This month's content focuses on some important changes for small business being superannuation, payroll & record keeping obligations.

ATO warning regarding small business record-keeping

According to the ATO, of all of the things that can cause small businesses to fold, "high on that list is poor record keeping".

More than half of the businesses they visited in their Protecting honest business campaign needed to improve their record keeping.

Issues they found include businesses:

estimating their sales and income;using the 'no sale' and 'void' button on cash registers when taking cash payments;not keeping cash register tapes and not reconciling at the end of the day; andpaying their employees cash-in-hand.

They are writing to these businesses to recommend they attend one of the ATO's record keeping workshops, which cover why good record keeping is important and how it will save them time.

Consultation on 'protecting superannuation entitlements'

Following the recommendations of the Superannuation Guarantee Cross‑Agency Working Group, the Government has released draft legislation "to protect workers’ superannuation entitlements and modernise the enforcement of the superannuation guarantee".

The draft laws extend Single Touch Payroll to all employers from 1 July 2019, and will require superannuation funds to commence ‘event-based’ reporting to the ATO of payments they receive for employees from their employer from 1 July 2018.

Combined, these measures (if passed as drafted) should provide the ATO with more timely information to support earlier detection and proactive prevention of non‑payment of superannuation owed to employees.

The ATO will have a suite of enforcement and collection tools for employers who break the law, including

strengthened arrangements for director penalty notices and security deposits for superannuation and other tax-related liabilities;the ability (for the first time) to apply for court‑ordered penalties, including up to 12 months imprisonment; andthe ability to require employers to undertake training.

The Government’s commitment to a Director Identification Number will also help identify those directors who are robbing their employees of their superannuation.

CAS: The Government introduced legislation last year to implement another recommendation by the Working Group to close a loophole that could be used by unscrupulous employers to short‑change employees who use salary sacrifice arrangements, and will progress that legislation along with this broader compliance Bill.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should contact the team @ Clear Accounting Solutions to independently verify your interpretation and the information’s applicability to your particular circumstances.

ATO's occupation-specific guides

The ATO has developed occupation-specific guides to help taxpayers understand what they can and can’t claim as work-related expenses, including:

car expenses;home office expenses;clothing expenses; andself-education or professional development expenses.The guides are available for the following occupations:construction worker; retail worker; office worker; Australian Defence Force;sales and marketing;nurse, midwife or carer;police officer;public servant;teacher; andtruck driver.

Reforms to stop companies avoiding employee entitlements

The Government will introduce new laws to stop corporate misuse of the Australian Government’s Fair Entitlements Guarantee (FEG) scheme.

The FEG scheme is an avenue of last resort that assists employees when their employer’s business fails and the employer has not made adequate provision for employee entitlements, but it is clear that some company directors are misusing the FEG scheme to meet liabilities that can and should be paid directly by the employer, rather than passed on to Australian taxpayers.

The proposed changes will:

Penalise company directors and other persons who engage in transactions which are directed at preventing, avoiding or reducing employer liability for employee entitlements;Ensure recovery of FEG from other entities in a corporate group where it would be just and equitable and where those other entities have utilised the human resources of the insolvent entity on other than arm’s length terms; andStrengthen the ability under the law to sanction directors and company officers with a track record of insolvencies where FEG is repeatedly relied upon.

These changes will be targeted to deter and punish only those who have inappropriately relied on FEG, and so should not affect the overwhelming majority of companies who are doing the right thing.

CAS: The Government has separately released a ‘Comprehensive Package of Reforms to Address Illegal Phoenixing’, which will assist regulators to better target action against those who repeatedly misuse corporate structures and enable them to take stronger action against those entities and individuals.

These reforms will include (for example) the introduction of a Director Identification Number (DIN) (to identify all directors with a unique number), and making directors personally liable for GST liabilities as part of extended director penalty provisions.

Can travel in an Uber be exempt from FBT?

CAS: The ATO has released a discussion paper to facilitate consultation regarding the definition of 'taxi' contained in the FBT Act, and the exemption from FBT for taxi travel undertaken to or from work or due to illness.

Although the provision of travel by an employer to an employee would generally be a benefit upon which FBT would be payable, employers are specifically exempted from having to pay FBT in respect of travel undertaken by their employees in a 'taxi' to or from work or due to illness of the employee.

The ATO has previously advised that this exemption "does not extend to ride-sourcing services provided in a vehicle that is not licensed to operate as a taxi."

However, in light of a recent Federal Court decision regarding Uber, and proposed changes to licensing regulations in a number of states and territories, the ATO is reviewing its interpretation of the definition of 'taxi' in the FBT Act and may adopt an interpretation that accepts that a taxi may include a ride-sourcing vehicle or other vehicle for hire.

CAS: Until this matter is resolved, private travel (including between home and work) undertaken using ride-sourcing vehicles and other vehicles for hire may possibly be exempt from FBT under the minor benefits exemption.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should contact the team @ Clear Accounting Solutions to independently verify your interpretation and the information’s applicability to your particular circumstances.

Binding Death Benefit Nomination ('BDBN') upheld

A recent decision by the Full Court of the South Australian Supreme Court has provided guidance about the operation of BDBNs.

CAS: Members of super funds may generally make a BDBN directing the trustee of the fund to pay out their superannuation benefits after their death in a particular way and/or to particular beneficiaries.

In this case, the member had executed a BDBN that nominated his legal personal representative (‘LPR’) as the beneficiary to receive his death benefits.

Because he frequently lived outside Australia, he had also executed an enduring power of attorney (‘EPOA’) allowing his brother to be the sole director of the corporate trustee of his SMSF in his place.

Following his death, the executor of his estate (Dr Booth) brought an action for declarations that the trustee was bound by the BDBN.

Editor: Both the executor of a will and a person acting under an EPOA are 'LPRs' for superannuation purposes.

The Full Court held that the BDBN was effective and that Dr Booth, as executor of the will, was the LPR for these purposes.

Although the brother was the LPR of the deceased during his lifetime, the EPOA was terminated upon his death.

Reporting of transfer balance account information

CAS: The recent superannuation reforms introduced the concept of a 'transfer balance account', to basically record the value of member balances moving into or out of 'retirement phase'.

In order to monitor these amounts, the ATO is introducing new reporting requirements and forms.

The ATO has released the new Transfer Balance Account Report (‘TBAR’), which is now available on ato.gov.au, and the ATO plans to have an online TBAR form available from 1

January 2018.

The TBAR is the approved form to provide data relating to transactions associated with the payment of retirement phase income streams to the ATO.

Reporting on events that affect a member’s transfer balance account is vital to minimising the taxation consequences if the transfer balance cap is exceeded.

While SMSFs will not be required to report anything until 1 July 2018, SMSFs can use the TBAR to report events that affect an individual member’s transfer balance account from 1 October 2017.

SMSFs with relatively straightforward affairs are likely to have only a few events per member to report over the life of the fund, including the commencing values of any retirement phase income streams to which an SMSF member is entitled (e.g., account based pensions, including reversionary income streams), and the value of any commutation of a retirement phase income stream by an SMSF member.

Combatting the cash economy

The ATO has reminded taxpayers that it uses a range of tools to identify and take action against people and businesses that may not be correctly meeting their obligations. Through 'data matching', it can identify businesses that do not have electronic payment facilities.

These businesses often advertise as 'cash only' or mainly deal in cash transactions. When businesses do this, they are more likely to make mistakes or do not keep thorough records.

The ATO’s ability to match and use data is very sophisticated. It collects information from a number of sources (including banks, other government agencies and industry suppliers), and also obtains information about purchases of major items, such as cars and real property, and then compares this information against income and expenditure reported by businesses and individuals to the ATO.

Example: Unrealistic personal income leads to unreported millions

The income reported on their personal income tax returns indicated that a couple operating a property development company didn’t seem to have sufficient income to cover their living expenses.

The ATO found their company had failed to report millions of dollars from the sale of properties over a number of years.

They had to pay the correct amount of tax (of more than $4.5 million) based on their income and all their related companies, and also incurred a variety of penalties.

Example: Failing to report online sales

A Nowra court convicted the owner of a computer sales and repair business on eight charges of understating the business’s GST and income tax liabilities.

The ATO investigated discrepancies between income reported by the business and amounts deposited in the business owner’s bank accounts, and found that the business had failed to report income from online sales.

The business owner was ordered to pay over $36,000 in unreported tax and more than $18,400 in penalties, and also fined $4,000 (and now has a criminal conviction).

Get it in writing and get a receipt

The ATO also notes that requesting a written contract or tax invoice and getting a receipt for payment may protect a consumer's rights and obligations relating to insurance, warranties, consumer rights and government regulations.

Consumers who support the cash economy, by paying cash and not getting a receipt, risk having no evidence to claim a refund if the goods or services purchased are faulty, or prove who was responsible in case of poor work quality

Higher risk trust arrangements targeted

The ATO’s 'Tax Avoidance Taskforce – Trusts' continues the work of the Trusts Taskforce, by targeting higher risk trust arrangements in privately owned and wealthy groups.

The Taskforce will focus on the lodgment of trust tax returns, accurate completion of return labels, present entitlement of exempt entities, distributions to superannuation funds, and inappropriate claiming of CGT concessions by trusts.

Arrangements that attract the attention of the Taskforce include those where:

trusts or their beneficiaries who have received substantial income are not registered, or have not lodged tax returns or activity statements;there are offshore dealings involving secrecy or low tax jurisdictions;there are agreements with no apparent commercial basis that direct income entitlements to a low-tax beneficiary while the benefits are enjoyed by others; changes have been made to trust deeds or other constituent documents to achieve a tax planning benefit, with such changes not credibly explicable for other reasons;there are artificial adjustments to trust income, so that tax outcomes do not reflect the economic substance (e.g., where someone receives substantial benefits from a trust but the tax liability on those benefits is attributed elsewhere, or where the full tax liability is passed to entities with no capacity/intention to pay);transactions have excessively complex features or sham characteristics (e.g., round robin circulation of income among trusts);revenue activities are mischaracterised to achieve concessional CGT treatment (e.g., by using special purpose trusts in an attempt to re-characterise mining or property development income as discountable capital gains); andnew trust arrangements have materialised that involve taxpayers or promoters linked to previous non-compliance (e.g., people connected to liquidated entities that had unpaid tax debts).

No small business tax rate for passive investment companies

The Government has released draft tax legislation to clarify that passive investment companies cannot access the lower company tax rate for small businesses of 27.5%, but will still pay tax at 30%.

The amendment to the tax law will ensure that a company will not qualify for the lower company tax rate if 80% or more of its income is of a passive nature (such as dividends and interest).

The Minister for Revenue and Financial Services said the policy decision made by the Government to cut the tax rate for small companies was meant to lower taxes on business, and was not meant to apply to passive investment companies.

ATO to be provided with more super guarantee information

The Government has announced a package of reforms to give the ATO near real-time visibility over superannuation guarantee (SG) compliance by employers.

The Government will also provide the ATO with additional funding for a SG Taskforce to crackdown on employer non-compliance.

The package includes measures to:

require superannuation funds to report contributions received more frequently (at least monthly) to the ATO, enabling the ATO to identify non-compliance and take prompt action;require employers with 19 or fewer employees to transition to single touch payroll (‘STP’) reporting from 1 July 2019;improve the effectiveness of the ATO’s recovery powers, including strengthening director penalty notices and use of security bonds for high-risk employers, to ensure that unpaid superannuation is better collected by the ATO and paid to employees’ super accounts; andgive the ATO the ability to seek court-ordered penalties in the most egregious cases of non-payment, including employers who are repeatedly caught but fail to pay SG liabilities

CAS: Following extensive consultation when STP was originally announced, it was decided that employers with 19 or fewer employees would not be required to comply. Given the backflip here, the business community will be hoping the Government does not introduce compulsory real-time payments of SG and PAYG withholding, as well as real-time reporting.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should give Adrian & the team at Clear Accounting Solutions a call to independently verify your interpretation and the information’s applicability to your particular circumstances.

ALP announces massive (potential) changes to trust taxation

The Leader of the Opposition, Bill Shorten, announced that a Labor Government (should they be elected) will introduce a standard minimum 30% tax rate for discretionary trust distributions to "mature beneficiaries" (i.e., people aged 18 and over).

Although the ALP acknowledges that individuals and businesses use trusts for a range of legitimate reasons, such as asset protection and business succession, "in some cases, trusts are used solely for tax minimisation."

Labor’s policy will only apply to discretionary trusts, so other trusts – such as special disability trusts, deceased estates and fixed trusts – will not be affected by this change.

Labor’s policy will also not apply to farm trusts and charitable trusts, and other exemptions will apply, such as for people with disability (the Commissioner of Taxation will be given discretionary powers to manage this).

Their announcement also reiterated their other policies regarding tax reform, including further changes to superannuation, changes to negative gearing and CGT, and limiting deductions for managing tax affairs.

Single Touch Payroll update

A limited release of 'Single Touch Payroll' began for a small number of digital service providers and their clients on 1 July 2017, with Single Touch Payroll operating with limited functionality for a select number of employers.

CAS: Single Touch Payroll will effectively require some employers to report information regarding payments to employees (or to their super funds)in 'real time', via their payroll software.

The following timeline sets out what is happening in the lead-up to the mandatory commencement of Single Tough Payroll next year.

September 2017 – the ATO will write to all employers with 20 or more employees to inform them of their reporting obligations under Single Touch Payroll.

1 April 2018 – employers will need to do a headcount of the number of employees they have, to determine if they need to report through Single Touch Payroll.

From 1 July 2018 – Single Touch Payroll reporting will be mandatory for employers with 20 or more employees.

Keeping ABN details up to date

The ATO finds that businesses tend to forget to update their Australian business number (ABN) details in the Australian Business Register (ABR) when their circumstances or details change, so they have asked that we contact our clients to help keep your ABN details up to date and reduce unnecessary contact from the ATO.

In particular, the ATO says that many partnership and trust ABNs are not in operation, or their business structures have changed, so please let us know if:

your business is no longer in operation (so we can cancel the ABN); or if your business structure has changed (so we can cancel the ABN for the old structure before applying for a new one).

The ATO also recommends that we add alternative contacts to clients' ABN records (so please provide us with alternative contact information, if possible), and to update the ABN records where any contact details have changed.

Register trading names with ASIC

By 31 October 2018, businesses will need to register any existing or old trading names as a business name with the Australian Securities & Investments Commission (ASIC) in order to continue operating with it.

The ABN Lookup website will reflect these changes and will only display business names registered with ASIC from this date.

Limited opportunity to avoid 'transfer balance cap' problems

If the total value of a superannuation fund member's pensions exceeded $1.6 million on 1 July 2017, they may face adverse tax consequences.

However, there is a transitional provision that permits a minor excess over $1.6 million to be ignored, subject to certain conditions being met.

Basically, this will be satisfied if the value of their pension interests on 1 July 2017 exceeded $1.6 million by no more than $100,000 (i.e., their total value did not exceed $1.7 million), but the member is able to commute the pension(s) by an amount that is at least equal to that excess no later than 31 December 2017.

