16 Jun 2015

Straight Numbers & Tax Talk – June 2015

by | posted in: Newsletter |

In this edition:

35184975_ml-300x224We are ready for the end of the financial year! Are you? If you haven’t done all you can to minimise your tax burden, you still have time… but you must act now!

Traditionally, year-end tax planning for small businesses is based around two simple concepts – i.e., accelerating business deductions and deferring income.

To help you prepare and assess what you can and can’t claim this tax year, we have a checklist for business owners and individuals. Just give us a call on 07 3399 8844 and request a copy.

Best regards from the Team at Straight Talk Accounting & Tax

 

Visit www.straighttalkat.com.au to read a multitude of recent articles of vital interest… some are genuinely irreverent but all are relevant.

Employers and SMSFs must prepare for SuperStream

BabyBoomerRetirementWith the 30 June 2015 deadline fast approaching for medium to large employers to be SuperStream compliant, the ATO is urging these employers to act now to ensure they are SuperStream ready.

Editor: For ‘small employers’ with 19 or fewer employees, SuperStream starts from 1 July 2015 and they have until 30 June 2016 to be ready (though they can start using SuperStream earlier, if possible).

The ATO has also reminded employees of these taxpayers who are members of a self-managed super fund (SMSF), that they have the same deadline.

For SuperStream to work efficiently, employees with SMSFs must provide relevant e-commerce details to their employer so they can update their payroll system.

This information includes the SMSF’s:

  • Australian Business Number (ABN);
  • bank account details; and
  • electronic service address.

Editor: By 30 June 2015, SMSFs must be able to receive employer contributions electronically in the SuperStream format if their members work for a medium or large employer.

In the event that an SMSF member fails to provide this information to their employer in time for the employer to get ready, the employer may request that the employee completes a new choice form.

Therefore, the ATO recommends that SMSFs provide these details to their employer at least 30 days prior to the date the employer will start sending contributions using SuperStream, to allow enough time for the employer to manage the changes and ensure the SMSF has no interruption in maintaining their contributions flow.

Editor: If you need any assistance with this, including the requirement to obtain an electronic service address, please contact our office on 07 3399 8844.

Government ends benefits for parents who do not vaccinate

The government has confirmed that eligibility for tax-payer-funded payments (including Child Care Benefit, Child Care Rebate and the Family Tax Benefit Part A end of year supplement) will be dependent on children having met early childhood immunisation requirements.

The government will end the one religious exemption on children’s vaccinations (for the Church of Christ, Scientist, which apparently doesn’t advise against vaccinating children anyway!) for access to these payments from 1 January 2016.

The conscientious objector exemption on children’s vaccination has also ended, so the only authorised exemption from being required to have children immunised in order to receive benefits will be on medical grounds.

Therefore, parents may still decide to not vaccinate their children (as a ‘vaccination objector’), but they are no longer eligible for assistance from the Australian Government.

Memorable Quotes…

“Profound commitment to a dream does not confine or constrain: it liberates. Even a difficult, winding path can lead to your goal if you follow it to the end.”

Paulo Coelho – Author

2014 online selling data matching program

The ATO will request and collect, from eBay Australia & New Zealand Pty Ltd (which operates www.ebay.com.au), online selling data relating to between 15,000 and 25,000 individuals that sold goods and services of a total value of $10,000 or more for the period from 1 July 2013 to 30 June 2014.

This acquired data will be electronically matched with certain sections of ATO data holdings to:

  • identify individuals and businesses selling goods and services via the online selling site who may not be complying with registration, reporting, lodgment and payment obligations under taxation law, particularly those with undeclared income, and incorrect lodgment and reporting for GST; and
  • enable the ATO to be more strategic in its approach to determine appropriate educational and compliance strategies to encourage voluntary compliance for taxpayers in the online selling market.

IGT to take on tax complaint handling function from 1 May

From 1 May 2015, the Inspector-General of Taxation (IGT) will be able to consider and assist taxpayers with their complaints about the ATO.
The integration of the complaint handling function with the IGT’s existing role will provide a single port of call for all taxpayers and tax practitioners for their complaints or broader concerns about the tax system as administered by the ATO.

The IGT will consider all complaints, from the simple to the complex, including those arising during audits, objections and litigation.

Further information regarding the IGT’s new functions and how complaints may be lodged will be available on the IGT’s website at www.igt.gov.au.

A little bit of Trivia…

  • 2nd June 1953 – Queen Elizabeth the Second was crowend Queen of the British Commonwealth.
  • 5th June 1926 – Bill Haley, one of the first musicians to be catapulted to international stardom in the post war musical revolution know as “rock and roll”, was born on this day. Rock Around The Clock was the title of his famous signature song, long play disc and movie.
  • 18th June 1928 – Amelia Earhart became the first woman to fly across the Atlantic on this date. She did so as a passenger to pilot Wilmar Stulz, when they flew from Newfoundland to Wales.
  • 20th June 1789 – The French Revolution began.
  • 26th June 1906 – The first motor racing grand prix was organised and conducted over twelve laps of a sixty-five mile triangular circuit built at famous Le Mans in France.

