Taxable Payments Annual Report
28th August is the end date for lodging the ATO’s Taxable Payments Annual Report. This form requires those businesses within the building and construction industry to report all payments to contractors within the building and construction industry.
Building and constructions includes more services than one might think as evidenced by the following link – http://tinyurl.com/y7hrnfxm
You need a good accounting system to simplify the reporting of Taxable Payments Annual Report as you need to report the following for each contractor:-
- Name
- ABN
- Address
- Gross payment including GST as well as the total GST amount. It is important to note that for those who run an accrual accounting system, reporting is based not off the date of the contractor invoices, but they year in which they are paid.
If you are struggling with this reporting requirement, we would be happy to help you or refer you to a good book-keeper.
Ways you can lodge the Taxable Payments Annual Report
- The main software providers enable the Taxable Payments Annual Report to be lodged from the software.
- You can also lodge by paper.
- You may also wish to view the following YouTube clip from the ATO on how to lodge the Taxable Payments Annual Report through the Taxpayer Portal.
https://www.youtube.com/watch?v=SRhFsB-k1Uc
So what to the ATO do with all this data?
They crossmatch all payments reported to each business within the building construction industry to their reported income. The ATO had a field day some years ago with a pilot program of plasterers within the Hunter Valley. Obviously it is paying dividends if the ATO still requires this reporting – so much so that it has now been expanded to other industries from July 2018.
2018 Company Tax rate
At last we know what the 2018 Company Tax rate will be for small and medium size businesses! So whilst the House of Reps was in uproar today, at least the Senate did something.
What a joke it is that only now do we know with certainty what tax rate applies from 1st July 2017.
Finally we can finalise Tax Returns with certainty!
If you would like to read more about this, please refer to our August edition of Tips & Traps.
Reasonable travel allowances & how they help you
It is now time for Victorian employers to lodge their annual Pay-roll Tax declaration. One of the dangers of Pay-roll Tax is not complying with grouping provisions.
The grouping provisions assess a number of employers against the remuneration threshold (now $650,000). Remuneration in excess of that threshold is subject to Pay-roll Tax at 4.85%.
Employers can be assessed as a group where:-
- There is common ownership and control, or
- Where an employer performs duties for another business.
The latter one is commonly misunderstood. Having a larger business answer the phone of a smaller business (with unrelated owners) for 30 minutes over lunchtime can be enough to treat a business as grouped. So it could be that a small business with remuneration of only $100,000 has to pay Pay-roll Tax of $4,850 for the sake of 2 ½ hours a week of phone minding. A phone answering machine or service would seem to make more sense!
If you would like to know more about grouping, you can go to:-
https://www.sro.vic.gov.au/grouping
You can also watch the Victorian State Revenue Office’s video on grouping at:-
https://www.sro.vic.gov.au/videos/payroll-tax-grouping-provisions-webinar
With we welcome any question you may have in respect of this or any other employment related matter.
Pay-roll Tax and the danger of grouping provisions
It is now time for Victorian employers to lodge their annual Pay-roll Tax declaration. One of the dangers of Pay-roll Tax is not complying with grouping provisions.
The grouping provisions assess a number of employers against the remuneration threshold (now $650,000). Remuneration in excess of that threshold is subject to Pay-roll Tax at 4.85%.
Employers can be assessed as a group where:-
- There is common ownership and control, or
- Where an employer performs duties for another business.
The latter one is commonly misunderstood. Having a larger business answer the phone of a smaller business (with unrelated owners) for 30 minutes over lunchtime can be enough to treat a business as grouped. So it could be that a small business with remuneration of only $100,000 has to pay Pay-roll Tax of $4,850 for the sake of 2 ½ hours a week of phone minding. A phone answering machine or service would seem to make more sense!
If you would like to know more about grouping, you can go to:-
https://www.sro.vic.gov.au/grouping
You can also watch the Victorian State Revenue Office’s video on grouping at:-
https://www.sro.vic.gov.au/videos/payroll-tax-grouping-provisions-webinar
With we welcome any question you may have in respect of this or any other employment related matter.
Last minute tax saving tips
Are you a business owner who wants to legally minimise your tax? Or perhaps you’re an individual who wishes to legally minimise your tax? Our June edition of Tips and Traps (being our monthly newsletter) explored last-minute tax saving tips.
