Newsletter
Autumn 2011 Edition
Happening at CAS
We think we say this every newsletter but ‘how fast is this year going?!’
Easter eggs are now filling the supermarket shelves, Christmas is a long ago memory and the new tax year will be upon
us before we know it!
But before that we have the 2010 tax year lodgment deadlines in May - just six weeks away! Anyone who doesn’t have
their work in will need to get a move on so we can complete the work in time. The ATO are increasingly using their
discretionary powers to apply penalties for lodging tax returns late. These penalties currently range from $110.00 to
$550.00 depending on the lateness of the lodgement.
We don’t need to be paying the taxman any more than necessary.
Proposed carbon price link to tax
reforms
According to the Garnaut Climate Change
Review the starting price for carbon should
be between $20 and $30 per tonne of carbon dioxide equivalent, rising at 4 per cent
(real) per annum.
Professor Garnaut said the largest element of revenue from a
carbon price should be applied to reform the personal income
tax system. For example, according to the paper, a large
amount of revenue could be used to reduce personal income
tax rates and social security withdrawal tapers at the lower
end of the income distribution.
The proposal by Professor Garnaut, the government’s key
climate change adviser, to use the proceeds of its planned
carbon tax to drive cuts to personal income tax is welcomed
as it should benefit small and medium businesses (most of
which are unincorporated) and taxpayers generally. CPA Australia
Tax Forum to be held in October
The Treasurer, the Hon. Wayne Swan, has
announced the Australian Government will
host a Tax Forum to discuss the nation's tax
reform agenda.
The Tax Forum will be held in Canberra from Tuesday 4 to
Wednesday 5 October and is expected to host around 150
representatives from businesses, community groups, academics and tax practitioners.
Mr Swan said he will release a discussion paper in the middle of the year 'to help foster the debate' and the Tax Forum
will assist the government in prioritising its tax reform
agenda.
The forum is a major opportunity to incrementally advance
tax reform in Australia. It should be kept in mind that the
Henry tax review report, released last May, is a reference
tool for a longer-term (10 or more years) agenda and there is
still a significant amount that can be done and should be
done.
A Guide to claiming business
deductions
You can claim most expenses you incur in
running your business as deductions to reduce
your assessable income. The rules can vary
depending on the business structure you operate under and the
nature of each expense.
Keeping good records
You must keep records of your business transactions, including
expense claims, for five years after they are prepared, obtained or
the transactions completed, whichever occurs later. If you don’t
have those records, your expense claim may be denied or reduced.
Store records in either paper or electronic form. But they must be
readily accessible and available in English.
What you can claim and how to claim
As a general rule, you can claim your day-to-day business operating expenses in full in the year you incur them, while capital items
– such as buying plant and equipment – are claimed over a number
of years.
Motor vehicle expenses
The deductions you can claim for the business use of a motor vehicle depend on the business structure you operate under, whether
you use the vehicle for private use, and the type of vehicle. Business travel expenses
To claim business travel expenses, you need specific, documented
evidence of the expenses.
Capital allowances - plant & equipment depreciation
There are two sets of rules you can use to work out how much you
can claim for depreciating assets, such as plant and equipment –
the simpler capital allowances rules concession; and the uniform
capital allowances rules. Small businesses with aggregated turnover of less than $2 million can select the set of rules preferred.
Larger businesses must use the uniform capital allowance rules.
Salaries, wages and super
If you operate your business as a company or trust, you can claim a
deduction for salary and wages paid to all employees including
yourself, and for super contributions you make to a complying
super fund or retirement savings account for them. If you are selfemployed, you can claim a deduction for your own super contributions in your personal tax return and you can claim a deduction for
salary and wages you pay to other employees.
Note: Wages to family need to be reasonable for the work performed otherwise they can be varied by the ATO.
