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Welcome to the
June 2014 edition of the Spry Roughley Report.

With the end of the current financial year next Monday it is timely to ensure the important year end matters that must be considered before 30 June are addressed.

I wrote about year end tax planning actions in the May edition of the Report but a few reminders in case these have been overlooked:            

  • All trusts need to consider their income or capital distributions and minute these in accordance with the Trust Deed
  • For bonuses to be deductible at 30 June they must be locked in by a set formula or be declared before 30 June
  • Superannuation contributions must be paid into the superannuation fund by 30 June. Ensure you allow enough time for funds to clear, particularly if you use a clearing house
  • If you are drawing a pension from your self managed super fund, ensure that you have met the minimum pension withdrawal amount for the year
  • Write off any Bad Debts in the ledger at 30 June
  • Apply stock write-downs in the stock listing at 30 June
On Tuesday we will be in a new financial year and that brings with it some new matters to consider and prepare for:            
  • The FBT rate increased to 47% from 1 April 2014, to take account of the increased Medicare levy, and will increase again, to 49% from 1 April 2015 and stay at that level until 31 March 2017
  • The Super Guarantee contribution rate increases to 9.5% from 1 July 2014
  • The Medicare levy increases to 2% from 1 July 2014
  • The Temporary Budget Repair Levy of 2% for individuals earning above $180,000 applies from 1 July 2014, thus bringing the top marginal tax rate to 49%!
  • The end of the residual living-away-from-home-allowance transitional concessions occurs at this year end, 30 June 2014. This will bring all LAFHA recipients into line with the revised rules introduced in 2012
  • The general superannuation concessional contributions cap increases to $30,000 p.a. from 1 July 2014 and to $35,000 p.a. for individuals aged 49 years or over on 30 June 2014
  • The company tax rate is scheduled to reduce to 28.5% from 1 July 2015, with the associated impact of reducing the value of franking credits from that date
Two consequences in particular that may need attention are to ensure that software packages used to prepare payroll are updated to incorporate the new rates, and a number of these changes may affect salary sacrifice arrangements that you may have in place for yourself or your staff. It is important to remember that any changes to such arrangements can only be made prospectively – they cannot be back-dated.

In this edition of the Report we also provide year end tax return preparation checklists to help you collate the required information needed to complete your returns. These checklists are for individuals; superannuation funds; and companies, partnerships or trusts
           
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,

Martin

Martin Roughley, Director
Spry Roughley Services Pty Limited


 

 


Tax amnesty for undeclared offshore income

The ATO has launched a voluntary disclosure initiative known as "Project DO IT: disclose offshore income today". The Tax Commissioner, Chris Jordan, has warned that the initiative is a last chance opportunity for individuals who have not declared their overseas assets and income to come back into the tax system before 19 December 2014 in order to avoid steep penalties and the risk of criminal prosecution for tax avoidance.

The Commissioner says eligible individuals who make disclosures will only be assessed for applicable periods of review (generally only the last four years). A shortfall penalty of 10% (plus interest) will apply for these disclosures, although low-level disclosures will attract minimal or no penalties.

Individuals will also be able to obtain additional certainty (where circumstances call for additional surety) and seek assurance regarding the ATO's tax treatment of repatriated offshore assets. In addition, Commissioner Jordan says individuals will not be investigated or referred for criminal investigation by the ATO on the basis of their disclosures under Project DO IT.

The ATO notes that in order to receive the benefits of Project DO IT, individuals must make a "truthful disclosure" and lodge their disclosure statement before 19 December 2014. The ATO further notes that until the individual lodges the statement, the ATO's normal compliance activities will continue – if the taxpayer is detected first, they will not be able to benefit from the initiative.
           

Learn more about this...


ATO targeting online sellers

The ATO has announced a data-matching program targeting eBay online sellers. Broadly, the ATO is looking at and testing correct tax reporting by taxpayers and identifying areas that require improved educational and compliance strategies in order to encourage voluntary compliance by individuals. The ATO says it will gather data from eBay Australia & New Zealand Pty Ltd relating to registrants who sold goods and services of a total value of $10,000 or more in either or both of the financial years 2011–2012 and 2012–2013. It is expected that records relating to between 15,000 and 25,000 individuals per financial year will be matched.

