P J BEDDOW & CO
Accountants & Registered Tax Agents
ABN 83 441 523 120
Postal Address –
PO Box 568
Castle Hill NSW 1765
Office Address –
59/15-17 Terminus Street
Castle Hill NSW 2154
Lynette J Beddow NTAAF
Peter J Beddow NTAAF
Tele – 02 9659 8174
Email – beddowco@iprimus.com.au
JUNE 2014 – CLIENT MEMORANDUM – BUSINESS
The items contained in this Memorandum are a brief summary only of matters that may impact on your business. It is YOUR
responsibility to ensure that your records and business affairs are in order. We would be more than happy to assist you if you
require more information or clarification.
REPORTING PAYMENTS TO CONTRACTORS
If you work predominately in Building & Construstion
Industry - 2014 Reports due at ATO 21 July, 2014.
If Reports not required you MUST advise ATO that Nil.
CHANGES FROM 1 JULY, 2013
-For Small Businesses (Turnover less $20M) Immediate
write off of Assets purchased and installed ready for use
BEFORE 1/1/14 - Assets under $6,500
- First $5,000 of motor vehicle (does not need to be new).
The balance will be depreciated in the 30% pool. If
vehicle used only part business then the $5,000
immediate deduction will be apportioned
-Repealed Company Loss Carry Back rules from 1/7/13
-On 31 January, 2012 the Personal Properties
Securities Act came into force (see 2012 Newsletter)
CHANGES FROM 1 JULY, 2014.
-Employee Superannuation rate increases to 9.5%
- Superannuation Contributions maximum –
- $35,000 Aged 50 & over
- $30,000 Aged less 50
-Company, Trusts, Super Fund & FBT Returns need
Bank Account details for electronic refunds.
CASH ECONOMY
URGENT - ATO requesting “Z” Tape cash register
reconciliations to bankings from all shops
BENCHMARK TESTS - AUDITS–
The ATO have delevoped a range of benchmark
tests for various industries in the “Cash Economy”.
We provide clients within these Audit fields a summary
of the ATO benchmark %’s & a summary of their last
3 years figures compared to these benchmarks.
Please review these summaries & ensure ALL cash
Income received is fully declared.
The Audit results to date have revealed a 60-70%
error rate – incurring heavy penalties & interest.
LOG BOOKS/MOTOR VEHICLE EXPENSES
Must be current - kept for 13 consecutive weeks
- renewed every 5 years (sooner if useage change over10%).
If your vehicles have Employee Contributions or FBT paid
on the Statutory basis, you MUST note odometer readings on
31/3 & 30/6 each year. You MUST also complete the
Required Declaration in respect of these contributions.
DIRECTORS & PENALTIES
Personally liable if trading while insolvent
Have 21 days to comply with Director Penalty notices –
Please don’t ignore these. Personally liable for PAYG
Withholding & Superannuation Contributions.
Keep ASIC addresses up to date as ATO uses these.
Notices – wrong ASIC address is no defence
OTHER UPDATES & REMINDERS
EMPLOYERS & SUPERANNUATION
-Super for quarter ended 30 June, 2014 due 28/7/14
must be paid & receipted before 30/6/14 if you
want a deduction in your 2014 Tax Return.
-Reportable Superannuation (on PAYG Summary) is - excess over Statutory 9.25% Super Contribution &
- employee salary sacrificed Super
-Statutory 9.25% is calculated on Gross AFTER Salary
Sacrificed amount is deducted.
- Super due on wages to Employees aged to 70 years.
-9.25% Statutory Superannuation Contribution is payable
on ALL “Ordinary Times Earnings” . See separate
“Rate Sheet for details of “OTE”
-Must give employee Choice of Super Fund Form
within 28 days of commencement.
-Super Contributions are deemed paid when received
by Fund – not when posted by you.
-Super due 28th day of month following end of quarter.
If paid late must complete Super Guarantee Charge
Form & pay admin fees & interest. Watch the December
Quarter – due 28 January (only BAS due 28 February)
-Super payable where employee’s eligible wages etc
exceed $449 per month.
-Superannuation Clearing house for contributions
where < 20 employees & no default fund or employee
provided fund – Now operated by ATO.
SELF EMPLOYED TAXPAYERS & SUPERANNUATION
-For year ended 30 June, 2014 Super deductible to max –
- $35,000 Aged >59 at 30/6/13
- $25,000 Aged 59 or less at 30/6/13
-Available to age 75.
