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Single Touch Payroll Update

 

Single Touch Payroll: Update

Single Touch Payroll (STP) was introduced on 1st July 2018 for all businesses with 20 or more staff (substantial employers). The Bill to extend the Single Touch Payroll (STP) reporting requirements so they apply to all employers has now passed the Senate and will be Law.

 This means STP is set to be rolled out to smaller organisations with less than 20 employees
on the 1st July 2019.

 Whilst there are still elements of the STP rollout for smaller organisations that need to be defined by the ATO, what is clear is that you need to be aware of what STP is, and what it will mean for you into the future. 

What do you need to know? Read more…

Tax on shares: ATO extends data matching program

The Australian Tax Office (ATO) is utilising data provided by the Australian Investments and Security Commission (ASIC) to data match share trades.

 

The ATO is accessing more than 500 million records detailing price, quantity and time of individual trades dating back to 2014. The information complements information that the ATO already holds from brokers, share registries and exchanges.

 

Utilising this wealth of information, the ATO will explore what has been reported on tax returns, specifically, capital gains on the sale or transfer of shares and the losses claimed. Read more…

The Taxable Payments Reporting system was introduced to stem the flow of cash payments to contractors and rampant under reporting of income. Since the building and construction industry was  first targeted in 2012, the reporting system has expanded to include cleaning and courier services. Now, a broader set of industries have been targeted.

 

If you have an ABN, and are in road freight, IT or security, investigation or surveillance, then any payments you make to contractors will need to be reported to the Australian Tax Office (ATO).

 

Be careful here as the definition of these industries is very broad. For  example, 'investigation or surveillance' includes locksmiths. The definition covers services that provide "protection from, or measures taken against, injury, damage, espionage, theft, infiltration, sabotage or the like."

 

IT services are the provision of "expertise in relation to computer hardware or software to meet the needs of a client." This includes software installation, web design, computer facilities management, software simulation and testing. It does not include the sale of software or lease of hardware. Read more…

New laws passed by parliament last month directly target the behaviour of taxpayers that don't meet their obligations.

Tax deductions denied

If taxpayers do not meet their PAYG withholding tax obligations, from 1 July 2019 they will not be able to claim a tax deduction for payments: 

  • of salary, wages, commissions, bonuses or allowances to an employee;
  • of directors' fees;
  • to a religious practitioner;
  • under a labour hire arrangement; or
  • made for services where the supplier does not provide their ABN.  

The main exception is where you realised there is a mistake and voluntarily corrected it. For example, if you made payments to a contractor but then later realised that they should have been paid as an employee and no PAYG was withheld. In these circumstances, a deduction may still be available if you voluntarily correct the problem but penalties may still apply for the failure to withhold the correct amount of tax.

How tampons became a political debate

GST is applied to tampons but not to incontinence pads. Viagra is exempt from GST but nipple shields for breast feeding mothers are not. Breakfast cereals are GST-free but breakfast bars and drinks are taxable. We explore the political football of GST exemptions.

Australia's goods and services tax (GST) is messy. To ensure that the GST passed Parliament, a deal was brokered to exclude certain items including fresh food, education, health and child care. The reason for the carve out was to ensure that low income earners are not adversely affected by the GST on the necessities of life. Our New Zealand neighbours however, took the simpler approach and apply GST to most things, leaving the social security system to target the needs of low-income earners.

The problem with the carve out is that the boundaries between different products and services are not clear-cut or intuitive, creating anomalies between the tax treatment of different items. Feminine hygiene products are one of those anomalies. For example, feminine hygiene products are not considered a health product but pads for incontinence are as they are required for a medical condition. Toilet paper and nappies, arguably also essentials of life, are also taxed.

Treasury has undertaken consultation to define what a feminine hygiene product is to remove it from the GST. The States and Territories have agreed to remove the tax. The Federal Government has stated that it intends to remove the tax on tampons from 1 January 2019 but as yet, no legislation has been introduced into Parliament to effect the change.

Small business is still a vote winner with the Government and Opposition teaming up to accelerate tax cuts for the sector by 5 years impacting on an estimated 3.3 million businesses.

Parliament recently passed legislation to accelerate the corporate tax rate reduction for corporate tax entities that are base rate entities (BREs). Under the new rules:  

·     A 26% rate will apply to BREs for the year ending 30 June 2021, and

·     A 25% rate will apply to BREs from 1 July 2021 Read more…

Working from home: What deductions can you claim?

Working from home: What deductions can you claim?

