly linked to any one specific product or project (e.g., if you have an administrative assistant who works on sales tasks as well as accounting work).

Fixed vs variable expenses

Fixed costs are those whose rates do not change over time—they remain at exactly the same amount every month regardless of your volume of activity during that period (e.g., rent). Variable costs fluctuate depending on how many units you sell each month—the more products sold per month means higher variable expenses (e.g., packaging materials for each unit).

COGS/Cost of Goods Sold/Inventory

COGS is the cost of goods sold, or the inventory on hand. It is also called Cost of Goods Sold and Inventory. When you buy raw materials, receive them in your warehouse, process them into finished products and sell those products to customers, this figure will be used to calculate your profitability (or lack thereof).

Marketing & Promotions

So, what does all that mean? Well, a Profit & Loss Statement is an overview of your company’s financial performance. It breaks down revenue and expenses so you can see how much money you’re making or losing. The first section of the statement is Marketing & Promotions.

Marketing is one of the key drivers of revenue in any business because it helps customers find you and buy your products or services. But marketing isn’t just advertising—it’s also customer relations and public relations (PR).

Marketing can be divided into three main categories: consumer-facing marketing; business-to-business (B2B) marketing; and branding through corporate social responsibility (CSR), sustainability initiatives, etc., which I refer to as integrated communications.

Salaries & Benefits (including Contractors)

Salaries & benefits are a cost of doing business. They include salaries, bonuses, 401k contributions and any other benefits you provide employees (such as health insurance).

Salary: This is the amount you pay your employees. If you have contractors or subcontractors who work with your company but don’t make up a significant part of your workforce, then they would be considered “contractors” here (more on that later).

Rent, Utilities, and Insurance

As a business owner, you’ll want to know what your rent, utilities, and insurance costs are. These three items make up a significant portion of your ongoing expenses as a small business owner. To calculate them:

  • First add together all of the monthly payments that you make for these services. For example, if you pay $2,000 in rent each month and $200 in utilities each month, then your total monthly payments for these two things would be $2,200 ($1,400 + 600 = 2200).
  • Next divide this number by 12 to get an average monthly cost per year (2200 / 12 = 175).
  • Finally multiply this amount by 100% to arrive at a percentage of total expenses (175 * 100% = 175%).

Interest paid on debt or financing including any fees associated with the loan or line of credit.

The interest paid on debt or financing, including any fees associated with the loan or line of credit. This is a cost of doing business, and it will vary depending on the type of loan you take out.

A Profit & Loss Statement is a document that reports your company’s financial performance over a specified time period.

A Profit & Loss Statement is a document that reports your company’s financial performance over a specified time period.

You can use this statement to calculate how much money you made or lost during the given time period.

Conclusion

Profit and loss statements provide a snapshot of your business’s financial performance over a given time period. In addition to showing how much money you made or lost, they provide insight into your company’s expenses and income sources so that you can make informed decisions about future financing needs, inventory levels, pricing strategies and more.

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What Is Cloud-Based Accounting and What Are Its Benefits

Cloud-based accounting is a term used to describe storing and accessing financial data and records in the cloud. This type of accounting offers many advantages over traditional on-premises accounting, including increased flexibility, scalability, and collaboration.

What Is the Cloud?

The cloud is a remote server network used to store, manage, and process data. Cloud-based applications and services are delivered over the internet and can be accessed anywhere.

What Are the Benefits of Cloud-Based Accounting?

Cloud-based accounting is a growing trend in the business world. more and more businesses are moving to the cloud to take advantage of its many benefits. Here are just a few of the benefits of cloud-based accounting:

1. Cost-Savings

One of the biggest benefits of cloud-based accounting is that it can save money. You don’t have to invest in expensive hardware or software with cloud-based accounting. Instead, you can access your accounting software from any internet-connected device.

