February Newsletter. Data Matching Programs. Car expense rates per km 2013/14. Tax help for people affected by bushfires.

Transcription

1 February Newsletter February 2014 Car expense rates per km 2013/14 The car expense rates per kilometre have been set for the 2013/14 year (and they have been increased for the first time since 2008/09). Year Small car Medium car Large car 2012/13 63c 74c 75c 2013/14 65c 76c 77c Tax help for people affected by bushfires The ATO has assured people directly affected by bushfires that their refunds will be fast tracked and that they will have additional time to lodge income tax returns and activity statements. The ATO can also provide more time for people to pay tax debts and can help reconstruct tax records where documents have been destroyed. Editor: If you have been affected by bushfires or other natural disasters, contact us and we'll see what we can do for you with the ATO. Donations People donating up to $10 to bucket appeals and other disaster relief funds this financial year will be able to claim a tax deduction without a receipt. Data Matching Programs The Government has announced that it will request and collect information for the purposes of the following data matching programs. Credit and Debit Card Data Matching Program The ATO will request and collect data relating to credit and debit card sales of approximately 900,000 businesses for the periods from 1 July 2012 to 30 June 2014 from major banks and other financial institutions, including American Express and Diners Club Australia. This data will be electronically matched with certain sections of ATO data holdings to help provide a more level playing field for those businesses which meet their obligations by identifying those who may not, for potential corrective action. Injured Worker Data Matching Program The Comcare Chief Executive Officer has announced that Comcare will request and collect from the ATO details of approximately 4,500 individuals who are currently receiving, or have received, incapacity payments in relation to a Comcare workers compensation claim for any period during the financial years 2009/10 through 2011/12. Comcare will collect information reported by individuals to the ATO for each relevant financial year and utilise this information to ensure injured workers have received and continue to receive the correct level of entitlements from Comcare.

2 The importance of BDBNs Two recent court cases dealing with self-managed superannuation funds (SMSFs) have highlighted the importance of making, and recognising, Binding Death Benefit Nominations (BDBNs). Editor: A member of a superannuation fund may generally make a 'BDBN' which, if valid, requires the trustee of the fund to pay out their death benefits (i.e., after they die) exactly as set out in the BDBN. In the first case, a member of an SMSF expressed a desire in her Will that her superannuation benefits be left to her children (and specifically not to her husband). However, she did not make a BDBN, and the Supreme Court of Western Australia held that the preference in her Will did not affect the rights or duties of the trustee of the fund under the fund s trust deed. Consequently, the remaining trustee (i.e., the husband) had no obligation to appoint the deceased s executor as a trustee of the fund, and was also entitled to distribute the death benefits at his discretion, contrary to the direction in the deceased's Will. In the second case, the deceased member of an SMSF had executed a BDBN in favour of his two children, but the trustees (basically the deceased's spouse and her son from a previous relationship) had wrongly believed that the BDBN was invalid and so had ignored it. Nonetheless, the Supreme Court of Victoria held that the BDBN was valid and binding on the trustees of the SMSF, and ordered that both the current trustee of the fund and the deceased's spouse personally were liable to make payment of the full amount of the deceased s benefits as at the date of death, plus an interest component and costs, to the nominated beneficiaries under the BDBN. Reminder: Lodging SMSF returns To help prepare for lodgment, the ATO is reminding those with SMSFs that their fund's audit report needs to be completed before their SMSF annual return can be lodged. This is especially important for new registrants (i.e., those SMSFs registered in the 2012/13 year), as their 2013 SMSF annual return is due on 28 February Note that newly registered funds that did not have assets set aside for the benefit of their members and did not commence operating in their first year of registration may request a 'return not necessary' for their first year only. However, funds that were set up in the 2012 year that have not yet set aside assets for the benefit of members, and have not operated, must have their registration cancelled. ATO compliance: Taxable payments annual reports The ATO has advised that it is phoning some businesses in the building and construction industry to: test the levels of understanding of the new reporting requirements for businesses in that industry; and help those businesses to comply with their taxable payments annual reporting obligations. They have also been contacting them to: ensure lodged reports are correct and complete; follow up with businesses that have not yet lodged a report (where ATO records indicate they should have); and follow up with businesses who have advised that they are not required to report (where

3 ATO records indicate they have a reporting requirement). Editor: If your business is contacted, let us know. Small Business Super Clearing House Reform The Government has announced that the ATO will take over the running of the Small Business Superannuation Clearing House. Editor: The Small Business Superannuation Clearing House is a free online service that helps small businesses with 19 or fewer employees meet their superannuation guarantee obligations by allowing employers to pay superannuation contributions in one transaction to a single location (currently administered by Medicare) to reduce red tape and compliance costs. According to the Government, the ATO is best placed to increase the take up rate of the Clearing House, as they have access to data on who is eligible for this free service, and employers will be able to remit their compulsory superannuation payments directly to the ATO (which will then distribute contributions to individual accounts). This move will be followed by an extensive consultation process so the Government can better understand superannuation compliance cost concerns and develop further options to reduce these costs. Crystal ball gazing - what 2014 will mean to you What a strange few years we ve had. A two-speed economy meant that the day-to-day experiences of many people were not matched by Australia s outstanding headlines. But right now, consumer sentiment appears to have picked up with retailers expecting over $15.1bn to have gone through the tills pre Christmas, the housing market is hotter than ever, and flowing from that, household wealth was at record highs rising by 6% across So, as Paris Hilton would say, we re totally hot right now. On the downside, the divide between rich and poor is greater than ever. Not everyone is riding the wave and those not on it are drowning not waving as the cost of living increases. More than 8,000 people lost their jobs in December 2013 and more have dropped out of the system as older workers and the disenfranchised stop trying to find work (according to Westpac, the actual unemployment rate would have been 6.8% not 5.8% if the participation rate had not fallen over the last 6 months). The Government has also stated that it will not be popular this year with Deputy Prime Minister Warren Truss saying you cannot reduce expenditure without having an impact on people. Hmmm. For employers, almost all economic and business surveys are showing that confidence is up but this has not translated into jobs growth. So, what can we expect in 2014? What s changing? The Treasurer Joe Hockey has flagged that a structural overhaul of the economy is required to prevent a decade of deficits. The Mid Year Economic and Fiscal Outlook released in December stated that the Budget wouldn t get back into surplus even if there are no tax cuts for the next 10 years. At the very least, you should expect the May Budget to be more like a renovation than a refresh with all options on the table. Welfare is a likely target, so are any concessions or benefits out of alignment with the overall tax system. In addition to the big picture tax changes flagged during the election to repeal the mining tax and carbon tax (both Bills are currently before the Senate), you can expect a focus on: how money moves between individuals, companies and trusts