For a while now, the Australian Taxation Office (ATO) has been concerned about tax deductions individuals have been claiming for a whole host of expenses. The latest on their 'hit list' are home office expenses.  We guide you through what you can and can't claim if you work from home.

 

Last financial year, 6.7 million taxpayers claimed a record $7.9 billion in deductions for 'other work-related expenses' which includes expenses for working from home. While the ATO appreciates that technology has led to more people working from home and greater flexibility, they don't believe that all of the claims being made are legitimate. Take the example of the school principal who claimed $2,400 for electricity and phone expenses incurred during the year. The principal had a letter from the school verifying that they were required to work from home outside of school hours but could not explain how she calculated the claim. The principal ended up voluntarily reducing the claim by 70%. Or, the advertising manager who claimed her rent as a tax deduction because she worked from home at irregular hours to manage the timeframes of overseas clients. Her deduction for rent was rejected. Read more…

Will your Business be Audited?

How the ATO identifies audit targets

 

The ATO is very upfront when it comes to their compliance activity. Every year they publish small business benchmarks that outline what a typical business 'looks like' in different industries. If your business falls outside of those benchmarks, the ATO is likely to take a closer look at why that is.

 

Falling outside of the benchmarks might not indicate a tax related problem. It might mean that your business has a different business model to the norm or is performing poorly relative to others in the industry. If your business does fall outside of the benchmark however, it is important to ensure that the reasons why can be clearly articulated (preferably documented) and the reason for those differences is not tax evasion. If there is no proof as to why the business is outside of the benchmarks, the ATO is likely to simply apply the benchmark ratio and issue a revised tax assessment.

 

The ATO look at:

·      cost of sales to turnover (excluding labour)

·      total expenses to turnover

·      rent to turnover

·      labour to turnover

·      motor vehicle expenses to turnover

·      non-capital purchases to total sales, and

·      GST-free sales to total sales.

 

For example, for a veterinary practice with a turnover between $300,001 and $800,00, the cost of sales to turnover ratio is expected to be between 25% and 29% (averaging at 27%), and average total expenses are 78%. The cost of labour to turnover ratio is between 21% and 29% and rent is between 5% and 8%.

 

The benchmarks are also a useful tool for anyone wanting to understand what is typical in their industry and how they perform against the average. It might also indicate opportunities for improvement and where the business is falling behind its competitors.

Tax Deductions in the Danger Zone

A recent Parliamentary Inquiry into Tax Deductions created some fairly sensational headlines about what and how deductions are being claimed - $22 billion worth to be exact. 

 

In Australia, tax deductions are available for expenses incurred in producing assessable income. These are generally work-related deductions or investment related deductions. And, unlike some other countries, these expenses can be offset against taxable income including wages (other countries only allow deductions relating to capital income against capital gains).

 

In a recent speech, the Tax Commissioner Chris Jordan highlighted that in 2014-15, more than $22 billion was claimed for work-related expenses. "While each of the individual amounts over-claimed is relatively small, the sum and overall revenue impact for the population involved could be significant – in the vicinity of, or even higher than the large market tax gap of $2.5 billion - and that's just for this category of deductions, work-related expenses."

 

He went on to say that in this same period around 6.3 million people made claims for clothing expenses totalling almost $1.8 billion. "That would mean that almost half of the individual taxpayer population was required to wear a uniform or protective clothing or had some special requirements for things like sunglasses and hats." Clearly, that's unlikely.

 

While the ATO is doing random audits of taxpayers making claims for work related expenses, the primary problem for the Commissioner is, as he says, that the individual amounts over-claimed are relatively small. The administrative cost of a crackdown is likely to be more than what would be gained. The likely 'solution' then is to change what taxpayers can claim.

 

If you want to see the likely 'hit list' of deductions with a potentially short future, then Treasury's submission to the Inquiry is a starting point: Read more…

Superannuation Strategies for Year End Planning

Superannuation Strategies for Year End Planning

With so many changes to Superannuation, it is important you take the time to review your current strategies before the beginning of the new financial year. Making changes to your strategies may help to facilitate the new rules which took effect from 1 July 2017 and significantly benefit your superannuation savings.

Salary Sacrifice

For employees, salary sacrificing is a popular and tax effective strategy for boosting retirement savings.

From July 1 2017, the general limit for concessional contributions is $25,000. Read more…

Are you a Business Owner paying too much Tax?

If you're in business and you feel year after year you're giving too much of your hard-earned dollars away to the ATO, there may be some strategies we can implement for you to minimise the amount of tax you're required to pay.

