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Australian Tax Office Industry Benchmarks

ATO Industry Benchmarks

The Australian Tax Office use industry benchmarks and other risk indicators to identify businesses that may be avoiding their tax obligations by not reporting some or all of their income.

Businesses that report expense and profit figures outside of the Tax Office benchmarks are at increased risk of audit. For more information click here.

 

Australian Tax Office benchmarks can be located here.

 

As usual, contact us at A Grade Tax Penrith for any advice in this area.

2015 Federal Budget assistance to Small Businesses

Small Business Assistance

Accelerated Depreciation
All small businesses will get an immediate tax deduction for any individual assets they buy costing less than $20,000. (Previously, the threshold was at $1,000).
This $20,000 limit applies to each individual item. Small businesses can apply this $20,000 rule to as many individual items as they wish. These arrangements start from Budget night 12th May 2015 and continue until the end of June 2017.
Further information on accelerated depreciation is available on the ATO website.
Tax cuts
The Government is reducing the tax rate for the more than 90 per cent of incorporated businesses with annual turnover less than $2 million. The company tax rate for these businesses will be reduced by 1.5 percentage points to 28.5 per cent.
To help all Australian small businesses grow, the Government will also provide a 5 per cent tax discount to unincorporated businesses with annual turnover less than $2 million from 1 July 2015. This delivers a tax cut of $1.8 billion over the next four years.
Further information on tax cuts for Small Business is available on the ATO website.

 

Contact A Grade Tax Accountants Penrith on 4731 1405 for support on all tax matters.

Tax Time 2015 Checklist

2015 Tax Time

Dear Client,

Please ring for an appointment to complete your Tax Returns this year with either Donna, Tynna, or Max.

Taxation Advice
It is important that anyone considering an investment proposal seeks our advice with regard to the taxation consequences and options available to minimize taxation. For example there can be very significant tax advantages available by holding an investment in a Self Managed Super Fund rather than your own name.
We provide a full range of taxation services including:

  • Advice regarding the best tax structure for the formation of new businesses. It is always best to discuss your new business proposal before committing to any new venture.
  • Company & Family Trust returns.
  • Formation & administration of Self Managed Super Funds.
  • Investment property tax advice.
  • Bookkeeping.
  • Our mobile lending service offers a wide range of finance options for home & investment loans plus vehicle financing.

Please review the above PDF of our checklist and tax tips, to assist with the preparation of your returns.
See you soon and thank you again for your referrals over the past year.
Kind regards,
Max Connelly
B.Comm (NSW Uni.) FIPA JP

 

Mature Age Worker Tax Offset

A Grade Tax Accountants Penrith



The Mature Age Worker Tax Offset has been abolished and cannot be claimed in taxpayer's 2015 tax return.

The 2014 tax return was the last tax return in which the offset could be claimed.

 

Read more here.

 

Contact A Grade Tax Accountants Penrith for clarification on this or any tax matter.

Eligibility for Medical Expenses Tax Offset

Medical Expenses Tax Offset

The net medical expenses tax offset (NMETO) is being phased out.

To be eligible for the NMETO for 2014–15, taxpayers must have received an amount of the NMETO in both of their 2012–13 and 2013–14 income tax assessments.

The eligibility rule for the NMETO does not apply to clients with out-of-pocket medical expenses relating to disability aids, attendant care and aged care. These expenses can continue to be claimed until 30 June 2019 in the Total net medical expenses label.

Meaning of 'received'

‘Received’ means that taxpayers must have had an amount of NMETO greater than zero shown on their notice of assessment, refer to subsection 159P(1C) of the Income Tax Assessment Act 1936.

If taxpayers 2012–13 Notice of Assessment shows an amount of zero for NMETO they wouldn't have received this offset in their income tax assessment and so are not eligible to make a claim in 2013–14 or 2014–15.

Example

Section 63-10 of the Income Tax Assessment Act 1997 requires tax offsets against gross tax to be applied in a priority order. This means that tax offsets including the seniors and pensioners tax offset and the low-income tax offset must be applied before NMETO or other non-refundable tax offsets are considered.

Contact us at A Grade Tax Penrith should you require any further clarification.

Boost your Super

Boost your Superannuation

Boost your super at tax time

Here are some tips to help you boost your super and benefit from superannuation's favourable tax treatment:

  •     You can claim up to $500 in government co-contributions if you’re a low to middle income earner and you make after-tax contributions of up to $1,000 to your super.
  •     You can receive a tax offset of up to $540 if your spouse is a low income earner and you contribute up to $3,000 in after-tax contributions towards their super.
  •     You can contribute up to $30,000 in before-tax contributions to your super at the ‘concessional’ tax rate of 15% — or $35,000 if you’re aged 50 or over.
  •     You can contribute up to $180,000 a year (or $540,000 over three years) in after tax-contributions. Since this is from your after-tax income the full contribution reaches your super account, and no tax is deducted when the contribution reaches your super fund.
  •     You can start a transition to retirement strategy once you’ve reached your super preservation age (the age at which you can access your super, which will be between 55 years to 60 years of age depending on your date of birth)—this can allow you to draw up to 10% of your super as a pension.

