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Dr Ray Hamey
Tax Talk with Dr Ray No 1
He is also currently the President of the CPA Committee branch of FNQ. He’s been a part-time lecturer in accounting. Commercial law; business studies; mathematics; aviation and believe it or not in classical guitar.
Dr. Ray is a specialist in taxation. He’s had 26 years in public practice and is going to present a little session called Tax Talk with Dr Ray. I hope you enjoy his different way of presenting tax! Thanks Dr Ray
Ray Thanks Chris & I welcome this opportunity to talk on tax and some issues that the Australian Taxation office would like to bring to the taxpayers’ attention.
Chris Dr. Ray why do we have to do tax returns in the first place?
Ray Well Chris all I can say is that when I asked students & I lectured in tax & many other subjects for many years, I expected the answers to be something along the lines of “legislation” etc. However I know the real answer, Chris
Chris Well Dr Ray what’s your answer?
Ray – It’s because deep down, they hate you!
Chris – laughs.
Ray – AND, Chris, they know where you are!
Chris – moving right along now!!
Ray – The first topic I would like to discuss is where people seem to get their advice from. I hear it every week when a client says something along the following. “ The G.N.D. said…” or the FATP said “run your business at a loss””
Chris Dr Ray you are a CPA but I haven’t heard of GND or FATP. What are they?
Ray – GNDs – Let me explain these people are the Guy Next Door who says things such “save tax, do blah blah”. Unfortunately their advice is usually flawed and downright stupid.
Clients don’t want to ask professional advice so they ask the GND. Actually when I find the Guy Next Door I’m going to have him FLOGGED!!!
Chris and FATP???
Ray FATP – Chris are you sure you haven’t heard of them?
Chris sorry, no!
Ray FATP – Fella at the Pub who almost went to business school! He is the one who tells people who won’t ask advice on what to do from a prfoessional. There is rarely a week when I don’t have clients state that the GND or the FATP said whatever. Such advice is as I said before. Work very hard & run your business at a loss so you won’t have any tax to pay!
I have said to many students who I have inflicted my personality on “think about this. Someone says my accountant is brilliant I don’t pay any tax”. Students & likewise clients say “well that’s great”.
My reply is “if the accountant were brilliant you would be paying tax because you would be making money”.
Let’s get down to business.
Many taxpayers who are filing their tax returns and who are employees, will want to claim things such as mobile phone costs; computer expenses; travel expenses.
The ATO will want to see the nexus or if you like, the connection between those expenses and your job. If you want to claim those types of expenses you must have some satisfactory way of record keeping. Many jobs these days do require many of the expenses to be paid by the employee.
Now if you want to claim say the mobile phone, you should keep a log book or equivalent for say 4 weeks to produce some sort of documentary evidence. Now just because you spend $x per month on calls from your mobile phone, doesn’t necessarily mean you can claim the expense.
Chris Dr Ray what sort of situations would you expect to be able to do so?
Ray Let’s say you are a sales rep. You would call many customers & HQS for various reasons. By keeping a 4 week log book, then you would be able to establish that say you use your mobile phone for say 95%. You would then be able to claim 95% of the mobile phone account but you simply cannot claim if there’s no nexus between your calls and your work.
The same applies to the computer usage. Just because you bought a computer & use the internet well I’m sorry but it doesn’t necessarily man you can claim the expenses. There would have to be a nexus
Chris Dr Ray can you give us some examples?
Ray – Yeah sure. The sales rep uses the computer for writing orders; or their travel itinerary or keeping records related to work. The same with say a real estate agent who uses the computer for say contacts; writing up deals etc.
As an example of those who are unlikely to claim a computer or mobile phone I will suggest that a shop assistant wouldn’t be able to unless there are unusual circumstances. The ATO has labels in the tax returns asking for occupations & the ATO then uses that coded label to cross check the industry to see whether the taxpayer looks “normal” regarding those expenses
Chris – Dr Ray you mentioned travel. Can you give us some details and so forth please?
Ray Thanks Chris. Once again the ATO expects some nexus between claiming a travel allowance AND the job. Going to & from work; no matter what; is non-tax deductible unless there is an unusual reason.
Chris – Dr Ray what would be the exceptions?
Ray - Well Chris one of the main reasons would be for the taxpayer who is using their car for work purposes and as an example I will use an apprentice plumber who carries a wheel barrow, a very heavy tool box; a ladder; a compressor and so forth to work. Because the taxpayer is carrying the bulky & heavy equipment to work & note this; to work related sites, I would suggest that the apprentice plumber would be able to claim the expense.
I stress this is not to be interpreted or extrapolated without thinking it through. If you are say an administration officer & you carried a briefcase to work, then you wouldn’t qualify as I said before.
There are numerous ways to claim the expense & I will discuss such in forthcoming sessions.
To wrap up this segment, I would like to say I have a theory on sight & sound!
Chris – Einstein’s?
Ray No Dr Ray’s!
Some advisers including the GNDs & FATPs appear bright UNTIL they open their mouths!
Until next week
This is Dr Ray
Look Sharp
Sierra Accounting &
Consulting Pty Ltd
P.O. Box 3092,
46 Spence Street,
Cairns Qld 4870
Telephone:
Tel: 07 4041 7777
Fax: 07 4051 3477
Mobile: 0432 578 759