In this paper we share with you 10 proven strategies we have executed for our clients that have saved them thousands of dollars ... 

CLICK THE BANNER TO DOWNLOAD 

What's Changing in 2018?

What's changing on 1 July 2018?

There are multiple changes that you will need to be aware of for Individuals, Business, and Superannuation. Individuals

Personal tax bracket changes - The top threshold of the 32.5% personal income tax bracket will increase from $87,000 to $90,000*. Read more…

EOFY Checklist

Your essential EOFY checklist

No one wants to pay more tax than they need to or face unnecessary risks. We've compiled a list of our top tips for you.

 

Donate - If you are going to donate to charity, now is the time. Any donations you make to deductible gift recipients can be deducted this year. Remember, if you received something in return for the money, like goods purchased at a charity auction, you may not be able to claim a deduction for the full payment. There are special rules dealing with this situation that need to be taken into account. Read more…

Every year, the Australian Taxation Office (ATO) compiles the tax data they collect. The recently released 2015-16 'tax stats' encapsulate the data from 16 million income tax returns lodged for the 2016 income year for 13.5 million individuals, 940,000 companies, as well as superannuation funds, partnerships, and trusts.

Here's some of what they found in the areas of:

  • Highest earning job roles
  • The wealthiest Australian Suburbs
  • Who contributes the most Tax
  • Where do we make our money
  • What deductions do we claim
  • Superannuation

Read more…

Budget 2018/19 - The ‘Breadwinners’ Budget

Treasurer Scott Morrison handed down the 2018-19 budget on the 8th May; with a few surprises joining confirmed expectations.

Being labelled the "Breadwinners" Budget, reward for work seems to be the dominant theme. The seven year personal income tax plan initially targets low to middle income earners before making significant changes to the tax brackets.
 
Innovation continues to be the Government's mantra with the medical industry a clear winner. The Government has dedicated a total of $1.3 billion to fund genomic research projects investigating medicines that can be tailored to individual patients, clinical trials of new drugs and development of new medical technologies.
 
As you would expect from an election budget, there is not a lot of bad news or serious cuts. The black economy however features consistently with a multi-agency task force and all manner of programs including the imposition of a limit of $10,000 on cash payments.  Read more…

From 1 July 2018, new laws come into effect allowing first home buyers to use their super to help buy a home, and at the other end of the spectrum, downsizers to contribute proceeds from the sale of their home to super without many of the normal restrictions.

This article includes:

  • The pros and cons of using your super to save for your first home
  • The pros and cons of contributing the proceeds from the sale of your home into super

Read more…

Why ‘property flipping’ is the next ATO target

The tax law does not allow you to 'flip' a property tax-free even if you are living in it. Most people think that they can move in to a property, renovate it, and then sell it without paying tax. The main residence exemption - the exemption that protects your family home from tax - does not apply if your primary purpose is to 'flip' the property for a profit. The fact that you are living in the property does not mean it's exempt from tax.

 

Some people reading this are probably thinking, but who is going to know? How can the Australian Taxation Office (ATO) really know what my intention is when I buy a property to live in? Generally, the ATO is looking for a pattern of behaviour or a declaration of intention. For example:  Read more…

GST on Property Developments

The big changes for developers and purchasers 

If a Bill currently before Parliament passes, from 1 July 2018, purchasers of new residential premises or new residential subdivisions will need to remit the GST on the purchase price directly to the ATO as part of the settlement process.

 

This is a significant change from how GST is currently managed with the developer collecting the full proceeds and remitting GST to the ATO in their next BAS (which can be up to three months after settlement). The reforms are aimed at preventing developers from dissolving the business before the next BAS lodgement to avoid remitting the GST.  Read more…

Australia has followed the international trend of penalising foreign owners of Australian residential property who keep their property vacant for extended periods of time.

In February, Parliament approved legislation that imposes an annual vacancy fee on foreign owners of residential real estate if the property is not occupied or genuinely available on the rental market for at least 183 days in a particular 12 month period.

Foreign owners can avoid the fee by living in the property (or have a family member live in the property), leasing the property, or making it available for rent, for a total of 183 days in a 12 month period. A property is genuinely available for rent if it is made available on the rental market; advertised publicly; and, available at a market rent.

Interestingly, the law requires the property to be let for a minimum of 30 days – so short term rentals arranged through platforms such as AirBNB are not an option unless the rental period is 30 days or more. Read more…

The ATO’s FBT Hot Spots

The Fringe Benefits Tax (FBT) year ends on 31 March. We've outlined the key hot spots for employers and employees.

