Employer Alert

 

Empolyer Alert 

The end of the financial year is only days away

Employer Alert

As an employer you need to:

  1. Provide PAYG Payment Summaries to your employees by the 14th July 2016.
  2. Please ensure you send the ATO, your PAYG withholding payment summary annual report by the 14th August 2016.
  1. Use the latest tax rates to calculate employee withholding tax from 1st July 2016. While there have been no changes to tax rates for 2016/17, to check the latest rates, go to ato.gov.au/taxtables
  1. Ensure your accounting software payroll rates are updated from the 1st July 2016 and the file is ready for the first pay run of the 2017 year.
  1. All employee Superannuation Guarantee Charges have been met for the 2015/16 financial year. Please note the June Quarter SGC is due by the 28th July 2016.

 

If you have any questions on your EOFY obligations to the ATO, please do not hesitate to contact us.

Using EOFY to strengthen your business

McAdam Siemon Business Accountants Upper Mt Gravatt, Noosa Heads & Maroochydore. Specialising in Accounting, Taxation, Management Rights, SMSF Administration, Business Advisory, Business Valuations , Management Rights specialist accountants

Using EOFY to strengthen your business

(source: Sean O’Meara) 

With the end of the financial year quickly approaching it is critical that small business owners use this time to make a strong plan for the year ahead. It is vital to analyse your business and try to find any opportunities and improvements that can be made, no matter how small they may seem.

The additional administration time required at EOFY can make the lead up to 30 June extremely stressful. So the keep your business goals in check. Here are some strategies that will improve your business to maximise your growth in 2016/2017.

It’s time to review your businesses situation 

You are probably already using reporting throughout the year to track your revenue, gauge your sales trends etc but it is important to take a second look at how your business performed on the whole and compare this to previous years.

“By looking at year-on-year sales and revenue we can see how public holidays or seasonal changes affect the business and enables us to do more accurate forecasting, rostering and budgeting for the year ahead. It also helps us make informed decisions on whether to spend now or later,”

Take advantage on the low interest rates

Interest rates remain low so it could be an opportunity to invest in capital equipment and paying off debts. 

Review business partners and suppliers

Ensure you are getting an excellent price for quality products. New businesses keep coming into the market, so be sure to do your research and renegotiate with your present partners and suppliers.

Your customers are probably reviewing their own strategic plan and making changes for next year so don’t forget to let them know that their business matters to you.

Take a long – term view of your cashflow 

  • How is your cashflow?
  • Is your business seasonal, with peaks and troughs?

Do some advanced planning -review your budget and anticipate what may happen in the year ahead. It may be all that is needed to free up liquid assets and ensure ongoing profitability. This is the best way to ensure you have safeguards in place to keep your business afloat during low times. 

Capitalise on tax breaks 

  • Have you any expenses that can be pre-paid?
  • Think about maximising your superannuation contributions to the relevant caps.
  • Consider investing in areas that will support your business; new equipment and/or technology that will provide your business with greater efficiencies and productivity The Government still has an immediate tax deduction on assets coasting less than $20,000.

Don’t hesitate to give us a call if you would like to discuss anything EOFY’s.

Kind regards

The Team at McAdam Siemon

Pushing too hard with deductions!

In 2014, a Sydney man had to pay a hefty penalty after the ATO discovered he was falsely claiming thousands of dollars on work related expenses.

McAdam Siemon Business Accountants Upper Mt Gravatt, Noosa Heads & Maroochydore. Specialising in Accounting, Taxation, Management Rights, SMSF Administration, Business Advisory, Business Valuations , Management Rights specialist accountants, If you push too hard the tax man will get you.

If you push too hard with deductions the taxman will get you.

This guy worked as a salesperson and under the conditions of his employment he was able to work from home. He was advised by a Registered Tax Agent.

The dispute arose out of an audit of his tax affairs triggered by his 2010 tax return in which he declared a taxable income of $21,377, and claimed deductible items to the value of $97,162.

The ATO disallowed various tax deductions for the 2011 and 2012 financial years.

The tax office also imposed a penalty on the basis that he or his agent had “failed to take reasonable care or comply with tax law when claiming work related expenses”.

The sales person disputed this and took the matter to the Administrative Appeals Tribunal.

