Monthly Archives: May 2017
The $20,000 instant asset write-off continues
One of the good news items in the 2017 Federal Budget is that the $20,000 instant asset write-off will continue until June 2018.
So small businesses which buy assets costing less than $20,000 (excluding GST) will be able to deduct the cost in full. This is great for cash flow as the tax deduction will match the expenditure. So an asset costing say $10,000 excluding GST will reduce a Company’s tax liability by $2,750 (meaning that the net cost to a company will $7,250). For those undertaking their business in their own name or via a trust or partnership will save tax at their marginal tax rate (which could be as high as 49%).
What makes this news so welcome is that a small business is now defined as one with group turnover under $10,000,000 (previously $2,000,000).
So should you jump at this opportunity? Be careful as there are a number of matters to consider and traps to be aware of. To read more, go to http://www.mrsaccountants.com.au/the-20000-instant-asset-write-off/
At MRS, we will spend today planning for your future success
Did they really think they could get away with it?
Did they really think they could get away with it? I was gob-smacked when I heard about the $165 million tax fraud.
On one level, I was surprised how many people were allegedly involved.
On another level, I was surprised to hear that one of the main players was the son of a senior ATO official. How did it come to pass that not only a ATO official, but being one heading a major corruption and fraud section, saw his son leading what is reported to be an extravagant lifestyle?
What surprises me the most is how they thought that they would get away with it. The scam involved underpaying both employees and contractors. Surely at some stage someone was going to complain about being underpaid.
The really dangerous game though was in respect of the alleged underpaid PAYG WH (wages tax) and SG super. Since 2012, PAYG WH and SG super that goes unreported and unpaid for more than three months becomes a personal liability of a director (it doesn’t matter if the business can’t pay). All the ATO has to do is issue what is called a Directors Penalty Notice (DPN).
And if that all wasn’t bad enough, the other 40 tonne truck was the fact that the amount of late paid SG super is increased by the addition of lodgement fees and lost earnings. And if all of that wasn’t bad enough, the total amount payable is non-deductible – meaning that any late payment will cost anywhere from 2 to 3 times as much if it had been paid on time.
If all was as reported, then it was just a matter of time.
What was in the 2017 Federal Budget for you?
So what was in the 2017 Federal Budget for you?
There weren’t the nasty changes so often seen in a budget delivered in the first year of a new electoral term. There were even some welcome announcements – particularly in respect of the extension of the $20,000 instant asset write-off.
That all said, much of what appeared on TV and the press is simplistic and narrow further confused by useless political clap-trap from both parties.
We have published a briefing paper which sets out the important changes and includes tips thereon. You can make a request by e-mailing admin@mrsaccountants.com.au
We will be modifying our 2017 pre-year end checklist for businesses to take advantage of any opportunities and avoid any of the pitfalls where possible.
But whilst there may be only be minor adverse outcomes from this year’s budget, we remind you of the superannuation changes announced in last year’s budget which include:-
- From July 2017, the concessional contribution limit everyone will reduce to $25,000.
- From July 2017, the non-concessional contribution limit everyone will reduce to $180,000 and the three-year bring forward limit will reduce from $540,000 (for which there are tricky transitional rules).
- From July 2017, one will not be able make any further non-concessional contributions if their superannuation balance exceeds $1,600,000.
- From July 2017, one will be fined and forced to withdraw any pension balance in excess of $1,600,000. Those affected by these rules and who take action before July also have the option of nominating Capital Gains Tax relief on an asset by asset bases.
- From July 2017, income on transition to retirement pensions will be taxed.
These and other changes require many to take action both well before and after June and do so based on their individual circumstances. Many will also need to revisit their estate planning.
At MRS, we will spend today planning for your success tomorrow.
Unclaimed monies
In 2012, we sent out a warning e-mail to our clients in respect of the then new unclaimed monies regulations.
Since then, the balance of any bank account unused for more than 3 years is transferred to the government.
As it is not easy to reclaim one’s money as what one might think, we again remind you to either transact on any dormant account or close it. Please remember that charges debited or interest credited by a bank to your account do not keep an account active. You therefore need to either make a payment from or deposit into an account for it to be considered active.
If you want to know more or undertake a search on a closed bank account, go to http://tinyurl.com/qjozgon
At MRS, we will spend today planning for your success tomorrow.
Some crucial clarity at last
Effectively at a quarter to midnight, we now have some crucial clarity at last.
Superannuation changes announced in last year’s Federal budget, revised in September 2016 and passed into law by the Senate on 23rd November 2016 have remained far from clear for far too long. Only last Thursday did the ATO finally provide clarification on the unanswered questions in respect of pensions commuted before July 2017 in order to come under the pension balance cap. Also, a far less common situation was only addressed on Friday; that being in respect of defined benefits schemes.
This is a joke. The never should have been any ambiguity – or at the very least, it should have been rectified within weeks of the changes coming into law late last year. As it is, these two matters have been addressed so late that they will not feature in any tax or financial planning journal nor any seminar until at least June.
A commutation requires an exact figure to be nominated. The ATO now accepts that most members with a self managed super fund have no idea of their exact balance and will not be in a position to comply with the law as intended (fortunately, our clients do following the migration to Simple Fund 360 which, other than property, provides real-time valuations and balances). The ATO has now finally confirmed that they will ignore strict requirements and permit commutations of an unspecified amount sufficient to bring the pension balance under $1,600,000 – in other words of an amount that is not quantified until the financial statements are prepared.
The ATO will accept such commutations where:-
- The request by the member and acceptance by the trustee are in writing.
- The trustee resolution acknowledging this is dated before July 2017.
- Specifies the methodology which allows the precise quantum of the amount commuted.
- Specifies which pension will be commuted (which remains one of the big tax and estate planning issues).
- Does not conflict with a similar request to commute.
It is also important to note that the commutation cannot be revoked.
There is also the unstated issue that commutations must be made in accordance with the trust deed. If that deed does not permit such ATO approved commutations, then the fund will be in breach of SIS regulations. This may require some to upgrade their trust deed.
Whilst this all clarifies one issue, there are still many financial planning matters to consider such as which pension(s) is commuted and on what assets will Capital Gains Tax relief be obtained.
At MRS, we will spend today planning for your success tomorrow.
Questions for all business owners
We all know that the world is changing at an accelerating rate and becoming more online. At a conference last week, I saw a great example of this as evidenced by live numbers at http://www.internetlivestats.com/. Click on the link and look at the numbers – you will be amazed. So the questions for all business owners are, how are you changing your business to remain relevant and to maximise the opportunities that are now available?
The sad fact is that for most businesses, the answer is nothing. It is not only true in adopting new technologies that improve operational processes, but it is particularly true in respect of marketing (where technology now means that marketing is now push marketing not pull marketing).
To help you understand the tools you can use to improve your processes, we are looking at running a seminar on modern technologies. Please register your interest by emailing seminars@mrsaccountants.com.au
At MRS, we will spend today planning for your success tomorrow.