Motor Vehicles – using the company car outside of work

Just because your business buys a motor vehicle and it is used as a work vehicle, that alone does not mean that the car is exempt from FBT. If you use the car for private purposes - pick the kids up from school, do the shopping, use it freely on weekends, garage it at home, your spouse uses it - FBT is likely to apply. While we're sure the old, "what the ATO doesn't know won't hurt them" mentality often applies when the FBT returns are completed, it might not be enough. The private use of work vehicles is firmly in the sites of the Australian Tax Office (ATO).

Private use is when you use a car provided by your employer (this includes directors) outside of simply travelling for work related purposes.

 

If the work vehicle is garaged at or near your home, even if only for security reasons, it is taken to be available for private use regardless of whether or not you have permission to use the car privately. Similarly, where the place of employment and residence are the same, the car is taken to be available for the private use of the employee. Read more…

The governments Enterprise Tax Plan legislation which was passed in May 2017 and lowered the tax rate for companies over the next ten years.

Corporate Tax Rate Reduction Chart -

 

Corporate Tax Rate

Turnover <$10M

Turnover <$25M

Turnover <$50M

2016-17

27.5%

30%

30%

2017-18

27.5%

27.5%

30%

2018-24

27.5%

27.5%

27.5%

2024-25

27%

27%

27%

2025-26

26%

26%

26%

2026-27

25%

25%

25%

 

The legislation was initially directed to companies who actively carried on a business but as those with a legal background will know, it is a well-established principle that generally a company will always be considered to be carrying on a business. Read more…

Taxing Bitcoin 

Cryptocurrencies, like Bitcoin, are independent and not regulated by any central authority. Until recently, these digital currencies were not treated in the same way as cash for tax purposes in Australia. New legislation passed by Parliament late last year seeks to change all of that by removing GST from currency exchanges. 

How are cryptocurrencies taxed?

Under GST law, a 10% GST applies to supplies of goods and services. Money receives special treatment because it's a medium of exchange and not something for final private consumption. Up until recently, the Australian Taxation Office (ATO) took the view that cryptocurrencies did not meet the definition of 'money' because they have an independent value rather than being a debt, credit or promise to make a payment, and they don't meet the definition of money under GST law. The impact was that when people used digital currencies as payment, this could trigger GST twice; once on the goods or services being purchased, and also on the supply of the digital currency to the other party. So, the Government has changed the definition of money for GST purposes from 1 July 2017. Now, trades of cryptocurrency are disregarded for GST purposes, unless the trade is for a payment of money or digital currency (for example you are in the business of trading cryptocurrencies). Cryptocurrencies are now taxed in a similar way for GST purposes to foreign currency.

But it's not just GST to consider. Income tax and capital gains tax (CGT) issues might also arise in transactions involving cryptocurrency depending on how and why you are using it.  Read more…

Entities with a global parent or that are part of a large group of companies are being caught in the multinational tax crackdown regardless of their size in Australia.

With effect from 1 July 2016, many smaller entities connected to a larger parent or group are now only grappling with the changes prior to the lodgement of the 2016-17 tax returns. 

A series of laws targeting multinationals came into effect from 1 July 2016 to ensure that tax is paid on economic activity in Australia. But it's not just entities with revenues of $1bn or more that are affected. Subsidiaries may be caught by the new rules if they:

 

  • Have a large global parent with annual global income of A$1bn or more, or
  • Form part of a group of entities consolidated for accounting purposes where the global parent entity has an annual global income of A$1 billion or more.

This includes Australian headquartered entities (with or without foreign operations) and local operations of foreign head-quartered multinationals.   Read more…

Every vendor selling a property needs to prove that they are a resident of Australia for tax purposes unless they are happy for the purchaser to withhold a 12.5% withholding tax. From 1 July 2017, every individual selling a property with a sale value of $750,000 or more is affected.

 

To prove you are a resident, you can apply online to the Tax Commissioner for a clearance certificate, which will remain valid for 12 months.

 

While these rules have been in place since 1 July 2016, on 1 July 2017 the threshold for properties reduced from $2 million to $750,000 and the withholding tax level increased from 10% to 12.5%.

 

The intent of the foreign resident CGT withholding rules is to ensure that tax is collected on the sale of taxable Australian property by foreign residents. But, the mechanism for collecting the tax affects everyone regardless of their residency status.

