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TAX | NEWS | VIEWS & CLUES
We have well and truly entered the pre-election (Federal and State) news cycle which is creating a lot of noise and very little implemented policy. The markets are also a bit of a mess with a jittery ASX taking many of its signals from the US late run bull market and a split between commentators around the state of the East coast housing market. In contrast, the domestic labour indicators are OK with unemployment remaining low at 5% and wage growth picking up to 2.31%. Inflation, at 1.9%, is still below the RBA's target so the consensus among most economists is that the official cash rate will remain on hold and low for some time, which should give businesses a continuing platform of low rates to encourage their ongoing investment but there is some pressure on the Reserve Bank to start normalising rates before they really miss the opportunity. Too late already? Spry Roughley turned 29 on 1st November and a week or so later we debuted in the Australian Financial Review Top 100 Accounting Firms. Since inception the firm has grown organically and to reach the top 100 without merger or acquisition has been a significant achievement that we are very proud of. Thank you to our clients, our network of partners, and of course to our current and former team members who have all contributed to our success. Finally, a reminder for clients on the implementation of the new Lease accounting standard. This standard will impact December balance date entities on 1 January and June balancing entities on 1 July next year. Whilst your annual reports will not be due for a further 12 months, many clients are forgetting that bank, management and shareholder reporting will most likely need to be completed under the new standard through-out the year. Employee incentive negotiations may also be affected with the application of this standard splitting rent expenses between depreciation and interest. i.e. moving a pre- EBITDA expense to split across post-EBIT / EBITDA. It is also worthwhile checking banking covenants and starting a conversation with your financiers about adjusting for the impact of this standard on interest cover, debt servicing and other key covenant ratios. In other news....
As usual, please do not hesitate to call us on (02) 9891 6100 should you wish to discuss how any of the points raised in the report specifically affect you, or click here to send us an email. Warm regards, Fergus
Liability limited by a scheme approved under Professional Standards Legislation Transfer balance cap: ATO highlights admin issues On 30 August 2018, ATO Assistant Commissioner Superannuation Tara McLachlan gave a speech on "Administration issues under the transfer balance cap" at the Tax Institute Sixth National Superannuation Conference. The superannuation transfer balance cap is a limit on the total amount of super that you can transfer into retirement phase. The current cap is $1.6 million. Ms McLachlan highlighted several issues regarding common superannuation events that will need to be reported to the ATO (such as the start of new pensions that began to be in retirement phase on or after 1 July 2017), multiple transfer balance events, excess transfer balance determinations and more.
Australian Small Business White Paper: tax reform a key" "Numerous policy recommendations have been adopted from the first edition which was launched in 2015. However, we recognise that the state of our economy is reliant on the productivity, growth and prosperity of the small business sector, so this work must be ongoing", said IPA CEO Professor Andrew Conway. The Paper covers a range of topics, including productivity, regulation and workplace relations, and makes several tax reform recommendations relevant to small businesses and personal income tax. ATO expects 200,000 to miss out on refunds by failing to lodge Assistant Commissioner Kath Anderson has said that many salary and wage earners end up with a tax refund, but some are missing out because they fail to lodge on time. Taxpayers had until 31 October to either lodge their own return, or ensure they are on an agent's books, Ms Anderson said. Failing to lodge by the deadline can attract a penalty of $210 for every 28 days that the return is overdue, up to a maximum of $1,050. Black economy: electronic sales suppression tools now banned ESSTs come in many forms, such as:
These tools generally misrepresent or hide income by deleting or changing electronic transaction information, and falsifying sales or POS records. The ATO recognises some businesses may have bought POS software without knowing it contains suppression functions. There is a grace period to self-report without penalty. If you think you may be affected, contact us to find out more. People and businesses may face penalties of up to $1 million if they produce, supply, possess or use an ESST or knowingly assist others to do so. Super work test exemption for recent retirees Currently, people aged 65–74 must pass the "work test" – working at least 40 hours in any 30-day period during the financial year – in order to make voluntary super contributions. Bringing forward small business tax cuts by five years This means businesses with a turnover below $50 million will pay a tax rate of 25% in 2021–2022, rather than from 2026–2027 as currently legislated. Corporate tax rates and small business tax offset changes The new law also increases the small business income tax offset rate to 13% for 2020–2021. The offset will then increase to 16% for 2021–2022 and later income years. A "base rate entity" is a company that receives less than 80% of its taxable income from "passive" sources such as dividends, franking credits, interest, royalties and rent. Residential rental property travel expenses: ATO guidance The ATO has released new guidance about this, including details about the legal meanings of "residential premises" and "carrying on a business". Not sure if you can deduct the costs of maintaining your investment rental property? Tax on compensation received for inappropriate advice Capital gains tax comes into play, and the compensation amount may count as part of your assessable income if it's a refund of adviser fees that you've already claimed as a tax deduction. Contact us if you've received compensation from your bank or adviser and need to know more. ATO set to issue excess super contribution determinations "Concessional" contributions are taxed at the reduced rate of 15% in your super fund, but there's a limit to how much you can contribute at this rate ($25,000 for 2017–2018). Fund members may also receive an amended income tax return assessment together with the ECC determination, and may need to pay additional amounts to the ATO. This is because any super contributions you make over the concessional cap need to be included in your assessable income for the financial year, and an interest charge applies. |
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