Here are examples of some of the expenses he tried to claim deductions for:

  • Thousands of dollars for secretarial services completed by his son. (His son was around 7-years-old at the time)
  • Thousands of dollars of groceries as work related expenses (The groceries included cheese in a can and 39 packets of Monte Carlo biscuits.
  • Clothing, rubber soled shoes, dry cleaning, sunglasses, broad rimmed hat and sunscreen (just to name a few!)
  • Home office expenses
  • Other work related expenses

To read the full rulings click on the link below.

To find out more, please contact us

So, what are the deductions you can claim?

(Source: ATO, 14 March, 2016)

When completing your tax return, you’re entitled to claim deductions for some expenses, most of which are directly related to earning your income.

To claim a work-related deduction:

  • you must have spent the money yourself and weren’t reimbursed
  • it must be related to your job
  • you must have a record to prove it (there are some limited exceptions)

If the expense was for both work and private purposes, you can only claim a deduction for the work-related portion.

Follow the links below for specific deductions you can claim:

The staff at McAdam Siemon will get your deductions right because we have the checks and balances in place.

 

 

If you have one employee but less than 19

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If you have one employee but less than 19, You must be Super Stream ready by 30 June 2016

  • Do you have 19 or fewer employees?
  • Are you an SMSF Trustee? Self-managed super funds (SMSFs) must be able to receive employer contributions and the associated data electronically.
  • APRA – regulated funds

From 1 July 2016, the ATO’s SuperStream standards are set to be enforced.

A reminder:

  • If you are a larger employer, you should already be using SuperStream.

A Brief Overview

These new rules require employers to pay and report contributions to superannuation funds electronically. Both the payment and the reporting will need to be completed on the same day.

  • These measures don’t apply to individuals who are making personal contributions direct to their superannuation funds, only employers.

SuperStream will make it easier for you. 

  • You need to use SuperStream when paying employees super.
  • With SuperStream contribution payments are made electronically and you can pay all your employees super; sending all their information through one clearing house; saving you time and effort.
  • Providers must be approved by the ATO and are listed on the ATO website.

You should have already started transitioning by choosing an option to make super contributions electronically: 

  • Your payroll system
  • Your super funds online system, or
  • The Small Business Super Clearing House (SBSCH). This is a free service administered by the ATO whereby you can make super guarantee contributions as a single payment to the clearing house and it distributes the payments to the employees fund/s.

Next: You need to collect the following information on your employees. 

  • Their Tax File Number (TFN) and,
  • A Unique Super Identifier (USI)
  • Super fund ABN
  • For employees who have selected a SMSF for their contributions, they will also need to provide their Fund’s Bank Account details and Electronic Service Address (ESA)

Once this is done, these details must be entered into your preferred clearing house site.

For new employees, the ATO has updated the Super Choice form to include collection of the extra information required.

Start using SuperStream as soon as this process is completed so that any problems can be solved before 30 June, 2016.

If you any questions on setting up SuperStream super contributions for employees, please contact McAdam Siemon.

Tax file numbers (TFN)

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Forwarding documents with Tax file numbers

As you would be aware Privacy laws were significantly strengthened a couple of years ago with substantial penalties for both individuals and corporations who breach the rules.
One of the areas covered is dealing with tax file numbers.
It is now assumed that sending of emails is not a secure form of communication.  The tax department is taking a stronger stance on the sending of documents with TFN’s and there are cases of where tax agents have had their licences cancelled because of privacy breaches.
Our system does allow for tax returns to be printed with the TFN’s left out
For this reason we have established the following rules:

  1. No document will be emailed with TFN’s attached
  2. Any document that requires the TFN to be retained will either be posted or uploaded to our secure portal area which you can access via a password.
  3. Annual tax returns, if been emailed, will be sent with no TFN’s attached however your name, entity details will be shown to confirm that the return provided is the correct one.

 
If you have any questions or concern please do not hesitate to contact one of the team at McAdam Siemon.

Brisbane: 07 3421 3421

Noosa Heads: 07 54748955

Buderim: 07  5408 4622
 

Random ATO Audits 2016

 

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Random ATO Audits  2016

The ATO has decided not to reduce their random audits in 2016. They have now confirmed that random audits will recommence.
The compliance program will be physically audited, targeting 600 individuals and small businesses and focusing on underreporting and tax evasion.

There is good news for some though.

The ATO has contacted 500,000 taxpayers advising that their tax returns will not be subject to further review. This ATO project is aimed at taxpayers with straight – forward affairs and a taxable income of less than $180,000.
The ‘certainty letter’ is an assurance that the ATO will not review the return unless they find evidence of deliberate avoidance or fraud.