 

Properties under $750,000 are excluded from the rules. This exclusion can apply to residential dwellings, commercial premises, vacant land, strata title units, easements and leasehold interests as long as they have a market value of less than $750,000. If the parties are dealing at arm's length, the actual purchase price is assumed to be the market value unless the purchase price is artificially contrived. Read more…

Main residence exemption removed for non-residents

The Federal Budget announced that non-residents will no longer be able to access the main residence exemption for Capital Gains Tax (CGT) purposes. Now that the draft legislation has been released, more details are available about how this exclusion will work.

 

Under the new rules, the main residence exemption – the exemption that prevents your home being subject to CGT when you dispose of it – will not be available to non-residents.  The draft legislation is very 'black and white.' If you are not an Australian resident for tax purposes at the time you dispose of the property, CGT will apply to any gain you made – this is in addition to the 12.5% withholding tax that applies to taxable Australian property with a value of $750,000 or more (from 1 July 2017).

 

Transitional rules apply for non-residents affected by the changes if they owned the property on or before 9 May 2017, and dispose of the property by 30 June 2019.

This gives non-residents time to sell their main residence (or former main residence) and obtain tax relief under the main residence rules if they choose.

 

Interestingly, the draft rules apply even if you were a resident for part of the time you owned the property. The measure applies if you are a non-resident when you dispose of the property regardless of your previous residency status.

 

Special amendments are also being introduced to apply the new rules consistently to deceased estates and special disability trusts to ensure that property held by non-residents is excluded from the main residence exemption.

 

The rules have also been tightened for property held through companies or trusts to prevent complex structuring to get around the rules. The draft amends the application of CGT to non-residents when selling shares in a company or interests in a trust.  The rules ensure that multiple layers of companies or trusts cannot be used to circumvent the 10% threshold that applies in order to determine whether membership interests in companies or trusts are classified as taxable Australian property.

 

The residency tests to determine who is a resident for tax purposes can be complex and are often subjective. Please contact us if you would like to better understand your position and the tax implications of your residency status. Simply living in Australia does not make you a resident for tax purposes, particularly if you continue to have interests overseas.

Does superannuation offer an avenue to help downsizers and first home savers? The Government seems to think so. In July 2017, the detail of the housing initiatives announced in the Federal Budget were released for consultation. We explore what's on offer and the implications for those over 65 looking to downsize and first home buyers saving for their deposit.

 

Super concessions for downsizers

If you are over 65, have held your home for 10 years or more and are looking to sell, from 1 July 2018 you might be able to contribute some of the proceeds of the sale of your home to superannuation.

 

The benefit of this measure is that you can contribute a lump sum of up to $300,000 per person to superannuation without being restricted by the existing non-concessional contribution caps - $100,000 subject to your total superannuation balance - or age restrictions. It's a way of building your superannuation quickly and taking advantage of superannuation's concessional tax rates. The $1.6 million transfer balance cap will continue to apply so your pension interests cannot exceed this amount. And, the Age Pension means test will continue to apply. If you are considering using this initiative, it will be important to get advice to ensure that you are eligible to use this measure and the contribution does not adversely affect your overall financial position. Read more…

Investment Property: Post 30 June

Anyone with investment property in Australia is probably feeling a little edgy with all the recent media attention on deductions, affordable housing, and negative gearing.  We take a look at some of the key tax issues for investors.

 

No more deductions for travelling to and from your investment property

The days of writing-off the costs of travel to and from your residential investment property are about to end. From 1 July 2017, the Government intends to abolish deductions for travel expenses related to inspecting, maintaining, or collecting rent for a residential rental property.

 

Depreciation changes and how to maximise your deductions now

Investors who purchase residential rental property from Budget night (9 May 2017, 7:30pm) may not be able to claim the same tax deductions as investors who purchased property prior to this date. In the recent Federal Budget, the Government announced its intention to limit the depreciation deductions available.

 

Investors who directly purchase plant and equipment - such as ovens, air conditioning units, swimming pools, carpets etc., - for their residential investment property after 9 May 2017 will be able to claim depreciation deductions over the effective life of the asset. However, subsequent owners of a property will be unable to claim deductions for plant and equipment purchased by a previous owner of that property. If you are not the original purchaser of the item, you will not be able to use the depreciation rules to your advantage.  Read more…

GST on imports: new rules for goods under $1,000

Last month, Parliament passed legislation that will see GST applied to all consumer imports regardless of their value. Currently, imports below $1,000 are excluded from GST. 

The perceived preferential treatment of internet shopping has been a contentious issue for a while with the retail sector lobbying hard to ensure that where a business is benefiting from sales to Australian consumers, the purchase is taxed in the same way as local retailers.

