Ok ladies and gentlemen, we all love something that is free and helps us in our daily lives. Although the ATO is often seen as the enemy for business owners, they do try to help us out by providing tools to use in our businesses. The free ATO app is one such tool that I recommend to clients. It is relatively simple and allows you to do things on the fly, which can be really helpful to the Tradie when we get back on the road.
This app is not targeted at Tradies. It is targeted at all taxpayers, the bulk of the Australian population. It is an abbreviated version of the ATO website, giving us access to certain tools to assist us to be better tax citizens. Tradies are taxpayers too, so why not use some of the tools available.
The app is broken up into 3 sections, individual, business and superannuation. You can make some of the functions your favourites for quick access and I would recommend that as you are not going to use all the functions. To save you time, here are a few of my favourites.
Tax Withheld Calculator
This is a very simple tool that allows you to put in the gross pay for an employee and calculate the tax that needs to be withheld from that pay. There are options to change the settings so that you can calculate without the tax free threshold, withhold more for a HECS/HELP debt and other variations, but in its simplest form you type in the gross payment and press calculate.
I know we should all be using a payroll software provider, but often tradies are working out pays without access to accounting software. The pay run comes after the fact, and this is a great way to make sure the pay has been calculated correctly.
This is the feature of the app I use the most and the main reason I recommend the app to many of my tradie clients.
Did you know that it is your responsibility to check that you have been provided a valid ABN by your suppliers? If you have not been provided a valid ABN it is your duty to withhold 47% from the payment and direct this to the ATO. The onus is on you, the payer of the invoice to check this.
Why would someone quote an incorrect ABN? The answer is pretty obvious to me (the cash economy), but most Tradies don’t even consider it when paying their subbies. In 2017, details were released that over 40% of ABN’s quoted in the Northern Territory were for Bunnings. Clearly the Bunnings ABN has been misused, but how many “customers” noticed the wrong ABN had been quoted. If you are caught out during an audit paying these subbies with no ABN, and not withholding the 47%, the ATO can assess you for that amount. It is worth the few seconds it takes to check an ABN. Of course, you can do that on the internet but this tool allows you to do it on your mobile device.
Record keeping “My deductions”
This function is available for any taxpayer to take a photo of their receipts and store their expense claims online. The ATO want you to link this to your Tax File Number with the idea being that this data will be prefilled into tax returns in the future (for individual taxpayers). This has been promised for a few years now and has not happened, not that I have seen at least.
I am a little dubious about giving the ATO more info than they need to be honest, but it can be a handy way to keep a record of your receipts. My concern is that if the ATO recognise you are saving non-deductible receipts to the app you may be the target of an audit. Not all receipts presented to your accountant become tax deductions. I personally would prefer that filter to be done without the ATO’s input. Just my opinion.
If you don’t link your TFN to the program and lose your phone, you will probably be losing all your receipts as well, so please be careful using this function. If you have not linked the app to a TFN make sure you keep a copy of your receipts elsewhere. I think it is particularly aimed at the individual taxpayer as there are much better solutions for business (although they are not free). However, this may be a better alternative than losing all your receipts.
Business Performance Check
This is not available for all business types, but essentially it is a benchmarking tool. A number of the trades are included in this benchmarking tool so it is worth spending a few minutes looking at this.
You put in a few basic details (turnover, expenses etc) and it gives you a performance graphic comparing you to your industry.
Why is this important? Businesses who sit outside their industry benchmarks are targets for an audit. It may indicate that you are working in the cash economy and that is what the ATO are looking for. It could be that you do not really fit into that business category. It is important that the industry indicator on your tax return reflects the correct business you are in so as to avoid a benchmark based audit.
This tool may also help you understand how your business is performing compared to your peers.
Of course there are other functions on this app including fuel tax credit calculators and payment plan estimators (for ATO debt repayments) so take the time to download it and explore. It costs nothing and may save you some unnecessary stress in the future.