This will mean that no 'transfer balance cap' consequences arise (e.g., no 'excess transfer balance earnings' will accrue on the excess and no 'excess transfer balance tax' will become payable).

Therefore, it is important that this issue is identified and, if applicable, dealt with promptly.

CAS: Please contact us if you believe this may affect you and you need more information.

New Approved Occupational Clothing Guidelines 2017

The government has issued new guidelines to set out criteria for tax deductible non-compulsory uniforms.

CAS: The taxation law only allows a deduction to employees for expenditure on uniforms or wardrobes where either:

The new guidelines outline (among other things):

the steps that need to be undertaken by employers to have designs of occupational clothing registered; and

the factors that will be considered in determining whether designs of occupational clothing may be registered.

The guidelines commence on 1 October 2017, and the previous Guidelines are revoked with effect from the same day.

Ability to lodge nil activity statements in advance

The ATO generally issues activity statements by the end of the relevant month under their normal processes, allowing the statement to be lodged by 21 days after the end of the month, or 28 days after the end of the relevant quarter (as appropriate).

However, the ATO recognises that there may be a specific reason for a taxpayer to access their activity statements early, so activity statements can be generated early in some cases, such as where the taxpayer is going to be absent from their place of business before the end of the reporting period (and the business will not be trading during that period), or if the taxpayer's entity is under some form of administration, or the business has ceased.

CAS: There are certain eligibility requirements to take advantage of this service, so please contact us if this is of interest to you.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.

ATO warning regarding work-related expense claims for 2017

The ATO is increasing attention, scrutiny and education on work-related expenses (WREs) this tax time.

Assistant Commissioner Kath Anderson said: “We have seen claims for clothing and laundry expenses increase around 20% over the last five years. While this increase isn’t a sign that all of these taxpayers are doing the wrong thing, it is giving us a reason to pay extra attention.”

Ms Anderson said common mistakes the ATO has seen include people claiming ineligible clothing, claiming for something without having spent the money, and not being able to explain the basis for how the claim was calculated.

“I heard a story recently about a taxpayer purchasing everyday clothes who was told by the sales assistant that they could claim a deduction for the clothing if they also wore them to work,” Ms Anderson said.

“This is not the case. You can’t claim a deduction for everyday clothing you bought to wear to work, even if your employer tells you to wear a certain colour or you have a dress code.”

Ms Anderson said it is a myth that taxpayers can claim a standard deduction of $150 without spending money on appropriate clothing or laundry. While record keeping requirements for laundry expenses are "relaxed" for claims up to this threshold, taxpayers do need to be able to show how they calculated their deduction.

The main message from the ATO was for taxpayers to remember to:

Declare all income;Do not claim a deduction unless the money has actually been spent;Do not claim a deduction for private expenses; andMake sure that the appropriate records are kept to prove any claims.

GST applies to services or digital products bought from overseas

From 1 July 2017, GST applies to imported services and digital products from overseas, including:

digital products such as streaming or downloading of movies, music, apps, games and e-books; andservices such as architectural, educational and legal.

Australian GST registered businesses will not be charged GST on their purchases from a non-resident supplier if they:

provide their ABN to the non-resident supplier; and state they are registered for GST.

However, if Australians purchase imported services and digital products only for personal use, they should not provide their ABN.

Imposition of GST on 'low-value' foreign supplies

Parliament has passed legislation which applies GST to goods costing $1,000 or less supplied from offshore to Australian consumers from 1 July 2018.

Using a 'vendor collection model', the law will require overseas suppliers and online marketplaces (such as Amazon and eBay) with an Australian GST turnover of $75,000 or more to account for GST on sales of low value goods to consumers in Australia.

The deferred start date gives industry participants additional time to make system changes to implement the measure.

CAS: It should be noted that this is a separate measure to that which applies GST to digital goods and services purchased from offshore websites, as outlined above.

New threshold for capital gains withholding

From 1 July 2017, where a foreign resident disposes of Australian real property with a market value of $750,000 or above, the purchaser will be required to withhold 12.5% of the purchase price and pay it to the ATO unless the seller provides a variation (this is referred to as 'foreign resident capital gains withholding').

However, Australian resident vendors who dispose of Australian real property with a market value of $750,000 or above will need to apply for a clearance certificate from the ATO to ensure amounts are not withheld from their sale proceeds.

Therefore, all transactions involving real property with a market value of $750,000 or above will need the vendor and purchaser to consider if a clearance certificate is required.

Action to address super guarantee non-compliance

The Government will seek to legislate to close a loophole that could be used by unscrupulous employers to short‑change employees who choose to make salary sacrificed contributions into their superannuation accounts.

The Government will introduce a Bill into Parliament this year that will ensure an individual’s salary sacrificed contributions do not reduce their employer’s superannuation guarantee obligation.

Change to travel expenses for truck drivers

CAS: The ATO has released its latest taxation determination on reasonable travel expenses, and it includes a big change for employee truck drivers.

For the 2017/18 income year, the reasonable amount for travel expenses (excluding accommodation expenses, which must be substantiated with written evidence) of employee truck drivers who have received a travel allowance and who are required to sleep away from home is $55.30 per day (formerly a total of $97.40 per day for the 2016/17 year).

If an employee truck driver wants to claim more than the reasonable amount, the whole claim must be substantiated with written evidence, not just the amount in excess of the reasonable amount.

CAS: The determination includes an example of a truck driver who receives a travel allowance of $40 per day in 2017/18 ($8,000 over the full year for 100 2-day trips), but who spent $14,000 on meals on these trips.

In terms of claiming deductions for these expenses, he can either claim $14,000 as a travel expense (if he kept all of his receipts for the food and drink he purchased and consumed when travelling), or just rely on the reasonable amount and claim $11,060 ($55.30 x 200 days) as a travel expense (in which case he will need to be able to show (amongst other things) that he typically spent $55 or more a day on food and drink when making a trip (for example, by reference to diary entries, bank records and receipts that he kept for some of the trips)).

Car depreciation limit for 2017/18

The car limit for the 2017/18 income year is $57,581 (the same as the previous year). This amount limits depreciation deductions and GST input tax credits.

Example

In July 2017, Laura buys a car to which the car limit applies for $60,000 to use in carrying on her business. As Laura started to hold the car in the 2017/18 financial year, in working out the car’s depreciation for the 2017/18 income year, the cost of the car is reduced to $57,581.

Div.7A benchmark interest rate

The benchmark interest rate for 2017/18, for the purposes of the deemed dividend provisions of Div.7A, is 5.30% (down from 5.40% for 2016/17).

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should give Adrian & the team at Clear Accounting Solutions a call to independently verify your interpretation and the information’s applicability to your particular circumstances.

Extension of the $20,000 SBE Immediate Deduction Threshold

In the 2017/18 Federal Budget handed down on 9 May 2017, the Federal Government announced that it intended to extend the ability of Small Business Entity (or ‘SBE’) taxpayers to claim an outright deduction for depreciating assets costing less than $20,000 until 30 June 2018. This Budget Night announcement has now been passed into law.

Prior to the relevant legislation being passed into law, the outright deduction threshold for SBEs in relation to depreciating assets was scheduled to revert back to $1,000 as of 1 July 2017. Now that this change has become law, the threshold is scheduled to revert back to $1,000 as of 1 July 2018.

To qualify for an immediate deduction for depreciating assets purchased by an SBE taxpayer costing less than $20,000, the asset needs to be first used or installed ready for use on or before 30 June 2018.

CAS: The ‘aggregated turnover’ threshold to satisfy the requirements to be an SBE taxpayer has increased from $2 million to $10 million, as of 1 July 2016. As a result, more business taxpayers than ever before will be eligible for the $20,000 immediate deduction for depreciating assets.

Please contact our office if you need any assistance in determining if your business is an SBE, whether an asset purchase you are considering will qualify as a “depreciating asset” and/or what constitutes being “used or installed ready for use”.

Simpler BAS is coming soon

The ATO is reducing the amount of information needed to be included in the business activity statement (or ‘BAS’) to simplify GST reporting.

From 1 July 2017, Simpler BAS will be the default GST reporting method for small businesses with a GST turnover of less than $10 million.

In relation to GST, small businesses will only need to report:

G1 - Total sales

1A - GST on sales

1B - GST on purchases.

This will not change a business’ reporting cycle, record keeping requirements, or the way a business reports other taxes on its BAS.

Simpler BAS is intended to make it easier for businesses to lodge their BAS. It should also reduce the time spent on form-filling and making changes that don't impact the final GST amount.

The ATO will automatically transition eligible small business' GST reporting methods to Simpler BAS from 1 July 2017.

Small businesses can choose whether to change their GST accounting software settings to reduce the number of GST tax classification codes.

CAS: Call our office if you need help with the transition to Simpler BAS or to decide whether your business will use reduced or detailed GST tax code settings in its GST accounting software.

Changes to the foreign resident withholding regime for sales of Australian real estate

Since 1 July 2016, where a foreign resident has disposed of real estate located in Australia, the purchaser has had to withhold 10% of the purchase price upon settlement and remit this amount to the ATO, where the market value of the property was $2,000,000 or greater.

As a result of another 2017/18 Budget Night announcement becoming law, in relation to acquisitions of real estate that occur on or after 1 July 2017, the withholding rate has increased to 12.5% and the market value of the real estate, below which there is no need to withhold, has been reduced to $750,000.

CAS: Unfortunately, even if a sale of real estate with a market value of $750,000 was to take place between two siblings on or after 1 July 2017 (both of whom have been Australian residents for 50 plus years), withholding must occur unless the vendor obtains a ‘clearance certificate’ from the ATO – despite the two siblings clearly knowing the residency status of each other!

These changes highlight the need to obtain clearance certificates where the vendor is an Australian resident and the real estate is worth $750,000 or more - not a high exemption threshold given the sky-rocketing values of Australian real estate! If you are buying or selling real estate worth $750,000 or more (including a residential property, i.e., home) please call our office to see if a clearance certificate is needed.

Change to deductions for personal super contributions

Up until 30 June 2017, an individual (mainly those who are self-employed) could claim a deduction for personal super contributions where they meet certain conditions. One of these conditions is that less than 10% of their income is from salary and wages. This was known as the “10% test”.

From 1 July 2017, the 10% test has been removed. This means most people under 75 years old will be able to claim a tax deduction for personal super contributions (including those aged 65 to 74 who meet the work test).

CAS: Call our office if you need assistance in relation to the application of the work test for a client that is aged 65 to 74.

Eligibility rules

An individual can claim a deduction for personal super contributions made on or after 1 July 2017 if:

* A contribution is made to a complying super fund or a retirement savings account that is not a Commonwealth public sector superannuation scheme in which an individual has a defined benefit interest or a Constitutionally Protected Fund;

* The age restrictions are met;

* The fund member notifies their fund in writing of the amount they intend to claim as a deduction; and

* The fund acknowledges the notice of intent to claim a deduction in writing.

Concessional contributions cap

Broadly speaking, contributions to super that are deductible to an employer or an individual, count towards an individual’s 'concessional contributions cap'.

The contributions claimed by an individual as a deduction will count towards their concessional contributions cap, which for the year commencing 1 July 2017 is $25,000, regardless of age. If an individual’s cap is exceeded, they will have to pay extra tax.

CAS: Call our office to discuss the eligibility criteria and tax consequences of claiming a tax deduction for a personal contribution to super for the year commencing 1 July 2017.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should give Adrian & the team at Clear Accounting Solutions a call to independently verify your interpretation and the information’s applicability to your particular circumstances.

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Many of our business clients like to review their tax position at the end of the income year and evaluate any year-end strategies that may be available to legitimately reduce their tax. Traditionally, year-end tax planning for small businesses is based around two simple concepts – i.e., accelerating business deductions and deferring income.

However, Small Business Entities ('SBEs') have greater access to year-end tax planning due to particular concessions that only apply to them.

The basic requirement to be eligible for most of the SBE concessions for the year ending 30 June 2017 is that the business taxpayer's annual turnover (including that of some related entities) is less than $10 million.

See below for a number of deductions that may be considered for business taxpayers.

Maximising deductions for SBE taxpayers

Deductions can be maximised for SBE business taxpayers by accelerating expenditure and prepaying deductible business expenses. Former STS taxpayers who have continued to use the STS cash method since before 1 July 2005 cannot accrue expenses, but other SBE taxpayers on an accruals basis can accrue expenses (see above regarding accruing expenditure).

Accelerating expenditure – SBE

All SBE taxpayers can choose to write-off depreciable assets costing less than $20,000 in the year of purchase*. Also, assets costing $20,000 or more are allocated to an SBE general pool and depreciated at 15% (which is half the full rate of 30%) in their first year. Therefore, where appropriate, SBE business taxpayers should consider purchasing/installing these items by 30 June 2017.

It should be noted that SBE taxpayers choosing to use the SBE depreciation rules are effectively 'locked in' to using those rules for all of their depreciable assets.

Further note, former STS taxpayers who have continued to use the STS cash method since before 1 July 2005 and who qualify as an SBE are generally only entitled to deductions if they have paid the amount by 30 June.

(*) The small instant asset write-off threshold has been temporarily increased to 'less than $20,000', for assets acquired and installed ready for use between 7.30 pm (AEST) 12 May 2015 and 30 June 2017. On 9 May 2017 the Government announced it intends to extend this date to 30 June 2018.

Prepayment strategies – SBE

SBE taxpayers making prepayments before 1 July 2017 can choose to claim a full deduction in the year of payment where they cover a period of no more than 12 months (ending before 1 July 2018). Otherwise, the prepayment rules are the same as for non-SBE taxpayers.

The kinds of expenses that may be prepaid include:

Rent on business premises or equipment.Lease payments on business items such as cars and office equipment.Interest – check with your financier to determine if it’s possible to prepay up to 12 months interest in advance.Business trips.Training courses that run on or after 1 July 2017.Business subscriptions.Cleaning

Maximising deductions for non-SBE taxpayers

Non-SBE business taxpayers should endeavour to maximise deductions by adopting one or more of the following strategies:

Prepayment strategies;Accelerating expenditure; andAccrued expenditure.

Prepayment strategies – non-SBE

Any part of an expense prepayment relating to the period up to 30 June is generally deductible.

In addition, non-SBE taxpayers may generally claim the following prepayments in full:

– expenditure under $1,000;

– expenditure made under a 'contract of service' (e.g., salary and wages); or

– expenditure required to be incurred under law.

Note: Prepayments can be a little confusing, so before you commit to making a payment please feel free to call us with any queries or assistance if required.

Accelerating expenditure – non-SBE

This is where a business taxpayer brings forward expenditure on regular, on-going deductible items. Business taxpayers are generally entitled to deductions on an 'incurred basis'. Therefore, there is generally no requirement for the expense to be paid by 30 June 2017 (as long as the expense has genuinely been 'incurred', it will generally be deductible).