While the start date of the change has been pushed back until 1 July 2018, businesses importing goods into Australia will need to review their position to check whether supply chains are affected and determine which entity is actually liable for the GST. Australian businesses that purchase low value goods from overseas should also check to make sure that overseas suppliers are not imposing GST on supplies of these goods unnecessarily.

The new rules are intended to apply to situations that are not captured by the existing GST importation rules because the goods are worth $1,000 or less. The rules are designed to only apply when goods are delivered to Australian consumers who are either not registered for GST in Australia or where the goods do not relate to an enterprise or business being carried on in Australia. If your business imports goods into Australia and is registered for GST, the tax should not apply to low value goods you import.

GST applies where the supply is to an Australia consumer – it doesn't matter who makes the purchase. So, you could have the scenario where GST applies to a gift purchased for you by an overseas relative if the gift is shipped directly to you. 

Where goods are purchased through electronic platform providers, such as Amazon, eBay or Alibaba, responsibility for collecting the GST will rest with the platform provider as they manage the customer billing on behalf of the supplier. However, it will be more difficult for the Government to force foreign companies to comply with the new rules leading to concerns about the costs of the administration required to enforce GST on low value goods.

For overseas suppliers, if the value of goods sold into Australia is greater than $75,000 per annum, the entity is required to register for GST. However simplified options are available for those that only export to Australia and have no need to claim tax credits in Australia.

We are very excited by the initiatives brought forward for small - medium business in the 2017 - 2018 Budget. They are unprecedented and bring with them great opportunities which Small-Medium Business owners may now be in a position to take advantage of.  
Walsh Accountants is a strong advocate for business reforms and any legislative changes that will help build a strong business sector. We are very excited by the changes that were announced on the 9th May and the opportunities it creates for our Small – Medium business clients.  
If any of these changes speak to you and you would like to discuss how you can take advantage of them for your business, please do not hesitate to contact us to speak with your accountant.  

Changes include:  

  • Tax cuts begin in 2016–17 for businesses with annual turnover less than $10 million, with the tax rate for companies cut to 27.5 per cent – the lowest level in 50 years.

Read more…

The popular $20,000 instant asset write-off for small business ends on 30 June 2017.  This concession enables small businesses to immediately write-off depreciable assets which cost less than $20,000.

Until recently, this instant write-off was only accessible to businesses with an aggregated turnover of less that $2 million.  But, a last minute deal struck between the government and Senator Nick Xenophon to pass the enterprise tax Bill - containing amongst other things the tax cuts for business and a change in the small business threshold – will see up to 90,000 more businesses access the instant write-off.

While the Bill containing these changes is not yet law, we expect that it will be passed when Parliament next sits.

For those businesses that have not accessed this concession previously, it's important to understand how you can take advantage of it before 30 June 2017.

What is the $20,000 instant asset write-off? Read more…

We have just been informed that the Australian Taxation Office intends to notify credit rating agencies of businesses that have outstanding tax debts. This will take effect from 1st July 2017.

The plan will see the ATO disclose the tax debt information of businesses that have not effectively engaged with the ATO to manage these debts to credit agencies.  This means that if your or your clients business has a tax debt and steps have not been taken to work with the ATO, they will ensure that the business owner cannot access new finance or potentially maintain existing finance levels without first addressing the debt to the ATO.

We worry that this move will put significant pressure on business operators. The government says it expects the change will encourage businesses to pay their tax debts in a timely fashion to avoid doing damage to their credit ratings 
Debts will only be reported where:
  • The debt is for a taxpayer that has an ABN
  • The debt is not in dispute
  • No payment plan has been established or an existing payment plan has defaulted
  • The debt amount is over $10,000 and unpaid for over 90 days (we have little doubt however that this measure will eventually extend to all tax debtors)
The important thing is that anyone with an outstanding tax debt engage with the ATO - This will prevent the credit agency threat being triggered. The ATO will notify a business that it intends to refer its tax debt to a credit bureau before it passes on the information.

Pride & Prejudice: Top Four Predictions for 2017

The global economy is picking up and Australia is about to secure the global record for the longest period a country has gone without a recession. But with the focus on the political environment, there is an uneasiness in the market and with uneasiness comes a reticence to take risks. The fortunes of Australians this year will have much to do with how you or your business is positioned and how you respond to challenges. Here are our top predictions:

1. Trumponomics will impact on our region

2. For business: Innovate or Perish

3. For you: Superannuation knee-jerk reactions will disadvantage some

4. International is still a dirty word

Read more…

Parental Leave. Where are we up to?

