Good record keeping is essential for anyone in business because it makes it easier to manage your cash flow, meet your tax obligations and understand how your business is doing.

By law your records must:

• explain all transactions
• be in writing (electronic or paper)
• be in English or in a form that can be easily converted
• be kept for five years (some records may need to be kept longer).

If you don’t keep the right tax records, you can incur penalties.

You can keep invoicing, payment and other business transaction records electronically or on paper. The principles are the same for each, but keeping electronic records will make some tasks easier.

With the right electronic record-keeping software you can:

• automatically tally amounts and provide ready-made reports
• produce invoices, summaries and reports for GST and income tax purposes
• save on physical storage space
• protect your records against threat of theft, flood, fire etc.

Ask Leanne if your record keeping would stand up to an ATO review.  Leanne can help you choose a system you can understand and operate easily.

You can choose one of two methods to work out your car expenses. The two methods are either:

• cents per kilometre method (restricted to claiming up to 5,000 business kilometres per car per year only)
• logbook method.

Both methods require you to know or estimate your business kilometres. The records you need to keep will depend on your estimated business kilometres travelled. However, your claim at the end of the income year will depend on your actual business kilometres. If you cannot estimate your business kilometres, you should keep documentation as required by the logbook method. This will ensure that you can claim under the method which gives you the greater deduction.

Cents per kilometre method

You need records showing how you calculated business kilometres travelled and the amount of the claim – for example, diary entries and documents you can use to show the engine capacity of your car.

Logbook method

For each year you need:

• odometer readings for the start and end of the period being claimed
• business usage percentage based on the logbook
• receipts or other documents showing fuel and oil expenses, or a reasonable estimate based on odometer readings
• receipts or other documents showing other expenses for your car – for example, registration, insurance, lease payments, services, tyres, repairs, interest charges.

Your logbook is valid for five years. If this is the first year you are using this method (or the five years has expired) you will need to keep a logbook for this year. The logbook must cover at least 12 continuous weeks and show:

• when the logbook period begins and ends
• the car’s odometer readings at the start and end of the logbook period
• the total number of kilometres travelled in the logbook period
• the number of kilometres travelled for work activities based on journeys recorded for the period in the logbook. You need to record the start and finishing times and the odometer readings at the start and end of the journey, kilometres travelled, and the reason for the journey
• the business-use percentage for the logbook period.

You also need to monitor the pattern of your car usage during the year and adjust the business-use percentage accordingly. For example, your business use is likely to vary during a holiday period.

The ATO has developed a collection of occupation-specific guides to ensure that taxpayers understand what they can and can’t claim as work-related expenses.

These guides are not exhaustive but focus on the most common categories:

• car expenses
• home office expenses
• clothing expenses
• self-education or professional development expenses.

The ATO has released guides for the following occupations:

• construction worker
• retail worker
• office worker
• Australian Defence Force
• sales and marketing
• nurse, midwife or carer
• police officer
• public servant
• teacher
• truck driver

Please remember that if you have an expense outside of these guides, it may still qualify as deductible.  Please advise Leanne, and she will give you the right advice.

It means employers will report payments such as salaries and wages, pay as you go (PAYG) withholding and super information to us directly from their payroll solution at the same time they pay their employees.

For employers with 20 or more employees, Single Touch Payroll reporting starts from 1 July 2018. The first year will be a transition, and penalties will not apply.

You may need to update your payroll solution to report through Single Touch Payroll.

The Australian Government has announced it will expand Single Touch Payroll to include employers with 19 or less employees from 1 July 2019.

These measures have not yet passed through parliament however we should be planning early to avoid stress.

LG Advice will continue to provide information to help employers understand what they need to do to get ready for Single Touch Payroll reporting.