2. Anytime, Anywhere Access

Another great benefit of cloud-based accounting is that it gives you access to your financial data anytime, anywhere. With cloud-based accounting, you can check your financials from anywhere, anytime. This is a huge benefit for businesses that have employees working remotely or who travel frequently.

3. Automatic Updates

With cloud-based accounting, you’ll never have to worry about manually updating your software. That’s because updates are automatically pushed to your system, so you’ll always have the latest version.

4. Scalability

Cloud-based accounting is also highly scalable. That means it can grow with your business. As your business expands, you can easily add more users and features to your system.

5. Enhanced Security

When it comes to security, cloud-based accounting is second to none. With cloud-based accounting, your data is stored on secure servers in a professional data centre. That means it’s protected from natural disasters, power outages, and other potential threats.

6. Better Collaboration

Cloud-based accounting also makes it easy for you to collaborate with your team. With cloud-based accounting, multiple users can access and update your financial data in real time. That means you can quickly and easily share information with your accountant, bookkeeper, or financial advisor.

7. Improved Cash Flow

One of the benefits of cloud-based accounting is that it can help you improve your cash flow. With cloud-based accounting, you can easily track invoices and payments. That way, you can stay on top of your receivables and keep your cash flow healthy.

8. Comprehensive Reporting

Another great thing about cloud-based accounting is that it provides comprehensive reporting. With cloud-based accounting, you can track your financial data in real-time. That way, you can easily see how your business performs and make informed decisions about your finances.

9. Improved Customer Service

One of the benefits of cloud-based accounting is that it can help you improve your customer service. With cloud-based accounting, you can give your customers real-time access to your financial data. That way, they can easily track their invoices and payments.

Conclusion

Cloud-based accounting is a great way for businesses to keep track of their finances and ensure that they comply with tax laws. It is also a cost-effective solution for small businesses that may not have the resources to invest in an on-premises accounting system.

If you are looking for accounting firms in Sunshine Coast, you can hire us at SMB Accounting. We offer various accounting services for all small business needs. Get in touch with us to learn more.

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What to Expect During an ATO Audit

It can be a very daunting experience to be audited by the ATO. The process can be quite confusing and frustrating, especially if you don’t know what to expect. But there’s really nothing to worry about if you’re prepared and you know what will come up during the audit process. This guide should help you know what to expect from an ATO audit, so you get ready.

What the ATO Looks for When Auditing a Business

The ATO is the Australian Taxation Office, responsible for collecting taxes and enforcing tax laws in Australia. When a business is selected for an audit, the ATO will look at the business’ tax returns and financial records to ensure that the business is complying with tax laws. The ATO may also issue penalties if they find any discrepancies.

There are a few things that the ATO looks for when auditing a business:

1. Accurate Record-Keeping

The ATO will want to see that your business is keeping accurate records of its income and expenses. This includes both financial and non-financial records. Financial records include things like invoices, receipts, bank statements, and tax returns. Non-financial records include things like employee records, customer records, and inventory records.

2. Compliance with Tax Laws

During the audit process, one of the first things the ATO will want to see is whether or not your business is complying with all relevant tax laws. This includes things like paying the correct amount of tax, filing correct and complete tax returns, and keeping accurate records of income and expenses.

3. Proper Classification of Expenses

One of the most common issues the ATO finds during audits is businesses incorrectly claiming expenses. The ATO will want to see that your business is only claiming expenses that are legitimate business expenses and that they have been properly classified. This means that expenses should be classified according to their purpose and not lumped together into one general category. For example, expenses for advertising should be classified as advertising expenses and not as general business expenses.

4. Reasonableness of Expenses

In addition to the proper classification of expenses, the ATO will also want to see that the expenses your business claims are reasonable. This means that the expenses are not excessive and that they are in line with what other businesses in your industry would spend on similar items. For example, a small business is not likely to have expenses for first-class travel or luxury hotels.

5. Proper Documentation

The ATO will want to see that your business has documentation to support its expenses. This includes things like receipts, invoices, and bank statements. The ATO may disallow expenses that are not properly documented.

