tax tips

If you’ve thought about upskilling or undertaking professional development this year, you may be able to claim some of your self-education expenses in your 2024–2025 income tax return.

You incur self-education expenses when you:

• take courses at an educational institution (even if you don’t gain a formal qualification);
• undertake training provided by an industry or professional organisation;
• attend work-related conferences or seminars; or
• do self-paced learning and study tours in Australia or overseas.

Your self-education expenses need to have a sufficient connection to your current employment income in order to make a claim. This means that your study must either maintain or improve the specific skills or knowledge you use in your current role, or be likely to result in increased income in your current role.

Keep in mind that sometimes only certain subjects or components of your study are sufficiently connected to your work – in these cases, you'll need to apportion your expenses.

If you meet the eligibility criteria you may be able to claim a deduction for:

• tuition, course or seminar fees incurred in enrolling in a full fee paying place;
• general course expenses (eg stationery, internet usage);
• depreciation on assets like laptops;
• transport costs between home or work and your place of study;
• accommodation and meals when your course requires you be away from home for one or more nights; or
• interest on loans where you use the funds to pay for deductible self-education expenses.

You may be starting out in business and trying to decide whether to become a sole trader or to set up a company. Alternatively, you may already be an established sole trader and considering switching to become a company. Tax considerations are vital in deciding which of the two business structures is most suitable for you.

The first practical difference is in relation to your tax return. As a sole trader, you simply add your business income and expenses to a separate Business and professional items schedule in your individual tax return that you lodge each year.

For a company, there’s a separate annual tax return, and tax to pay on the company’s income. Companies are subject to annual reviews by the Australian Securities and Investments Commission (ASIC), so financial records must clearly show transactions and the company’s financial position, and allow clear statements to be created and audited if necessary. A number of strict legal and other obligations need to be met.

Tax returns for a company must clearly list the income, deductions and the liable income tax of the company. Also, directors and any employees of a company must lodge their own individual tax returns.

There’s no tax-free threshold for companies – they simply pay tax on the amount they earn. However, for sole traders, whose tax is assessed as part of the individual’s personal income, $18,200 is the tax-free threshold.

For all companies that are not eligible for the lower company tax rate, the full company tax rate of 30% will apply.

To be eligible for the lower company tax rate of 25%, the company needs to meet strict requirements to be a base rate entity. One of the tests is that your company’s aggregated turnover for the relevant income year must be less than the aggregated threshold for that year – which since 1 July 2018 has been $50 million a year.

Both sole traders and companies can:

• register for goods and services tax (GST) if your GST turnover is $75,000 or more, or you’d like to claim fuel tax credits; and regardless of your turnover, you must register for GST if you provide taxi, limousine or ride-sourcing services; and
• employ people, and if the business’s gross wages exceed the threshold set by your state or territory, then you will have to pay payroll tax.

Both types of business also need to pay capital gains tax (CGT) if a capital gain has been made, but sole traders may be able to reduce this gain by what are known as the discount and indexation methods. The latter may also be used by some companies.

If your employees in either business structure receive a fringe benefit then you may also need to pay fringe benefits tax (FBT).

In the wake of recent cyber-attacks on several large Australian super funds, you might be wondering how to protect your retirement savings.

The past few years have seen significant data breaches from well-known Australian companies outside of the superannuation sector, exposing a huge amount of consumer personal identity information. The cyber-attacks on superannuation funds reportedly used a technique called "credential stuffing" where cybercriminals used personal information stolen in previous data breaches (like email addresses and passwords) to attempt to access member accounts.

The attacks were timed for the early hours of the morning when most account holders would be asleep and unlikely to notice suspicious login attempts or account changes, and targeted members in the pension drawdown phase who are able to request lump sum withdrawals.

Most funds indicated that their member accounts and retirement savings were secure and that members had not lost any money following the attacks. One super fund revealed a small number of members had lost a combined $500,000 during the cyber-attack, but said it would make remediations out of fund reserves.

Here are some practical steps you can take to help keep your super safe:

• Keep track of your super account: The best defence is regular monitoring. Check your balance periodically, verify employer contributions are coming through, review your insurance cover, examine your annual statement, and ensure your contact details are current.
• Upgrade your passwords to passphrases: Never reuse passwords across different accounts. Instead, create a passphrase, which is a sentence or mix of four or more words that's easy for you to remember but difficult for others to guess. Include a combination of upper and lowercase letters, symbols and numbers, and aim for at least 14 characters.
• Enable Multi-Factor Authentication (MFA): MFA adds an extra layer of protection by requiring two or more verification methods to access your account. This typically combines something you know (password/PIN), something you have (mobile device/security token), or something you are (fingerprint/facial recognition). Check if your super fund offers MFA and enable it if available.
• Protect your devices: Secure all devices you use to access your super account. Use strong passwords or passcodes, set up biometrics where possible, enable auto-lock when not in use, and activate "find your device" services so you can lock or wipe your device if it's stolen.
• Be wary of unsolicited communications: Take your time to verify the identity of anyone contacting you unexpectedly. Don't click links in suspicious emails or texts. Contact your fund directly using the official contact details from their website.
• Report suspicious activity: Alert your super fund immediately if something doesn’t seem right with your account or if you receive suspicious communications.