How did paid parental leave get to be so contentious?  The current debate is not about parental leave in general; the entitlement to 12 months with a potential for 24 months of unpaid leave with your job guaranteed (or an Parental Leaveequivalent position) remains.  It's about who pays for paid leave.

 

According to a recent report, on average across OECD countries, mothers are entitled to just less than 18 weeks of paid maternity leave around childbirth.  Almost all OECD countries offer paid maternity leave that lasts at least three months. The United States is the only country to offer no statutory entitlement to paid leave on a national basis.  On the flip side, UK mothers can take up to nine months paid maternity leave.

 

On average, OECD countries offer eight weeks of paid father-specific leave, either through paid paternity leave or paid father-specific parental or home care leave. Nine OECD countries provide no paid father-specific leave at all, and 11 offer two weeks or less.

 

Most OECD countries provide payments that replace over 50% of previous earnings, with 12 countries offering a mother on average earnings full compensation across the leave period. Payment rates are lowest in Ireland and the United Kingdom, where only around one-third of gross average earnings are replaced by maternity benefits.  As a result, despite lengthy paid leave entitlements, full-rate equivalent paid maternity leave in these countries lasts only nine and 12 weeks respectively.  Read more…

Making Sense of Super Reformes

In the 2016–17 Budget, the Government announced a package of reforms designed to improve the sustainability, flexibility and integrity of the superannuation system. It set out a clear objective for superannuation: 'to provide income in retirement to substitute or supplement the Age Pension', which guided the superannuation changes

If you are waiting for the superannuation reforms announced in the Budget to pass Parliament before working out what they mean to you, you might miss out on any opportunities available.

 

When enacted, the reforms will represent the single biggest change to superannuation since its inception. While there has been a softening of the original Budget announcements, there are still some very big changes coming your way.

 

Accumulators: Under 65s

The reforms likely to impact on you are: Read more…

Last call for SuperStream Compliance!

The ATO's final deadline is fast approaching. 28 October is the day all businesses that pay super - big and small - need to be using a SuperStream-compliant process, whether that be a super clearing house, messaging portal, or compliant software.

The ATO's employer checklist provides a good overview for those still non-compliant. SuperStream
Employee Checklist: a step-by-step guide... 

If you need any assistance, please contact us ASAP. Our team have been assisting our clients get set up and they would be more than happy to assist you.

Please contact Rachael Keuning on 5592 3644 or rachael@walshaccountants.com to discuss. 

Uber is calling for drivers, Airbnb is seeking more hosts but what are the implications of becoming part of the sharing economy?

The basics of tax apply regardless of how you earn money.  That is, even though you may be earning income from different sources or using different platforms to generate income, the fundamental tax issues remain the same. You don't have to be carrying on a business to pay tax on income you earn.

And, given that so many of these services are through sharing platforms, the Australian Tax Office (ATO) has the capacity to data match money flowing through to financial institutions specifically from these platforms.

'Sharing' a room or an entire house

Sharing a room or your house through services such as Airbnb can be a great way to earn income from an existing asset.  The tax treatment of what you earn from these services is the same as any other residential rental property arrangement.  This means you must include the rental income in your income tax return.  For example, if a husband and wife jointly own a property that they rent out through a sharing service, whatever they earn needs to be declared on their income tax returns in the same proportion as the ownership of the house in the year they earned the income. Read more…

Upper-middle Australia is set to reap the greatest rewards from the Turnbull Government's election eve budget, while high-income retirees are facing a surprise hit on their earnings.

Key points:

  • Wealthy retirees' tax free super capped at $1.6m
  • 25 per cent flat company tax rate by 2026
  • New $10m turnover ceiling for small business tax breaks
  • Tax receipts down $6.4b next year

Explore who's a winner and who's a loser as a result of Scott Morrison's 2016 Budget...   

Budget 2016: Winner & Losers                          Read more…

If your business is in the hospital/non-profit sector and uses salary packaging for team members, you're a small business, or provide team members with a gym

or space to do yoga, then there are a few things you need to know beyond the basic FBT changes when the new FBT year starts on 1 April 2016.

1. You will pay more FBT

 2. Meal entertainment crackdown – medical professionals beware

3. Salary sacrificing may not be worth it

4. Two laptops are better than one for small business 

5. Yoga or gym classes at the office?                                             Read more…

Ups & Downs: Managing in uncertain times

Ups & Downs: Managing in uncertain times

How do you create certainty in uncertain times?  Much of what we do personally to grow and protect our wealth, and commercially for the businesses we manage is subject to unpredictability and change.

