Practice Update – May 2025

Lowe Lippmann Chartered Accountants

How to manage business day-to-day transactions


The ATO has the following tips for small business owners "that can make your tax life easier":

  • They should keep an eye on upcoming expenses, and regularly update their books and reconcile their accounts.
  • They should set aside the GST they collect (ie. by transferring it into another bank account within the business to keep it separate from their cash flow).
  • They can also set their PAYG withholding and super aside, so they will have the funds available when payments are due.
  • They should plan ahead and schedule time in their calendar to prepare their business activity statement (BAS), and lodge and pay their BAS on time.



If you need assistance with any of these issues, please contact our office.


Minimum pension drawdown reminder


A self-managed superannuation fund (SMSF) must pay a minimum amount each year to a member who is receiving an account-based pension.


This minimum amount is calculated by applying the relevant percentage factor based on the member's age by the member's pension account balance calculated as of 1 July 2024, or on a pro-rata basis if the pension commenced part way through the 2025 financial year.


If the minimum payment is not made by 30 June, this could result in adverse taxation consequences for the member.


How to avoid common CGT errors


The ATO wants taxpayers to know that having a foreign resident capital gains withholding (FRCGW) clearance certificate does not mean they do not have any further CGT obligations.


If taxpayers have sold property, they still need to include capital gains, losses or an exemption or rollover code in their income tax return.


If an amount of FRCGW was withheld from the property sale, please advise our office and provide the 'FRCGW payment confirmation' from the purchaser. This is a necessary document when completing your income tax return.


Where you have lived in a property for any period during your ownership period you should provide us with the full details so we can determine the correct application of the main residence exemption.


Keeping not-for-profit records up to date


Taxpayers should remember that they are legally required to keep certain records for their not-for-profit (NFP).


All organisations including NFPs are required to keep accurate and complete records of all transactions relating to their tax and superannuation affairs.


Generally, for tax purposes, taxpayers must keep their records in an accessible form (either printed or electronic) for five years.


Records that NFP taxpayers are required to keep include:

  • governing documents;
  • financial reports;
  • documentation relating to grants; and
  • registrations and certificates.


A good record keeping system will help taxpayers run their NFP successfully and manage their tax and super obligations.


If a taxpayer's NFP is endorsed as a deductible gift recipient (DGR), they must keep records that explain all transactions and other acts relevant to their organisation's status as a DGR.


This requirement applies to both endorsed DGRs and listed by name DGRs.


Increase to rate for working from home running expenses


The ATO’s Practice Compliance Guide PCG 2023/1 outlines the new method (the fixed-rate method) for calculating additional running expenses while working from home, which has applied from 1 July 2022.


This PCG guideline was recently updated to increase the work from home fixed rate from 67 cents to 70 cents per hour from 1 July 2024.


The fixed-rate method allows taxpayers to claim at a rate of 70 cents per hour for the following additional running expenses for working from home:

  • energy expenses (electricity and gas) for lighting, heating, cooling, and electronic items used while working from home;
  • internet expenses;
  • mobile and home phone expenses; and
  • stationery and computer consumables.


However, PCG 2023/1 does not cover occupancy expenses relating to a home, such as rent, mortgage interest, property insurance and land tax.


Taxpayers are not required to use the above fixed-rate method — as from 1 July 2022, they can instead continue to claim the actual expenses they incurred as a result of working from home and keep all expense records (ie. invoices and receipts) necessary to substantiate their claim.


Truck driver entitled to claim meal expenses


In a recent decision, the Administrative Review Tribunal (ART) upheld a truck driver's claim for meal expenses, notwithstanding that those expenses had not been fully substantiated.


The taxpayer was employed as a long-haul truck driver in Western Australia. He was away from home for considerable periods each year.


The taxpayer sought a deduction for meal expenses of $32,782 in the 2021 income year, apparently calculated by multiplying the number of days he was away from home (310 days) by the maximum reasonable daily allowance under Taxation Determination TD 2020/5.