Checklist

The following may act as a checklist of possible accelerated expenditure:

Depreciating assets costing $100 or less can be written off in the year of purchase. Depreciating assets costing less than $1,000 can be allocated to a low value pool and depreciated at 18.75% (which is half of the full rate of 37.5%) in their first year regardless of the date of purchase.Repairs – repairs to office premises, equipment, cars or other business items.Consumables/spare parts.Client gifts.Donations.Advertising.Fringe benefits – any benefits to be provided, such as property benefits, could be purchased and provided prior to 1 July 2017.Superannuation – contributions to a complying superannuation fund, to the extent contributions are actually made (i.e., they cannot be accrued but must be paid by 30 June).

Accrued expenditure – non-SBE

Non-SBE taxpayers (and some SBE taxpayers) are entitled to a deduction for expenses incurred as at 30 June 2017, even if they have not yet been paid.

The following expenses may be accrued:

Salary or wages and bonuses – the accrued expense for the days that employees have worked but have not been paid as at 30 June 2017.Interest – any accrued interest outstanding on a business loan that has not been paid as at 30 June 2017.Commercial bills – the discount applicable to the period up to 30 June 2017, where the term of the bill extends past 30 June.Commissions – where employees or other external parties are owed commission payments.Fringe benefits tax (FBT) – if an FBT instalment is due for the June 2017 quarter, for example, but not payable until July, it can be accrued and claimed as a tax deduction in the 2017 income year.Directors’ fees – where a company is definitively committed to the payment of a director’s fee as at 30 June 2017, it can be claimed as a tax deduction.

The following outlines common types of deductible expenses claimed by individual taxpayers, such as employees and rental property owners, plus some strategies that can be adopted to increase deductions for the 2016/17 income year.

Pick up the phone or email if you have any questions for us to explain how we can reduce your personal tax bill

1. Depreciable plant, etc, costing $300 or less

Salary and wage earners and rental property owners will generally be entitled to an immediate deduction if certain income-producing assets costing $300 or less are purchased before 1 July 2017.

Some purchases you may consider include:

books and trade journals;briefcases/luggage or suitcases;calculators, electronic organisers;electronic tablets;software;stationery; andtools of trade.

2. Clothing expenses

Purchase or pay for work-related clothing expenses prior to the end of the income year, such as:

compulsory (or non-compulsory and registered) uniforms, and occupation specific and protective clothing;other expenses associated with such work-related clothing, such as dry cleaning, laundry and repair expenses.

3. Self education expenses

Consider prepaying the following self education items before the end of the income year:

course fees (but not HECS-HELP fees), student union fees, and tutorial fees;interest on borrowings used to pay for any deductible self education expenses.

Also bring forward purchases of stationery and text books (i.e., those which are not required to be depreciated).

4. Other work-related expenses

Employees can prepay any of the following expenses prior to 1 July 2017:

union fees;subscriptions to trade, professional or business associations;magazine and newspaper subscriptions;seminars and conferences;income protection insurance (excluding death and total/permanent disability).

Note: When prepaying any of the expenses above before 1 July 2017, ensure that any services being paid for are to be provided within a 12 month period that ends before 1 July 2018. Otherwise, the deductions must generally be claimed proportionately over the period of the prepayment.

Super changes may require action by 30 June 2017!

Due to the introduction of the new 'transfer balance cap' from 1 July 2017, super fund members with pension balances (in 'retirement phase') exceeding $1.6 million will need to partially commute one or more of their pensions to avoid the imposition of excess transfer balance tax.

In addition, members in receipt of a transition to retirement income stream ('TRIS') will lose the pension exemption from 1 July 2017.

This means that the future disposal of any assets currently supporting such pensions will potentially generate a higher taxable capital gain (even though the disposal of the asset prior to 1 July 2017 could be fully or partially tax-free, depending on whether the asset is a segregated or unsegregated asset).

Fortunately, to avoid funds selling off assets before 1 July 2017, transitional provisions have been introduced to allow super funds to apply CGT relief in certain situations.

Although the choice to apply the CGT relief can be made up until the day the super fund is required to lodge its 2017 tax return, in many cases, action must be taken on or before 30 June 2017 for the fund to even be eligible to make that choice.

Hot off the press - in this month's update we cover the ATO's further crackdown on Superannuation Gurantee non-compliance and some great FREE face to face workshops run by the ATO for small business owners.

As always if you have any questions pick up the phone & give us a call

Best Regards

Adrian De Vito - CPA

FREE ATO workshops for small business in your area

click link below

ATO data regarding Super Guarantee non-compliance

The ATO has provided some information about Superannuation Guarantee (SG) non-compliance in its recent submission to a Senate inquiry into the impact of the non-payment of the Superannuation Guarantee.

In addition to marketing and education activities to re-enforce the need for employers to meet their SG obligations, the ATO conducts audits and reviews to ascertain SG non-compliance, with 70% of cases stemming from employee notifications (the remaining 30% of cases are actioned from ATO-initiated strategies).

On average, the ATO receives reports from employees which relate to approximately 15,000 employers each year, although the ATO finds that nearly 30% of these employers have in fact paid the required SG to their employee.

However, an SG shortfall is identified in the remaining 10,000 cases (this represents approximately 1% of the estimated 880,000 employers who make SG payments).

The top four industries from which reports are received by the ATO are from:

Accommodation and Food Services;Construction;Manufacturing; andRetail Trade

Ride-sourcing is 'taxi travel'

In a recent case, the Federal Court has agreed with the ATO that 'ride-sourcing' (such as that provided using Uber) is 'taxi travel' within the meaning of the GST law.

The ATO has advised people who are taking up ride-sourcing to earn income sho keep records;

have an Australian business number (ABN);register for GST, regardless of how much they earn, and pay GST on the full fare received from passengers for each trip they provide;lodge activity statements; andinclude income from ride-sourcing in their income tax returns.

Drivers are also entitled to claim income tax deductions and GST credits (for GST paid) on expenses apportioned to the ride-sourcing services they have supplied.

The ATO warns that they can match people who provide ride-sourcing through data-matching, and will continue to write to them to explain their tax obligations.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should give Adrian & the team at Clear Accounting Solutions a call to independently verify your interpretation and the information’s applicability to your particular circumstances.

This month we have the ATO focusing on UBER DRIVERS & ONLINE RETAILERS if you have any questions about the above give Mitchell Calley from our office a call as this is his area of specialty.

The are some other interesting updates to read over - as always pick up the phone and call us if you have any questions

Best Regards Adrian De Vito - CPA

ATO data matching programs

CAS: The ATO has announced that it will be undertaking the following two data matching programs.

Ride Sourcing data matching program

The Ride Sourcing data matching program has been developed to address the compliance risk of the registration, lodgement and reporting of businesses offering ride sourcing services as a driver.

CAS: 'Ride sourcing' = Uber (basically).

It is estimated that up to 74,000 individuals ('ride sourcing drivers') offer, or have offered, this service.

The ATO will request details of all payments made to ride sourcing providers from accounts held by a ride sourcing facilitator's financial institution for the 2016/17 and 2017/18 financial years, and match the data provided against their records.

This will identify ride sourcing drivers that may not be meeting their registration, reporting, lodgement and/or payment obligations.

Where the ATO is unable to match a driver's details against ATO records, it will obtain further information from the financial institution where the driver's account is held.

Credit and debit card and online selling data matching program

The ATO is collecting new data from financial institutions and online selling sites as part of its credit and debit cards and online selling data-matching programs, specifically:

the total credit and debit card payments received by businesses; andinformation on online sellers who have sold at least $12,000 worth of goods or services.

The ATO will be matching this data with information it has from income tax returns, activity statements and other ATO records to identify businesses that may not be reporting all their income or meeting their registration, lodgement or payment obligations.

Deductibility of expenditure on a commercial website

The ATO has released a public taxation ruling covering the ATO’s views on the deductibility of expenditure incurred in acquiring, developing, maintaining or modifying a website for use in the carrying on of a business.

Importantly, if the expenditure is incurred in maintaining a website, it would be considered 'revenue' in nature, and therefore generally deductible upfront.

This would be the case where the expenditure relates to the preservation of the website, and does not:

alter the functionality of the website;improve the efficiency or function of the website; orextend the useful life of the website.

However, if the expenditure is incurred in acquiring or developing a commercial website for a new or existing business, or even in modifying an existing website, it would generally be considered capital in nature (in which case an outright deduction cannot be claimed).

CAS: Please contact us if you want any guidance about the ATO's latest views on this important issue.

Changes to the ‘backpacker tax’

From 1 January 2017, tax rates changed for working holiday makers who are in Australia on a 417 or 462 visa (these rates are known as ‘working holiday maker tax rates').

If a business employs a working holiday maker in Australia on a 417 or 462 visa, from 1 January 2017, they should withhold 15% from every dollar earned up to $37,000, with foreign resident tax rates applying from $37,001.

Businesses must register with the ATO by 31 January 2017 to withhold at the working holiday maker tax rate.

If they don’t register, they will need to withhold at the foreign resident tax rate of 32.5% (and penalties may apply to businesses employing holiday makers that don't register).

CAS: Therefore, if this affects you and you haven't registered by the time you read this, please contact us immediately!

Also, note that businesses already employing working holiday makers will need to issue two payment summaries (with different rates) this year – one for the period to 31 December 2016, and a second for any period from 1 January 2017.

Easier GST reporting for new small businesses

The ATO has notified taxpayers that, from 19 January 2017, newly registered small businesses have the option to report less GST information on their business activity statement (BAS).

Therefore, if you plan to register for GST after receiving this Update, we can help you access the reporting benefits of the simpler BAS early.

CAS: From 1 July 2017, small businesses generally will only need to report GST on sales, GST on purchases, and Total sales on their BAS.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should give Adrian & the team at Clear Accounting Solutions a call to independently verify your interpretation and the information’s applicability to your particular circumstances.

Superannuation changes passed by Parliament

The government's extensive changes to the taxation laws regarding superannuation were passed by Parliament on 23 November 2016.

According to the Treasurer, Mr Scott Morrison:

"The superannuation reform package better targets tax concessions to make our superannuation system fair and sustainable, as the population ages and fiscal pressures increase.

"The reforms include the introduction of a $1.6 million transfer balance cap, which places a limit on the amount an individual can transfer into the tax-free earnings retirement phase and the introduction of the Low Income Superannuation Tax Offset".

The amendments also include the following two new measures to provide more flexibility to help Australians save for their retirement:

the removal of the ‘10% rule’, allowing anyone (including employees) to claim a deduction for personal contributions into superannuation from 1 July 2017 (which will particularly help contractors who also draw income from salary and wages); andthe ability for individuals with superannuation balances below $500,000 to make ‘catch up’ concessional contributions from 1 July 2018 (allowing them to 'tap into' unused amounts of their contributions cap from prior years, which will help those with broken work patterns – the overwhelming number of whom are women – better save for their retirement).

Make sure you give us a call to ensure your superannuation funds are structured correctly to maximise the tax effectiveness of your life savings

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.

Renting out a room is rental income

The ATO has issued an information sheet to let taxpayers know that money earned from renting out a room in a house is rental income. This applies to rooms rented by traditional means or through a sharing economy website or app. Also, taxpayers can only claim expenses related to the part of the house they rent out (so expenses will need to be apportioned accordingly). If this applies to you let us know and we will work through what you can and can't claim

Survey for SMSFs using LRBAs

The ATO has announced that it will be contacting some SMSF trustees in November 2016 to participate in a survey about the use of 'limited recourse borrowing arrangements' ('LRBAs') to acquire assets for their SMSF.The ATO will email a sample of SMSFs that reported LRBA assets on their 2015 SMSF annual return to invite them to participate in the survey.

Participation is voluntary, and they assure trustees that responses will remain anonymous and the information gathered from the survey will not be used for compliance purposes.

The ATO encourages any trustees contacted to participate (the survey should only take five to seven minutes), as their feedback will help it to gain a better understanding about the SMSF community’s use of LRBAs.

NB: The ATO has also issued a new Practical Compliance Guideline and a new Taxation Determination regarding SMSFs that enter into non-commercial LRBAs with related parties (e.g., where a member lends money to their SMSF but does not charge interest).

If you would like to discuss any of these SMSF issues, please contact our office.

ATO warning for the building and construction industry

The ATO has reported that the building and construction industry represents a disproportionate amount of its debt book, and has identified worrying trends that affect the industry.

Clients in the industry are encouraged to contact their tax agents regarding outstanding debts, as the ATO may be able to offer a range of payment options to help them get back on track sooner and reduce any interest they may be liable for.

Clients that fail to pay, or make arrangements to pay, may have their outstanding tax debts recovered through a garnishee notice.

Living overseas but still taxable here

In a recent case, the AAT confirmed that a taxpayer was a resident of Australia for taxation purposes while he was living in Oman.

The taxpayer had left Australia in January 2008 to work in Oman, and he ended up working 21 months in Oman before returning to Australia permanently in September 2009.

Before leaving Australia, the taxpayer sold an investment property in Queensland, cancelled his Medicare card, cancelled his Australian private health insurance, and had his name removed from the electoral roll.

When he left Australia in January 2008, he completed an outgoing passenger card indicating that he was permanently departing Australia.

However, the ATO was of the view that the taxpayer remained a resident of Australia. In particular, his wife remained in Australia at a jointly-owned dwelling in Mt Martha, he had returned to Australia for three holidays where he stayed at the Mt Martha home with his wife, he maintained an Australian bank account, and sent money to Australia to help pay his wife’s living expenses and to assist with repaying the mortgage on the home.

The AAT concluded the taxpayer had not severed his connections with Australia and had not established enduring and lasting ties in Oman (and so was still a resident of, and his income was taxable in, Australia).

Crucial issue to consider when buying a company

Where a buyer commences to hold all of the shares in a company (including a company acting as trustee of a trust), they are highly likely to be appointed as a director of that company.

Although being a director in itself does not make the director personally liable for the debts of the company, there are two types of tax debts that are major exceptions to this rule, being PAYG withholding (‘PAYGW’) and compulsory employee superannuation guarantee (‘SG’).

That is, directors can be made personally liable for any outstanding PAYGW or SG, even if they were not a director at the time the debt was incurred.

Therefore, a key component of the due diligence process undertaken by a potential purchaser should be an assessment of whether the company is up-to-date with its PAYGW and SG obligations (as part of this, a potential buyer should also consider whether any ‘contractors’ to whom payments were made would be seen as 'employees' in the eyes of the ATO).

The buyer will also ordinarily want the vendor to provide some kind of indemnity in relation to the buyer’s PAYGW and SG exposure.

Note also, however, that the ‘old’ directors do not cease to have exposure to unpaid PAYGW and SG. That is, both the ‘old’ and ‘new’ directors are all jointly and severally liable for these debts. This position does not alter even if a director resigns before the due date for payment of a relevant amount to the ATO.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should give Adrian & the team at Clear Accounting Solutions a call to independently verify your interpretation and the information’s applicability to your particular circumstances.