Preparing for an ATO Audit

If you’re a small business owner, it’s important to be prepared for an ATO audit. Here are a few tips to help you get through an audit with minimal stress:

Know Your Rights – The first step is to educate yourself on your rights during an ATO audit. You have the right to legal representation, and you should also familiarise yourself with the ATO’s audit process.

Gather Your Records – The ATO will request a range of documents and records during an audit. These may include your financial records, tax returns, GST returns, payroll records and superannuation records.

Be Prepared to Answer Questions – The ATO auditor will ask you a range of questions about your business. It’s important to be prepared to answer these questions and to have supporting documentation to back up your answers.

Cooperate with the Auditor – It’s important to cooperate with the ATO auditor, as this will make the audit process go more smoothly. However, you should also know when to draw the line – if you feel like you’re being interrogated or treated unfairly, you can always seek legal representation.

Conclusion

An ATO audit can be a stressful experience for small business owners – but if you’re properly prepared, you should be able to get through it unscathed. If you’re worried about an upcoming audit, it’s always a good idea to get in touch with a tax professional who can help you understand your rights and obligations.

You don’t have to power through an audit all by yourself. You can always hire an accountant in Sunshine Coast to help you prepare for it and make sure you have everything in order. That’s what SMB Accounting is here for. We offer a range of accounting services, including business advice, taxation and Quickbooks consulting. With our help, you don’t have to worry about surprise audits by the ATO. Reach out to us today and let our business accountants in Sunshine Coast assist you.

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What to Know about Boosting Your Tax Refund

If you believe that you always receive the full amount of your tax refund, you might be mistaken. After all, there are always more ways to increase the size of your tax refund.

The Australian tax system imposes numerous restrictions on the sorts of deductions that are allowable. The procedure of seeking tax deductions might be complicated, but help is available.

During tax season, here are a few simple techniques to help you save money. Read on to discover what to know about boosting your tax refund today.

Consult with Your Trusted Tax Agent

By now, you must be aware of all of the tax breaks available to you and the expenditures associated with your job. If not, it might be time to consult with your tax advisor.

According to data published by the Australian Taxation Office, more than 70% of Australians employ the services of tax agents such as Etax.com.au. If you question your tax advisor about tax-deductible expenses and what you are allowed to claim, he or she may be able to provide deductions that you were not previously aware of.

Remember, expenses related to one’s job, such as a home office, mobile phone, car, union dues, and other work-related expenses, are tax deductible. Simply taking advantage of one more deduction might improve your tax refund by hundreds of dollars.

Use ATO App to Help You Organise and Store Your Receipts

Keep all of your receipts so you can claim more tax deductions and receive a larger refund. Yes, this also means receipts for money spent on things related to your job so that you can deduct it from your taxes. This is critical!

This can be done simply by downloading the ATO App, scrolling down until you see the option to “Add deductions or receipts you have for the following year’s tax return” on the welcome screen, and then pressing the “Add” button. You can just attach files such as receipts and papers.

Etax is Australia’s most popular online tax agent service year after year because users are certain they will receive a larger refund if they use the service.

Reimburse or Claim All Work-Related Costs

You may be able to deduct a percentage of your annual mobile phone charges if you use your phone for business-related calls, searches, purchases, and emails.

A calculator, as well as a “regular” monthly account statement, are required to compute the deductible that is applied to your monthly mobile phone bill. Determine what proportion of your overall calls are work-related, and then deduct that amount from your total annual expense.

For example, the rising cost of mobile phones may result in higher tax returns. If you have a $660 annual mobile phone bill and 40% of your calls are related to business, you may be entitled to deduct $264 in expenses related to using your mobile phone for work on your tax return. As a result, a $60,000 return might increase by more than $70.

You have also gotten a training course that was subsidised by your employer. If you stayed overnight, your employer was supposed to provide you with food and lodging. You may have also had to purchase textbooks, a certificate, or your own laptop computer. These are the kinds of items that mount up over time, yet are sometimes overlooked when submitting tax returns.