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QUOTES
Joking Around
Money can't buy you happiness .....
but it does bring you a more pleasant form of misery. Spike Milligan
Only Irish coffee provides in a single glass all four essential food groups:
alcohol, caffeine, sugar and fat. Alex Levine
I was married by a judge. I should have asked for a jury.
Wickenby Update
Groucho Marx
The Cost of Power
Project Wickenby is a cooperative partnership between the ATO, Australian Federal
Police, Australian Crime Commission,
Australian Securities and Investments
Commission and the Commonwealth Director of Public Prosecutions, with support from the Australian Transaction Reports and Analysis Centre, the Australian
Government Solicitor and the Attorney-General’s Department.
As at 28 February 2011 the Project Wickenby taskforce results:
• $1,064 million in tax liabilities have been raised
• $245.44 million in tax has been collected
• 62 people have been charged with serious offences
• 24 criminal investigations are currently in progress
• $56.25 million in assets have been restrained, and
• $306.1 million gathered in improved voluntary compliance.
The latest prosecution saw former co-directors of a Sydney
work safety company be sentenced to 2yrs 7mths for utilising
illegal ‘round-robin’ schemes where money from their company was transferred offshore and then returned ‘tax free’ to
their personal accounts, which they then claimed were loans.
The sentencing brings the total number of criminal convictions under Project Wickenby to 18.
Tax Commissioner Michael D’Ascenzo indicated that those
who are tempted to deliberately cheat the system should be
warned and those who do the wrong thing will get caught.
Further, that the net is closing on those who use tax secrecy
jurisdictions to deliberately avoid paying their fair share of
tax.
The ATO suggests - “Contact us before we contact you.”
Business Succession
No matter how successful , eventually almost
everyone will wish to sell their business. The
following checklist will help to maximize the
sale value.
Improve the efficiency of internal systems
Make sure the business can operate without your involvement.
Legalise key client and supplier contracts and increase the
use of longer term agreements.
Boost the business’ online presence by updating the website.
Consider the business structure. You may need to restructure
to allow for new owners, investors or shareholders.
Ensure the business is compliant with all necessary rules and
regulations.
Work on reducing liabilities and debt
Make effective succession planning a priority.
Todd and Alex have specific experience to assist here, as
well as invaluable contaacts for the next step.
With energy cost rising and the general
push to reduce our carbon footprint it may
be useful to look at which appliances are
costing you the most in real terms:
Appliance
$Cost
Per quarter
Pool heater (heat pump)
434
Ducted air conditioning
268
Wall mounted air conditioning
166
Electric storage hot water unit
150
Pool pump
95
Pool heater (solar)
48
New refrigerator 500 litre
30
400 litre freezer
30
Salt water chlorinator
26
Plasma TV
20
Bar fridge
15
Large LCD TV
10
Model, age and use can influence running costs.
Estimated costs are based on Energy Australia’s domestic all time
tariff for 2010 - 2011 for NSW
A Guide to claiming business deductions
Continued from page1
Losses
If you operate a business that makes a loss, you can carry forward
that loss and may be able to claim a deduction for that loss in a
future year. The rules differ for different business structures. If you
operate as a sole trader or a partner in a partnership, you may be
able to claim business losses by offsetting them against other income – for example, income you earn from salary or wages.
Expenses related to your work area
If you run all or some of your business from home, you may be
able to claim things such as rent, rates, insurance and utilities.
What you can claim depends on whether your home is your place
of business and whether or not you have an area set aside exclusively for business activities.
Tax-related expenses
You may be eligible to claim a deduction for things such as having
a bookkeeper prepare your business records and activity statements.
Repairs, maintenance and replacement expenses
You may be able to claim a deduction for repairs to machinery,
tools or premises you use to produce business income.
Remember this is generic commentary - as always the CAS
team are available to answer your questions.
Disclaimer: While due care is taken in preparing comment on topics this newsletter is not intended to provide advice. If any
of the topics above cause concern or general interest please do not hesitate to contact our office.
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