-Must satisfy work test after 65 (40 hours in consecutive
30 day period)
-MUST hold Certificate from your Super Fund confirming
your intention to claim contributions as tax deduction,
BEFORE lodging your Tax Return.
-Eligible for Govt Super Co-Cpontribution – up to $500
Where Adjusted Taxable Income “ATI” less than $33,526
& phasing out at “ATI” og $48,516
YEAR END TAX PLANNING
- Do accurate year end stock take
- Ensure obsolete stock written off
- Ensure bad debts correctly written off
- Pay all superannuation for the June quarter before 30 June
- Write off obsolete equipment
- Bonuses in place before 30 June,
- Remember you must declare & minute dividends before
30 June.
FEDERAL BUDGET – MAY 2014 (Not Law yet)
From 1 July, 2014
-Restart Programme – up to $10,000 over 24 months to
Employers who hire a full time mature age job seeker
(Aged 50 or over) who has been unemployed for at least
6 months – payable -$3,000 after 6 months
-$3,000 after 12 months
-$2,000 after 18 months
-$2,000 after 24 months
- Trade Support Loan of up to $20,000 over a 4 year
Apprenticeship. This will be repayable like HELP.
From 1 July, 2015
-Company tax rate reduced to 28.5% (currently 30%)
-For large Companies (Taxable Income >$5M) a 1.5%
Parental Leave Levy will be imposed
FRINGE BENEFITS TAX - 1 April to 31 March
FBT Rate 1/4/14-31/3/15 – 47% (currently 46.5%)
Any expense paid for ANY employee, shareholder,
director or associate is a Fringe Benefit e.g.
Cars – see attached rate sheet for details. You MUST
have log books 31/3 & 30/6 each year to verify km’s
Entertainment -
Entertainment provided for staff, directors, associates is a
Fringe Benefit and MUST be included in your Fringe Benefits
Tax Return e.g. business lunches, social functions.
Where clients are also entertained the bill may be split on
a pro rata basis - no GST is claimable on any of the bill the client portion is not deductible for tax purposes but not
subject to FBT - the staff portion IS subject to FBT.
(see separate attachment re Entertainment & Gifts)
Xmas Party - Annual exemption limit for minor & irregular
benefits i.e. xmas party, is $300 per employee per benefit
Exemptions - Lap tops, PDA’s & portable printers
to go with laptops, mobile phones, briefcases, calculators,
tools, protective clothing etc. Limit of 1 item of each type
per year unless replacement for broken item.
Please ensure you are correctly completing the Employee
Declaration Forms in respect of reimbursed expenses and
the Motor Vehicle Odometer Record in respect of motor
vehicles.
We assume that you are correctly documenting any possible
liability for Fringe Benefits Tax. Please consult the ATO book
“Fringe Benefits Tax – A Guide for Employers”
OTHER REMINDERS
- Payment of private expenses via Company credit
Card may be subject to FBT. Need to complete “Expense
Benefit Declaration” in respect of these expenses.
SELLING OR WINDING UP A BUSINESS - CGT
Plan ahead to ensure you maximise the rebates & roll-over relief
provisions available. It is too late when you have signed a
contract. Contact your advisor prior to advertising the sale or
making any verbal agreements.
Some small business CGT concessions available are - 15 year exemption - entire gain is tax free
- 50% Reduction - 50% of capital gain is tax free
- retirement exemption - tax free gains can be derived up to
lifetime limit of $500,000
- replacement rollover - timing benefit for deferment of
capital gain if you buy a replacement active asset
BE VERY AWARE OF GST ON SALE AND WINDING UP
ATO DEBTS
Don’t ignore. Once at Debt Collectors very difficult to
negotiate payment arrangements.
You may be personally liable for ATO & Super Debts.
AUDIT ACTIVITY TARGETS
-Online sellers. ATO is tracking trading activity online
& via Ebay.
CAPITAL GAINS TAX (CGT)
POINTS TO NOTE
- applicable to investments (shares, property, trust) purchased
after 20/9/85
- assets acquired from deceased estate have a cost base a )if purchased by deceased pre 20/9/85 then you acquire
the asset at its market value on the date of death, OR
b) if purchased by deceased post 20/9/85 then you acquire
the asset at the price & date of purchase by deceased.