Conclusion

Taxes are never easy to talk about, especially when you do not know where to start. Thankfully, with the help of professionals, you can boost your tax refund and make more claims than you originally thought.

Are you in need of a tax professional’s guidance? SMB Accounting is here to manage your finances, including your taxes. Work with us today!

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Tax Refunds and Returns in Australia: Why Is It Too Low?

It’s that time of year again. You’ve filed your taxes and are eagerly awaiting your tax refund. But when the refund arrives, it’s much lower than you expected. Why is your tax refund so low? 

If you pay tax on the portion of your taxable income that is subject to tax and you are considered an Australian resident for income tax purposes, you may be qualified for both of the following:

  • tax offset for low-income individuals
  • tax reductions for low- and middle-income earners

You are not obliged to finish a specific tax return section to benefit from these tax reductions. Once you’ve filed your tax return, accountants figure out your tax offset for you.

You won’t get the offset as a separate payment; if you are qualified, it will be a part of your tax return, and the amount will be reflected on your notice of assessment.

The prospect of a tax refund is all the more appealing given that Australia is now experiencing a recession due to the pandemic.

However, a tax consultant from Australia has cautioned that there are several reasons why taxpayers who are entitled to refunds this year may get less money than they had anticipated.

Almost eight out of ten Australians who submit tax returns are eligible for a cash refund. But for some of us, the return we are entitled to is far smaller than we had anticipated.

How Do Tax Refunds Work in Australia?

Every year, about 14 million people in Australia submit tax returns. Only about two-thirds of eligible people receive a refund, and the average amount is slightly over $4,000.

As a result, a total of $3 billion is reimbursed. As a result, you should be certain that you are making all the necessary efforts to maximise your return.

To avoid penalties, you must file your income tax returns by October 31. (Alternatively, you could be eligible for an extension over this deadline if you register with a tax professional before October 31.)

The return processing will take about two weeks, although your agent can update you on its status anytime.

These due dates will remain the same, and COVID-19 will not impact how you typically file your tax return. Because of the Low and Middle-Income Tax Offset available to many taxpayers, you could get a larger tax refund this year.

Why Is Your Tax Return Less?

According to the ATO’s most recent timetable, many taxpayers have already begun receiving tax refunds. But one of the questions that keep coming up is why it is at such a low level.

Or, to put it another way, why is the amount of the return payment so much less than what was anticipated when compared to the sums received in previous years?

Refunds have decreased between 8% and 10% from the previous year, according to information provided by the ATO.

It is possible that, when comparing your tax return from one year to the next, the total amount will be lower due to different circumstances.

The amount of your refund you are eligible to receive may be lowered if your income changes or if you cease to qualify for a tax credit or deduction.

It would help if you weren’t concerned since it’s conceivable that getting a lower tax refund will be beneficial in the long run. 

Even if you consider your tax refund “found money,” a more realistic comparison would be the situation in which you contribute money to the government without obtaining any interest in return.

When comparing their refund from one year to the next, many taxpayers are astonished to discover that their return has drastically decreased.

Your tax refund may need to be altered if your financial condition has recently changed. These alterations may include It’s crucial to prepare as much as possible to prevent getting caught off guard by a surprise occurrence.

Why Your Tax Refund Is Lower Than Expected

Due to changes made to their withholdings at the beginning of 2018, some taxpayers began receiving larger paychecks, which resulted in their paying less tax for the whole year.

Some taxpayers will pay less in total taxes due to the adjustment, but they might not get their entire anticipated tax refund.

Another result of the tax reform that was put into place at the end of 2017 is that the ATO modified the data that businesses use to estimate how much tax should be withheld from employees’ paychecks after the beginning of the year.

As a result, for certain employees whose withholding was based on out-of-date tax laws, some refunds and quantities payable were different from what they had been in recent years.

