A Grade Tax News Business Newsletter
There are three important changes to the simplified depreciation rules that apply from the 2012-13 financial year:
- the instant asset write-off threshold increased from $1,000 to $6,500
- a quicker initial deduction of up to $5,000 for motor vehicles
- the long-life small business pool and the general small business pools have been consolidated into a single pool.
For more information, refer to Changes to small business concessions for 2012-13.
Contact A Grade Tax Accountants Penrith on (02) 4731-1405 for all taxation accounting services.
Employers across Australia will have new super obligations under a range of reforms that are being implemented from 2013 to 2019.
From 1 July 2013, employers must:
- Increase the minimum rate for super guarantee payments on behalf of their employees from 9% to 9.25%, and
- Start making super guarantee contributions for employees aged 70 years and over with the removal of the existing upper age limit.
This measure will significantly increase future retirement incomes for Australian workers through the gradual increase in the superannuation guarantee (SG) rate to 12 per cent.
The SG rate will be increased gradually with initial increments of 0.25 percentage points on 1 July 2013 and on 1 July 2014. Further increments of 0.5 percentage points will apply annually up to 2019‐20, when the SG rate will be set at 12 per cent.
Further information contact A Grade Tax Accountants Penrith on (02) 4731-1405 for retirement tax planning, accounting and tax advice.
For the 2013 tax year, the government have introduced simpler depreciation rules which will provide additional benefits to many businesses via:
- an increase to the instant asset write-off thresholds,
- consolidation of depreciation pools, and
- accelerated initial deduction for motor vehicles.
Increase to the instant asset write-off thresholds
Previously for assets costing less than $1,000 an immediate tax deduction or write-off was available. This threshhold has now been increased to $6,500 providing a significant tax benefit.
Additionally, if the SBE General Pool balance drops below $6,500 then the entire value of the Pool will be able to be written-off and claimed as a tax deduction.
Consolidation of depreciation pools
All assets previously added to the Long Life Pool and depreciated at 2.5% can now be transferred to the SBE General Pool and depreciated at 30%, again providing a significant tax benefit.
Accelerated initial deduction for motor vehicles
For any motor powered road vehicle we are able to claim an immediate tax deduction for the first $5,000 of the purchase price and then claim the traditional SBE General Pool depreciation of 30% on the balance.
This does not apply to road vehicles if:
- The main function is not related to public road use, or
- If the vehicle's ability to travel on a public road is secondary to it's main function.
Further information contact A Grade Tax Accountants Penrith for all your taxation, accounting, bookkeeping, superannuation, tax returns and tax advice.
Reduce your paperwork.
Make all your employee superannuation contributions in one transaction.
There's a simple way to meet your employee's superannuation obligations and reduce your administrative burden.
If you have 19 or less employees, you can pay all your employee superannuation contributions in one secure electronic transaction through the Small Business Superannuation Clearing House (the Clearing House).
This free online service is provided by the Australian Government to help you meet your superannuation obligations.
Simply visit www.humanservices.gov.au/smallbusinesssuper to register your business details and receive your secure user ID. Once you've registered, it will take just a few minutes to enter your employee's details - you only need to enter their details once.
Over 20,000 small businesses are already using the Clearing House.
If you're already using the Clearing House, you'll now find it even easier to use. In addition to the existing payment methods, you can now make your employee superannuation contributions using Electronic Funds Transfer.
If you have any questions, please email SBSCHenquiries@humanservices.gov.au or call 1300 660 048.
Contact us at A Grade Tax Accountants Penrith on (02) 4731-1405 for all your taxation, accounting, bookkeeping services, superannuation, tax returns and advice for personal and business clients.
This article contains a summary of the key tax changes announced in the 2012 budget that impact on businesses and the various other tax and compliance measures announced over the past 12 months that also impact on all businesses and apply from 1 July 2012.
FEDERAL BUDGET TAX CHANGES
(1) Income Tax
No reduction in company tax rate
The company tax rate cuts to 29 and 28% have been shelved, including the small business tax rate reduction to 29% that was due to start from 1 July 2012.
Company tax loss carry-back
Companies, and entities taxed like companies, will receive a tax loss carry-back concession. The concession is limited, however, to company tax losses incurred in the 2012-13 income year and thereafter. Tax losses in the 2012-13 year may be carried back one year only, and company tax losses in later years may be carried-back for up to two years.
The company carry-back loss concession is limited to $1.0m of company income (revenue) losses, incurred from the 2012-13 income year, and may be carried-back only to receive a refund of income tax paid, in the previous one or two years as the case may be, that is represented by franking credits remaining in the a company’s franking account. The tax benefit is limited up to $300,000 per year. The tax benefit will not be received by a company until it has lodged its income tax return for the year it incurs the tax loss.
