NEWSLETTER INSIDE IMPORTANT DATES CHANGES TO INCOME TAX RETURNS FOR INDIVIDUALS REMINDER: THE CHEQUE IS NOT IN THE MAIL!

Transcription

1 NEWSLETTER October, 2013 IMPORTANT DATES INSIDE Important Dates Reminder: The Cheque is Not in the Mail! 1 Private Health Insurance Rebate ATO Tax 2013 App 2 ATO Compliance in Focus for Increase in ATO Failure to Lodge on Time (FTL) Penalty Concessional Contributions Cap Increased 3 SMSF Investment Strategies and Insurance Requirements ATO Stricter on ABN Registrations 4 New Government Approach to Independent Contractors and the Self-Employed Business Benchmarking 5 Post-election Coalition Tax Changes 6 Luxury Car Tax (LCT) 7 Client Profile Practice Update Phone: Fax: Internet: Postal: Address: Facebook twitter (08) (08) reception@rawsonverco.com.au PO Box 6627 Halifax Street ADELAIDE SA Greenhill Road WAYVILLE SA 5034 CAs 8 9 Date Event 21 October 2013 Lodgement and payment of September 2013 monthly IAS and BAS 28 October 2013 Lodgement and payment of September 2013 quarter BAS (if lodged yourself) 28 October 2013 Due date for payment of superannuation guarantee contributions for the September 2013 quarter 21 November 2013 Lodgement and payment of October 2013 monthly IAS and BAS 25 November 2013 Lodgement and payment of September 2013 quarter BAS (if lodged by Rawson Verco) 21 December 2013 Lodgement and payment of November 2013 monthly IAS and BAS CHANGES TO INCOME TAX RETURNS FOR INDIVIDUALS REMINDER: THE CHEQUE IS NOT IN THE MAIL! From 1 July 2013, individual income tax returns with an expected refund will need to include Australian bank account details to be lodged electronically. All refunds will now be paid by electronic funds transfer (EFT) directly into an Australian bank account, as the ATO will no longer issue tax refunds by cheque. The relevant bank account details required are the account name, BSB and account number. Joint accounts are acceptable. We are unable to complete individual income tax returns without this information; it is therefore important that you provide your nominated bank account details to us when sending in your tax information. DIRECTORS: Richard Verco BAcc,CA,FTIA,CFP Christopher Velliaris BAcc,CA,FTIA,GCertFinPlanning Page 1

2 PRIVATE HEALTH INSURANCE REBATE The private health insurance rebate is an amount that the government contributes towards the cost of your private health insurance premiums each year. You can claim the private health insurance rebate as either a reduction in the amount of premiums you pay to your private health insurance provider throughout the year or as a refundable tax offset through your income tax return. Most people with private health insurance claim the rebate as a premium reduction that reduces the cost of the policy charged by their insurance provider throughout the year. From the financial year, the private health insurance rebate will be income tested against three income tier thresholds to determine the level of rebate you are entitled to receive. The total rebate amount depends on both your age and your single or family income for surcharge purposes. This effectively means that if you have a higher income, your rebate entitlement may be reduced or you may not be entitled to receive any rebate at all. You can only claim the private health insurance rebate if you have a statement from your private health insurance provider stating that you are entitled to the rebate and the specific amount you can claim. Each adult covered by the policy is income tested on their share of the cost of the policy, regardless of who pays for the insurance policy. As a result, each adult will receive their own private health insurance statement from their insurance provider. We will need your annual statement to complete the necessary private health insurance policy details item in your income tax return. The ATO will calculate your entitlement to the private health insurance rebate using the information provided in your individual income tax return. Where you have over claimed the rebate by way of a premium reduction throughout the year, you will receive a tax liability. Alternatively, where you have under claimed the rebate, you will receive a tax offset equal to the amount under claimed. You can avoid receiving a private health insurance liability when you lodge your income tax return in future by changing the amount of private health insurance rebate you receive from your insurance provider as a premium reduction at the beginning of the financial year. Should you wish to do this, you will need to contact you private health insurance provider to nominate a new rebate amount. There are no penalties for making an incorrect rebate nomination with your insurance provider. Income thresholds for Income thresholds for * The family income threshold is increased by $1,500 for each dependent child after the first. ATO TAX 2013 APP The ATO has released a number of tools to assist taxpayers at tax time, including the ATO Tax 2013 app. You can use the app on your smart phone or tablet to view income tax rates for the current year, check the progress of your income tax return after it has been lodged and you can use the tax withheld calculator to work out how much tax you pay. The app also includes links to hot tax topics and other helpful information to assist you in relation to your tax. The app is available for download now through Google play, Apple App Store and Windows Phone Store. Page 2