 

If you need any clarification on the taxation implications in respect of superannuation, contact us at A Grade Tax Penrith on 4731 1405.

SMSF Borrowings Whilst in Pension Phase

SMSF Borrowing

SMSF Limited Recourse Borrowings & Pension Phase

 

Can a SMSF engage in limited recourse borrowing while in pension phase?

While there may be good reasons for an SMSF which is in pension phase not to engage in limited recourse borrowing – for instance, if the borrowing arrangement will be cash flow negative – the issue is whether the SIS Act or Regulations prevent a SMSF in pension phase from engaging in a limited recourse borrowing.

It has been suggested that SIS Regulation 1.06(9A)(d) which states that “the capital value of the pension and the income from it cannot be used as a security for a borrowing” prevents a SMSF in pension phase from engaging in limited recourse borrowing.

Our view is that SIS Reg 1.06(9A)(d) is directed to the mischief of a member attempting to charge their pension rights rather than being directed to the trustee (or holding trustee) imposing a charge on the assets of the fund as permitted by s67A.  The expression “capital value of the pension” means, for account pensions, the pension account balance rather than the assets underlying the pension.

Consequently, it seems that this prohibition does not preclude a SMSF from entering into or maintaining a limited recourse borrowing arrangement if one or more members are in pension phase or if one or more members convert to pension phase while the borrowing arrangement is on foot.

Should you require clarification on this or any other tax related matter, don't hesitate to contact A Grade Tax Accountants Penrith.

School Subsidies & the Schoolkids Bonus

Schoolkids Bonus

Schoolkids Bonus

The Schoolkids Bonus is a payment from the Federal Government to a parent or carer receiving Family Tax Benefit Part A for a dependent child in primary or secondary education. It provides $422 a year for each child in primary school and $842 for each child in secondary school. This year, from 1 January 2015, payments will be subject to an income test and will only be payable to families with an adjusted taxable income of $100,000 or less. You can find out more about eligibility at the Department of Human Services website.


Assistance for Isolated Children

If you have a child at primary or secondary school-age who can’t go to a state school because of geographical isolation, disability or health reasons, the Assistance for Isolated Children scheme may provide tax-free payments exempt from income and assets tests. Find out more at the Department of Human Services website.

Tax Time 2014

Tax Time 2014

Dear Client,

Please ring for an appointment to complete your Income Tax Returns with either Donna, Tynna or Max.

Taxation Advice

It is important that anyone considering an investment proposal seeks our advice with regard to the taxation consequences and options available to minimise taxation. For example there can be very significant tax advantages available by purchasing an investment property within a Self Managed Super Fund rather than your own name.

We provide a full range of taxation services including:

  • Advice regarding the best tax structure for the formation of new businesses. It is always best to discuss your new business proposal with us before committing to any new venture.
  • Company and Personal Tax Returns.
  • Formation and administration of Self Managed Super Funds.
  • Investment property tax advice.
  • Bookkeeping.
  • Our mobile mortgage broker offers a wide range of finance options for home and investment loans plus vehicle financing.

Please review our attached Personal Checklist and tax tips to assist with the preparation of your income tax returns, prior to your appointment with A Grade Tax Accountants Penrith.

Residential Property Tax Depreciation Claims

Tax Depreciation Claims

The Australian Taxation Office (ATO) has announced changes to the number and types of tax deductions available to investment property owners, including a clarification of which items in a rental property can be claimed as depreciating assets.

The changes are contained in a Taxation Ruling, which offers an updated list of more than 150 individual rental property assets that can be classified as ‘depreciable’, provides the depreciation rates of these assets, and specifies how non-listed items should be treated.

In particular, the ruling takes a stricter approach to which items can be classified as depreciable and which must be treated as part of the building. This means a key area of the draft ruling is determining which assets in a residential rental property fall within Division 40 (for depreciating assets) and which are subject to Division 43 (for capital works) of the Income Tax Assessment Act 1997.

In the draft ruling the number of assets that can be claimed as a tax deduction (based on assets normally found in residential properties) has increased, and in some instances there have also been changes made to the period of time over which deductions can be claimed for those assets.

Depreciation of an asset allows a tax deduction for the cost over the asset’s life.

However, while the changes may benefit some investors, others may find that assets they have claimed for in the past are no longer eligible under the new depreciation rates, or else should not have been claimed for in the first place.

The ATO has also introduced a recommended useful life for dishwashers (10 years) and freestanding outdoor furniture (5 years), while other items have had their recommended effective lives changed, including hot water systems (reduced from 20 years to 12 to 15 years) and washing machines (increased from 6 2/3 years to 10 years). The changes to useful lives apply to assets acquired on or after July 1, 2004.

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