FBT: Record keeping exemption threshold

The small business record keeping exemption threshold for the 2015/16 FBT year is $8,164, replacing the amount of $7,965 that applied in the 2014/15 FBT year.

FBT: Benchmark interest rate

The benchmark interest rate for the 2015/16 FBT year is 5.65% p.a. (replacing the rate of 5.95% that applied for the 2014/15 FBT year).

The rate of 5.65% is used to calculate the taxable value of:

  • a loan fringe benefit; and
  • a car fringe benefit where an employer chooses to value the benefit using the operating cost method.

Example
On 1 April 2015 an employer lends an employee $50,000 for five years at an interest rate of 5% p.a., with interest being charged and paid 6 monthly, and no principal repaid until the end of the loan.

The actual interest payable by the employee for the current year is $2,500 ($50,000 × 5%). The notional interest, with a 5.65% benchmark rate, is $2,825. Therefore, the taxable value of the loan fringe benefit is $325 (i.e., $2,825 – $2,500).

FBT: Cents per kilometre basis

The rates to be applied where the cents per kilometre basis is used for the 2015/16 FBT year in respect of the private use of a vehicle (other than a car) are:

Engine capacity Rate per kilometre
0 – 2,500cc 51 cents
Over 2,500cc 61 cents
Motorcycles 15 cents

Teacher denied deduction for business management course

Editor: A recent case before the AAT highlights how careful taxpayers must be when claiming deductions for self-education expenses.

The taxpayer was a classroom teacher (teaching psychology, chemistry, mathematics and science). He was also enrolled as a part-time student in a ‘Postgraduate Diploma in Management,’ and he claimed a deduction of $19,779 for “work related self-education expenses”.

The AAT concluded that the course expenses, when considered as a whole, were not “sufficiently connected” with the taxpayer’s employment as a classroom teacher so as to warrant deductibility.

ATO warns about aggressive phone scams

The ATO is again warning the public to be aware of a phone scam that is circulating, where fraudsters are intimidating people into paying a fake tax debt over the phone.

The aggressive scam attempts to force people to pay a fake tax debt immediately by threatening arrest if they don’t comply.

Editor: If any client receives a call from the ATO we recommend that they should ask for the caller’s name and either call our office with the details or phone them back through the ATO’s switchboard on 13 28 69.

FREE Tax Blaster Session

The countdown is on for the end of Financial Year 2014-15. There are a number of ways that individuals and small business operators can legally slash their tax. We find that many of our clients only begin to realise after a chat with one of our professional tax agents how much tax they could have saved if they had taken action earlier.

Don’t delay it any longer and book in for your FREE 20-minute Tax Blaster session. We’ve got limited spaces available for people who want to increase their earnings, save on taxes and put more money into their retirement fund.

Find out NOW how you could be making more money for your retirement and facing less financial stress now and in future.

Call our Team on 07 3399 8844 to book your FREE meeting NOW.

Heard this one before?

ElvisSmiley-smallAt Penn State University there were four sophomores taking chemistry and all of them had an ‘A’ so far. These four friends were so confident that the weekend before finals, they decided to visit some friends and have a big party.

They had a great time but, after all the hearty partying, they slept all day Sunday and didn’t make it back to Penn State until early Monday morning.

Rather than taking the final then, they decided that after the final they would explain to their professor why they missed it. They said that they visited friends but on the way back they had a flat tyre. As a result, they missed the final.

The professor agreed they could make up the final the next day. The guys were excited and relieved. They studied that night for the exam.

The next day, the Professor placed them in separate rooms and gave them a test booklet. They quickly answered the first problem worth 5 points.

Cool, they thought! Each one in separate rooms thought this was going to be easy… then they turned the page. On the second page was written:

For 95 points: Which tyre?

Holiday homes that taxpayers rent out

Editor: The ATO has updated its information guide on claiming deductions on holiday homes. This may have something to do with its stated intention to increase its audit focus on holiday homes that are rented out.

Clients with such holiday homes may want to take notice of the following.

Claiming deductions on holiday homes

The principles that apply to a rental property also apply to a holiday home if it is rented out.

If a taxpayer rents out their holiday home, they can claim expenses for the property based on the proportion of the income year it was rented out or was genuinely available for rent.

They must apportion their expenses if the property is used:

  • for private purposes for part of the year – such as when they use it themselves, or allow their family, relatives or friends to use it free of charge; and
  • by family or friends for part of the year and they are charged less than market rent.