Conclusion 

There are a few reasons why your tax refund may be lower than expected. Firstly, the ATO may have made an error when processing your tax return on the sunshine coast. Secondly, you may have had deductions or offsets applied to your refund. Finally, the amount of tax you paid during the year may have been higher than usual, resulting in a lower refund.

If you are concerned that your tax refund is too low, you should contact the ATO and a tax consultant to discuss your options.

SMB Accounting offers services for individual income tax returns, small-business accounting using a variety of small-business accounting products, SMSF audits (self-managed super funds), and an accounting firm based on the Xero accounting software. In addition, we provide audits for trust accounts, nonprofit organisations, special needs audits, audits of financial statements for specific purposes, and more. Contact us if you have queries about your tax! 

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What You Need to Know Regarding SMSF Audits: A Guide

During tax season, self-managed superannuation funds (SMSFs) are subject to several financial and compliance checks. SMSFs may qualify for tax breaks on investment income if specific requirements are met. 

One of these regulations mandates that an authorised SMSF auditor conduct an annual audit of SMSFs. This article will give a thorough introduction to SMSF auditing. 

What Exactly Is an SMSF Audit?

Before submitting annual tax returns, SMSF holders must undergo an annual audit. An ASIC-registered auditor performs an SMSF audit to verify the financial statements’ accuracy and your fund’s compliance with superannuation laws.

The Australian Taxation Office (ATO) mandates an audit even in cases where no contributions or payments were made during the fiscal year. The auditor will provide a letter of engagement outlining the scope of their work during the audit. You have 14 days to respond if more information is needed. 

Another excellent way to make sure that there are no mistakes or inaccurate numbers in calculations that could harm your fund is to have them reviewed by a knowledgeable and objective specialist.

Why SMSF Audits Are Necessary

For several reasons, your SMSF must comply with super law. If funds fail to recognise and address compliance problems, the ATO may impose significant financial penalties on them. 

Numerous SMSF regulations are additionally intended to safeguard you and ensure that your investments comply with the fund’s definition. You can avoid compliance fines and investment losses by using an audit to help you find strategic flaws in your fund.

According to the ATO, an annual SMSF audit is necessary before submitting a yearly return. A few essential steps must be taken to ensure all deadlines are met. According to the ATO website, you must appoint an SMSF auditor at least 45 days before your annual return is due. You will be subject to financial penalties if you do not file your tax return by the deadline.

What Happens during an SMSF Audit?

SMSF auditors examine an SMSF’s operations for financial and compliance issues as part of their auditing process. According to Australian Auditing Standards, the fund’s financial statements are audited (balance sheet, income statement, and member statement). The compliance audit determines how well the fund complies with all relevant superannuation laws.

Following the conclusion of these financial and compliance audits, an SMSF auditor must complete an independent auditor’s report document provided by the ATO. Within 28 days of the auditor receiving all required documentation, the trustees must receive this report. 

SMSF trustees should act quickly to fix any violations with the help of their auditor. A fund’s audited annual return must be submitted to the ATO, and trustees are mandated by law to ensure that all related taxes are paid in full.

Auditors must use a contravention report document provided by the ATO to report any super legislation violations (contraventions) to the ATO within 28 days of their discovery during the compliance audit. Trustees should use the ATO’s SMSF early engagement and voluntary disclosure service if any breaches go unresolved.

The ATO will take the voluntary disclosure of any violations by SMSF trustees into account when determining the range of penalties it may impose after opening its investigation.

Conclusion

By law, trustees of SMSFs must have their funds audited by an independent SMSF auditor to ensure ongoing compliance with Australian super laws. ATO has the power to impose a range of sanctions for noncompliance, depending on the severity of the violation.

SMB Accounting is the firm for you if you are an accounting firm looking for highly efficient and comprehensive audit work. We are one of the leading SMSF audit firms. Our offices complete audits for accountants all over Australia with a guaranteed 24-hour turnaround time. All work is completed in-house, with NO outsourcing.

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