3 ATO COMPLIANCE IN FOCUS FOR The ATO has released its new look Compliance Program for , Compliance in Focus. The ATO s compliance focus describes the compliance issues that the ATO will focus on for the year ahead. Regarding compliance activities, the ATO is focusing on 4 areas: GST or activity statements where the lodgement results in a refund or a nil result, that is, neither a debt nor a refund. The ATO may also not apply FTL penalties in isolated cases of late lodgement, and where unexpected delays that you could not reasonably be expected to foresee have occurred, such as postal or electronic transmission delays. data matching and information gathering The ATO will check over 640 million transactions to ensure income is reported correctly and claims are not overstated tax crime the ATO will work with other law enforcement agencies and international revenue authorities to deal with those who seek to abuse the tax system. misuse of trusts the ATO has established a Trust Taskforce to work with other agencies to deal with the misuse of trusts. profit shifting the ATO will be focusing on multinational businesses that use complex structures to shift profits offshore to low tax jurisdictions, to ensure they pay the appropriate amount of tax. INCREASE IN ATO FAILURE TO LODGE ON TIME (FTL) PENALTY A failure to lodge on time (FTL) penalty is an administrative penalty which may be applied by the ATO where you lodge a return, statement, notice or other document after the due date. The FTL penalty is calculated at the rate of one penalty unit for each period of 28 days, or part thereof, for which a document is overdue, up to a maximum of five penalty units. SELF MANAGED SUPERANNUATION FUND UPDATE CONCESSIONAL CONTRIBUTIONS CAP INCREASED For the financial year, the concessional contributions cap for people aged 59 years or over on 30 June 2013 has increased to $35,000, while the concessional contributions cap for everyone else remains at $25,000. For each financial year from onwards, the higher $35,000 cap will apply if you are aged 49 years or over on 30 June of the previous financial year. The value of one penalty unit has increased from $110 to $170 on 28 December 2012, making the maximum failure to lodge on time penalty $850 for a document that is lodged over 5 months after the lodgement due date. Consequently, the longer you take to lodge a document after the due date, the higher the penalty amount that may be applied. Generally, a penalty will not be applied to late-lodged income tax returns, fringe benefits tax returns and Page 3

