Dear Valued Client,
2005 Income Tax Returns and Newsletter
The tax system continues to change and there are some changes in this year’s return that you
need to be aware of.
Please find attached the tax worksheets for individuals to assist in the accurate completion of
your tax return. If you are posting your return to us for completion this information is mandatory.
Please note that this is the cheapest option for your tax return and you must include a daytime
contact number so we can contact you to confirm any queries we may have about its contents.
Please see the following page for current rates applicable for 2005.
We also have a new website that will be active from 1st August 2005, which will be available to
keep you informed of current news etc. This website in the future will also allow you to download
your individual financial records held by our office to assist in finance applications and any other
queries you may have. The sites address will be www.pdkfinancial.com.au
We also need to advise you of the current ATO position on a number of issues and these are as
follows:
ATO 2005 Audit Targets
Targets for ATO audits
 Road Transport Employees – travel allowances
 Real Estate Agent Employees – those earning a fixed salary are not entitled to claim
expenses for advertising, referral fees for clients etc.
 Accountants and Financial Planners and other professionals – claiming occupancy
costs such as interest, rent and taxes for home office when they have a regular place of
employment and may work from home 2 days per week.
 Entertainers – expenses associated with looking for work such as attending auditions and
the initial photo portfolio are considered to be incurred too soon in the course of earning
assessable income and not deductible.
RENTAL PROPERTIES
 the ATO is concerned that rental property expenses increased by 13% last year and rental
income increased by only 8%. The ATO will send letters to 37,000 landlords identifying their
areas of concern. They also expect to conduct around 4,600 audits.
CLAIMS THE ATO WILL TARGET
 Travel Expenses related to a rental property
Travel Expense
Travel to prepare property for new tenant
Travel to collect rent
Travel to inspect property during tenancy
Travel to maintain or undertake repairs
Travel to inspect property after tenant leaves
Travel to inspect property before auction, attend auction & sign contract
Travel to inspect property prior to settlement
Travel to undertake initial repairs
Travel to undertake improvements
Deductible
X
X
X
X
X
Non Deductible
X
X
X
X
CAPITAL GAINS TAX COMPLIANCE
With the recent property boom, the ATO is well aware that there have been some significant
profits on sale of properties and accordingly they will be using data matching techniques to
obtain information from State Revenue Offices to identify properties sold. The same
principals apply for the sale of shares.
NEW MATERNITY PAYMENT FROM 1.7.04 and PHASING OUT BABY BONUS
Key Features : the new maternity payment is administered by the Family Assistance Office and is a one
off lump sum payment of $3,079 a child for children born after 1.7.04.
 the payment is not income tested.
 There is no apportionment of the amount i.e. if you have a child on 29th June you get the
full amount not 2 days out of 365 amount.
 Not limited to the first child but for all children born after 1.7.04
The Baby Bonus still applies for a child born before 1.7.04 and should happen automatically in
the lodgement of your income tax return.
NEW MATURE AGE WORKER TAX OFFSET
Key Features : maximum offset if $500 and applies to workers over 55 years old.
 applies for incomes between $0 and $9,999 and is equal to 5% of the net income.
 Incomes over $10,000 to $48,000 the rebate is $500.
 Incomes over 48,001 to $57,999 the $500 is reduced by 5% for each dollar over
$48,000.
 Income over $58,000 the rebate is nil.
SUPERANNUATION CO-CONTRIBUTION
Who is eligible? – you must pass the 6 tests below:1. Individual makes eligible personal superannuation contributions. Not salary sacrifice or
deductible contributions for self employed.
2. 10% or more of the individual’s income for the year must be from eligible employment.
3. Individual’s total income must be less than $58,000.
4. Individual must lodge an income tax return for the year.
5. Individual must be less than 71 years old at the end of the income year.
6. Individual must not hold an eligible temporary resident visa during the year.
THE 30% CHILD CARE REBATE
Features:- The 30% childcare tax rebate announced by the government means that parents
could claim 30% of the out of pocket childcare expenses they incur for putting their children
in approved childcare. The maximum rebate is $4,000 per child.
To claim the rebate the taxpayer must : receive child care benefit from Centrelink and satisfy the work/study/training test.
 Have their child/children in approved childcare.
Note – the 30% childcare rebate can only be claimed after the income year. Therefore for 2005
income year will only be claimable in the 2006 tax return.
Important – Record Keeping
Taxpayers are required to keep all their receipts of their childcare fees paid during the
income year. You will also need a letter from the Family Assistance Office advising you of
your CCB status. This letter is the ‘reconciliation letter’, which looks at the individual’s
estimated family income, CCB paid, CCB entitlements and the balance.