(02) 9891 6100 email@spryroughley.com.au
Servicing Greater Sydney, Parramatta

TAX | NEWS | VIEWS & CLUES

Welcome to the October 2017 edition of the Spry Roughley Report.

This month sees the trickle of tax legislation expanding to become a flood as the various budget announcements find their way through the complex political situation we currently face.

One highlight to monitor is the change that impacts family trusts in the Eastern States that hold residential property. If there is any foreign beneficiary of the trust then the trust may be exposed to additional foreign owners duty charges and, in NSW and Victoria, land tax surcharge. The simple remedy may be to amend the Trust Deed to specifically exclude any foreign beneficiary. If you think this will affect you, please seek advice immediately.

For the technically inclined, we are running a client seminar on the changes in recognition, timing and disclosure under the Revenue Standard AASB 15, on 23 November 2017. This will be a 3 hour CPD workshop and will be of particular interest to any significant business reporting under Australian Accounting Standards.

Fraud is on the rise. Traditionally the focus has largely been on employee fraud and consideration of the "Fraud Triangle"

Pressure is the financial or emotional force that drives an individual to consider defrauding someone.
Opportunity is the ability to implement the fraud without being caught.
Rationalisation is the ability of the person to justify their dishonest actions to themselves.

In business:

  • one can be alert and sensitive to the pressures employees are under; 
  • it is most important to ensure that the opportunities for fraud are restricted through effective control processes; and 
  • manage the opportunity for rationalisation through treating people fairly and honestly.

However, in isolation, those measures will be ineffective.  You must attend to all three aspects to protect against fraud.

More recently, the scammers external to the business are becoming more sophisticated. Recently we noted an instance where a supplier's IT site had been infiltrated and their legitimate invoice, sent electronically, was intercepted, with new bank account details entered into that invoice, before being sent on to the customer. In such cases your only protection is to be vigilant to any changes in a supplier's bank account details. Always independently confirm changes directly with the supplier, on a trusted line of communication, and ensure that any master file updates in your own system are properly controlled. I suspect we will see a lot more frauds like this. The key take out is probably the old adage that "if you have money, someone, somewhere, is working to take that from you".

In other news:

In addition, you'll find a Due Diligence Checklist here to help with various considerations when acquiring a business.

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,

Martin

Martin Roughley, Director
Spry Roughley Services Pty Limited



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Bill to increase Medicare levy

The Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017 has been introduced to implement the Government's 2017–2018 Budget announcement to increase the Medicare levy by 0.5% to 2.5% from 1 July 2019 in order to help finance the National Disability Insurance Scheme (NDIS). Nine other Bills have been introduced to increase the following rates that are linked to the top personal tax rate.

Think you may be affected by personal tax rate changes? Contact us to find out more.

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Budget changes to foreign resident CGT: draft legislation 

Draft legislation has been released to implement 2017–2018 Federal Budget measures relating to the CGT liability of foreign residents. The measures, which applied from 9 May 2017:

  • remove the entitlement to the CGT main residence exemption (MRE) for foreign residents that have dwellings that qualify as their main residence; and 
  • ensure that, for the purpose of determining whether an entity's underlying value is principally derived from taxable Australian real property (TARP), the principal asset test is applied on an associate inclusive basis.

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Foreign resident CGT withholding: early recognition of tax credit 

The Commissioner has made a determination to modify the time at which the vendor is entitled to a tax credit in respect of an amount withheld under the foreign resident CGT withholding rules.

The modification, applicable for transactions entered into on or after 1 July 2016, ensures that, where a settlement period for a transaction covers more than one income year for the vendor, the credit entitlement will be available in the same year as that in which the transaction giving rise to the payment to the ATO is recognised for tax purposes for the vendor.

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Further guidance for tax losses via a new "similar business" test 

The ATO has released a draft guideline on how they will apply the new "similar business test" to supplement the existing "same business test" used for testing whether a company can utilise an earlier year tax loss.

The draft guideline says the similar business test will operate in a way that is comparable to the same business test, and that the overall business of a company must satisfy the similar business test to access losses. The focus remains on the identity of a business, as well as continuity of business activities to generate assessable income.