If their holiday home is rented out to family, relatives or friends below market rates, their deductions are limited to the amount of rent received for that period.

Tax Tip: Keeping records for CGT purposes

Editor: Clients who own holiday houses should be aware that they need to keep records of their expenses.

If they make a capital gain when they sell the property, the proportion of expenses (interest, insurance, maintenance costs and council rates) they could not claim a deduction for are taken into account in reducing the amount of their capital gain.

Early access to super for people with terminal illness

The Assistant Treasurer has announced that, from 1 July 2015, the government will amend the provision for accessing superannuation for people suffering a terminal illness.

Under the current provision for early access to super, a person with a terminal illness is required to obtain a certification from medical specialists that they have less than 12 months to live.

The relevant regulations will be amended to change the life expectancy period from 12 months to 24 months.

Consider buying house in spouse’s name if used partly for business

Where an individual is using part of their home as a place of business, this will affect the application of the CGT main residence exemption when the home is eventually sold.

That is, the main residence exemption is effectively reduced (i.e., only a partial exemption applies).

However, if that taxpayer does not have an ownership interest in the dwelling (e.g., the dwelling is solely owned by the taxpayer’s spouse), the CGT main residence exemption is not reduced.

This is because the spouse would not have been able to claim a deduction for interest incurred on any borrowings to buy their interest in the house (as they do not use the dwelling for income-producing purposes, the taxpayer does).

Therefore, where a taxpayer uses (or plans to use) part of their home as a sole base of operations (or as a place of business), the dwelling could still retain the full main residence exemption when it is sold if it is owned solely in the name of the taxpayer’s spouse (or even some other family member, where appropriate).

However, in these circumstances, interest expenses incurred on moneys borrowed by the spouse (or other family member) to acquire the property (or an ownership interest in it) are basically not deductible, because the spouse (or other family member) is not using the property themselves for income-earning purposes.

The sharing economy

Editor: The ATO has issued an information guide titled the ‘Sharing economy and tax’. It states that the ‘sharing economy’ is a new way of connecting buyers (‘users’) and sellers (‘providers’) for economic activity.

Sharing economy arrangements are generally booked through a facilitator using a website or app.

Common examples of some sharing economy services include:

  • renting out or letting a room or other property for accommodation;
  • renting out or letting car parking space;
  • providing odd jobs, errands, deliveries or more skilled services on an ad hoc basis; and
  • using a car to transport members of the public for a fare.

The ATO says that tax laws which apply to activities conducted in a conventional manner apply in the same way to activities conducted in the sharing economy.

ATO’s new appeals division – the “RDR”

In a recent speech, an ATO Second Commissioner spoke about the ATO’s new Review and Dispute Resolution (RDR) area which is being set up as a separate division to review objections and appeals.

He stated that the ATO has accepted that disputes should be managed in a division separate from audit.

He said that “From 1 July, all objections will come under the purview of RDR, which reports to him, and is separate from their Compliance and Tax Counsel areas”.

FBT: Car parking threshold

The car parking threshold for the FBT year commencing on 1 April 2015 is $8.37. This replaces the amount of $8.26 that applied in the previous year commencing 1 April 2014.

Luxury car tax threshold

The luxury car tax threshold for the 2015/16 financial year is $63,184. The fuel-efficient car limit for the 2015/16 financial year is $75,375.

Beef and Guinness Pie

Winter is well and truly on the way and this pie recipe will warm the cockles of Aussies and Irish hearts alike. Why not make a batch and keep a few for a second occasion.

  • 2 kg diced chuck steakBeefGuinessPie-300x199
  • 3 sliced onions
  • 4 crushed cloves garlic
  • 1 tablespoon oil
  • 2/3 cup plain flour
  • 400ml Guinness
  • 2 cups Campbell’s Real Stock Beef
  • Ready-rolled puff pastry
  • 1 beaten egg

Step 1
Brown 2kg diced chuck steak in hot oil. Set aside. Cook 3 sliced onions and 4 crushed cloves garlic in 1 tablespoon oil until golden. Sprinkle in 2/3 cup plain flour and cook for 1 min.

Step 2
Return meant and juices to pan, add 400ml Guinness and 2 cups beef stock. Bring to the boil. Reduce heat, simmer for 2 hours until tender and sauce has thickened.

Step 3
Preheat oven to 200°C. Spoon beef mixture into eight 250ml ovenproof ramekins. Cut out eight circles of ready-rolled puff pastry to cover. Press firmly onto dishes and seal. Brush with 1 beaten egg, place on a tray and bake for 25 minutes until golden. Freeze uncooked pies, wrapped in plastic then foil. Defrost before cooking.

Source: www.taste.com.au
Recipe by Rebecca Truda
Image by Steve Brown

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.