Increase in the Contribution Tax Rate to 30% in Some Cases
From 1 July 2012, businesses in the building and construction industry need to report the total payments they make to each contractor for building and construction services each year. You need to report these payments to the Australian Taxation Office (ATO) on the Taxable Payments Annual Report.
To make it easier to complete the annual report you may need to change the way you currently record your contractor information.
As part of the 2011-12 Federal Budget, the government announced the introduction of taxable payments reporting for businesses in the building and construction industry.
The aim of the system is to improve compliance with tax obligations by those contractors who are currently not doing the right thing.
The information reported about payments made to contractors will be used for the ATO's data matching to detect contractors who have not:
- lodged tax returns
- included all their income in returns that have been lodged.
Who needs to report?
From 1 July 2012 you need to report if all of the following apply:
- you are a business that is primarily in the building and construction industry
- you make payments to contractors for building and construction services
- you have an Australian business number (ABN).
You are considered to be a business that is primarily in the building and construction industry if any of the following apply:
- in the current financial year, 50% or more of your business activity relates to building and construction services
The Australian Business Register (ABR) is running a program to cancel the Australian business numbers (ABN) of individuals where records show they are not carrying on an enterprise. The program started in December 2011 and will continue throughout 2012. The ABR regularly reviews applications and cancels the ABN's of individuals who are no longer entitled, or who have never been entitled, to an ABN.The program aims to improve the accuracy of data held in the ABR. The ABR helps the community in
a number of ways, including:
■■ through the use of ABN Lookup to check information regarding the ABN status of businesses, and■■ supporting more than 300 government agencies that use ABR data to identify and interact with business.
If your ABN is cancelled, you will receive a letter providing the reason and your review rights.
If you don’t agree with the Registrar’s decision, you can object. If you can show you are entitled to have
an ABN, your registration will be reinstated.
For further information contact A Grade Tax Accountants Penrith for tax accounting, bookkeeping and tax advice on (02) 4731-1405.
The Australian Taxation Office ("ATO") is making it harder for people in business who deliberately use cash transactions to hide income and evade tax obligations - making it fairer for everyone.
This includes businesses:
- paying cash in hand wages
- skimming some or all of the cash takings
- running a part of their normal business activities off the books
- not reporting barter transactions
- operating underground; avoiding their obligations by not registering or lodging returns.
The ATO strategies to tackle the cash economy and detect these businesses doing the wrong thing include:
- the publication of benchmarks which provide a guide as to the expected profitability on over 100 business industries
- educating the broader community about the risks of not getting a receipt for cash jobs,
- reviewing the records of businesses to ensure they are reporting all business income and expenses, and
- acting on information received from the community on suspected tax evasion.
The focus of this work is on industries which have ready access to cash in their business dealings. Examples include businesses in the hospitality industry such as coffee shops as well as the building and construction industry.
In April 2011, the Australian Tax Office will be writing to selected employers about exempt vehicles and car fringe benefits.
If you are an employer, who is not registered for FBT and has registered a business vehicle listed on Fringe benefits tax - exempt motor vehicles, the ATO may write to you to remind you of the limited private use eligibility criteria for exempt vehicles. Basically vehicles with a carrying capacity of less than one tonne such as taxis, panel vans and utilities may be exempt from FBT if the private use of the vehicle is limited to:
- travel between home&work
- travel that is incidental to travel in the course of employment related duties
- non-work related use that is minor, infrequent and irregular e.g. occassional use of the vehicle to remove domestic rubbish.
The ATO is also contacting some employers who have registered a new business vehicle to ensure they are aware that non-business usage of the vehicle may result in a FBT liability.
What is a car fringe benefit?
A car fringe benefit most commonly arises where you (the employer) make a car you 'hold' available for the private use of an employee (or the car is treated as being available). A car you hold generally means a car you own or lease.
The following types of vehicles (including four-wheel drive vehicles) are cars:
motor cars, station wagons, panel vans and utilities (excluding panel vans and utilities designed to carry a load of one tonne or more)
all other goods-carrying vehicles designed to carry less than one tonne, and
all other passenger-carrying vehicles designed to carry fewer than nine occupants.
You make a car available for private use by an employee on any day that:
Australia’s first national Paid Parental Leave (PPL) scheme started on 1 January 2011. This means from 1 July 2011, employers must provide parental leave pay to their eligible long-term employees.
Employers can register at any time to provide parental leave pay to their eligible employees through the Centrelink website at www.centrelink.gov.au
Clients may be interested to know that parental leave pay:
Will be provided to them by the Family Assistance Office in advance of their employee’s usual pay cycle;
Is subject to PAYG withholding;
Does not change an employee’s usual pay cycle;
Does not attract super contributions;
Does not increase payroll tax or workers’ compensation premium liabilities;
Should be rolled into salary and wages on an employee’s payment summary.
For more information:
visit the Family Assistance Office website at www.familyassist.gov.au
Employers should phone 13 11 58
Employees should phone 13 61 50.
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