 

The answer is that there are no certainties in life - sorry about that.  But, this doesn't mean that you can't take charge and protect against uncertainty - you just need to know where and how to look at it.

Where we are at

Government spending will continue to be a focus this year with the interest on Government debt now running at $1 billion per month according to Treasury.  There are only a few ways the Government has of dealing with the increasingly ominous debt trend; initiatives to lift productivity and growth to boost tax revenues, spending cuts, and increased taxes or a reduction in tax concessions.  This year, for you personally, your SMSF, and your business, you should keep this in mind when trying to manage change as Government policy is likely to provide both opportunities and risks in the short and long term. Read more…

Naughty or nice? Xmas tax checklist

It's that time of year again - what to do for the Christmas party for the team, customer gifts, gifts of appreciation for your favourite accountant (just kidding), etc., etc.   Here are our top tips for a generous and tax effective Christmas season:

For your business

What to do for customers?

The most effective way of sharing the Christmas joy with customers is not necessarily the most tax effective. If, for example, you take your client out or entertain them in any way, it's not tax deductible and you can't claim back the GST.  There are specific rules designed to prevent deductions and GST credits from being claimed when the expenses relate to entertainment, regardless of whether there is an expectation of generating goodwill and increased business sales.  Restaurants, a show, golf, and corporate race days all fall into the 'entertainment' category.

 

However, if you send your customer a gift, then the gift is tax deductible as long as there is an expectation that the business will benefit (assuming the gift does not amount to entertainment).  Even better, why don't you deliver the gift yourself to your best customers and personally wish them a Merry Christmas.  It will have a much bigger impact even if they are not available and the receptionist tells them you delivered the gift. 

 

From a marketing perspective, if your budget is tight, it's better to focus on the customers you believe deliver the most value to your business than spending a small amount on every customer regardless of value.  If you are going to invest in Christmas gifts then make it something people remember and appropriate to your business.

 

You could also make a donation on behalf of your customers (where your business takes the tax deduction) or for your customers (where they receive the tax deduction).  Donations to deductible gift recipients (DGRs) above $2 are tax deductible and can make an active difference to a cause (see For you below).   Read more…

Earlier this week the government released it's innovation statement announcing tax breaks and law changes to encourage and entice innovation and investment in entrepreneurial start-ups.

Key tax incentives included in the announcement include:

  • Early stage investor tax break- expected to commence 1 July 2016
  • Changes to company losses tests
  • Changes to employee share schemes
  • Changes to Depreciation rules for intangible assets
  • Tax offset for early stage venture capital partnerships - expected to commence in July 2016
  • Insolvency reforms

Early stage investor tax break- expected to commence 1 July 2016

The statement outlines tax breaks for eligible companies (Unlisted companies, incorporated during the last 3 years, undertaking an eligible business with expenditure less than $1mill and income less than $200,000 in previous year) that provide a 20% non-refundable tax offset based on the amount of investment capped at $200,000 per investor, per year. The incentives also provide a 10 year CGT exemption for investments held for at least three years.

Read more…

Treasurer raises ‘idea’ of personal tax cuts

Who doesn't like a tax cut when they personally benefit from it?  In a recent speech, the Treasurer said that personal tax cuts were required to prevent 'bracket creep' – that's jargon for what happens when the tax rate thresholds don't keep pace with inflation and more people are pushed into a higher tax bracket (they get taxed more and potentially lose access to benefits but are economically standing still).

 

The last change to the tax brackets was in 2012 to increase the tax-free threshold.  The Government estimates that in the next two years, 300,000 Australians will move into the second highest tax bracket.  And, by 2025, 43% of taxpayers will be in the top two tax brackets.  The political problem is that because personal tax rates are a percentage, any cut to personal tax rates benefits higher income earners - they earn more therefore the dollar value of the cut is more.  As it stands, the top 10% of income earners pay almost half of all personal tax collected – in the 1990s it was closer to 25%.   Read more…

What now for the GST?

Fifteen years after the introduction of the GST in Australia debate still rages over what should be taxed and whether the GST rate should increase. 

Unless the Government changes the GST Act, any change requires the approval of the States and Territories.  The Treasurers' workshop late last month resolved to keep the GST rate at 10% but enable a series of other changes.  We look at the key areas of change:

GST on online products

The 'Netflix tax': GST on digital goods

GST to remain on tampons  Read more…

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