If you would like a copy that newsletter setting out those tax savings tips then please email admin@mrsaccountants.com.au
We have a thorough tax planning process to ensure clients avoid pitfalls and take advantage of any opportunity that is legally available. Our process is to:-
- Review year-to-date numbers to the end of May.
- Understand what may have happened or will happen during June.
- Run through our seven page tax planning checklist.
- Identify all opportunities.
- Identify pitfalls that may require corrective action either now or shortly after year-end.
- Set out our recommendations in a clear and concise report. That report also addresses the timing the future payments or refunds.
- Discuss those recommendations with you in either a face to face or Skype meeting.
The end result to you is that you:-
- Are left in the best position.
- Have our advice presented to you in an understandable report (backed up with a discussion).
- Know the timing of your future tax payments – and are not left with any shocks when the Tax Returns are finalised.
Today, our process and tax savings tips have saved our clients over $400,000. This doesn’t take into account the value of other advice given throughout the year.
If you feel that your accountant is just filling in your Tax Returns and not looking after your long-term interests, then call Alex Stewart on 03 9899 7511. Our initial meeting is free of cost of obligation so you have nothing to lose (and maybe a lot to gain).
Personal super contributions
Last year’s super tax changes certainly received substantial press coverage. Most of that though was in respect of the must do corrective (and negative) aspects such as commuting under the $1,600,000 pension balance cap.
There were however some sensible and attractive changes (you may wish to refer back to our 2017 Budget Briefing paper which explored these).
One of the attractive changes is that since July 2017 employees been able to claim a tax deduction for personal super contributions. Until then, employees were denied a personal tax deduction where their employer had an obligation to pay SG (whether they paid it or not). There was an exemption for those whose employment income was minor.
So who are personal super contributions attractive to:-
- Those whose employer who won’t allow a salary sacrifice arrangement.
- Small business owners who wish to pay the super in their own name rather than having their own business pay it (which would be subject to WorkCover).
- Those who may wish to reduce the tax on their other income including interest, rent or capital gains.
- Those who can use the money more efficiently – like pay down the mortgage during the year but pull it back at the end of the year to fund the super.
- Those who are employees aged over 65 who have more than $1,600,000 in super (and are denied making further non-concessional contributions) and who have already satisfied the 40 hours in a 30 day work test during the year.
Is making personal super contributions best for you?
Well that depends entirely on your personal circumstances.
And the younger you are the more careful you have to be as super is locked away until one reaches what is called preservation age (which can be as late as age 60 even for those who retire early).
There are also other considerations like Section 293 tax.
You don’t want to have excess super contributions as you will issued with an excess contribution notice which can easily happen if you don’t fully understand all the complexities.
Moreover, you should not make such a contribution without first seeking financial planning advice as that advice will consider all of our circumstances, explain the risk and rewards of all strategies (and do so in context of other strategies) and show you the long term results from advanced financial planning modelling software.
A word of warning
There is now just one concessional (deductible) contribution limit for all employees – it is now just $25,000. And that as assessed by when the fund receives the contribution. So a contribution by an employer for the June 2017 SG quarter (which may include salary sacrifice contributions) paid into a super fund in July 2017 counts as a contribution in the 2017/18 year.
You should therefore disregard whatever appears on your pay slip as that just records what has been provisioned by your employer during the year. You must check what has been received by your super fund(s).
$2,345,900 of savings
$2,345,900 of savings is what the MRG group saved its clients as part of its June 2017 tax planning process.
That’s a lot of money to spend on the your business, your family, equipment, holidays, your kid’s education ….
How do we do this?
It was done by following a lengthy checklist which explored clients’ ability to obtain advantages and avoid pitfalls. It was then followed by discussions and reminders to ensure plans were put in place.
And the $2,345,900 of savings doesn’t include all the other savings delivered from our advice given during the year.
While some of our work necessitates that we attend to compliance tasks, we believe the fees you pay your accountant should be an investment. In this regard, the savings we deliver to our clients were not only greater but multiple of what they paid us.
If you like to know more about how you may benefit from our tax planning process then please call us.
Great news – the $20,000 instant asset write-off has been extended
Great news – the $20,000 instant asset write-off has been extended for another 12 months to June 2019.