4 and the tax paid; non-residents; and, a renewed attempt by the ATO to try and recover the almost $18b of tax that is currently owed. Your business While there will be a heavy focus on revenue raising over the next few years, there will also be structural change. The Abbott Government has pilfered the American concept of a repeal day, and plans to axe more than 8,000 redundant Federal laws to reduce red tape. The repeal day is scheduled for the House of Representatives on 26 March, following the introduction of an omnibus red tape reduction bill and a series of specific deregulation bills on 19 March. The repeal day follows the scrapping of 71 unlegislated and unresolved tax and super announcements late last year. Among the items scrapped were the Gillard/Rudd Government s announcements to cap self-education expenses at $2,000, remove the statutory method for car fringe benefits, and change tax on earnings on super assets. For small business, many of the concessions encouraging you to purchase motor vehicles or invest in business assets have either already gone, or are likely to go. If the mining tax is abolished, a number of small business tax concessions will also go. For example, the immediate deduction for depreciating assets costing less than $6,500 will be reduced back to the old rate of $1,000. The start date for this is intended to be 1 January Looking after No. 1 protecting you If you plan on quitting smoking then you are part of a nationwide trend. According to the Australian Bureau of Statistics (ABS), the smoking rate decreased from 22% in 2001 to 16% in 2011/2012. Weight loss is another New Year s resolution for many. However, despite the fact that we are all conscious of our weight, the ABS tells us that the proportion of adults who are overweight or obese in Australia rose to 63% in 2011/2012. Your weight and whether or not you smoke not only have a major impact on your health, life expectancy, and wallet, but these two factors often determine what you pay for insurance. The strange thing about life is that we live as if life is consistent. The reality is that it isn t - accidents, illnesses, social issues always seem to come as a surprise despite the fact that we know problems commonly occur - just not to us. So, to protect yourself in 2014, here are our top 5 things you should do: Get your insurance sorted - at the very least, you should have life insurance. Insurance for total and permanent disability and income protection is even better. If you have a SMSF, your investment strategy needs to consider life insurance for fund members. If you own or invest in a business, it s important to consider what might happen if you, or one of your fellow directors dies or is permanently or temporarily incapacitated. There are some clever structures that can be put in place to manage all these eventualities. Make a will or make sure it is updated - as life changes so should your will. When was the last time you reviewed it? Enduring Power of Attorney is also a major issue right now, particularly for those with SMSFs. Plan ahead - while it seems that most personal financial planning strategies are all about retirement, this isn t really the case (it s just where the money is). There is a wide array of strategies that you can employ when you re coming into and

5 in your best income producing years to help build and maintain wealth. Protect your personal health - your diet and exercise patterns make a difference. Exercise reduces your risk of heart attack, diabetes and unexpected disease. If that s not enough, The Guardian also reports that there are some indications that exercise makes you smarter! Invest in good advice - major personal, financial life or business decisions deserve attention. OK, yes we know coming from us this might sound self-serving but good advice can make the difference between a good and not so good result. You need to know what to look for when it comes to structuring, tax, planning, and strategy. Easy come, easy go: The PPSR & your business 31 January 2014 should be seared into the brains of business owners and operators. When the Personal Property Securities Act (PPSA) came into effect in January 2012, it provided a two year grace period to register security interests on the Personal Property Securities Register (PPSR). The PPSR is a national register of who has security over different forms of property (other than land and buildings). If you sell goods under retention of title or consignment arrangements, if your business hires or leases goods or equipment to others, if you buy or sell used goods, you need to register your security interests by midnight on 31 January 2014 or risk losing that property. the store is closed and chained up. Your business hasn t been paid yet. You sold the goods on a retention of title basis so the stock belongs to you until the retailer pays you, right? The answer is not necessarily. If your security interest in the stock is not on the PPSR, then your rights may not be recognised even if you can prove you have legal title. One business has already learnt this lesson the hard way when they lost the rights to assets they held legal title over because they did not register their security interest on the PPSR but a financier did (see Maiden Civil v QES [2013] NSWSC 852[1]). The PPSA is one of the most important changes to business in many years. It means that ownership is no longer king if you get into a stouch about who owns what. It s important to review whether or not your business is affected, and if so, register quickly. If you are buying assets or entering into agreements, it s also important to check the register to find out who has a security interest over the property involved. The PPSR is not just for business. If you are personally buying anything valuable that is second hand, for example a car, you should check the register. See for more information and to access the PPSR. The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained. Imagine this...you are in business and have supplied stock to a retailer. You haven t been paid for the stock but continue to supply to the retailer under normal terms of trade. When the next delivery arrives at the retailer it can t be delivered because