Tax & Accounting

We are excited to announce that The Hopkins Group (THG) was ranked as one of top 25 most popular accounting and tax services in Victoria for 2022. 

More specifically, among over 3,300 accounting firms across Victoria, we were ranked: 

• #5 in ‘Most Popular Tax & Accounting Service in Melbourne CBD’ 
• #8 in ‘Most Popular Tax & Accounting Service in Inner City Melbourne’ 
• #22 in ‘Most Popular Tax & Accounting Service in Melbourne Region 
• #24 in ‘Most Popular Tax & Accounting Service in Victoria’ 

These rankings have been allocated by location to the businesses with the highest number of visits, positive reviews and overall engagement across the Search4Accountants website.

Search4Accountants is an online marketplace where over 61,500+ accountants, finance experts and tax agents can be found and contacted in just a few clicks. For more information about their services, please visit: https://www.search4accountants.com.au/

If you are looking for an accountant for your personal tax or business accounting, please email info@thehopkinsgroup.com.au to request an obligation-free callback from one of our tax and accounting consultants. 

Bitcoin, Ethereum, Polkadot, Ripple, even Dogecoin – interest in cryptocurrencies and the things they buy (like the surge in NFTs) has certainly ramped up in recent times. We’ve also seen how volatile the market can be with all-time highs met with sudden and significant corrections – it’s a risky game.

For those who may have tried to “get rich quick” through cryptocurrency trading, it’s a timely reminder that cryptocurrencies are treated by the ATO in a similar way that they treat other investment assets like property and shares – it’s potentially subject to capital gains tax.

As we wrote in one of our blogs in 2019, the ATO are keeping an eye out on Australians who are trading in cryptocurrencies and are working with a number of service providers including brokerage services, payment facilitators, exchange services and even bitcoin ATM providers to match data relating to cryptocurrency transactions. You can’t hide from the tax man!

A reminder on your obligations

This year, the ATO will be writing to around 100,000 taxpayers with cryptocurrency assets urging them to review their previously lodged returns.

Cryptocurrency is considered a CGT asset for tax purposes and as such any profits made from trading it could be liable for capital gains tax. However, an Australia resident taxpayer who has held the currency for greater than 12 months may be entitled to the 50% CGT discount. The ATO has said they are looking at whether a taxpayer has omitted capital gains on the sale of cryptocurrencies when preparing their income tax returns.

Just because you might think cryptocurrencies operate in an “anonymous” digital world, it doesn’t give you license to ignore your tax obligations.

How to report your cryptocurrency gains or losses

As with any asset, it’s important you keep records of your cryptocurrency transactions for tax purposes. Depending on the exchange you trade on, you may be able to find a report of these transactions within your exchange account – but it’s important to keep your own back up records where possible.

Come tax-time these records will help you calculate any capital gains or losses you may need to report. Working with a qualified accountant is often the easiest way to determine your tax obligations and make the right claims on your return.

Our team of accountants at The Hopkins Group are well versed in understanding the intricacies of Australian tax law and your obligations. With more and more advice coming out of the ATO on cryptocurrencies specifically, seeking quality advice is a safe bet come tax time. Speak to an accountant today to discuss your situation and get an idea of your personalised next steps.

Like clockwork, tax time is here again, and by now your employer will have likely finalised your Income Statement to make it tax ready. With all the pieces lined up to get started, you might be thinking about getting a move on your return. But where do you begin?

Download your checklists

The Hopkins Group’s handy tax time checklists have been designed to help you collate all your documents, ready for your accountant to prepare your return. Click the links below to download your checklists now!

✓ Individual Income Tax Return Checklist for FY 19/20

✓ Rental Property Checklist

✓ Vehicle Logbook Template

Know your deadlines

If you are completing your tax return yourself, you have until 31 October 2020 to file your 2019/20 tax return with the ATO.

But did you know, you can get an extension to that deadline?

If you complete your tax with a registered tax agent, like the accounting team at The Hopkins Group, you have until May 2021 to file the same return. This gives you that extra time to get everything together and work with an accountant to hopefully get the best result possible from your return.

All you need to do to get started is to contact one of our accountants to add your name to our tax agent’s list.

Speak to an accountant

Ready to lodge your return?

Request an appointment with one of our accountants to get started today, or send through your completed checklists to info@thehopkinsgroup.com.au and we’ll be in touch to discuss next steps.

At some point in our working lives, many of us have fantasied about switching our 9-to-5 office job to the luxury of working from the comfort of our lounge room. I certainly have; after all, at one point it was taking me two hours every day to get ready and commute to work. When saving money is an option – there’s no need to pay for public transport or fuel if you don’t leave the house – I’d readily choose to avoid the stress and unpleasantness of the daily commute.