Government 'backflip' on superannuation changes

Following further consultation, the government has announced the following 'improvements' to the superannuation changes announced in the 2016/17 Budget:

the $500,000 lifetime non-concessional cap will be replaced by a new measure to reduce the existing annual non-concessional contributions cap from $180,000 per year to $100,000 per year;individuals with a superannuation balance of more than $1.6 million will no longer be eligible to make non-concessional contributions from 1 July 2017; andthe commencement date of the proposed 'catch-up' for concessional superannuation contributions will be deferred by 12 months to 1 July 2018.

Also, the government will now not change the contribution rules for those aged 65 to 74.

Clients who wish to discuss these superannuation changes should contact our office.

Fallout from 'Panama Papers' spreads

Earlier in the year, we reported that an unknown source had leaked 11.5 million documents from the Panamanian law firm of Mossack Fonseca – these are now referred to as the 'Panama Papers'.

Basically, the documents illustrated how many wealthy individuals are hiding their money and income from tax authorities around the world.

The Commissioner of Taxation, Chris Jordan, has announced that the ATO has made significant progress in dealing with those exposed in the Panama Papers who have tried to avoid their tax obligations.

He went on to say that, having commenced the assessment of the data, the ATO believes that some overseas structures and trusts are being used to:

evade tax;avoid corporate responsibility;disguise and hide unexplained wealth; andfacilitate criminal activity and launder the proceeds of crime.

The ATO has obtained information on offshore service providers who have established entities for Australians in secrecy jurisdictions to conceal their interests and wealth.

"Importantly, the sheer size of the information available to us for analysis should send a clear message to those who believe that their data is secure, hidden and beyond the reach of law enforcement and tax authorities – it is not."

In related news, the International Consortium of Investigative Journalists (ICIJ) has revealed that it has obtained a leaked Bahamian corporate registry which provides names of directors and owners of more than 175,000 Bahamian companies, trusts and foundations registered between 1990 and early 2016, which will also be made available to the public.

GST on low-value imports

Goods imported into Australia – often by consumers using the internet – which cost less than $1,000 are currently GST-free.

On May 3 2016, as part of its package of Budget Night announcements, the Federal government

proposed that, as of 1 July 2017, this low-value threshold (‘LVT’) of $1,000 will be abolished.

The removal of the LVT will see many purchases made by individuals and businesses over the internet from an overseas vendor being subject to GST from 1 July 2017.

It is proposed that, as of 1 July 2017, overseas businesses with an Australian annual turnover of greater than $75,000 will be required to register for GST and collect GST on sales made to Australian customers.

It has been reported that the Federal government could use powers it has under the Telecommunications Act to force internet service providers to block websites of overseas businesses that do not meet their Australian GST obligations (although it remains to be seen if they would go that far . . . )

Record keeping is always key to taking on the ATO

In a recent case before the Administrative Appeals Tribunal (AAT), amended assessments issued to a taxpayer by the ATO, which were based on the amounts of unexplained deposits to the taxpayer's bank accounts (in some years, in the hundreds of thousands of dollars, in others, millions), have been largely upheld.

The total further tax claimed by the ATO was almost $4 million, and, on top of that, they imposed an administrative penalty of almost $2 million (imposed at the rate of 50% for recklessness).

The taxpayer was partially successful in proving that some of the amounts deposited into bank accounts held in his name were not assessable income.

In particular, the taxpayer was able to demonstrate that some of the deposits were reimbursements of amounts he paid in relation to a group of companies of which he was an investor, and some were transfers from one of his bank accounts to another.

However, in relation to many of the deposits to his bank accounts, he had no corroborative evidence as to what they represented.

Therefore, he failed to discharge his onus to prove the amounts should not have been included in his assessable income.

Yet again the AAT has provided taxpayers with another reminder as to the importance of documentation and good record-keeping.

DHS – Data matching project

The Department of Human Services (DHS) (which operates Centrelink) has launched its 'Non Employment Income Data Matching project', matching income data it collects from "customers" with tax return related data reported to the ATO.

This project will assist the DHS to identify social welfare recipients who may not have disclosed income and assets to the Department, including welfare recipients who have lodged a Tax Return with the ATO during 2011 to 2014.

16 forced sales of properties illegally held by foreigners

The Treasurer has ordered the sale of a further 16 Australian residential properties that have been held by foreign nationals in breach of the foreign investment framework.

“The 16 properties were purchased in Victoria, New South Wales, Queensland and Western Australia, with prices ranging from approximately $200,000 to $2 million.

"The individuals involved come from a range of countries including the United Kingdom, Malaysia, China and Canada.

“Illegal real estate purchases by foreign citizens attract criminal penalties of up to $135,000 or three years' imprisonment, or both for individuals; and up to $675,000 for companies. The new rules also allow capital gains made on illegal investments to be forfeited."

Singapore and ATO to share data to reduce tax evasion

The Inland Revenue Authority of Singapore and the ATO have entered into an agreement on the automatic exchange of financial account information (based on the 'Common Reporting Standard').

This automatic exchange of financial information will commence by September 2018. This automatic exchange of financial information will commence by September 2018.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should make contact with the team at Clear Accounting Solutions to independently verify your interpretation and the information’s applicability to your particular circumstances.

ATO exposes dodgy deductions

With over eight million Australians claiming work-related expenses each year, the ATO is reminding people to make sure they get their deductions right this tax time.

Assistant Commissioner Graham Whyte said that, in 2014/15, the ATO conducted around 450,000 reviews and audits of individual taxpayers, leading to revenue adjustments of over $1.1 billion in income tax.

“Every tax return is scrutinised using increasingly sophisticated tools and data analytics developed (by) the ATO. This means we can identify and review income tax returns that may omit information or contain unreasonable deductions," Mr Whyte said.

The ATO also set out some case studies, which provide a fascinating insight into the ATO's methods, including:

A medical professional who made a claim for attending a conference in America, and provided an invoice for the expense, but when the ATO checked, it found that the taxpayer was still in Australia at the time of the conference (the claims were disallowed and the taxpayer received a substantial penalty); andA taxpayer who claimed deductions for car expenses, but the ATO found they had recorded kilometres in their log book on days where there was no record of the car travelling on the toll roads, and further inquiries identified that the taxpayer was out of the country. Their claims were also disallowed.

Deductibility of gifts provided to clients

The ATO has confirmed that a taxpayer carrying on business is generally entitled to a deduction for expenses incurred on a gift made to a former or current client, if the gift is characterised as being made for the purpose of producing future assessable income.

However, the expense may not always be deductible (e.g., if the gift constitutes the provision of entertainment that is not deductible).

The ATO’s recent determination also highlights that a deduction will be denied where expenditure on gifts is more accurately described as being 'private' in nature (for example, where a gift is provided to a relative outside a business’ usual practice of providing client gifts).

Deductibility of airport lounge memberships

The ATO has also confirmed that the cost to a business taxpayer of a yearly airport lounge membership (e.g., Qantas Club, Virgin Lounge) that will be used by its employees is ordinarily deductible, and should not give rise to any FBT liability for the employer (even if the majority of (or indeed only) use of the airport lounge membership is for private purposes).

Phoenix Taskforce swoops on dodgy businesses

The ATO’s stance against phoenix activity has continued with multiple search warrants issued, and many business and residential sites accessed without notice across Victoria and Queensland, as part of a criminal investigation into unpaid superannuation, employee withholding, GST, and income tax.

'Phoenix activity' refers to a business that shuts down whilst still owing creditors, employees and the ATO lots of money, and then starts up again perhaps somewhere else or under a new name.

Deputy Commissioner Michael Cranston said “By showing up unannounced we’re able to access records that we might otherwise never have seen. This information is then used to take further compliance action, and shared among our partner agencies to better inform our strategies targeting the 50 highest-risk phoenix operators.”

What employees of these companies should be looking out for Mr Cranston stated that there are a number of signs that a business someone is working for may be involved in phoenix behaviour:

“Employees may be pressured to take leave or have their employment status changed from permanent to casual. They may also notice that there are frequent changes in the identity of the company that is paying their wages, or that their superannuation entitlements are not paid."

Employees who suspect that a company they are dealing with is exhibiting any of these signs should get in touch with the ATO by reporting it online or by calling 1800 060 062.

Avoid 'too good to be true' tax schemes

The ATO has launched a new project called 'Super Scheme Smart', an initiative aimed at educating individuals about the potential pitfalls of 'retirement planning schemes', to keep them safe from risking their retirement nest egg.

According to the ATO, individuals most at risk are those approaching retirement, including anyone aged 50 or over, looking to put significant amounts of money into retirement, particularly SMSF trustees, self-funded retirees, small business owners, company directors, and individuals involved in property investment.

While retirement planning schemes can vary, there are some common features that people should be aware of.

Usually these schemes:

are artificially contrived and complex, usually connected with a SMSF;

involve a lot of paper shuffling;are designed to leave the taxpayer with minimal or zero tax, or even a tax refund; and/oraim to give a present day tax benefit by adopting the arrangement.

Individuals caught using an illegal scheme identified by the ATO may incur severe penalties under tax laws, which includes risking the loss of their retirement nest egg and also their rights as a trustee to manage and operate a SMSF:

"Retirement planning makes good sense provided it is carried out within the tax and superannuation laws. Make sure you are receiving ethical professional advice when undertaking retirement planning, and if in doubt, seek a second opinion from an independent, trusted and reputable expert".

For more information about the specific schemes, they can visit their website at www.ato.gov.au/superschemesmart.

ATO assistance with the pending $500,000 lifetime super cap

In the 2016/2017 Federal Budget, it was announced that, from 7:30pm (AEST) on 3 May 2016, there will be a lifetime cap of $500,000 on non-concessional (i.e., non-deductible) superannuation contributions.

This new lifetime cap is proposed to take into account all non-concessional contributions an individual has made on or after 1 July 2007.

Therefore, taxpayers currently planning to make non-concessional contributions may need to check their historical non-concessional contributions, back to 1 July 2007. Fortunately, the ATO has stated that, where individuals and funds have met their lodgement obligations, the ATO will be able to calculate and report these amounts for the period from 1 July 2007 to 30 June 2015.

If you are considering making such contributions but are unsure of your past non-concessional contributions, let us know

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances give us a call to independently verify the interpretation and the information’s applicability to your particular circumstances.

Update on the government's superannuation program

Now that the government has been re-elected, it seems they are committed to proceeding with their superannuation policy, including the controversial measure to impose a 'lifetime cap' of $500,000 on the amount of non-concessional (i.e., undeducted) contributions that can be made into superannuation (calculated from all contributions made since 1 July 2007).

The Treasurer Scott Morrison has also indicated that transitional relief provisions will be introduced in relation to the lifetime non-concessional contributions cap of $500,000.

It is proposed that transitional provisions will allow for non-concessional contributions to be made under the rules and limits that existed prior to Budget Night where a superannuation fund has entered into a contract before 3 May 2016 to acquire an asset, and the contract settles after 3 May 2016.

Furthermore, there will be transitional relief for self-managed superannuation funds (SMSFs) that had a Limited Recourse Borrowing Arrangement in place before 3 May 2016, and additional non-concessional contributions are to be made up to 31 January 2017 (so that the borrowing will comply with the ATO's new guidelines).

There have also been reports that the government may also allow 'carve-outs' for extraordinary 'life events' (e.g., divorce). The government is apparently going to release draft legislation for their superannuation changes some time in August 2016.

Tax time is prime time for scams

The ATO is reminding Australians to be on the lookout for tax-related scams during tax time, as scammers are particularly active because of the large number of people lodging their tax returns.

For example, although the ATO makes thousands of outbound calls to taxpayers a week, there are some key differences between a legitimate call from the ATO and a call from a potential scammer:

“We would never cold call you about a debt; we would never threaten jail or arrest, and our staff certainly wouldn’t behave in an aggressive manner. If you’re not sure, hang up and call us back on 1800 008 540”.

ATO also warns against identity theft

The ATO is also reminding Australians to protect themselves against identify theft this tax time. Highly organised crime networks use a range of methods to steal personal information in order to commit refund fraud.

The ATO recommends following a few easy steps for taxpayers to protect themselves against identity theft:

Put a padlock on their letterbox;

Shred documents containing personal details (especially their tax file number (TFN)) before throwing them away;

regularly.

The ATO also says that taxpayers should report the loss or theft of their TFN without delay, if they can’t find their TFN, and/or think their TFN has been stolen or misused.

The 'sharing economy' in the ATO's sights

The ATO is concerned that those earning money from the 'sharing economy' may not realise they have to declare these amounts on their tax return.

In the sharing economy, buyers and sellers are connected through a facilitator who usually operates an app or website.

Assistant Commissioner Graham Whyte said: “If you earn money from doing odd jobs or providing a service like task sharing, transporting passengers through things like ride-sourcing, or renting out a room or house, you need to declare it because it counts as assessable income. If you are running a business through the sharing economy you also need to declare this income.

“It’s a bit different if the goods you provide or the activity you complete through a sharing economy website or platform is done as a hobby or recreational activity. The amount you are paid may not be assessable income."

We can help you with this distinction.

Mr Whyte said ATO technology was keeping up with the sharing economy, and, thanks to their data collection and data matching activities, the ATO would know if taxpayers have left out a significant amount of income. In addition, some taxpayers may need to register for, and pay, GST (especially those earning an income from carrying on an enterprise of ride-sourcing services, regardless of how much money they earn).

Latest ATO benchmarks released

The ATO has released the latest benchmarks for small business based on the data from 2014 income tax returns and business activity statements, covering over 1.3 million small businesses.

Assistant Commissioner Matthew Bambrick said that, if a small business is inside the benchmark range for their industry and the ATO hasn't received any extra information that may cause concern, they can be confident that they probably won't hear from the ATO.

Mr Bambrick said the benchmarks were also a helpful guide for small businesses to see how they stack up against others in their industry.

Cents per km deduction rate for motor vehicle expenses

The ATO has determined that the rate at which work-related motor vehicle expense deductions may be calculated using the cents per kilometre method is 66 cents per kilometre for the income year commencing 1 July 2016.

Overtime Meal Allowance Amounts

The reasonable amount for overtime meal allowance expenses for 2016/17, where an allowance is paid under an award, order, determination, industrial agreement or a Commonwealth, State or Territory law, is $29.40 per meal.

Div.7A benchmark interest rate

The benchmark interest rate for 2016/17, for the purposes of the deemed dividend provisions of Div.7A, is 5.40% (down from 5.45% for 2015/16).

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should give Adrian & the team at Clear Accounting Solutions a call to independently verify your interpretation and the information’s applicability to your particular circumstances.

Maximising deductions for Small Business Entity (SBE) Taxpayers

Generally if you carry on a business and have turnover less that $2 million you qualify as a SBE

Deductions can be maximised for SBE business taxpayers by accelerating expenditure and prepaying deductible business expenses.

