Frequently Asked Questions

If an entity is registered for GST, sales (including bartering) are normally subject to GST, unless they fall into the category:

GST Free sales

  • Health services
  • Educational courses at a recognised educational institution (but not sale of goods or supplies by an educational institution)
  • Food that is not prepared, or not served at a restaurant or take-away premises
  • Child care
  • Religious services
  • Non-commercial activities of charitable institutions
  • Water & sewerage
  • Sale of going concern
  • Transport & related matters
Entities registered for GST can usually claim back the GST on acquisitions (including bartering) acquired by the entity unless they fall into the category:

1. GST free acquisitions

    • Medical expenses
    • Licences & registrations
    • Rates & taxes
    • Sewerage
    • Training & education
    • Stamp duty on insurance policies, Hire purchase etc
    • Expenses that are not tax-deductible
    • Donations

2. Input taxed acquisitions – acquisitions related to income that is input taxed. You are not entitled to input tax credits for GST included in acquisitions and importations related to making input taxed supplies.

    • Bank charges & fees
    • Borrowing expenses
    • Residential rental property expenses

For expenses directly related to share dividends eg brokerage – claim 75% of the GST input tax dissected into GST taxable non-capital acquisitions 75% and input taxed 25%

Capital gains tax (CGT) is the tax paid on any capital gain made and is included in the income tax return. There is no separate tax on capital gains; it is a component of income tax. Tax on net capital gain is at your marginal tax rate.

You make a capital gain or capital loss if a CGT event happens. You can also make a capital gain if a managed fund or other trust distributes a capital gain to you.

For most CGT events, your capital gain is the difference between your capital proceeds and the cost base of your CGT asset, for example, if you received more for an asset than you paid for it. You make a capital loss if your reduced cost base is greater than your capital proceeds.

Generally, disregard any capital gain or capital loss made on an asset acquired before 20 September 1985 (pre-CGT).

Net capital gain = total capital gains for the year – total capital losses (including any net capital losses from previous years) – any CGT discount and CGT small business concessions to which you are entitled.

Car expenses are costs incurred as a result of using your car (whether owned, leased or hired under a hire-purchase agreement) for work-related travel. They do not include expenses for vehicles other than cars, for example, motorcycles, utility trucks or panel vans with a carrying capacity of one tonne or more, or any other vehicle with a carrying capacity of nine or more passengers. These are treated as travel expenses. Short-term car hire, public transport fares, bridge and road tolls, parking fees, taxi fares or the work-related running costs associated with a car owned or leased by somebody else, (a borrowed car), are also travel expenses. Refer to ATO info car and travel expenses.

Use the Work related Travel Claim Work Sheet to assist in collecting necessary details.
The four methods available to calculate your claim are:

Calculated using rates based on engine capacity, (cents per kilometre limited to 5,000 kms per car).

  • Log book – A log book is kept for at least a 12 consecutive week period and can be used for 5 years if not varied by more than 10%. The claim is calculated by the total running expenses being multiplied by the business percentage (obtained from the log book). Opening and closing odometer readings need to be kept each year. Documentary evidence of all running costs should also be kept.
  • 12% of the cost price of the car.
  • One third of actual expenses (business and private).

Refer to ATO info work related car expenses.

Up to 5,000 business kilometres

Where a car travels 5000 kilometres or less during a year you maybe able to claim under either:

  • Set rate per kilometre.
  • Log book.

More than 5,000 business kilometres

Where a car travels more than 5000 kilometres during a year you maybe able to claim under one of the following methods:

  • Set rate per kilometre only up to 5,000km.
  • Log book.
  • 12% of the cost price of the car.
  • One third of actual expenses (business and private).

If you commence to use a car part way through the year you may choose any of the above methods, but must be able to show that the car would have travelled in excess of 5,000 kms in the year, if choosing 12% or 1/3rd method.

Work related travel expenses includes:- vehicles other than cars, for example:

  • Motorcycles
  • Utility trucks or panel vans with a carrying capacity of one tonne or more
  • Any other vehicle with a carrying capacity of nine or more passengers
  • Award transport allowance (award travel)
  • DTA (Daily travel allowance)
  • Overseas and domestic travel
  • Short-term car hire
  • Public transport fares
  • Bridge and road tolls
  • Parking fees
  • Taxi fares or the work-related running costs associated with a car owned or leased by somebody else, (a borrowed car).

Use the Travel Claim Work Sheet to assist in collecting necessary details.

Award transport allowance – an allowance paid under an industrial award. A claim maybe made against this allowance if you are:-

  • Travelling between different job sites
  • Required to carry bulky tools and equipment to work sites.

Domestic Travel

If you are required to sleep away from home for work purposes you maybe entitled to a deduction. Expenses include meals, accommodation, car hire and incidentals. A travel diary may need to be kept.

Overseas Travel

If you are required to travel overseas for work purposes you maybe entitled to a deduction. You must obtain documentary evidence as well as keep a diary.

Refer to ATO info on Travel Expenses

Compulsory uniform or wardrobe – uniforms that are compulsory and unique, or distinctive to the employer. Usually corporate wardrobes. It must be the expressed policy of the firm to wear the uniform and it must be enforced. All employees of the same class must be compelled to wear the uniform in its entirety. The uniform must specifically identify the employer. It may consist of only one garment of clothing eg a blue shirt with the company logo that is permanently attached. There may be interrelated items including stockings and footwear.

Non-compulsory uniform or wardrobe – Many employees such as banks have a wardrobe specifically designed for their employees. It is not always compulsory and is often conventional in nature. It consists of a collection of interrelated clothing and accessories that are unique and distinctive to a particular organization. It does not include shoes, socks or stockings but may include scarves and ties etc. The Approved Occupational Clothing Guidelines do not allow for the registration of a single item of clothing eg a shirt; a dress would be allowed, as it is a full body garment. To be deductible a non-compulsory uniform or wardrobe needs to be listed on a register maintained by the Textile Clothing and Footwear Branch of the Department of Industry, Science and Tourism.

Occupation specific – specifically identifies a worker to a particular occupation, eg traditional clothing of nurses, police officers, security guards, defence force personnel, chefs checked pants and clerics robes. Must not be conventional clothing. It does not include stockings, socks or underwear.

Protective clothing – clothing that protects the wearer from the risk of personal injury, death, disease and damage to other clothing in performing their duties. It must be worn in addition to other conventional work clothing. Heavy-duty clothing such as jeans, drill trousers and drill shirts (King Gee or Yakka work wear) are not considered protective clothing. The ATO views that these are being worn as conventional clothing.

Maintenance of protective clothing and uniforms – costs of maintaining, cleaning and hiring these items are deductible if the clothing itself is allowable. This would include dry cleaning, washing, repairs and alterations.

Refer to ATO info on work-related clothing, laundry & dry cleaning expenses

A depreciating asset is an asset that has a limited effective life and can reasonably be expected to decline in value over the time it is used. Depreciating assets include such items as computers, electric tools, furniture and motor vehicles. The cost of a depreciating asset is apportioned over the effective useful life of the asset.

Land and items of trading stock are specifically excluded from the definition of depreciating asset. Most intangible assets are also excluded from the definition of depreciating asset. Refer to ATO info guide to depreciating assets 2009/2010