But it isn’t only the cost of the commute that can save you money. If you’ve got your own little work den set up at home, there could be tax deductions waiting for you!

How do you claim home office expenses?

The deductibility of your home office expenses depends on whether you work from home out of convenience or whether you run your business from home. The ATO has very clear distinctions between the two.

Home business

According to the ATO, a home-based business is one where you operate the business under either of the following circumstances:

At home – that is, you carry out most of the business’ work at your home, for example, a dressmaker who does all their work at home, with clients coming to their home for fittings

From home – that is, the business does not own or rent any premises other than your home, for example, a tiler who does most of their work on clients’ premises but does not have any other business premises.

To work out which of these distinctions apply to you, ask yourself:

• Do you meet clients at home? If yes, then you work at home
• Is there a separate entrance for your clients? If yes, then you work at home
• Do you have an alternative workplace from which you operate? If yes you are most likely working from home
• Is the area you work out of used for any other purpose? If yes, then you work from home

Whether you operate your business from or at home, as long as the ATO agrees you’re operating a legitimate business, you’re eligible to claim the following deductions:

1. Running cost

If you work at or from your home, you are entitled to claim monthly running expenses. This includes the cost of using the room you’re working out of – e.g. heating, lighting, air conditioning, work phone costs, the depreciation of office equipment and the general workplace environment – curtains, carpet, etc.

2. Occupancy cost

For sole traders who work exclusively out of their home, you may be able to claim a portion of your rent, mortgage, insurance and rates.

Be aware that if you are able to claim occupancy home office expenses, it will affect your ability claim a main residence exemption for capital gains tax purposes.

Home Study

If you use your home as a workplace out of convenience and your principal place of work is not in your place of residence, you’re not out of the tax-deduction picture. While occupancy cost is not deductible, you may still be able to claim the running cost of your home office.

How much you can claim for your utilities?

There are two methods to claim your utilities expenses:

1. Set rate

The first method makes use of a set rate – determined by the Commissioner –  of $0.52 per hour of business usage. The only substantiation you require to claim this is a logbook detailing your business usage over a four week period. The $0.45 per hour rate covers both the cost of utilities and depreciation on furniture.

Example: Dany occasionally works from home on the weekend. She estimates she works from home 16 hours per week based on diary entries for a representative four week period. This means Dany can claim $399 (16 hours x 48 weeks x $0.52).

2. Percentage of actual bill

The second method involves claiming a percentage of all your utilities bills across the financial year. In order to claim a deduction using this method, you will need to first establish what percentage of your overall utility use is attributed to your business usage. There is no guidance on how this percentage can be calculated but you do need to substantiate your claim. A bona fide estimate based on a reasonable percentage of the household bill will be accepted, as long as you can provide a basis for your reasonable estimate.

Example: Ellen operates a business from home. The business has home office running expenses, including utilities expenses. She incurred $1,000 of utilities expenses in the current financial year. She calculates that the business related expenses makes up 40% of the total cost, based on her diary entries across a representative four-week period. In her tax return, Ellen can claim $400.

How much you can claim back from your home phone and internet?

If you use your own phone and internet exclusively for work purposes, you can claim a deduction provided you have sufficient records to support your claims. If you use your phone and internet for both work and personal purposes, like your home utilities, you’ll need to calculate the percentage that reasonably equates to your work use.  For more information on this type of claim, please see advice on the ATO website.

Keep those receipts!

Like all deductions, you need to be able to substantiate your claims. For any of these claims to be credible, you must keep accurate and up-to-date records. For home office expenses, these records include:

1. Equipment Diary – You’ll have to record how much you used your office, phone, and equipment for business over a four week period.

2. Itemised Phone Accounts – An itemised phone account will help you identify what calls you made for business purposes.

3. Receipts – Any expense you wish to claim must have proof in the form of receipts or written evidence. This includes any depreciating assets you’ve purchased over the tax year.

If all this seems overwhelming, don’t worry – you don’t have to go at it alone! While claiming home office deductions can add a layer of complexity to your annual return, it can be rewarding. If you’re entitled to a deduction, don’t let yourself miss out because it seems too complicated – it really can be as simple as getting advice from an accountant. The team here at The Hopkins Group are tax experts so you don’t have to be – we’re here to help you maximise your return for you. If you’re ready to get the most out of tax season, contact The Hopkins Group today!

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General advice warning: The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances and objectives. We recommend you obtain professional financial advice specific to your circumstances.

Article first published 15 June 2018. Last Updated: 27 March 2020 

If you’re looking to make additional contributions to your super fund to boost your retirement savings and avoid additional taxes, it pays to know what your total super balance and the transfer balance cap is, and the difference between the two.

What is the transfer balance cap?