What is a ‘certainty letter’?

This year the ATO is sending letters to some taxpayers as part of a trial to confirm their 2014-15 tax return is finalised.

Record Keeping for Tax Purposes

 

 

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Frequently our clients ask us these questions with regards to record keeping for tax purposes.

  • How long should I keep my records
  • Is it acceptable to keep my records in an electronic format, or are paper copies sufficient?
  • Why should you keep records?
  • How do I know what records I should keep?

How long are you required to keep your records? 

Generally speaking, all of your evidence must be kept for five years from the date you lodge your tax return:
i.e. If you lodge your 2015 tax return on 1 December 2015 any records associated with that return (generally) can be destroyed on 2 December 2020.

However: 
·      If you acquire or dispose of an asset (e.g. shares or a rental property, dividend reinvestment statements) – 5 years after it is certain that no capital gains tax event can happen.
·      If you are in a dispute with the ATO – 5 years from the date you lodged your tax return and the dispute is finalised.

The Australian tax system relies on taxpayers self-assessing, so what do you need to keep?

As far as the ATO is concerned, you can store your documents in either format. Remember though…

  •  If you keep paper copies they must be a true and clear reproduction of the original.
  • If you keep your records electronically, we strongly recommend that you keep backup copies – what if your hard drive is corrupted?

Why should you keep records?

  • To provide written evidence of your income and expenses.
  • To help you or your tax agent prepare your tax return.
  • To ensure that you are able to claim all your entitlements.
  • In case the ATO asks you to prove the information you provided in your tax return.

What records should you keep? 

  • Any payments you have received.

  •  Any expenses related to payments you have received.
  • When you have acquired or disposed of an asset (shares or rental property)

  • Any tax deductible gifts, donations and contributions.

You may also need to keep records in some other categories, or for other members of your family – for example, if you receive the family tax benefit.

You may decide not to keep particular records – for example, because you expect to claim for only a small amount of business travel. If it turns out that you travel more than you expected during the year, you may be limited to a smaller claim than if you had kept more records.

If you are unsure about whether to keep or destroy a record please do not hesitate to give one of the team at McAdam Siemon a call.

Kind regards

Rob McAdam, McAdam Siemon Accountants

Rob McAdam

 

Top Things To Do and Review Before 30 June

Here’s our list of the top things you need to do and review before 30 June arrives:

1. Write-off bad debts. To be a bad debt, you need to have brought the income to account as assessable income, and given up all attempts to recover the debt. It needs to be written off your debtors’ ledger by 30 June. If you don’t maintain a debtors’ ledger, a director’s minute confirming the write-off is a good idea.

2. Trading Stock. Write off any stock that is damaged or obsolete. Complete a stock take (if you are not using the simplified trading stock rules) and remember that stock can be valued at the lower of cost, replacement, or net realisable value. You can use different methods for different stock items.

3. Review your asset register and scrap any obsolete plant. Check to see if obsolete plant and equipment is sitting on your depreciation schedule. Rather than depreciating a small amount each year, if the plant has become obsolete, scrap it and write it off before 30 June. Small Business Entities can choose to pool their assets and claim one deduction for each pool. This means you only have to do one calculation for the pool rather than for each asset. It also allows you to claim an immediate deduction for depreciating assets that are bought for less than $1,000.

4. Repairs, consumables (office stationery etc), trade gifts or donations. To claim a deduction for the 2014/2015 financial year, consider paying for any required repairs, replenishing consumable supplies, trade gifts or donations before 30 June.

5. Pay June quarter employee super contributions if you want to claim a tax deduction in the current year. The next quarterly superannuation guarantee payment is due on 28 July 2015. However, some employers choose to make the payment early to bring forward the tax deduction instead of waiting another 12 months.

6. Superannuation. Don’t forget yourself. Superannuation can be a great way to get tax relief and still build your wealth position. Your personal or company sponsored contributions need to be received by the fund before June 30 to ensure deductibility.

7. Capital gains and losses. Neutralise the tax effect of any capital gains you have made during the year by realising any capital losses that you have. These need to be genuine transactions in order to be effective for tax purposes. It may be possible to contribute assets with unrealised losses to superannuation in order to do this.

8. Directors’ fees and bonuses. Declare them before 30 June and providing the company is absolutely committed to them, you are entitled to the deduction even if they have not been paid. Again, a director’s minute is a good idea. The directors and employees only need to declare this income in the year of receipt although they need to be formally notified of their entitlements by 30 June.

