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Client Letter - Tax Time 2011

Tax Returns Penrith
Download a printable PDF version of this newsletter here

Dear Client,

I am pleased to advise of the appointment of Andrew Smith to our team. Andrew is a senior accountant
with over 9 years of taxation experience. 

We have also expanded our services to include Financial Planning. Justin Hyland heads up this important
area.  Please call if you would like a no obligation consultation of your personal
circumstances either at your home or our office. Justin is available on weekdays and weekends.


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 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 asset
    financing.

Please review our checklist and tax tips in the following newsletter 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 PNA JP

Education Tax Refund

A Grade Tax Accountants Penrith NSW

The Australian Government is helping you with the costs of educating your kids.

The Education Tax Refund provides up to 50% back on a range of children’s education expenses.

For the 2010–11 tax year refunds may be as much as $397 for every child at primary school, and up to $794 for every child at secondary school.

Am I eligible?

I care for a child.

You can claim the Education Tax Refund (ETR) if you had eligible education expenses during the financial year for a child who meets the schooling requirement, and:

  • you received Family Tax Benefit (FTB) Part A for the child or
  • a payment was made for the child which prevented you from receiving FTB Part A,
  • your child stopped full-time school during the year and received income over the cut-out amount which prevented you from receiving FTB Part A for the child.

You can claim the ETR even if do not get FTB Part A. Other payments which still entitle you to receive the ETR include:

Youth Allowance
Disability Support Pension
ABSTUDY Living Allowance
the Veterans’ Children Education Scheme
Student Financial Supplement Scheme, and
the scheme to provide education and training under s258 of the Military Rehabilitation and Compensation Act 2004.


You can claim the ETR even if you do not have to lodge a tax return.


You can claim the ETR if you are an Independant Student.

You can claim the ETR if you have eligible education expenses and you:

Eligible Education Tax Refund Expenses

A Grade Tax Penrith - Tax Refunds

Many types of education expenses are eligible under the Education Tax Refund (ETR). And you do need to keep your receipts.

What is an eligible education expense?

An eligible education expense is:

  • incurred by an eligible person
  • for a child or independent student’s education
  • an item specified in the legislation as an eligible education expense, and
  • incurred on a day when the child or independent student satisfied the schooling requirement.

You cannot claim the ETR for an expense if:

it is an allowable tax deduction or subject to another tax offset, or

What items can I claim?


Eligible expenses include the cost of buying, establishing, repairing and maintaining any of the following items:

  • home computers and laptops
  • computer-related equipment such as printers, USB flash drives, and disability aids to assist in the use of computer equipment for students with special needs
  • computer repairs
  • home internet connections
  • computer software for educational use
  • school textbooks and other printed learning material, including prescribed textbooks, associated learning materials, study guides and stationery, and
  • prescribed trade tools for secondary school trade courses.

What items can’t I claim?


You cannot claim:

Fringe Benefit Tax

Penrith Accountant - Fringe Benefit Tax

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:

Fringe Benefit Tax

A Grade Tax Accountants Penrith NSW - SMSF advice

The government has announced that it is committed to improving the Australian Superannuation System by introducing a range of measures from July 1, 2012.


Under the current legislation, members over the age of 50 can contribute up to $50,000 per year, up until June 30, 2012. The legislation reduces this to $25,000 from that date. Members under the age of 50 can contribute $25,000 per year for which a tax deduction can be claimed.


One of the proposals the Government wants to introduce is to permanently increase the concessional contributions cap from $25,000 to $50,000 for members who are aged 50 and over, and who have a superannuation balance of less than $500,000.


In addition to the increase in concessional contributions, the Government also aims to increase the compulsory superannuation guarantee from 9% to 12% to boost members' retirement savings.


Furthermore, individuals earning less than $37,000 per year will receive a contribution of up to $500 from the Government into their fund, effectively abolishing any tax on their other concessional superannuation contributions.

Contact A Grade Tax Accountants Penrith on (02) 4731-1405 for all your taxation, accounting, tax returns, self managed superannuation, SMSF advice and planning.

Paid Parental Leave Scheme

Penrith Accountant -  Taxation Services Penrith

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.
 

Claiming Deductions for Study Expenses

Tax Return - A Grade Tax Accountanats Penrith NSW

The Australian Tax Office has started notifying taxpayers who may be entitled to claim deductions, and therefore receive an additional refund (plus interest), for study expenses following a recent decision of the High Court of Australia. Previously the Australian Tax Office would not allow a deduction for study expenses where the tax payer was in receipt of Youth Allowance payments from Centrelink unless the taxpayer had other work related income relevant to the field of study. This view of the ATO was overturned by the High Court.