The transfer balance cap (TBC) is a limit on the amount of superannuation funds you can transfer and hold in retirement phase to support a pension or annuity over the course of your lifetime. It is capped at $1.6 million from 1 July 2017 and is periodically in $100,000 increments in line with the consumer price index (CPI).

Why is it important to know what your TBC is?

Knowing your TBC is important because if your transfer balance account exceeds the cap limit, you will be liable to pay an excess transfer balance tax.

What is the difference between TBC and TSB?

While the TBC looks at the movement of capital to and from retirement phase, the total superannuation balance (TSB) is a sum of the values of your retirement-phase interests and accumulation-phase interests as at 30 June each year. The TSB has been introduced as a measure to help determine your eligibility for various super measures.

Your TSB comprises of:

• the accumulation or pre-retirement phase accounts
• retirement phase accounts, such as an account based pension, and
• funds in the process of being transferred from one super account to another (‘in-transit rollovers’).
• in some circumstances, the outstanding balance belonging to a limited recourse borrowing arrangement(LRBA) in an SMSF that was entered into from 1 July 2018, if either
  • the LRBA is with an associate of the fund, or
  • you have satisfied a condition of release with a nil cashing restriction

The ATO will determine your TSB based on the information it receives from your super funds. You can find out your TSB by logging in to your MyGov account.

Why is your TSB important?

Knowing your TSB is important as this figure can affect your eligibility for a range of things – like your ability to make non-concessional or catch-up concessional contributions, receive Government co-contributions, claim offsets, and use the segregated asset method. The impact of your TSB on these are outlined below.

Making non-concessional contributions and accessing to the bring forward arrangement

From 1 July 2017, if on 30 June of the previous financial year your TSB is below $1.6 million you may be eligible to make non-concessional contributions and use the bring forward arrangement. The cap for these contributions based on your TSB can be found in the table below (accurate as at November 2019)

Making catch-up concessional contributions

From July 2018, if your total superannuation balance is less than $500,000 on the previous 30 June, you may be able to accrue unused amounts for use in a later financial year.

The 2019/2020 financial year is the first year that the unused cap amounts can be used. Amounts carried forward will expire after five years if they are not used.

Accessing Government co-contributions

From 1 July 2017 in addition to the existing eligibility requirements (i.e. earning less than the threshold), you will be eligible for the government co-contribution in a financial year of up to $500 if:

• your non-concessional contributions do not exceed the non-concessional contributions cap for the relevant financial year
• on 30 June of the previous financial year, your total superannuation balance is less than the transfer balance cap ($1.6 million)

Claiming spouse tax offsets

As a result of the introduction of TSB, from 1 July 2017, there have been additional eligibility requirements to meet to be entitled to the spouse tax offset. These are:

• your spouse receiving the contribution cannot contribute more than their non-concessional contributions capfor the relevant year
• your spouse must have a total superannuation balance of less than the transfer balance cap ($1.6 million) immediately before the start of the financial year in which the contribution was made

Using the segregated asset method

From 1 July 2017, SMSFs and regulated super funds with fewer than five members (small APRA funds), cannot use the segregated asset method to calculate exempt current pension income if at any time in the year, the fund has a retirement phase interest, and all of the following apply:

• a person has a total superannuation balance exceeding $1.6 million just before the start of that year
• the same person has a super interest in the fund at any time during the year
• the same person is the retirement phase recipient of a superannuation income stream just before the start of the year (from the fund or another provider).

As you can see, while there are key differences between your TSB and the set TBC, both have implications on how and when you can make additional contributions to your super fund.

Understanding super terms and rules can be difficult, but seeking advice from an expert can simplify the complexities and put things into context within your own personal situation. To learn more about how your TSB and the TBC might impact you, contact The Hopkins Group today.

You may have heard a lot about First Home Owner Grant and the First Home Buyer Stamp Duty Exemption/Concession but have you heard of the First Home Super Saver Scheme (FHSSS)?

Back in the Federal Budget 2017 -2018, the FHSSS was introduced by the Australian Government to reduce pressure on housing affordability. FHSSS allows you to save money for your first home within your superannuation fund, by taking advantage of the concessional tax treatment of super.

Accessing your super before retirement

There is widespread misunderstanding that you can only access your super benefits when you reach your preservation age (i.e. when you retire). However, FHSS is a special release opportunity, which allows early access to super, provided certain conditions are met.

You can use the scheme if you are living in or intend to live in your first home when it is practical to move in for at least six months within the first year after your purchase.

How it works

Under the scheme, you can make concessional (before-tax) and non-concessional (after-tax) contributions into your super fund specifically for a home deposit.

Before-tax contributions are taxed at only 15% (which could be less than your current tax rate), and after-tax contributions are made into your super from after-tax income.

Up to $15,000 annual release of your voluntary contribution is allowed, with the life cap totaled at $30,000. This means that a couple can enjoy a combined concession amount of $60,000.