(please ask Trustee of Estate for cost base details in writing)
- assets held for more than 12 months are only taxed on 50%
of the profit (excluding if held by Company)
- assets held less than 12 months are taxed on 100% Profit.
- distribution on marriage breakdown MUST be under Court
Order for roll-over relief to apply
- Capital gains tax could apply where your shares are taken
over and you acquire different shares. Please notify us if
this situation has occurred this year and provide us with all
paperwork
- Tax Deferred distributions from Trusts reduce the cost base
of your investment - please keep all paperwork
- if you don’t know the cost of an Asset the Tax Office could
deem it to be $0
- Capital gains on overseas assets are taxable in Australia.
- date of sale is date of contract - not settlement. It could also
be date of “Heads of Agreement” where applicable.
Information we need to calculate CGT
- purchase & sale documents
- all dividend re-investment documents
- if Trusts then all distribution statements showing tax-free
and or tax deferred distribution
- re-construction of missing paperwork is VERY expensive.
The ATO produce booklets on capital gains in general and specifically
in respect of shares, property and estates. We have copies available.
UPDATE CONTACT DETAILS
Please ensure your details are up to date with ATO
ASIC
ABR (Australian Business Register)
PRIVACY ACT
If you require us to provide information to a third party you
MUST now instruct us in writing including the specific
information to be supplied.
GST UPDATE
-GST on Hire Purchase Contractors can
be claimed upfront, even if reporting on a cash basis.
This is a change from prior years.
- Withholding requirement where no ABN quoted
- Ensure GST correctly treated (if applicable) in sale/
Purchase agreements – property/business.
-If de-registering for GST you must remitt to the ATO 1/11th
of the value of ALL assets held at that date.
-Remember you MUST have a valid Tax Invoice for ALL
business purchases.
-If an expense is not-deductible for tax purposes then you
cannot claim the GST e.g. fines, entertaining.
-There is no GST on supplies made to overseas customers
providing YOU actually export the item.
-There is GST on sales & purchases of second hand goods
if the seller is registered or required to be registered
-GST must be remitted on trade-in or private sale of
business MV , or used partly for business.
- Where expense part business/private only claim GST
on business portion.
-GST is not always 1/11th of total – e.g. insurance
Remember there are penalties for reckless claims
GST & CONTRACTS - PURCHASE/SALE OF
PROPERTY & BUSINESSES
If you are buying or selling property, business etc, ensure
GST is correctly addressed in the contract. If buying
obtain written confirmation of the GST prior to exchange.
Ensure contract clauses support the GST charge, obtain
a tax invoice (if applicable).
Do not rely on Yes/No boxes or promises.
GST & SALE OF BUSINESS ASSETS
If you are registered for GST then GST MUST be charged
on the sale of ALL business assets including plant, motor
vehicle, equipment and goodwill. The issue of GST must
be addressed in a contract of sale or an indemnity clause
if uncertain and are awaiting an ATO Ruling (you may be
substantially out of pocket if this is omitted). If you plan to
sell or buy a business and use the GST exemption
applicable to “Sale of Going Concern” please obtain expert
advice to ensure this exemption is actually
applicable to your contract. The exemption is very narrow
and has limited application.
Sale where asset used part business & part private –
GST must be charged on total sale value with adjustment
to seller for private portion.
TOP BAS/GST ERRORS
- GST not remitted on sale of business or part-buiness
assets or where assets taken to private
- motor vehicle trade-ins incorrectly accounted for
- GST incorrectly claimed on MV Registration
- GST incorrectly claimed on non-tax deductible expenses
e.g. fines, entertainment.
- Tax invoices showing a different GST to that claimed.
- No GST adjustment for part business part private
- GST invoices not in claiming entities name.
- margin scheme calculations - 80% of cases reviewed show
incorrect calculations.
- GST not remitted on sale of new residential premises where
owner registered for GST.
- Incorrectly claiming sale of business is a “GST Free Sale as
a Going Concern”, when requirements not met.
Remember there are penalties for reckless claims
DISCLAIMER
Information is current at time of printing
No person should rely on the contents of this Memorandum without
first obtaining advice from a qualified professional. The publisher
expressly disclaims all and any liability and responsibility to any
person in respect of anything and of the consequences of anything,
done or omitted to be done by any such persons in reliance,
whether partially, upon the whole or any part of the contents of this
Memorandum.
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