4 If you are making concessional contributions, it is important that you are aware of the amount of your concessional contributions cap, the amount of superannuation guarantee and salary sacrifice superannuation your employer is contributing, as well as the timing of all contributions to ensure that you do not inadvertently breach your applicable concessional contributions cap in a financial year. SMSF INVESTMENT STRATEGIES AND INSURANCE REQUIREMENTS The Trustees of a self-managed superannuation fund (SMSF) are required to formulate and give effect to an investment strategy that has regard to the whole of the SMSF s circumstances. The purpose of the investment strategy is to outline the investment plan that the Trustees of the SMSF will follow to achieve the SMSF s investment objectives, based on the current and future financial needs of each member of the SMSF. Recent changes to the superannuation regulations now require the Trustees of a SMSF to consider the personal insurance requirements of its members as part of the investment strategy of the SMSF. In addition, Trustees are required to regularly review their investment and insurance strategies when the circumstances of the members change and also on a periodic basis. The new regulations do not require the SMSF to hold an insurance policy for a member; however the Trustees must consider whether it would be appropriate or not. The change in the regulations widens the scope of the SMSF investment strategy considerations to now include the consideration of life insurance and total & permanent disability (TPD) insurance that is usually offered under non-smsf superannuation funds. The following factors about the member should be taken into consideration, when determining their individual life insurance requirements: insurance cover outside of superannuation personal debt age of the member health of the member, including previous health conditions If the Trustees determine that insurance cover is not required or not appropriate within the SMSF, this must be reflected in the investment strategy of the SMSF. It is important to note that a SMSF is only permitted, under the superannuation legislation, to hold certain types of insurance policies including life insurance, TDP insurance and income protection insurance. Should you want some assistance with assessing or reviewing your insurance needs, we invite you to contact our in house Financial Planner, Will Barnett, to arrange a mutually convenient time to meet and discuss. ATO STRICTER ON ABN REGISTRATIONS The Australian Business Register (ABR) is currently undertaking work to significantly improve the accuracy and integrity of information on the ABR. Entitlement to an ABN is being closely scrutinised and as a result an increasing number of inactive ABNs are being cancelled by the ATO. There is also a stricter screening criteria in place for new applicants and heftier fines for providing false or misleading information to the ABR. Not everyone is entitled to an Australian Business Number (ABN). In order to receive an ABN, you must be carrying on an enterprise in Australia for example, an activity or series of activities done in the form of a business. You must have commenced trading, or have undertaken sufficient activities to show you intend to start a business. Before applying for an ABN, you need to first check the eligibility guidelines to determine if you are an eligible applicant. If you are an individual or sole trader, the ATO has an online ABN entitlement tool Page 4

5 and for companies, partnerships, trusts and other organisations, the eligibility guidelines can be found on the Australian Business Register (ABR) website. If you decide to go ahead with your application, it is crucial to ensure that the information you provide is true and correct, otherwise penalties may apply. Our experience has shown the ABN registrations for contractors are being looked at very carefully by the ATO, and we have been contacted on numerous occasions to assess if our clients are still eligible for their ABN. Please contact our office if you would like assistance with your ABN application or have any queries in relation to your eligibility. The government wants to reduce the occurrence of businesses being pressured by government agencies and unions into engaging workers as employees when they are genuine contractors, however they will continue to pursue businesses who are incorrectly engaging workers as contractors (rather than employees) as a way for the business to avoid having to pay employee entitlements such as sick leave and superannuation. Please contact our office if you have any queries in relation to employee/contractor relationships. BUSINESS BENCHMARKING NEW GOVERNMENT APPROACH TO INDEPENDENT CONTRACTORS AND THE SELF-EMPLOYED Benchmarking provides a means to compare your business against other businesses, and identify areas where you can improve your performance. We have subscribed to a benchmarking service which enables us to obtain very specific benchmarking data for over 100 industries. This is different to those benchmarks provided by the ATO, which are used to assist the ATO in identifying business that may be avoiding their tax obligations by not reporting some or all of their income. The ATO has historically been quite strict on independent contractors and the self-employed, and has conducted thousands of audits to assess if businesses are engaging workers correctly as employees or contractors. The recent increased reporting requirements within the building and construction industry (taxable payments annual report) has also increased the burden on those businesses who engage contractors. The new Minister for Small Business has indicated that the new government will aim to have government agencies apply looser regulations on independent contractors and the self-employed, and ensure the law is administered fairly. The government wants to encourage independent contracting as a legitimate source of employment, and will not unnecessarily pursue those contractors who are abiding by the law. We can use the benchmarking service to compare your business financial results to industry data and gain an insight into areas where your business is performing well, and areas that could be looked into for improvement or given further attention. The benchmark data is based on an all business average turnover for the relevant industry, as well as on a turnover range (e.g. turnover under $500,000, $500,000- $1,000,000, etc.). As a result, we can compare your business to others in the same industry and of a similar size. In addition to the benchmark comparison, there is a whole range of other information available including financial ratios, key performance indicator (KPI) feedback and general industry statistics (subject to the industry chosen). This information is provided to you in a detailed Benchmark Report & Analysis, and can be specifically tailored to include the relevant information you require. Please contact our office if you would like to discuss benchmarking for your business. Page 5