Accelerating expenditure – SBE

All SBE taxpayers can choose to write-off depreciable assets costing less than $20,000 in the year of purchase*. Also, assets costing $20,000 or more are allocated to an SBE general pool and depreciated at 15% (which is half the full rate of 30%) in their first year.

Where appropriate, SBE business taxpayers should consider purchasing/installing these items by 30 June 2016 in order to claim the deduction.

(*) The small instant asset write-off threshold has been temporarily increased to 'less than $20,000', for assets acquired and installed ready for use between 7.30 pm (AEST) 12 May 2015 and 30 June 2017.

Prepayment strategies – SBE

SBE taxpayers making prepayments before 1 July 2016 can choose to claim a full deduction in the year of payment where they cover a period of no more than 12 months (ending before 1 July 2017). Otherwise, the prepayment rules are the same as for non-SBE taxpayers.

The kinds of expenses that may be prepaid include:

Rent on business premises or equipment.Lease payments on business items such as cars and office equipment.Interest – check with your financier to determine if it’s possible to prepay up to 12 months interest in advance.Business trips.Training courses that run on or after 1 July 2016.Business subscriptions.Cleaning.

Information Required

This is some of the information we will need you to bring to help us prepare your income tax return:

Stocktake details as at 30 June.Debtors listing (including a list of bad debts written off) as at 30 June. Note: In order to claim a deduction, the debt must be written off on or before 30 June.Creditors listing as at 30 June.

Common work-related claims made by individuals

The following outlines common types of deductible expenses claimed by individual taxpayers, such as employees and rental property owners, plus some strategies that can be adopted to increase deductions for the 2015/16 income year.

1. Depreciable plant, etc, costing $300 or less

Salary and wage earners and rental property owners will generally be entitled to an immediate deduction if certain income-producing assets costing $300 or less are purchased before 1 July 2016.

Some purchases you may consider include:

books and trade journals; briefcases/luggage or suitcases;

calculators, electronic organisers;

electronic tablets; software;

stationery; tools of trade.

2. Clothing expenses

Purchase or pay for work-related clothing expenses prior to the end of the income year, such as:

compulsory (or non-compulsory and registered) uniforms, and occupation specific and protective clothing;other expenses associated with such work-related clothing, such as dry cleaning, laundry and repair expenses.

3. Self education expenses

Consider prepaying the following self education items before the end of the income year:

course fees (but not HECS-HELP fees), student union fees, and tutorial fees;interest on borrowings used to pay for any deductible self education expenses.

Also bring forward purchases of stationery and text books (i.e., those which are not required to be depreciated).

4. Other work-related expenses

Employees can prepay any of the following expenses prior to 1 July 2016:

union fees;subscriptions to trade, professional or business associations;magazine and newspaper subscriptions;seminars and conferences;income protection insurance (excluding death and total/permanent disability).

Note: When prepaying any of the expenses above before 1 July 2016, ensure that any services being paid for are to be provided within a 12 month period that ends before 1 July 2017. Otherwise, the deductions must generally be claimed proportionately over the period of the prepayment.

Information Required

We will need you to bring information to assist us in preparing your income tax return.

Please check the following and bring along payment summaries, statements, accounts, receipts, etc., to help us prepare the return.

Income/Receipts:

payment summaries for salary and wages;lump sum and termination payments;government pensions and allowances;other pensions and/or annuities;allowances (e.g., entertainment, car, tools);interest, rent and dividends;distributions from partnerships or trusts;details of any assets sold that were either used for income earning purposes or which may be caught by capital gains tax (CGT).

Expenses/Deductions (in addition to those mentioned above):

award transport allowance claims;bank and government charges on deposits of income, and deductible expenditure;bridge/road tolls (travelling on business);car parking (when travelling on business);conventions, conferences and seminars;depreciation of library, tools, business equipment (incl. portion of home computer);gifts or donations;home office running expenses: l cleaning l cooling and heating l depreciation of office furniture l lighting l telephone and internet;interest and dividend deductions: l account keeping fees l ongoing management fees l interest on borrowings to acquire shares l advice relating to changing investments (but not setting them up);interest on loans to purchase equipment or income-earning investments;motor vehicle expenses (business/work related);overtime meal allowances;rental property expenses – including: l advertising expenses l council/water rates l insurance l interest l land tax l legal expenses/management fees l genuine repairs and maintenance l telephone expenses l travelling to inspect property;superannuation contributions by sole traders or substantially unsupported taxpayers;sun protection items;tax agent fees;telephone expenses (business);tools of trade.

Other Budget announcements

1. Changes effective for the 2015/16 income year

1.1 Medicare levy low income thresholds for 2015/16

For 2015/16, the Medicare Levy low income thresholds will be as follows:

• Individuals $21,335 (previously $20,896)

• Families $36,001 (previously $35,261)

The family income threshold (i.e., $36,001) will be increased by $3,306 for each dependent.

For single seniors and pensioners with no dependants who are eligible for the seniors and pensioners tax offset, the threshold will be increased to $33,738 (previously $33,044).

1.2 Income tax relief for Australian Defence Force personnel deployed overseas

The government will provide a full income tax exemption for Australian Defence Force personnel

deployed on Operation PALATE II in Afghanistan. This income tax exemption has effect from 1

January 2016, and will remain in effect until 31 December 2016.

The government will also update the coordinates for Operation MANITOU in international waters, with effect from 14 May 2015, and Operation OKRA in the Middle East, with effect from 9 September 2015, to reflect the actual areas covered by the operations.

2. Changes effective 1 July 2016 (i.e., 2016/17 income year)

2.1 Targeted personal income tax relief

From 1 July 2016, the government will increase the 32.5% personal income tax threshold from $80,000 to $87,000. This measure will reduce the marginal rate of tax on incomes between $80,000 and $87,000 from 37% to 32.5%, preventing around 500,000 taxpayers facing the 37% marginal

tax rate.

2.2 Increasing the Small Business Income Tax Offset (‘SBITO’)

From 1 July 2016, the government will increase the current 5% tax discount (referred to as the SBITO) to 8%. The discount is currently available to an individual in receipt of income from an unincorporated small business entity (‘SBE’) (i.e., basically, an entity with an aggregated turnover of less than $2 million), and applies to the income tax payable on the business income received from such an entity.

The discount will remain constant at 8% for eight years, and will then increase to:

• 10% in 2024/25;

• 13% in 2025/26; and

• 16% from 2026/27.

The current tax discount (or SBITO) cap of $1,000 per individual for each income year will be retained.

Furthermore, access to the discount will be extended to individual taxpayers with business

income from an unincorporated business that has an aggregated annual turnover of less than $5 million.

2.3 Reducing the company tax rate over 10 years

The government will reduce the company tax rate to 25% over 10 years (i.e., by 1 July 2026).

This measure will commence from 1 July 2016, whereby the government will cut the small

business company tax rate to 27.5%, and make this tax rate available to small companies with anannual aggregated turnover of less than $10 million.

This turnover threshold will then be progressively increased to ultimately have all companies

eligible for the 27.5% tax rate in 2023/24

In the 2024/25 income year, the company tax rate will be reduced to 27% and then be reduced

progressively by 1 percentage point per year until it reaches 25% in the 2026/27 income year.

2.4 Increasing the small business entity (‘SBE’) turnover threshold

From 1 July 2016, the government will increase the SBE turnover threshold from $2 million to $10

million. The current $2 million turnover threshold will be retained for access to the small business

capital gains tax (‘CGT’) concessions, and access to the SBITO (i.e., the increased 8% tax discount) will be limited to entities with turnover less than $5 million (as noted above).

The increased $10 million turnover threshold will allow an additional 90,000 to 100,000 business

entities to gain access to certain small business concessions, such as the following:

• The lower (27.5%) small business corporate tax rate (noted above).

2.5 Tax Integrity Package – Establishing the Tax Avoidance Taskforce

The government will provide $678.9 million to the ATO over the forward estimates period to establish a new Tax Avoidance Taskforce. This will enable the ATO to undertake enhanced compliance activities targeting multinationals, large public and private groups and high wealth individuals.

The Tax Avoidance Taskforce will conduct operations to improve tax compliance in high tax risk

sectors, resulting in better targeted audits and higher collections.

The government will also ensure the ATO has access to the information it needs by enhancing

information sharing between the ATO and the Australian Securities and Investments Commission.This supports the operation of the Taskforce through improved risk analysis and detection.

3. Changes effective 1 July 2017 (i.e., 2017/18 income year)

3.1 Applying GST to low value goods imported by consumers

From 1 July 2017, GST will be extended to low value goods imported by consumers. The intent ofthis measure is to ensure that low value goods imported by consumers face the same tax regime as goods sourced domestically.

Overseas suppliers that have an Australian turnover of $75,000 or more will be required to

register for, collect and remit GST for low value goods supplied to consumers in Australia, using

a vendor registration model.

This change requires the unanimous agreement of the States and Territories.

Superannuation reform changes

1. Effective Budget Night – 7.30pm (AEST) 3 May 2016

1.1 New lifetime cap for non-concessional superannuation contributions

The government will introduce a $500,000 lifetime non-concessional contributions cap.

The lifetime cap will take into account all non-concessional contributions made on or after 1 July 2007 (i.e., from the 2008 income year) and will be indexed in $50,000 increments in line with average weekly ordinary times earnings.

If an individual has exceeded the cap prior to commencement date (being 7.30 pm (AEST) on 3 May 2016 (i.e., Budget night)), they will be taken to have used up their lifetime cap but will not be required to take the exc.cess out of the superannuation system

It is important to be aware that the lifetime non-concessional contributions cap will replace the existing non-concessional contributions cap, which allow non-concessional contributions of up to $180,000 per year (or $540,000 every three years for individuals aged under 65). Note that, similar changes are proposed to apply to contributions into defined benefit accounts and constitutionally protected funds.

2. Changes effective from 1 July 2017 (i.e., effective from the 2018 income year)

2.1 Allow catch-up concessional superannuation contributions

From 1 July 2017, the government will allow individuals with a superannuation balance of less than $500,000 to make additional concessional contributions where they have not reached their concessional contributions cap in previous years.

2.2 Taxing earnings on assets supporting a Transition to Retirement Income Stream From 1 July 2017, the government will remove the tax exemption on earnings of assets supporting Transition to Retirement Income Streams (‘TRIS’), being income streams of individuals over preservation age but not retired.

2.3 Introduction of a $1.6 million ‘superannuation transfer balance cap’

From 1 July 2017, the government will introduce a $1.6 million ‘superannuation transfer balance cap’ on the total amount of accumulated superannuation an individual can transfer into pension phase.

2.4 Reducing the concessional contributions cap

From 1 July 2017, the government will lower the annual cap on concessional superannuation contributions to $25,000.

2.5 Changes to the contribution rules for those aged 65 to 74

From 1 July 2017, the government will remove the current restrictions on people aged 65 to 74 from making superannuation contributions for their retirement. Specifically, the government will remove the requirement that an individual aged 65 to 74 must meet the ‘work test’ before making voluntary or nonconcessional contributions to superannuation.

2.6 Tax deductions for personal superannuation contributions

From 1 July 2017, the government will change the law to allow all individuals under age 75 to claim an income tax deduction for personal superannuation contributions. Individuals who are, for example, partially self-employed and partially wage and salary earners, and individuals whose employers do not offer salary sacrifice arrangements will benefit from the proposed changes.

2.7 Changes to the ‘high income contribution rules’ (Division 293)

From 1 July 2017, the government will lower the Division 293 threshold (i.e., the point at which high income earners pay additional contributions tax of 15%) from $300,000 to $250,000.

2.8 Removal of the anti-detriment provision in respect of death benefits

From 1 July 2017, the government will remove the anti-detriment (deduction) provision. Briefly, the anti-detriment provision allows the spouse (or former spouse) and/or children of a deceased fund member to effectively obtain a refund of all contributions tax paid by the deceased member during their lifetime.

2.9 Removing election to treat pension payments as lump-sum payments

The government will remove the rule that allows individuals to treat certain superannuation pension payments as lump-sums for tax purposes (which currently makes them tax-free up to the low rate cap of $195,000).

Currently, an individual drawing down an account-based pension from their superannuation fund can generally make an election, under special income tax rules, for a benefit withdrawal not to be treated as a pension benefit. If such an election is made, the benefit withdrawal is treated (and taxed) as a lump sum benefit instead.

2.10 Improve superannuation balances of low income spouses

From 1 July 2017, the government will increase access to the low income spouse superannuation tax offset by raising the income threshold for the low income spouse to $37,000 (from $10,800). The offset is gradually reduced for income above this level and completely phases out at income above $40,000.

2.11 Introducing a Low Income Superannuation Tax Offset (LISTO)

From 1 July 2017, the government will introduce a Low Income Superannuation Tax Offset (‘LISTO’) to reduce tax on superannuation contributions for low income earners. The LISTO will provide a non-refundable tax offset to superannuation funds, based on the tax paid on concessional contributions made on behalf of low income earners, up to a cap of $500. The LISTO will apply to members with adjusted taxable income of up to $37,000 that have had a concessional contribution made on their behalf.

Impending blowout from the leaked 'Panama Papers'

You may have recently heard something about an unknown source who has leaked 11.5 million documents from the Panamanian law firm of Mossack Fonseca.

Basically, the documents illustrate how many wealthy individuals hide their money from tax authorities.

Under a plan devised by the Commissioner of Taxation, Chris Jordan, 35 countries have agreed to mount the most ambitious international investigation in history to hunt down tax evaders identified in the Panama Papers leak.

About 800 Australians are listed in the files of Panama law firm Mossack Fonseca, from which confidential correspondence was leaked, and 80 of those are identified in the Australian Crime Commission's (ACC's) database for serious and organised crime.

The ATO says that it has now linked over 120 of them to an associate offshore service provider located in Hong Kong.

Deputy Commissioner, Michael Cranston, said that “The information we have includes a large number of taxpayers who haven’t previously come forward, including high wealth individuals, and we are already taking action on those cases”.

The documents from Mossack Fonseca have been exposed in a global media project led by the International Consortium of Investigative Journalists (ICIJ).

The ICIJ plans to release the names of all of the 240,000 offshore entities set up by Mossack Fonseca, along with directors and shareholders, next month.

Gold Coast businesses under the ATO's microscope

As part of an ongoing, Australia-wide program, the ATO has advised that it will be visiting restaurants, cafés and take-aways, along with hair salons and nail bars, on the Gold Coast.

Assistant Commissioner Matthew Bambrick said “In all, we’ll be visiting around 250 businesses in the Gold Coast to talk about a range of topics, including business registration, record-keeping, superannuation and lodgment."

“Where taxpayers are unwilling to work with us or continue to cause us concern, we will undertake further investigation. In Sydney and Melbourne, for example, we have now moved to auditing businesses that didn’t want to work with us.”