If you were eligible for a deduction in the years 2007, 2008, 2009 or 2010 the ATO will be writing to advise you that they will be amending your assessment(s) for those years. The ATO said they will write to eligible taxpayers between 1 March 2011 and 30 April 2011.


 

Government Flood Levy

A Grade Tax  Accountants Penrith

A Government Flood Levy of 0.5% is to apply in 2011-12.

The Government will introduce a one-year levy to help pay for the flood rebuilding effort.
The levy will not be paid by those affected by the floods, will not be paid by lower income earners, and will apply only in the 2011-12 financial year.

The levy is based on an individual’s ability to pay:

•Anyone earning under $50,000 will not pay the levy.
•People earning between $50,000 and $100,000 will pay 0.5 per cent of taxable income in excess of $50,000.
•People earning over $100,000 will pay 0.5 per cent of taxable income in excess of $50,000 and 1 per cent of taxable income in excess of $100,000.
As examples:

•Someone earning $60,000 a year will pay 96 cents per week.
•Someone on average annual adult full-time total earnings of $68,125 will pay $1.74 a week.
•Someone earning $100,000 a year will pay $4.81 per week.
The levy will be paid through tax taken out of regular pay, in the same way the Medicare levy is paid.
To make sure those affected by the floods do not have to pay the levy, anyone who received an Australian Government Disaster Recovery Payment for a flood event in 2010‑11 will be exempt from the levy.

For further explanation regards specific taxation services, tax deductions, planning and tax advice please contact A Grade Tax Accountants Penrith on (02) 4731-1405 or visit our website www.agradetax.com.au

Taxing of Trusts

Penrith Accountant - Taxing Trusts

Taxation of Family trusts has been a focus of attention for the Australian Taxation Office (ATO) in recent months.


It has issued a number of statements lately, most notably in early June 2010 when it released important documents dealing with two issues:


1. Allocating trust income to company beneficiaries, and

2. The High Court decision in Bamford. As a result, trustees of family trusts should check their trust deeds and income distribution practices.


COMPANY BENEFICIARIES


The ATO’s final ruling on the question of ‘unpaid present entitlements’ (UPEs) involving company beneficiaries of a trust has been released. Essentially, it maintains the same view as a draft ruling released late last year.


Broadly, the issues covered by the ruling arise when a family trust has allocated some of its income to a company beneficiary, but has not paid the full amount to the company by the due date for lodging the trust’s tax return for the year.


The ATO’s view is that, at this time, the unpaid trust distribution becomes a loan, thus triggering the deemed dividend rules in Division 7A (see example below). 


This is a change from the previous understanding of whether Division 7A applied in such cases.


According to the tax ruling, Division 7A rules will be applied to any allocation of trust income made on or after 16 December 2009, which usually will mean from the 2010 tax year. The ruling will only apply retrospectively where something more has been done, such as the trustee actually creating a loan in its accounts.


Example - unpaid present entitlements
 

Tax Office Cash Sale Benchmarks

Accounting Services

Cash Sales - New Tax Office Benchmarks!

Are you? - A small business owner?
 
The Tax Office recently released a new category of small business benchmarks which focus on cash sales within a business.
 
You should be aware of the new benchmarks for small business.


- Contact us if you require any clarification or advice. 
 

The small business benchmarks were introduced by the Tax Office to provide a tool for assessing the performance of a business as well as checking the reasonableness of various costs incurred in the business relative to its turnover.


The benchmarks provide a means of assessing what is happening in a particular industry.


The Tax Office has announced that it will be using the cash sales benchmarks to determine the proportion of cash sales a business should be making to identify businesses that may be avoiding their tax obligations.


The cash sales benchmarks have been initially developed for the following industries:


· Clothing retailers;

· Beauty Supplies;

· Coffee Shops;

· Florists;

· Fruit and Vegetable retailers;

· Fuel Retailers;

· Garden Supplies retailers;

· Grocery retailing and general stores;

· Hairdressers;

· Hardware and building supplies retailing;

· Meat retailers and Butchers;

· Newsagents;

· Pubs, taverns and bars;

· Restaurants; and

· Takeaway food services


Small businesses that are found to be falling outside the benchmarks for a particular industry will be more likely to attract an audit by the Tax Office.


The Tax Office estimates that it will contact over 100,000 businesses this year.

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