6 POST-ELECTION COALITION TAX CHANGES With the election come and gone and the appointment of a new Coalition government, it is now a good opportunity to discuss the tax related changes that the new government proposes to implement in its first term. We have summarised the key tax measures and tax administration changes that the new government proposes to implement that will impact on the majority of our clients. Corporate/Company Reduce the company tax rate to 28.5% from 1 July 2015 Apply a 1.5% levy on companies earning more than $5 million in taxable income from 1 July 2015 Scrap the phase-down of interest withholding tax on financial institutions Scrap the loss carry-back provision Small Business Personal Remove the increase to the immediate asset write off threshold from $5,000 to $6,500 Remove the upfront deduction for the first $5,000 of the cost of a motor vehicle Reduce the red tape for small businesses by allowing them to remit compulsory superannuation guarantee made to the ATO at the same time as they remit other PAYG payments Abolish the Schoolkids Bonus Restore the full private health insurance rebate Introduce from 1 July 2015, a paid parental leave scheme to provide mothers with 26 weeks of paid parental leave at their actual wage, capped at $150,000 per annum, or the national minimum wage, whichever is greater, plus superannuation Minerals Resource Rent & Carbon Tax Abolish the Minerals Resource Rent Tax Abolish the Carbon Tax. However, still maintain most aspects of the household assistance package, including the increased tax free threshold for individuals Superannuation Delay the increase of superannuation guarantee to 12% by two years (i.e. 2021) Scrap the low income superannuation co-contribution Fringe Benefits Tax (FBT) Scrap the recently announced changes to FBT on cars to remove the statutory formula method for determining FBT applicable to motor vehicles Indirect Taxes The Coalition will continue its support in investing in the R&D Tax Program for the private sector to help boost the competitiveness of the Australian Manufacturing Sector Implementation of a level-playing field for Australian manufacturers by strengthening the anti-dumping regime, stopping cheap imports flooding the market Tax reform and Tax administration Make public, details on how taxpayer's money has been spent and the level of Australian Government debt. The measure is intended to improve transparency on taxes. Reduce the overall tax burden on business and taxpayers over time and provide a more co-operative relationship between taxpayers and the ATO Page 6

7 Increase the number of Second Tax Commissioners who have market place experience, which sets the strategic direction of the tax office and hopefully, less red tape Provide greater taxpayer certainty by requiring the Commissioner to affirm that all new tax legislation and related explanatory memoranda accurately express the government s stated policy intent and that the ATO affirm that it has the administrative and compliance systems in place to give practical effect to the legislation. The Coalition announced that it would produce a White Paper within three years regarding options for lower, simpler, fairer taxes for higher economic growth with better sustained services. Recommendations from the White Paper would be taken to the 2016 election and form part of any incoming Coalition government s second term agenda. The Coalition's first term tax agenda is designed to remove some of the existing red tape and promote growth for the taxpayers, whilst providing a more transparent view of the ATO. Ultimately, the benefit of these tax measures will depend on each particular taxpayer s circumstances. LUXURY CAR TAX (LCT) What is LCT? LCT is a tax payable on the portion of a luxury car s value, which is above the relevant LCT threshold. The tax is currently 33%. You generally pay LCT when you sell or import a luxury car. You must pay LCT as well as any GST payable. Who is liable for LCT? You must pay LCT if you are registered or required to be registered for GST and you sell a luxury car. This includes car retailers, wholesalers and any business that sells a luxury car. Even if you are a private buyer, you may also have to pay LCT. Which vehicles are a luxury car? A luxury car is a motor vehicle that is designed to carry a load of less than two tonne, or less than nine passengers, with a value above the LCT threshold. For the financial year the LCT threshold is: $75,375 for fuel-efficient cars; and $60,316 for other cars Fuel-efficient cars with a combined-cycle fuel consumption of 7L/100km or less, are defined as luxury cars. The LCT threshold for a fuel-efficient car is known as the fuel-efficient car limit. Fuel-efficient cars with a GSTinclusive value below $75,375 are not considered to be luxury cars. There are special rules for primary producers and tourism operators which allows for a refund of LCT up to $3,000 per year for one eligible luxury car. What luxury cars are exempt from LCT? Certain cars are not subject to the LCT, even if they are valued above the LCT threshold. Generally, these include cars that are:- manufactured in Australia more than two years before the supply (i.e. before you purchased it) imported and intended for home consumption more than two years before the supply emergency vehicles specifically fitted out for transporting people with a disability who are seated in wheelchairs motor homes or campervans commercial vehicles How do you pay LCT? You pay LCT and make LCT adjustments through your business activity statement in the period you make a sale/ adjustment in relation to a luxury car. Page 7