ATO – SuperStream deadline rapidly approaching

With the SuperStream deadline of 30 June rapidly approaching, ATO Deputy Commissioner James O’Halloran says now is the time for employers who are not yet using SuperStream to cross it off their to-do list.

SuperStream is the new way employers must pay super. It means paying super and sending employee information electronically.

More than 60% of all Australia’s small businesses are now using SuperStream.

“Employers who are using SuperStream have reduced the time they spend on super by an average of around 70%, each cycle,” says Mr O’Halloran.

“We are encouraging the remaining employers who have not yet adopted SuperStream to do so before 28 April."

“By taking action now employers will have a chance to test their SuperStream solution and ensure things are running smoothly and eliminate any stress around the 30 June deadline”, says Mr O’Halloran.

ATO's 'High risk industries' for super guarantee

Each year, the ATO identifies industries that they believe are at risk of not meeting their super guarantee obligations for eligible employees.

This year they are looking at these industries:

bakeries;supermarkets;car retailers; andcomputer system designers.

Letters will be sent to clients in these industries advising of planned audits from July 2016.

Lifestyle assets and CGT

The ATO has advised that it has identified some instances where lifestyle assets, such as artworks and collectables, are not being properly accounted for.

They said that they want to help taxpayers with these kinds of assets comply and be aware they may be subject to CGT on disposal.

They said that it's important taxpayers are aware that:

items purchased for more than $500 on or after 20 September 1985 are subject to CGT, even if they are kept mainly for the personal use or enjoyment of your client;special CGT rules apply to items that form part of a deceased estate; andthe date of purchase/auction needs to be accounted for, not the settlement date.

The ATO is currently working with insurance companies to identify owners of these sorts of assets.

Clients who may be affected should contact our office.

New rules for selling property over $2 million

From 1 July 2016, new rules will apply to sales of taxable Australian property (e.g., real estate) with a market value of $2 million or above.

A 10% non-final withholding tax may be applied to all contracts to sell such property entered into on or after 1 July 2016.

Australian resident vendors selling such property will need to obtain a clearance certificate from the ATO prior to settlement to avoid the 10% non-final withholding tax.

Editor: This new 10% withholding tax was really only intended to apply to non-residents selling Australian property.

However, it equally applies to Australian resident vendors and forces them to obtain a clearance certificate from the ATO to, in fact, prove that they are Australian residents.

Generally speaking, clients will be affected for sales of residential and commercial properties, or companies or trusts that hold such properties.

Contractor payments data matching program

The ATO has advised that it is continuing its Contractor payments data-matching program.

It will acquire data from businesses that it visits as part of its employer obligations compliance program during the 2016/17, 2017/18 and 2018/19 financial years.

The data collected from businesses is used to identify contractors that may not be meeting their taxation obligations through:

not registering correctly with the ATO;non-lodgment of returns;failing to report payments received; andnot paying amounts of tax due to the ATO.

This is an ongoing data matching program and has been conducted for more than five years.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should give us a call @ Clear Accounting Solutions to independently verify the interpretation and the information’s applicability to your particular circumstances.

Small Business Entity Reminder

Instant asset write-off< $20,000 – Small businesses can immediately deduct the business portion of most (new or secondhand) assets if they cost less than $20,000 and were purchased between 7:30pm on 12 May 2015 and 30 June 2017.

Deductions for professional expenses for start-ups

From 1 July 2015, small businesses are entitled to certain deductions when starting up a small business.

The range of deductible start-up costs includes professional, legal and accounting advice, and government fees and charges.

Small business restructure roll-over

From 1 July 2016, small businesses will be able to change the legal structure of their business without incurring any income tax liability when assets are transferred by one entity to another.

This roll-over basically applies to:

CGT assets;trading stock; anddepreciating assets used, or held ready for use, in the course of carrying on a business.

Small business income tax offset

From the 2015/16 income year, an individual is entitled to a tax offset on the tax payable on the portion of their income that is from: net small business income from sole trading activities; and/or

their share of net small business income from a partnership or trust.

The ATO will work out the offset based on the total net small business income reported in a client's income tax return.

Company tax cut for small businesses

For income years commencing on or after 1 July 2015, the small business company tax rate has been reduced from 30% to 28.5%.

The maximum franking credit that can be allocated to a frankable distribution is unchanged at 30%, even if a small business is eligible for the 28.5% tax rate.

SMSF's - ATO sounds warning to super funds with 'collectables'

The ATO is warning trustees of SMSFs who hold investments in collectables* or personal-use assets*, acquired before 1 July 2011, that time is running out for those items to be transferred out of the fund under the old rules.

Basically, collectables and personal use assets are things like artworks, jewellery, vehicles, boats and wine. Investments in such items must be made for genuine retirement purposes, not to provide any present-day benefit.

ATO releases latest business benchmarks

2013/14 data is now available for the 'Small business benchmarks'.

The ATO uses these benchmarks as a guide on industry trends to identify businesses that may be avoiding their tax obligations by not reporting some or all of their income.The ATO says that using the Small business benchmarks can assist with building taxpayers' businesses.

They say that taxpayers should compare their details against similar businesses in their industry and see how competitive they are or where improvements can be made.

Give us a call & we will help you find the benchmarks for your industry

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should give us a call to independently verify the interpretation and the information’s applicability to your particular circumstances.

Lodge and ye shall be saved (or at least have the chance to avoid personal liability)

In the last 12 months, we have found many directors were issued with a DPN in respect of outstanding superannuation both prior to and following our appointment as external administrators over their company, some providing 21 days for a director to take action in order to avoid personal liability (“non-lockdown”) and some providing no time and having immediate effect (‘lockdown”).

The question then generally arises as to how this could happen and we proceed to explain to them the lay of the land. The conversation generally concludes with “What lodgement” or “What is a Superannuation Guarantee Charge Statement” and ends with the usual statement of “if only I had known that was required”.

Recap the position relating to superannuation and DPNs

A company is required to complete a Superannuation Guarantee Charge statement if, within the relevant period, it did not pay sufficient superannuation contributions for its eligible employees by the quarterly cut-off date.

The cut-off date is on the 28th day of the month following each quarter (see table below) the company must pay an employee’s superannuation guarantee entitlement to their fund.

If superannuation guarantee contributions are unpaid by this date, directors must lodge the Superannuation Guarantee Charge statement and pay the Superannuation Guarantee Charge.

The due date is the date that the Superannuation Guarantee Charge statement is to be lodged, being one calendar month after the cut-off date and is outlined in the table below.

The required form to be completed and lodged with the ATO is available here: Superannuation guarantee charge statement - quarterly (NAT 9599).

In summary, the DPN “lockdown provisions” work along the lines that if lodgement of the SGC Statement does not occur within three months of the due date (table 2)—the director penalty is permanently locked down automatically. The ATO can issue a DPN with immediate effect that cannot be discharged by appointing an administrator or liquidator.

If the client has lodged their SGC Statement on time (even if the payment hasn’t been made) then the DPN that the ATO can issue is required to provide 21 days in order for action to be taken.

The key message for both advisers and their clients is “lodge and ye shall be saved”.

As an employer, it's important you understand the difference between employees and contractors. You're responsible for getting it right!

Common myths

Do you think that someone is a contractor because they:

have an ABNdo short-term work onlyhave agreed to work as a contractorissue invoices for their work, orwork in an industry where just about everyone is a contractor?

In fact, none of these things by themselves determine whether someone is a contractor or not.

For example, employees can also do short-term work, whether it's just to help out with busy periods or to work on a specific project.

And having an ABN doesn't automatically make someone a contractor. Every situation is different, so you need to take into account a range of factors.

Why you need to know

Employees and contractors have different rights and entitlements when it comes to things like leave, super, tax and hours of work. Getting it wrong could land you in trouble, and put your business at risk of penalties.

Help is at hand

Working out your tax and super responsibilities as an employer can be tricky.

To help you employ people the right way, use the Australian Tax Office's Employee/contractor decision tool .

The tool will tell you:

if your worker is an employer or contractoryour tax and super responsibilities for them.

Please feel free to call Adrian De Vito & the team anytime to help you through your obligations and get it right!

Employers with 19 or fewer employees need to be using SuperStream by 30 June 2016

As an employer, it means you will need to pay super and send employee information electronically in a standard format.

What do you need to do?

1. Choose an option. You can use:

Your super fund's online system A super clearing house, such as the ATO's Small Business Superannuation Clearing HouseYour payroll system. Orask us to handle your super payments and use one of these options for you.

2. Collect information. You need your employee's:

Tax file numberSuper fund ABNSuper fund unique super identifier (USI).

Ask your employee to get their fund details for you.

3. Use SuperStream:

Start using SuperStream as soon as possible and save time

If you employee staff, your December quarter 2015 superannuation contribution is due in 3 days

Call us ASAP If you need assistance calculating and lodging

Data matching program – on eBay online sales

The ATO has announced that it will acquire online selling data relating to between 15,000 and 25,000 individuals who sold goods and services of $10,000 or more on eBay between 1 July 2014 to 30 June 2015.

Data will be sought from eBay Australia and New Zealand Pty Ltd, a subsidiary of eBay International AG which owns and operates www.ebay.com.au.

The data requested will include information that enables the ATO to match online selling accounts to a taxpayer, including name, address and contact information, as well as information on the number and value of transactions processed for each online selling account.

These records will be electronically matched with certain sections of ATO data holdings to identify non-compliance with registration, lodgment, reporting and payment obligations under taxation laws.

ATO moves on cafés & restaurants

The ATO has advised that it will be visiting restaurants, cafés and take-aways in Box Hill (Melbourne) over the coming months as part of its ongoing Australia-wide program involving the café and restaurant industry.

Assistant Commissioner Michael Hardy said similar visits in Sydney and Adelaide with over 500 cafés had been well-received, with businesses keen to meet with the ATO to better understand their obligations, as well as learn about available help and support.

“Where taxpayers are unwilling to work with us or continue to cause us concern, we will undertake further investigation. In Sydney, for example, we have now moved to auditing businesses that did not want to work with us.”

Small Business Protections from unfair contract terms

There are laws protecting consumers from unfair terms in 'standard form contracts' where the person has little or no opportunity to negotiate with the business concerned.

Businesses use standard form contracts to more efficiently deal with their customers. However, because the business is often in a somewhat superior bargaining position, there are laws in place to protect consumers from unfair terms in a standard form consumer contract.

The government has announced it will extend consumer unfair contract term protections to small businesses as well.

The changes will cover standard form contracts where at least one of the parties employs less than 20 people, and where the upfront price of the contract does not exceed $300,000 or $1 million for contracts longer than 12 months.

The ATO and its regulation of SMSFs

In a recent speech, Kasey Macfarlane, Assistant Commissioner, SMSF Segment, Superannuation, discussed the issues facing SMSFs and their aging trustees. The following is an excerpt from her speech. Planning ahead – cognitive decline

"I’d like to touch on the increasingly important topic of cognitive decline. Dementia is on the rise and currently affects one in ten people over 65, and three in ten over 85."

"Even mild dementia will affect a person’s ability to make financial decisions. SMSF numbers continue grow, and . . . require a high level of financial decision making.

"While many trustees remain perfectly capable of effectively managing their financial affairs well past retirement age, there is a risk that some with diminished capacity to effectively manage their fund may nevertheless continue to do so. "As my colleague Matthew Bambrick said back in March, ‘These issues are a time bomb waiting to go off if not addressed now’.

"It’s essential to ensure that all trustees are genuinely involved in managing SMSF funds, to agree in advance about decision points and exit decisions, to have a will, and appoint an enduring guardian and power of attorney."

If you would like to discuss this important issue further, please contact our office.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should give us a call to independently verify their interpretation and the information’s applicability to your particular circumstances.

GST on all (taxable) online transactions from 1 July 2017

The (now former) Treasurer recently announced that the States and Territories had unanimously agreed in principle to reduce the GST threshold on imported goods and services (currently at $1,000) to zero.

The new arrangements will apply from 1 July 2017. He said that he had put forward a proposal that relies on a vendor registration model as a method of collecting the GST. As goods would not be stopped at the border, administering a vendor registration model would have a relatively low cost.

Non-residents (overseas suppliers) will be the ones who charge, collect and remit the GST for digital and physical products. As is the case in Australia, only vendors with an Australian turnover of at least $75,000 will need to register and charge the GST.

Holiday rentals under the microscope

The ATO has advised that it is sending letters to taxpayers in approximately 500 postcodes across Australia, reminding them to only claim the deductions they are entitled to, for the periods a holiday home is rented out, or is genuinely available for rent.

They advise that, to avoid making mistakes on their tax return, property owners should:

keep accurate records to ensure they declare the right amount of rental income and have evidence for claims made; andonly claim deductions for the periods the property is rented out, or is genuinely available for rent. If a property is rented at below market rates, for example to family or friends, claims for deductions must be limited to the income earned while rented.

Credit and debit cards data-matching program

The ATO has announced that it will conduct a data-matching program on credit and debit card transactions for the 2012/13 and 2013/14 years.

Data will be collected from the following financial institutions:

American Express Australia Limited;Australia and New Zealand Banking Group Limited;Bank of Queensland Limited;Bendigo and Adelaide Bank Limited;BWA Merchant Services Pty Ltd;Commonwealth Bank of Australia;Diners Club Australia;National Australia Bank Limited;St George Bank; andWestpac Banking Corporation.

Based on previous programs, it is estimated that over 8 million records will be acquired, relating to over 940,000 merchants. These records are linked to approximately 90,000 individuals and 850,000 non-individuals.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.

ATO's apps and other online tools

As a result of user feedback, the ATO has improved their ATO Small Business app and it continues to expand in functionality and usability.

The most useful features for small business include:

ABN Lookup, which verifies business details.Tax withheld calculator, which shows how much tax to withhold.Key dates, which can set important tax and super reminders and alerts.Report a concern, which enables users to report suspected tax evasion.

The ATO has also released a new function for the app which includes a business performance check tool (which provides a snapshot of profitability, cash flow, working capital and debt serviceability).

It also compares a business's performance against similar businesses in its industry using the benchmark database.

'myDeductions' online tool

Another online tool that came live recently is "myDeductions", which allows taxpayers to upload their receipts and information for deductions for the 2015/16 year. Taxpayers are advised to simply take a photo of a receipt and upload it.

The deductions covered include work-related expenses, car expenses (it also includes a trip information calculator using Google maps) and other travel expenses, uniforms, self-education, and other types of deductions (such as the cost of managing tax affairs and donations).

Data will be stored in the taxpayer's mobile device and, at the end of the financial year, can be shared with their tax agent.

Work-related car expense deductions

Commensing 2015/16 income year and later income years the ATO has changed the way taxpayers claim. Currently, taxpayers have an option to use one of four methods to determine their work‑related car expense deductions.

The government is proposing to reduce the number of methods by removing the '12% of original value method' and the 'one-third of actual expenses method'.

The other two methods, the 'cents per kilometre method' and the 'logbook method' are being retained.

Cents per kilometre method is also being changed by replacing the three current rates based on engine size with one rate set at 66 cents per kilometre, which applies to all motor vehicles.