The ATO says it will contact individuals and businesses that it identifies as being at risk of running part of their business "off the books" or in other ways that result in them not reporting all their income. It says individuals will be given the opportunity to respond to the information it collects before any administrative action is taken.
           

Learn more about this...


Review of small business tax hurdles

The government has asked the Board of Taxation to conduct a "fast-track review" to identify features in the tax system that are hindering or preventing small businesses from reaching their commercial goals. The government says it wants "small business owners to spend less time on paperwork and more precious time and resources on growing their business".

The government says the Board's report should provide business and broader community perspectives on issues in the tax system that are of most concern to small businesses, and identify the short- and medium-term priorities for small business tax reform in Australia. In particular, the government says the report should focus on high priority options for simplification and deregulation.

The Board is due to deliver its report to the government by 31 August 2014. To assist the Board in identifying the most serious tax system impediments that small businesses face, the Board is conducting broad public consultations with the business community. Public consultation closes on 23 May 2014.

Learn more about this...


Protection from announced but un-enacted tax changes

Treasury has released draft legislation that seeks to implement the government's announcement that it would legislate to protect taxpayers in relation to previously announced but un-enacted tax amendments. The government had previously stated on 6 November 2013 that "there will be legislated protection for any taxpayer who has self-assessed with announced changes that the government will not proceed with".

The draft proposes to amend the tax law to introduce a protection provision to ensure that tax outcomes are preserved in relation to income tax assessments in specified circumstances. This protection operates primarily by placing a statutory bar on the Commissioner amending an income tax assessment to the extent that it reflects a taxpayer's anticipation of the impact of a prior announcement that was then later scrapped (and that meets other conditions set out in the legislation).

Learn more about this...            


Small Business Superannuation Clearing House
                                 
The government has announced that the ATO has taken over responsibility for the Small Business Superannuation Clearing House. This clearing house is a free online superannuation payments service that helps small businesses with 19 or fewer employees to meet their superannuation guarantee obligations.

The Small Business Superannuation Clearing House was previously managed by Medicare. The government says there are now 58,000 employers registered with the clearing house. It says it is also encouraging the other 700,000 businesses that are potentially eligible to use the clearing house to sign up.
           

Learn more about this...


Superannuation guarantee obligations attracting ATO scrutiny

This year, the ATO is targeting the management advice and consulting, hairdressing and beauty, and clothing retail industries to ensure they meet their superannuation guarantee obligations. According to ATO Assistant Commissioner Emma Haines, these industries have been identified as being at risk of not meeting their obligations.

She says extra effort is being made to help businesses get their superannuation guarantee payments correct before audit activity focusing on these industries starts in July 2014. Assistant Commissioner Haines notes that contractors may also be eligible for superannuation contributions, even if they have an ABN.

Employers are entitled to a tax deduction for contributions made to a complying superannuation fund or a retirement savings account (RSA) for the purpose of providing superannuation benefits for their employees. The contributions are only deductible for the year in which they are made.

To maximise the deductions available, employers should ensure that the contributions are paid to their employees' superannuation funds or RSAs before 30 June.

           

Learn more about this...


Value of goods taken from private stock

The ATO has updated the amounts that the Tax Commissioner will accept for 2013–2014 as estimates of the value of goods taken from trading stock for private use by taxpayers in certain specified industries. For example, for a restaurant/café (licensed), the Commissioner will accept $4,400 (excluding GST) for each adult or child over 16 years of age. The ATO intends to adjust the values annually.

If you take an item of trading stock for your private use, you must account for it as if you had sold it and include the value of the item in your assessable income. If you want to, you can keep records of the actual value of goods you take from your trading stock for your own private use and report that amount.

The ATO says it recognises that greater or lower values may be appropriate in particular cases. The ATO says that where taxpayers are able to justify a lower value for goods taken from stock than that determined by the Commissioner, the lower amount should be used. The ATO says that where the value of goods ex-stock would be significantly greater, the actual amount should be used.

           

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