This concession was supposed to stop at 30th June 2018. Now you have another 12 months in which you can claim a full deduction on assets costing less than $20,000 ex GST. If you really need any asset(s), you might as well still buy it now. Otherwise, you can now sit back and find the best time to commit a qualifying purchase.
If you want to know more about important considerations and traps, click on the following link:-
http://www.mrsaccountants.com.au/tips-traps-to-the-20000-asset-write-off/
We would welcome your call if you have any queries.
We will of course raise this as part of our year end tax planning process.
And on that subject, we have been quantifying the savings our clients received as part of our planning advise last June. We are both pleased and proud to report the collective savings to our clients has now been quantified to exceed $2,300,000. And that is not even taking into account the savings from other advice during the year!
How To Protect Yourself Against Scammers
Last week was Scam Awareness Week. It’s an initiative of the ACCC. They gave great advice on how to protect yourself against scammers.
There are many forms of scamming. And the methods are continually changing and becoming ever more sophisticated. It’s also on the rise as the losses to scammers last year increased by 23%. Many are linked to computers and other electronic devices but can also include:-
- Phone calls – you would be surprised how many clients have received a phone call like the above purporting to be from the ATO.
- Door knocks.
- Fake supplier invoices.
- Stealing identity by stealing personal information from mail boxes.
So what are some of the keys ways you can protect yourself:-
- Never give your personal details over the phone or by e-mail.
- On your computer, run a virus checker and malware protector. Ensure these are set to update automatically and run a full scan at least once a week.
- Use an e-mail washing program. It will allow you to safely preview the text of an e-mail and to check that the sender’s e-mail address is genuine.
- Use a password protection program so you can set complicated passwords for all your logins. And change your passwords at least every month.
- Email, just like a letterbox, is not safe. Google also reserve the right to use information contained within an e-mail to or from a Gmail email address. Use our client portal service to securely exchange information with us.
- Do not accept emails from suspicious addresses.
- Be very wary of all other emails. Spammers are now so specific in what they are attacking that we often receive e-mails from major software providers.
- Use a banking token / toggle and perhaps set your daily limit lower.
- Run a back-up system and regularly test that it is functioning properly.
- Use two step software authentication wherever possible.
In short, adopt appropriate practices and always be on guard.
You may also wish to read the ACCC’s scam guidebook – Little Black Book of Scams. https://www.accc.gov.au/publications/the-little-black-book-of-scams
Please call us if you would like a referral to a trusted computer support technician.
Bitcoin & the blockchain – what’s next
Many are asking what is the future of Bitcoin? That is a very good question after the wild ride in its price. After nearly touching $US20,000 just before Christmas it has since fallen to around $US8,000. Some have made eye watering amounts based on when they got in and out; others have lost spectacular amounts. There are more than 1,000 crypto currencies and most of those have also seen wild fluctuations in their price. Bitcoin has certainly been subject to speculation. It’s rise was larger than that of the Dutch tulip bubble of the 17th century. Arguably it’s more at risk than other famous asset price bubbles as nothing underpins the currency as does say the Reserve Bank to the Australian dollar.
The creator of Bitcoin Satoshi Nakamoto (or at least his/her pseudonym) announced Bitcoin to the world as “a new electronic cash system that’s fully peer-to-peer with no trusted third party.” There is certainly appeal to such a system.
What interests me far more is the blockchain, the system which underpins Bitcoin. The blockchain is an encrypted open ledger which records all transactions. There is no central storage system; it’s an open ledger system that is verified every ten minutes and in which every transaction is date stamped. With transactions cleared every ten minutes, funds can knowingly be received on average in five minutes – makes a three day cheque clearance seem slow doesn’t it!
The co-founder of Netscape Marc Andreessen has been quoted as saying that the blockchain is one of the most fundamental inventions in the history of computer science. I think that that is an under-statement. With seemingly everyone tapping to pay for even the cheapest item and with a verified transaction base, the ATO may seek to receive GST at the time of sale. Various world governments are looking to store anything and everything on the blockchain – including such things as land titles. Kodak, arguably the camera company most affected by the digital camera explosion last month had its share price surge some 70% after it had announced it was developing a crypto currency where the underpinning blockchain would enshrine photographers’ copyright.
I keenly await to see how others adopt the blockchain to revolutionise the way we do things.
At MRS, we will spend today planning for your success tomorrow.