8 CLIENT PROFILES ULTIMA AIR Ultima Air was founded through the enterprise and foresight of its principal, Wayne Carvosso whose industry knowledge and experience saw him realise an opportunity to improve upon the work practices and procedures of residential air conditioning in South Australia. "Our approach on all work large and small is the same. We pride ourselves on delivering quality results every time for every client, and we achieve this by our high level of professionalism in every area of our business". Along with our strategic partners in ActronAir and Panasonic, we are well placed to meet any challenge. ActronAir has been designing and building air conditioning systems, for Australia's unique and demanding climate since The company's technological advancements have led to development of some of the most energy efficient systems in the world. Industry leading Inverter technology puts Panasonic at the top of the list for air conditioning systems, with a host of innovative features and functions to help keep you comfortable. For more information please go to We have been fortunate to have had great guidance from Richard Verco who has been there all the way. Thank you Richard! PRACTICE UPDATE SUCCESSION PLANNING CHANGES AT RAWSON VERCO As business advisors we are often involved in advising on transitioning businesses from one owner to the next, whether that be from one generation to the next, a management buy-out, or a sale of the business to an unrelated party. An example of such a transition has been that of our own in recent years. Over a period of three years, John Rawson has now completely sold down his ownership in the firm, leaving Richard Verco & Chris Velliaris as each 50% owners of the firm. Richard Verco has assumed the role as Managing Director, and John Rawson has moved to a consultant role, generally only venturing into the office when required in specific client meetings. During this transitional time Richard & Chris have developed an experienced and well qualified team of 15 staff, dedicated to providing quality service to our diverse client base. The best advisors practice what they preach, and in this case, we believe that we could not have possibly executed the succession plan better. Like most good things, it takes time and planning. If your goal is to hand-down or sell your business, you need to be thinking about these issues 3-5 years out. With our own personal experience and having assisted many of our clients over the years, we believe that we can help you achieve your goal, ensuring that you receive maximum return on your investment along the way. Page 8

9 PRACTICE UPDATE (CONTINUED) We are pleased to introduce some new faces to Rawson Verco: Shannon Spadavecchia recently joined Rawson Verco as an accountant in Business Services. He completed his Bachelor of Commerce (Accounting) in 2011 and has since been working in business services. He is currently studying his Graduate Diploma of Chartered Accounting to gain his Membership to the Institute of Chartered Accountants in Australia (ICAA). Outside of work, Shannon loves playing soccer, music, and travelling. Shannon Spadavecchia Jenny Shao recently joined Rawson Verco as an accountant in Business Services. She completed her Bachelor of Commerce (Accounting) degree from the University of Adelaide in July 2011 and was working as a junior tax accountant in a small Accounting firm before she joined the team. Jenny Shao Maria Ursida recently joined the Rawson Verco team when our Receptionist Stella Matthews went on maternity leave. She previously worked as a medical receptionist for 12 years and thought it was time to follow a different path and experience a new field. Maria enjoys spending time with friends and family outside of work. Maria Ursida CONGRATULATIONS! Congratulations to Shani Wegener and her partner Clem Halliday who are expecting their second child to be born on the 18th December Shani will be working until mid November and will be on maternity leave for approximately 12 months. Congratulations are also in order to Vince and Katrina Mammone who are also expecting their second child in February Stella Matthews gave birth to Zyla Lillian Boundy on 04 July Congratulations Stella and Tyson! Page 9