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ATO increases its scrutiny on work-related expenses 

Despite wide publicity on the issue, the ATO has reminded taxpayers that it is increasing its scrutiny on work-related expenses. Last year over 6.3 million people made a work-related expense claim for clothing and laundry expenses, totalling almost $1.8 billion. 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.

Unsure about what you can claim as work-related expenses? Talk to us to avoid making a mistake.

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Activity statements can now be lodged in advance 

The ATO says nil activity statements can be generated early in some cases. Under normal bulk processes, activity statements generally issue from the ATO by the end of the month. 

However, the ATO says there may be a specific reason for a business to access its activity statements early, such as: if you are a short-term visitor (for example, you are an entertainer or sports person and will be leaving during the relevant period); or know that you will be travelling when an activity statement is due.

Activity statements can be generated for up to six months in advance.

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New downsizing cap available 

If you are aged 65 or over, your home is your main residence for CGT purposes and you have owned it for a minimum of ten years, you could benefit from new draft legislation. You will be able to make additional non-concessional contributions, up to $300,000, from the proceeds of selling your home from 1 July 2018. 

The downsizer contribution cap of $300,000 will be in addition to existing caps; the capital must come from the proceeds of the sale price and application must be made within 90 days after the home changes ownership. There will also be exemption from the contribution rules for people aged 65 and above, and the restrictions on non-concessional contributions for people with total super balances above $1.6 million.

Thinking of downsizing? Speak to us about what this could mean for you in terms of tax concessions.

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GST: simplified accounting for food retailers 

The ATO has released a draft determination on the choice available to you, if you are a food retailer, to use a simplified accounting method (SAM) to help you to work out your net amount by estimating your GST-free sales and GST-free acquisitions of trading stock.

The Draft SAM is substantially the same as the previous determination it replaces. If you were eligible to use a particular SAM specified in the previous determination, you will continue to be eligible to use that SAM under the draft determination.

Are you a food retailer? We can help you to use the simplified accounting method for your business.

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Super system reforms 

Australian Prudential Registration Authority (APRA) has written to RSE licensees setting out its approach to the Government's super system reforms aimed at enhancing APRA's prudential powers to improve member outcomes. Under the proposed reforms, the current "scale test" will be replaced with an "outcomes test" requiring MySuper trustees to attest to outcomes promoting the financial interests of members on a broader range of indicators.

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Segregated current pension assets 

A warning has been issued from the Actuaries Institute that tens of thousands of self-managed super funds (SMSFs) could be at risk of incorrectly claiming exempt current pension income (ECPI) under the ATO's approach to segregated current pension assets.

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First Home Super Saver Scheme – draft legislation 

Treasury has released draft legislation to implement the 2017–2018 Federal Budget superannuation measures aimed at improving housing affordability by the establishment of the First Home Super Saver Scheme (FHSSS). 

The FHSSS will allow voluntary superannuation contributions made from 1 July 2017 to be withdrawn for a first home deposit starting from 1 July 2018. The scheme provides for up to $15,000 per year (and $30,000 in total) to be withdrawn from superannuation. 

To be eligible to use the FHSSS, a person must be 18 years or over, have not used the scheme before and never have owned property before in Australia.

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Super assets total $2.3 trillion at June 2017 

APRA has released its Quarterly Superannuation Performance publication and the Quarterly MySuper Statistics report for the June quarter 2017. As at 30 June 2017, superannuation assets totalled $2.324 trillion (up 10% from $2.113 trillion in June 2016).

Total assets in MySuper products amounted to $595 billion (up 25.5% from $474 billion in June 2016).

Self-managed super fund (SMSF) assets totalled $697 billion (up 9.8% from $635 billion in June 2016) held in over 596,000 SMSFs, representing 30% of all super assets.

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Our firm is built on being attentive to and extensively knowledgeable about our clients so we can work with them to help them to both achieve their goals and protect them from risk. We are forward looking in our advice and always aim to be practical and right.

– Martin Roughley, Managing Director

In business, there is so much going on and you don’t always have all the answers. That’s when you need to know who to call. Our clients call us.

– Shaun Madders, Director

Going beyond the compliance and routine is what we do. By maintaining open and frank communication we are able to provide valuable insights and assist in driving the changes required to help our clients achieve their goals.

– Fergus Roughley, Director