News

Welcome to our news section.  Over the coming months we will endeavour to write about various topics applicable to taxpayers such as yourself.  This process won't happen overnight however and we apologise for being a little light on content whilst building this resource.

 

SUBSTANTIAL CHANGES TO SMALL BUSINESS DEPRECIATION ARE NEARLY HERE! 30/01/2012

CASH ECONOMY IN THE SPOTLIGHT 10/01/2012

THE ATO IS TAKING FIRMER ACTION ON SMALL BUSINESS DEBT 05/01/2012

DOES THE 2011 - 2012 FEDERAL BUDGET AFFECT ME? 02/06/2011

IS A SELF MANAGED SUPER FUND RIGHT FOR ME? 06/06/2011

NEW SUPER CLEARING HOUSE FOR SMALL BUSINESS 13/06/2011

SALARY PACKAGING 20/06/2011

 

SUBSTANTIAL CHANGES TO SMALL BUSINESS DEPRECIATION ARE NEARLY HERE!

With the date fast approaching, now is the time for Australia's 2.7 million small businesses to plan ahead for some significant tax law changes (proposed to take effect from the 1st July 2012). The changes relate largely to how depreciable asset purchases are to be treated for tax purposes and are as follows:

• Depreciable assets costing up to $6,500 will be able to be fully expensed in the year of purchase;
• The first $5,000 of the cost of motor vehicles purchased will be able to be immediately expensed;
• The Long Life asset pool will be removed with all depreciable assets being assigned to a 30% general depreciation pool.

We believe small business owners should consider these changes when considering the timing of purchasing decisions.

 

CASH ECONOMY IN THE SPOTLIGHT

In previous years the skimming of cash takings may have been considered a fairly safe way of avoiding tax, due to the difficulty associated with identifying its occurrence. This is no longer the case. Some of the current techniques being employed by the ATO to identify participants in the cash economy centre around identifying people whose expenditure exceeds their reported income and include:

• Electronically matching 110,000 insurance records relating to the ownership of recreational boating vehicles with a value of greater than $25,000;
• Collecting data from the major banks of credit and debit card sales of up to 400,000 entities for the period 1 July 2010 to 30 June 2011.

 

THE ATO IS TAKING FIRMER ACTION ON SMALL BUSINESS DEBT

Many small businesses have noticed a much firmer stance being taken by the ATO in recent months in relation to debt recovery. This has been as a direct response to the current unprecedented level of doubtful debt being carried by the ATO. Businesses that fail to negotiate with the ATO in relation to debts and overdue lodgements now risk firmer action being taken in the form of bankruptcy or wind up proceedings.

Our advice to business owners carrying a large ATO debt is to take the following course of action:

1. Lodge any outstanding returns as soon as possible;
2. Ask your Accountant to put in place an achievable payment plan with the ATO. We have been successful in negotiating payment arrangements of up to 3 years in length with some new clients;
3. Ask your Accountant to request a remission of all interest and penalties charged by the ATO. We successfully negotiated the full remission of over $32,000 in interest and penalties for one new client recently.

Negotiating your way through an ATO debt should always be done with the aid of a proactive professional accountant. Trying to go it alone can potentially cost you thousands of dollars in remittable interest and penalties

 

Does the 2011 - 2012 Federal Budget affect me?

This year's budget contained more than a few changes to the taxation of small business, individuals and Super Funds.  Below is a brief overview of some of the more important changes affecting these taxpayers.

Changes affecting small business

• Instant Write-Off of the first $5,000 of the cost of Motor Vehicles purchased from 1 July 2012;
• Immediate Write-Off of all assets valued at under $5,000 from 1 July 2012;
• Reduction in company tax rate for small businesses from 30% to 29% from 1 July 2012;
• FBT and Cars flat statutory rate of 20% (regardless of kms travelled) is to apply for new vehicle contracts entered into after 10 May 2011 and will be phased in over four years.

Changes affecting individual taxpayers

• One off flood levy to apply to individuals for the year ended 30 June 2012;
• Minors no longer entitled to low income tax offset on unearned income from 1 July 2011 onwards.  This measure may reduce the appeal of Family Trusts;
• Dependent spouse tax rebate for spouses under 40 years of age to be phased out from 1 July 2011.

Changes affecting Superannuation

• Refund of excess concessional contributions of up to $10,000 from year ended 30 June 2012;
• 25% reduction in the minimum pension payment allowed for year ended 30 June 2012;
• Concessional contributions cap for persons over 50 from 1 July 2012 will remain at $50,000 provided they have an account balance of less than $500,000.

 

Is a Self Managed Superannuation Fund right for me?

The potential advantages of a Self Managed Super Fund 'SMSF' are many and varied and this has led to many people rushing to create funds without a full understanding of exactly what they're in for.  The decision to start a SMSF should only be made after giving due consideration to your specific circumstances.  We listen to our clients; only by doing this can we then advise them of the advantages/disadvantages that a SMSF would present to them.

Below are just some of the potential advantages and disadvantages of starting a SMSF:

Potential advantages of a SMSF

• Ability to have personal control over investment decisions;
• Ability to borrow to purchase certain assets in the fund by way of a non-recourse loan;
• Ability to hold unique assets such as business real property in the fund;
• Greater flexibility in terms of tax and estate planning and benefits structure.

Potential disadvantages of a SMSF

• Necessarily requires a degree of organisation and dedication not required by members of retail or industry funds;
• Members with quite small balances may find the cost of operating a SMSF to be greater than an industry or retail fund.

Want to know more about Self Managed Super?  We can advise you on all aspects of Self Managed Super from creating and operating to winding up the fund.

 

New Superannuation clearing house for small business

The Federal Government has introduced a free superannuation clearing house service for small businesses with less than 20 employees.  The service allows small businesses to pay their quarterly super guarantee obligations in one transaction thereby reducing the administrative burden imposed on the business owner.

Strangely enough the service is being administered by Medicare and small businesses can register at www.medicareaustralia.gov.au/super

 

Salary Packaging

What is it?

Whilst the majority of Australian employees work in exchange for a cash salary, 'salary packaging' describes the arrangement whereby an employee works for a combination of a cash salary and some other benefit.  The 'other' benefit can take many forms, from the provision of a car to the making of additional superannuation payments or even mortgage payments on the employee's behalf.

Will I save by doing it?

Not always, and in some cases you could end up less well off by salary packaging rather than taking all your salary as cash.  Whether you will save by packaging your salary largely depends on one or more of the following factors:

• What type of benefit you're packaging (e.g. mobile phone, superannuation, mortgage payments, car etc);
• The extent to which the benefit is connected to your work duties;
• What your taxable income would be without salary packaging;
• Whether your employer is concessionally taxed or tax exempt (e.g. certain hospitals, charities, religious institutions etc).

Is it for me?

It could well be.  Many employees save thousands of dollars in tax each year through effective salary packaging arrangements.  However, you should never enter into a packaging arrangement until you've sought advice from a professional accountant as poor packaging arrangements can cost employees dearly.  Come in and see us for some advice.  After listening to your specific circumstance we can advise you of the dollar benefit that you stand to gain from packaging.