The government says that these changes will enable taxpayers who drive electric and hybrid vehicles to claim on a cents per kilometre basis, which is not currently an option for them.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.

Refresh - 3 tax changes for small business

The government has introduced legislation for the following three small business measures that, if passed, will apply from 1 July 2015:

A tax offset to individuals who run small businesses (with an aggregate annual turnover of less than $2 million), or who have a share of a small business’ income included in their assessable income. The tax offset is available to individuals, partners, or beneficiaries of a trust that is a small business entity.The tax offset is 5% of the income tax payable on the portion of an individual’s income that is small business income, capped at $1,000 per annum.

An immediate deduction for some business start-up expenses, such as legal advice and registration fees, including government fees and charges as well as costs associated with raising capital.

An exemption from FBT where small businesses provide an employee with more than one work-related portable electronic device, even where the devices have substantially identical functions.

Data matching to be expanded on individual returns

The ATO has advised that last year, it cross-referenced information reported in tax returns against over 600 million transactions provided to it by third parties to identify omitted income and gains, or incorrectly-claimed offsets or entitlements to exemption from surcharges.

It also contacted nearly 400,000 taxpayers who had apparent discrepancies in the information they reported in their tax returns.

The ATO said that traditionally, it has focused on areas such as omitted interest and employment income, but this year it is expanding its data matching to encompass a greater range of areas, such as:

capital gains tax (CGT) from the disposal of shares and property;employment-related foreign source income; andcontractor income from payments made by government agencies.

ATO warns over-claiming is easier to detect than ever

The ATO says it will be focusing on:

- unusually high work-related expense claims across all industries and occupations;

- expenses claimed that have already been reimbursed by employers; and

- claims for private expenses such as travel from home to work.It said that the ATO’s ability to identify and investigate claims that differ from the ‘norm’ is improving each year at a rapid rate.

Every return is scrutinised and it is becoming a lot easier to identify claims that are significantly higher than those claimed by people with similar occupations and employment income.

ATO increases focus on rental property deductions

ATO says that it will be paying closer attention to excessive deductions claimed for holiday homes in 2015, and will also be actively educating rental property owners about what they can and cannot claim.

The ATO will be writing to rental property owners in popular holiday locations, reminding them to only claim the deductions they are entitled to, for the periods the property is rented out or is genuinely available for rent.

Holiday homes

The ATO said that it recently amended a taxpayer's return to disallow deductions claimed for a holiday home after discovering that:

- the taxpayer rented the home to family and friends during the year at less than market rate;

- except for a brochure which was only available at the taxpayers’ business premises, there were no realistic efforts to let the property;

- the nightly rent advertised was much higher than that of surrounding properties; and

- the pattern of income did not match the advertised rate, or the requirement for a five-night minimum stay.

The ATO decided the property was mainly used by the taxpayer, and deductions were limited to the amount earned from family and friends.

ATO is using SMS messages to try and clear debt

The ATO has advised that it is using SMS and emails for promotional and information purposes.

They say that, if individual taxpayers receive an SMS or email claiming to be from the ATO, they can check the list of the ATO's current activities (on its website at ATO Online Services) to verify that it's genuine.

However, ATO messages will never ask taxpayers to reply by SMS and/or email to provide personal information, such as the taxpayer's tax file number or their personal bank account number or BSB.

ATO swoops on phoenix businesses

The ATO, supported by NSW and Federal Police, has made surprise visits to over a dozen sites across Sydney as part of an investigation into potentially fraudulent phoenix activity.

Recent figures show that phoenix activity costs the Australian economy up to $3.2 billion each year.

Honest businesses suffer the most, losing almost $2 billion in unpaid debts and the non-supply of purchased goods and services.

The ATO said that, if a member of the public has any knowledge or concerns about companies that may be exhibiting phoenix behaviour, they can report it online at ato.gov.au/reportaconcern or by calling 1800 060 062.

Update on taxi travel/ride-sourcing

As we mentioned in the last edition, the ATO has confirmed that people who provide ride-sourcing services are providing ‘taxi travel’ under the GST law. The existing tax law therefore applies to them and so such drivers are required to register for GST regardless of their turnover.

Recognising that some taxpayers may need to take some corrective actions, the ATO is allowing drivers until 1 August 2015 to get an ABN and register for GST.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.

Maximising deductions for Small Business Entities

STOP PRESS: It is important to note that proposed changes to the SBE capital allowance regime will impact the 2015 income year.

Under the proposals, the small instant asset write-off threshold will be temporarily increased to 'less than $20,000', for assets acquired and installed ready for use between 7.30 pm (AEST) 12 May 2015 and 30 June 2017.

On 28 May 2015, the Tax Laws Amendment (Small Business Measures No.2) Bill 2015, was introduced to give effect to this measure.

Prepayment strategies – SBE

SBE taxpayers making prepayments before 1 July 2015 can choose to claim a full deduction in the year of payment where they cover a period of no more than 12 months (ending before 1 July 2016). Otherwise, the prepayment rules are the same as for non-SBE taxpayers.

The kinds of expenses that may be prepaid include:

- Rent on business premises or equipment.

- Lease payments on business items such as cars and office equipment.

- Interest – check with your financier to determine if it’s possible to prepay up to 12 months interest in advance.

- Business trips.

- Training courses that run on or after 1 July 2015.

- Business subscriptions.

- Cleaning.

If you have any questions give us a call anytime...before 30 June!

Common work-related claims made by individuals

The following outlines common types of deductible expenses claimed by individual taxpayers, such as employees and rental property owners, plus some strategies that can be adopted to increase deductions for the 2014/15 income year.

1. Depreciable plant, etc, costing $300 or less

Salary and wage earners and rental property owners will generally be entitled to an immediate deduction if certain income-producing assets costing $300 or less are purchased before 1 July 2015.

Some purchases you may consider include:

- books and trade journals;

- briefcases/luggage or suitcases;

- calculators, electronic organisers;

- in electronic tablets;

- software;

- stationery;

- tools of trade.

2. Clothing expenses

Purchase or pay for work-related clothing expenses prior to the end of the income year, such as:

- compulsory (or non-compulsory and registered) uniforms, and occupation specific and protective clothing;

- other expenses associated with such work-related clothing, such as dry cleaning, laundry and repair expenses.

3. Self education expenses

Consider prepaying the following self education items before the end of the income year:

- course fees (but not HECS-HELP fees), student union fees, and tutorial fees;

- interest on borrowings used to pay for any deductible self education expenses.

- bring forward purchases of stationery and text books

4. Other work-related expenses

Employees can prepay any of the following expenses prior to 1 July 2015:

- union fees;

- subscriptions to trade, professional or business associations;

- magazine and newspaper subscriptions;

- seminars and conferences;

- income protection insurance (excluding death and total/permanent disability).

Give us a call if you have any questions 55 279 173

The 2015 Federal Budget was released on the 12th of May 2015. Below is a summary of the key points that may affect you and your circumstances - Happy reading!

Immediate deduction of Assets less than $20,000 The government will significantly expand accelerated depreciation for small businesses. It will do this by allowing small businesses with aggregate annual turnover of less than $2 million to immediately deduct assets they start to use or install ready for use, provided the asset costs less than $20,000. This will apply for assets acquired and installed ready for use between 7.30pm (AEST) 12 May 2015 and 30 June 2017. The pool can also be immediately deducted if the balance is less than $20,000 over this period (including existing pools).Tax cuts for small business

1.5% tax cut for small companies and 5% discount on income tax payable for unincorporated small business activity

From the 2015/16 income year, the government will deliver a tax cut to all small businesses: (a) Reduction in company tax rate – The company tax rate will be reduced to 28.5% for companies with aggregated annual turnover of less than $2 million. (b) 5% discount on tax payable for other taxpayers – Individual taxpayers with business income from an unincorporated business that has an aggregated annual turnover of less than $2 million will be eligible for a small business tax discount. The discount will be 5% of the income tax payable on the business income received by an unincorporated small business entity. The discount will be capped at $1,000 per individual for each income year, and will be delivered as a tax offset. Claiming car expense deductions From the 2015/16 income year, the government will modernise the methods of calculating work-related car expense deductions, as follows:

The ‘12 per cent of original value method’ and the ‘one-third of actual expenses method’ (which are used by less than 2% of those who claim work-related car expenses) will be removed.The ‘cents per kilometre method’ will be modernised by replacing the three current (cents per kilometre) rates based on engine size, with one rate set at 66 cents per kilometre (in respect of all cars).

Immediate deduction for professional expenses on commencing a new business Currently, some professional costs associated with commencing a new business are deducted over a five-year period. From 1 July 2015, the government will allow businesses to claim an immediate write-off for a range of professional expenses associated with starting a new business, such as professional, legal and accounting advice.Release of superannuation for terminal medical condition Broadly, before an individual with a terminal medical condition can currently access their preserved superannuation benefits (generally as a tax-free lump sum), two registered medical practitioners (including a specialist) must certify, jointly or separately, that the person is likely to die within a one-year period. From 1 July 2015, the government will extend access to superannuation for people with a terminal medical condition by extending the above certification period (i.e., the period within which the individual is likely to die) to two years. This will give terminally ill patients earlier access to their superannuation entitlements.

Capital Gains Tax roll-over reliefRelief is currently available for individuals who incorporate, but other entity type changes have the potential to trigger a CGT liability. From 1 July 2016, the government will allow small businesses with an aggregated annual turnover of less than $2 million to change legal structure without attracting a CGT liability at that point. This measure recognises that new small businesses might choose an initial legal structure that they later find does not suit them when the business is more established.

Changes to Parental Leave Pay (‘PLP’) Currently, individuals are able to access government assistance in the form of PLP, in addition to any employer-provided parental leave entitlements. From 1 July 2016, the government will remove the ability for individuals to 'double dip’, by taking payments from both their employer and the government. The government will ensure that all primary carers would have access to parental leave payments that are at least equal to the maximum PLP benefit (currently 18 weeks at the national minimum wage).Child care (workforce participation stream) A new single Child Care Subsidy (‘CCS’) will be introduced on 1 July 2017. Families meeting the activity test with annual incomes up to $60,000 (2013/14 dollars) will be eligible for a subsidy of 85% of the actual fee paid, up to an hourly fee cap. The subsidy will taper to 50% for eligible families with annual incomes of $165,000. The CCS will have no annual cap for families with annual incomes below $180,000. For families with annual incomes of $180,000 and above, the CCS will be capped at $10,000 per child per year. GST-related measures announced by the government The government has announced various GST-related measures, broadly as follows: (a) Cross border supplies of digital products and services – From 1 July 2017, GST will be extended to cross border supplies of digital products and services imported by consumers. Under the current law, digital products and services imported by consumers are not subject to GST. This results in forgone GST revenue to the States and Territories and places domestic businesses (which generally have to charge and remit GST on the digital products and services they provide) at a tax disadvantage compared to overseas businesses. Other Budget announcements Change to the asset test thresholds for the aged pension The government will increase the asset test thresholds at which pensions are reduced once the threshold is exceeded, as follows:

For a single person – a full pension may be received if the relevant value of included assets (i.e., assets other than excluded assets) is less than $250,000 for a homeowner (currently $202,000).For a pensioner couple – a full pension may be received if the relevant combined value of included assets is less than $375,000 for a homeowner (currently $286,500).

Non-home owner pensioners will also benefit by an increase in their threshold to $200,000 more than homeowner pensioners. Pensioners who lose pension entitlements on 1 January 2017 as a result of these changes will automatically be issued with a Commonwealth Seniors Health Card or a Health Care Card for those under Age Pension age.Cessation of the Large Family Supplement of Family Tax Benefit (FTB) Part A From 1 July 2016 families will continue to receive a per child rate of FTB Part A for each eligible child in their family. The government will also reduce the amount of time FTB Part A will be paid to recipients who are outside Australia. Currently, FTB Part A recipients who are overseas are able to receive their usual rate of payment for six weeks and then the base rate for a further 50 weeks. From 1 July 2016, families will only be able to receive FTB Part A for six weeks in a 12 month period while they are overseas.Changes to residency rules for temporary working holiday makers Currently, a working holiday maker can be treated as a resident for tax purposes if they satisfy the tax residency rules. The government will change the tax residency rules from 1 July 2016 (i.e., the 2017 income year) to treat most people who are temporarily in Australia for a working holiday as non-residents for tax purposes, regardless of how long they are here.Better targeting of Zone Tax Offset (‘ZTO’) to exclude ‘fly-in fly-out’ and ‘drive-in drive-out’ workers (‘FIFO/DIDO workers’) The ZTO is a concessional tax offset available to individuals in recognition of the isolation, uncongenial climate and high cost of living associated with living in identified locations. From 1 July 2015, the government will exclude FIFO/DIDO workers from the ZTO where their normal residence is not within a particular ‘zone’. Furthermore, for those FIFO/DIDO workers whose normal residence is in one zone, but who work in a different zone, they will retain the ZTO entitlement associated with their normal place of residence.Recovery of HELP repayments from overseas debtors The government will extend the Higher Education Loan Programme (‘HELP’) repayment framework to debtors residing overseas for six months or more if their worldwide income exceeds the minimum repayment threshold at the same repayment rates as debtors in Australia. The new arrangements will apply from 1 January 2016 to new and existing debts. From this date, debtors going overseas for more than six months will be required to register with the ATO, while those already overseas will have until 1 July 2017 to register. Repayment obligations will commence from 1 July 2017.Research and Development (‘R&D’) tax incentive – introducing a $100 million expenditure cap from 1 July 2014 Currently, under the R&D tax incentive, companies can claim a refundable tax offset of 43.5% if their turnover is less than $20 million, or a non-refundable tax offset of 38.5%. The government has introduced a cap of $100 million on the amount of eligible R&D expenditure for which companies can claim a tax offset at a concessional rate under the R&D tax incentive. Expenditure beyond the $100 million cap will receive a lower offset at the company tax rate. These changes apply in relation to assessments for income years commencing on or after 1 July 2014.

The ATO is also reminding directors of companies, that are required to pay Superannuation Guarantee (SG) for their employees, that they may be personally liable for any unpaid or unreported SG Charge liabilities of their companies

ATO's audit targets

The ATO has set up a new page on its website called "Building confidence", which talks about its current compliance activities, and the amounts of tax and penalties it has collected in 2014 from its various initiatives. Some of the areas that the ATO has stated it will be focusing on are:

Eligibility for net medical expenses tax offset

The ATO has reminded taxpayers that the net medical expenses tax offset (NMETO) is being phased out. To be eligible for the NMETO for 2014/15, a taxpayer must have received an amount of the tax offset in both of their 2012/13 and 2013/14 income tax assessments. If a taxpayer's 2012/13 notice of assessment shows an amount of zero for NMETO, they wouldn't have received this offset in that year and so are not eligible to make a claim in 2013/14 or 2014/15. However, the eligibility rule for the NMETO does not apply to clients with out-of-pocket medical expenses relating to disability aids, attendant care and aged care (these expenses can continue to be claimed until 30 June 2019).