The ATO only allowed the taxpayer a deduction for meal expenses of $5,890 based on a review of his logbook, fatigue diary and bank statements. This was an average of $19 per day multiplied by 310 days.


The ART found on the balance of probabilities that the taxpayer incurred the claimed expenditure, and it found that the taxpayer had met his burden of proof.



In this regard, the ART determined that the taxpayer incurred the disputed expenses in gaining or producing his assessable income, and it did not agree with the ATO that there was an insufficient linkage between the expenditure on bank statements and the taxpayer's work.


The ART held that the exception to the substantiation provisions applied to the taxpayer, as:

  • a travel allowance was paid by the taxpayer's employer which covered the expenses;
  • the taxpayer incurred the expenditure in gaining or producing his assessable income; and
  • the expenditure fell within the ATO's reasonable travel amounts set out in TD 2020/5.


The ART accordingly allowed the taxpayer's claim for travel expenses in full.



Please do not hesitate to contact your Lowe Lippmann Relationship Partner if you wish to discuss any of these matters further.

Liability limited by a scheme approved under Professional Standards Legislation


September 9, 2025
Costs incurred in acquiring / forming a business. Further to the recent blog about capitalisation of costs when acquiring an asset, we have received a number of questions in relation to costs incurred in setting up / purchasing a business. Formation costs on establishing a business: These costs would include: Incorporation fees ASIC registration fees Legal fees Business name registration Pre-operating costs Pre-opening costs. The relevant standard for these costs is AASB 138 Intangible Assets and paragraph 69a confirms that these start-up costs are expensed when incurred. There is no identifiable asset controlled by the entity when the costs are incurred as the entity does not exist. Business acquisition costs These costs would include: Legal and accounting fees Due diligence and valuation costs Stamp duty Advisory or brokerage fees Project management costs related to the acquisition Internal costs allocated to the transaction In contrast to the asset acquisition discussed previously, AASB 3 Business Combinations requires all acquisition costs to be expensed as incurred. This means that they are not included as part of the consideration paid and therefore do not affect calculated goodwill.  Entities purchasing businesses should be aware that these costs are not able to be capitalised as they can often be substantial, and purchasers often do not expect the costs to be taken directly to the income statement
September 8, 2025
ATO to include tax 'debts on hold' in taxpayer account balances From August 2025, the Australian Taxation Office ( ATO ) is progressively including 'debts on hold' in relevant taxpayer ATO account balances. A 'debt on hold' is an outstanding tax debt where the ATO has previously paused debt collection actions. Tax debts will generally be placed on hold where the ATO decides it is not cost effective to collect the debt at the time. The ATO is currently required by law to offset such 'debts on hold' against any refunds or credits the taxpayer is entitled to. The difficulty with these debts is that the ATO has not traditionally recorded them on taxpayer's ATO account balances. Taxpayers with 'debts on hold' of $100 or more will receive (or their tax agent will receive) a letter before it is added to their ATO account balance (which can be viewed in the ATO's online services or the statement of account). Taxpayers with a 'debt on hold' of less than $100 will not receive a letter, but the debt will be included in their ATO account balance. The ATO has advised it will remit the general interest charge ( GIC ) that is applied to 'debts on hold' for periods where they have not been included in account balances. This means that taxpayers have not been charged GIC for this period. The ATO will stop remitting GIC six months from the day the taxpayer's 'debt on hold' is included in their account balance. After this, GIC will start to apply.
August 26, 2025
How do we account for the costs incurred when acquiring an asset? When we acquire an asset such as property, plant and equipment, intangibles or inventory there are often significant other costs incurred as part of the purchase process, including delivery, stamp duty, installation fees. Whether we capitalise these to the value of the asset or expense them as incurred can make a significant difference to an entity’s reported position or performance. Since we have accounting standards for specific assets, the treatment can vary depending on the asset and the relevant standard. A summary of some common expenses and their treatment under four accounting standards has been included below. The four standards considered are: AASB 102 Inventories AASB 116 Property, Plant and Equipment AASB 138 Intangible Assets AASB 140 Investment Property.
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