Every strategy has its pros and cons

Like many strategies, the FHSSS has its upsides and downsides. Some of these pros and cons include:

Pros	Cons
Drawing attracts favorable tax concession	Money can only be accessed for first home deposit
Assist in accumulating savings as a deposit	Slower process to access funds
Earnings on contribution only taxed at 15%	Difficult to understand super rules

The First Home Super Saver Scheme may not be suited to everyone’s circumstances and needs. Before making any financial decisions it’s important to carefully consider all the pros and cons and the suitability of the strategy to your individual situation.

Looking to buy your first home or exploring your options? First Things First is The Hopkins Group’s dedicated site for first home buyers, providing all the education, advice and support you need to make your first home buying dreams a reality. To learn more or to arrange a free catch up with a member of our team, click here.

When you’re ready to offload your old or scrap car in Melbourne, you might be considering the best way to make some money out of the process. Often this might mean trying to sell or trade it in for some cash – but have you ever considered donating it instead?

Donating a car is a good option for people wanting to give back to a charity of their choice – but also claim a nice little tax deduction in the process.

If you are donating your car to charity online, Kids Under Cover is pretty much your only option currently available in Melbourne. The good news is this charity not only accepts cars, but also vans, motorbikes, caravans, trucks, buses, tractors, boats on trailers and much more. After you submit your details, the charity arranges collection of the vehicle, before putting it up for auction. Once sold, proceeds are put towards projects on youth homelessness at Kids Under Cover – and you’ll get your tax-deductible receipt 8-12 weeks later as a thank you.

Of course – you may feel more strongly about another charity and want to focus any donations towards them. While you may not be able to donate your car directly to these charities, you’re not completely out of luck. You can still turn your car into a tax-deductible donation for your preferred charity.

Companies like Rapid Car Removal, which provide instant cash for cars in Melbourne, allow you to sell your car directly for cash and donate that amount directly to the cause you care for.

Companies like these also tend to care for the community, so you can tell them you want to transfer the proceeds to whatever cause you care for. In these situations they’ll work to maximise the value of the car and also deposit the proceeds to the charity of your choice, on your behalf.

Whatever direction you choose – as long as the proceeds from the car sale are donated to charity, and a tax-deductable receipt is provided, you’ll be able to make the deduction come tax time. It’s a great way to give back to the community.

Want to learn more about what other deductions you might be able to claim come tax time? Speak to one of our expert tax accountants about your options today!

Each year the ATO matches million of transactions against multiple sources in order to ensure that taxpayers are correctly disclosing their tax obligations.  You might even be familiar with some of these such as bank interest, payment summaries from your employer, the sale of real property and the sale of shares.  Now the ATO says it will begin collecting records from Australian cryptocurrency designated service providers (DSPs) to ensure people trading in cryptocurrency are paying the right amount of tax.

What is cryptocurrency?

The term cryptocurrency is generally used to describe a digital asset in which encryption techniques are used to regulate the generation of additional units and verify transactions on a blockchain.  Cryptocurrencies can be bought or sold on an exchange platform using conventional money.  The ATO says the innovative and complex nature of cryptocurrencies can lead to a genuine lack of awareness of the tax obligations associated with these activities.

How will the ATO collect and match data relating to cryptocurrency transactions?

The data collected from third-parties will include purchase and sale information to better identify taxpayers who have failed to disclose their income details correctly.  Information collected will include a range of sale and contracted-related details, as well as transaction dates and times and amounts of transfers for individual account holders.  The ATO will be making contact with a ranges of service providers to obtain this information including brokerage services, payment facilitators, exchange services and even bitcoin ATM providers.  At this stage the data matching will focus on transactions that occurred from 1 July 2014 and will continue up until 30 June 2020.  The ATO said it was estimated there are between 500,000 to 1 million Australians who have invested in cryptocurrency.

What are my obligations?

Cryptocurrency is considered a CGT asset for tax purposes and as such any profits made from trading it could be liable for capital gains tax.  However, an Australia resident taxpayer who has held the currency for greater than 12 months may be entitled to the 50% CGT discount.  The ATO have said they are looking at whether a taxpayer has omitted capital gains on the sale of cryptocurrencies when preparing their income tax returns.

The ATO have said that following the data matching process, taxpayers may be contacted by the ATO and will be given at least 28 days to clarify any information that has been obtained from the data provider.  As usual the ATO has said penalties may be significantly reduced in circumstances where they were voluntarily contacted prior to audit activity commencing.

Next Steps

If you have transacted in cryptocurrency and have not considered the tax implications then please contact one of our accountants to discuss.  We have seen an increase in the number of clients of coming to us with these queries and increasingly the ATO are releasing more guidance as to the tax consequences.