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should give us a call to verify their interpretation and the information’s applicability to their particular circumstances.

We hope you have had a great break over the Easter long weekend

As we draw to the close of the 2015 financial year we need to ensure we plan over the next few months and make sure we have covered every possible deduction before 30 June 2015. ATO super crackdown

The ATO is currently running an education campaign for business owners to help them better understand their super obligations. It will be undertaking audits from July 2015 of employers who continue to not meet super obligations for their employees. The ATO is also reminding directors of companies, that are required to pay Superannuation Guarantee (SG) for their employees, that they may be personally liable for any unpaid or unreported SG Charge liabilities of their companies

ATO's audit targets

The ATO has set up a new page on its website called "Building confidence", which talks about its current compliance activities, and the amounts of tax and penalties it has collected in 2014 from its various initiatives. Some of the areas that the ATO has stated it will be focusing on are:

Contractor payments data matching program

The ATO has announced that it will continue to acquire details of entities that receive contractor payments from other businesses for the 2013/14, 2014/15 and 2015/16 financial years. The data that will be obtained includes:

Australian Business Number (ABN) of the payer business;ABN of the payee business (contractor);Name, address and telephone details of the contractor;Dates of payments to the contractor; andAmounts paid (including details of whether the payment included GST).

The ATO estimates that records for approximately 25,000 entities will be obtained each year, including the records for approximately 12,500 individuals. The purpose of this data matching program is to ensure that taxpayers are correctly meeting their taxation obligations in relation to contractor payments.

Eligibility for net medical expenses tax offset

The ATO has reminded taxpayers that the net medical expenses tax offset (NMETO) is being phased out. To be eligible for the NMETO for 2014/15, a taxpayer must have received an amount of the tax offset in both of their 2012/13 and 2013/14 income tax assessments. If a taxpayer's 2012/13 notice of assessment shows an amount of zero for NMETO, they wouldn't have received this offset in that year and so are not eligible to make a claim in 2013/14 or 2014/15. However, the eligibility rule for the NMETO does not apply to clients with out-of-pocket medical expenses relating to disability aids, attendant care and aged care (these expenses can continue to be claimed until 30 June 2019).

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.

It is not always easy running a business and many clients mention one of their biggest gripes can be staffing. In this months tax update their are some recent rulings where directors have unsuccessfully argued against personal penalties for staff entitlements. Staff are an integral part of all businesses so embrace it! If you can't afford to pay staff give us a call so we can determine where the problem is in your financial position. Clear Accounting Solutions will work with you on your businesses to assist with the best strategy to turn your business around

ATO update regarding the 'Director Penalty Regime'

The release of this ATO fact sheet follows a number of recent cases involving directors being largely unsuccessful in arguing why penalties under the director penalty regime should not apply to them. The ATO has issued a new fact sheet aimed at helping directors (and those that are about to become a director) understand their obligations under the Director Penalty Regime in respect of unpaid and unreported Pay As You Go (‘PAYG’) and Superannuation Guarantee Charge (‘SGC’) amounts. In particular: - Directors will be personally liable for unpaid PAYG withholding or SGC amounts. - Director penalties can apply even if an individual is no longer a director of a company, or is a newly-appointed director. - The ATO is likely to issue a director penalty notice to collect company debts where the company hasn’t engaged to resolve outstanding obligations. - Payment is the only option to remit the penalty if the associated company liability was not reported within three months of the due date (e.g., if an SGC statement was required to be lodged by 28 August, but this had still not been done by 28 November). - The ATO recommends that address details with the ATO and ASIC are kept up to date to ensure any time-sensitive action can be taken by impacted directors.

By SARAH KIMMORLEY (www.businessinsider.com.au)

There’s nothing like some beautiful, fresh green foliage to break up the monotony of an office space.

But did you know plants can also affect your bottom-line?

According to research carried out by the University of Queensland, an office enriched with plants makes staff happier and boosts productivity by 15%.

Along with this, Professor Alex Haslam from UQ’s School of Psychology, also found that by adding plants to a workplace it became a more “enjoyable, comfortable and profitable” place to work.

Now some of the biggest companies in the corporate world are catching on, one being international commercial property services firm, CBRE.

Joining the 202020 Vision last year, the company has already introduced “green spaces” in 21 of its offices across Australia and New Zealand, and is aiming to increase these by 20% over the next six years.

Already there are reports that the business’s bottom line has seen a positive impact through the reduction of staff absenteeism and productivity.

CBRE’s head of sustainability for the Pacific region, Amanda Steele, says by choosing hardy, low-allergy and high air-purifying plant varieties, health benefits have been boosted and the feedback has been “overwhelmingly positive”.

“Plants provide an excellent way to ‘soften’ the surfaces in an office environment,” she said.

“They also purify the air, without the use of chemicals or energy, and provide an excellent connection to nature – enacting biophilia, or the positive feelings people get when surrounded by living systems.”

But integrating green spaces into the work environment also has proven mental benefits including more rapid recovery from stress, increased patience and overall satisfaction.

“Working in greener spaces is proven to boost our moods, creating a happier and healthier workplace, which ultimately leads to financially quantifiable results for a business,” Steele said.

Steele says in addition to the feel-good vibe, biodiversity plays a pivotal role in offsetting the urban heat island effect as a result of urbanisation.

“Plants reduce urban heat and are key to improving the climate resilience of our cities,” she says.

“What once was an oversight to not integrate plants into buildings and leave large amounts of open space on rooftops is now becoming a new area of opportunity in the property industry.

“This is pretty simple market economics- without the natural environment we don’t have a market. Fresh air, fresh water, sustained ecologies, all contribute to the economic growth of our communities.”

So far, CBRE reports that the small investment in the plants has been “completely worthwhile”.

“Studies are conclusive that the natural environment improves health benefits,” said Steele who could not release definitive results on the policy change as the company is yet to “crunch the numbers”.

Written on the 19 February 2015 by Jenna Rathbone (from http://www.goldcoastbusinessnews.com.au/)

THE Gold Coast tourism industry is confident that a change of government is exactly what the city needs to boost tourism and ensure the industry is not overlooked by a dominating political party. Head of Gold Coast tourism Martin Winter (pictured below) met with the new Minister for Tourism Kate Jones today and says, ironically, the benefits of having no Labor representation on the Gold Coast could potentially work to the city's advantage. "We agree with Bernard Salt that by having one party dominate the local political scene has been detrimental to the Gold Coast in the past," says Winter. "The general consensus is that no favours were done previously because there were no political gains to be made. "Now with a change of government, there is hope that some of the marginal seats on the Gold Coast will be seen to be winnable at a future election and the Gold Coast will not continue to be overlooked." Jones, who was awarded the portfolio of education, tourism, major events, small business, and the Commonwealth Games just four days ago, met with an array of business leaders this morning where they talked all things tourism. Winter says he walked out of the meeting feeling positive about the appointment of Jones and described her as "a breath of fresh air". "It is very refreshing that we have a minister that is very keen to start off positively and make the effort to come down to the Gold Coast - after all we have the Commonwealth Games and the Gold Coast accounts for more than a quarter of the tourism in Queensland," he says. "With regard to any concern about the workload, certainly it is acknowledged that the education portfolio is very large, however we are confident that we will be able to work with the minister positively.

"We don't expect the minister to have all the answers and intimate knowledge of every issue, however provided she understands the strategic matters which are important for the future of the Gold Coast, we are confident that this meeting will have a good outcome." Winter says Jones expressed interest in utilising skills and expertise of the industry and quoted the Premier in saying "tourism is absolutely critical for the future of Queensland and the economy". "The minister expressed genuine interest in utilising the skills and expertise of the industry and was very open to the suggestion that she would be encouraging open communication to ensure the best results are achieved for the Gold Coast," says Winter.

"She reiterated the government's commitment to additional funding which was welcomed by all the people present, particularly the commitment to increasing resources for tourism and events Queensland and for the attraction for new major events."

Winter says the issue of the cruise ship terminal was not raised, however it is on his agenda.

"Unless the Gold Coast can develop significant new tourism infrastructure such as the ASF proposal, we won't continue to meet the changing expectations of visitors and struggle for relevance in an incredibly challenging international market place," he says.

"It's about jobs and the creation of jobs."

Labor's pre-election promise includes increasing the tourism budget $10 million a year over the next four years.

Winter says $10 million a year isn't going to make up the shortfall that was experienced over the last year alone and one of the key agenda items in his meeting today was ensuring funding would continue for tourism initiatives.

He says in particular that funds for marketing need to be a priority and long-term certainty needs to be established in the industry.

"Just recently the announcement made by the NSW Government of over $120 million additional to attract events is very concerning," says Winter.

"If we continue to have the funding levels that Queensland has had over the last three years, we will continue to struggle."

Gold Coast Tourism is calling for the Labor government to implement the commitments outlined in the Gold Coast Destination Tourism Management Plan - commit investment to vital tourism and transport infrastructure and increase marketing, events and business events funding.

(article credit: Bob Gorman, dynamicbusiness.com.au)

Small business marketing doesn’t have to be intimidating. In fact, if you take a common sense approach and have a plan, you can succeed with ease. However, if you don’t try hard or understand how to proceed, you can waste your time and money, which can hurt your business greatly.

With this in mind, here is a short guide on how to create a marketing plan.

What you want

First and foremost, before you do anything, you need to know what you want and who your audience is. While you may not know your exact audience, you should have some idea. Are your potential clients soccer moms? Or, are they retired people? If you know this and take it seriously, you can save a lot of money as you won’t waste it on marketing to the wrong people. Then, you can go ahead with your marketing ideas. Remember, while you don’t want to cast too wide of a net, you also don’t want to go after too small of a segment of people as you may miss out on potential clients.

Corporate gifts

If you want to get your name out there in the short and long-term, you should have amazing marketing materials. One of the most cost-effective ways to reach out to people is to offer your current or potential clients free, corporate gifts. By giving away minor and inexpensive items, you can impress people and give them something they will remember and. At the same time, if you give the right gift, other people will see it, and you can watch your exposure take off to new levels. As stated on the Promo Gallery website, nothing beats having your brand being displayed on a desk or counter top. Again, it’s important to think of your audience when you hand out gifts as you don’t want to give something to someone unless they have a need for it.

Create and update a brochure

All-too-often, people will rely on one method and forget about the other methods that still work wonders. One thing you should spend money on is a great brochure. Ideally, unless you are a professional, you should pay someone to create or update your brochure. In the brochure, you should list your hours and talk about your product or service. If you have a brochure, you will want people to read it and get excited about your product or service.

Advertise on the radio and yellow pages

A lot of people think they can find people only using their website and social media accounts. While this is a good way to start, you should think a little more deeply. If you can, you should have a radio spot. A well-placed radio ad will help you find a lot of clients, all within a few hours. Again, think of your market. You don’t want to advertise on talk radio if you are reaching out to teenagers. If you do this and advertise in your local Yellow Pages, you can watch as your company brings in a lot of new clients.

Social media marketing and offers

If you have a social media account, you probably get a lot of clients from it. But, you will want to go above and beyond your competition and make sure you provide true value. At the same time, when you have contest and offer coupons, you are going to keep your followers interested. In addition, when using social media, you need to keep things interesting and post often. Finally, if you respond to inquiries and make sure you listen to your clients, you are going to see your conversion rates fly. Simply put, with a well-run social media campaign, you can increase profits with little effort. In the future, this will only be more important, so make sure you keep up with your accounts.

If you want to run a company and have a wise marketing campaign, you should follow these basic ideas. Otherwise, if you don’t have a plan, you are likely to fail.

Article credit: Daniel DiPiazza (http://www.entrepreneur.com/article/241835)

So you want to start a business, but you have no idea where to start. Many beginning entrepreneurs have faced the same dilemma.

The answer: start with freelancing.

The word "freelancing" may sound scary but the concept is pretty simple. All you have to do is find skills that you already have, then find people who will pay you for those skills. Before you know it, you're in business.

Here's how it works.

1. Take an inventory of your skills.

What are you currently doing that someone is already paying you for? Could that same service you’re providing a large company be offered to individual clients?

The reality is, if you currently have (or have ever had) a job, you've already proven that you can provide a service that people will pay money for.

For instance:

If you’re an administrative assistant, there’s a good chance your organizational skills will be useful to clients.If you’re a web developer, you can definitely help people build projects on the side.If you’re an accountant, you can help clients with their taxes, or small businesses with their accounts.

These are just a few ideas to get your brain working but you can get the help you need thinking of more.

2: Determine what people are paying for the services you provide.

It's easy to get caught up on pricing. In the beginning, nobody knows what they should charge!

Remember: the true value of your services isn’t how much a company pays you directly (your salary/hourly rate), it’s how much they charge other people for you to deliver those services. The cost to the end user is your true value.

Consider this scenario:

You’re a paralegal who gets paid $30/hour to do pre-litigation work and settle cases. How much do you think the clients are paying the firm for your work? I’d guess the firm probably bills clients at least $150/hour for you to handle this work on their behalf.

So now you know your time is worth at least $150/hour. That means the firm is taking $120 from you as a “finder’s fee!”

Hmm…seems pretty steep, don’t you think? Couldn't you take those exact same skills and make money by yourself?

One way that comes to mind is divorce filings. The divorce process is expensive. It can cost hundreds or even thousands to file, but in reality most paralegals know how to do this work. Maybe you could open up an “express” business to offer this very specific service for a better rate.

There’s clearly a never-ending market for it and are people willing to pay!

3: Find clients (hint: they are everywhere).

When you're first starting off, the two easiest methods for finding clients are partnerships and freelance job boards. Forming partnerships with people who need your services, and already work with your ideal customer, is the fastest way to get an instant flood of clients. The key is to offer other businesses massive value in return for their partnership.

Provide a service that really makes the other business look great to their customers, and they will reward you with a mountain of referrals. It's all about the win-win. For example:

If you’re a personal trainer, you can partner with local apartment complexes with gyms to host classes for residents.If you’re a web developer, you can partner with graphic designers to help their clients build websites.If you’re an algebra tutor, you can partner with local schools and after-school programs to help their students.

The possibilities are endless, but you have to be willing to think outside of the box to see make some of these connections work.

How to use freelance job boards.

There are dozens of websites out there that are specifically designed to help freelancers find work and get paid. The most popular are Elance and oDesk.

Sites like these are fantastic starting points. You shouldn’t think of them as “forever” solutions to finding clients and growing your business, but they do provide some powerful advantages for the beginning freelancer:

They help you become comfortable with the idea of selling your services, tweaking your offer and understanding what clients are looking for.They help you refine your pitch.They build confidence by helping you get over the fear of rejection by enjoying the initial feeling of success, even if you only book a few small jobs.

Get out there and get started! These ideas are just the tip of the iceberg when it comes to starting a freelance business!

Anybody can do it. What's holding you back?