9. Management fees. Where management fees are being charged between related entities, make sure that the charges have been raised by June 30. Where management charges are used, make sure they are commercially reasonable and there is documentation to support this position. If any transactions are being undertaken with international related parties then the transfer pricing rules need to be considered and the ATO’s expectations in relation to documentation will be much greater. This is an area that the ATO are placing under greater scrutiny.

For Your Business

Trustees must make a decision on distributions by 1 July

Trustees need to decide on distributions of trust income by 30 June (at the latest) to ensure that beneficiaries are presently entitled to trust income for tax purposes. Trustees used to have until 31 August to make a decision but this administrative concession has been removed. If the ATO is not satisfied that the resolutions have been made in time then the risk is that the trustee or default beneficiary will be taxed on all of the trust income.

Defer your income

If possible, defer your income until the new financial year. In particular this can work for service based businesses or where you are billing your clients on a progress payment basis. Make sure that you can manage any cash flow effects that come with this one.

Manage your capital gains and losses

Remember that capital gains trigger on the date of the contract not the date of payment. Also, capital losses can only be written off against capital gains. So, if you are selling assets that will trigger a capital gain try and delay the contract until 1 July unless you have some capital losses that you are able to offset against.

Please contact either John, Rob or Sam, if you would like further information.

Minimise year end opportunities and minimise risks

The end of the financial year will be here before you know it.

In this end of financial year update, we have summarised some of the key ways you can minimise your tax and reduce your tax risks prior to 30 June.

Plus, to ensure you are prepared for the new financial year, we’ve outlined some of the key issues you should be aware of.

Key Dates

Key Dates

Your End of Financial Year Obligations

Consider this Financial ‘house-keeping’:

Software

Before rolling over your accounting software for the new financial year, make sure you:

  • Prepare your financial year end accounts. This way, any problems can be rectified and you have a ‘clean slate’ for the 1025/2016 year. Once rolled over, the software cannot be amended.
  • Do not perform a Payroll Year End function until you are sure that your payment summaries are correct and printed. Always perform a payroll back-up before you roll over the year.

PAYG Payment Summaries

You need to provide all of your staff with their PAYG Payment Summary on or before 14 July 2015. This includes any staff that left your employment during the 2014/2015 financial year.

The ATO imposes penalties for the late lodgement of their PAYG Summary Statements with penalties of up to $2,750.

The annual PAYG Summary Statement for the year ending 30 June 2015 needs to be lodged with the ATO on or before 14 August 2015.

Reportable Fringe Benefits on PAYG Payment Summaries

Where you have provided fringe benefits to your employees in excess of $2,000, you need to report the FBT grossed-up amount on their PAYG Payment Summary. This is referred to as a “Reportable Fringe Benefit”(RFB) amount and you will notice that a label is included on the PAYG Payment Summary for this purpose.

You might not need to do a stocktake – using the simplified trading stock rules

Small Business Entities (operational businesses with an aggregated turnover below $2 million) have access to a range of tax concessions. One of these concessions is the simplified trading stock rules. Under these rules, you can choose not to conduct a stocktake for tax purposes if there is a difference of less than $5,000 between the opening value of your trading stock and a reasonable estimate of the closing value of trading stock at the end of the income year. You will need to record how you determined the value of trading stock on hand.

If you would like to take advantage of the simplified trading stock rules, call us today to make sure you are eligible to use the simplified rules and to talk through how to use them properly.

Superstream Update

Superstream update

SuperStream is a government reform aimed at improving the efficiency of the superannuation system.

Under SuperStream, employers must report super contributions on behalf of their employees by submitting data and payment details electronically in accordance with the SuperStream standard. All superannuation funds must receive contribution details electronically in accordance with this standard.

The new rules apply to employers that have 20 or more employees from 1 July, 2014.

Employers that have less than 20 employees have until 1 July, 2015 to comply with the new regulations.

It is the employers’ responsibility to collect the required information and ensure that their payroll software can cater for SuperStream.

Employers will have to:

  1. Make contributions electronically to employees’ nominated super funds, and
  2. Provide details of the payment transaction, e.g. employee name, TFN and super fund member number electronically to the relevant super fund via an electronic service address

Super funds will need to provide the below information to the employer:

  1. ABN
  2. Bank account details where the contributions should be paid to, and
  3. Electronic service address (ESA)
  4. Bank account details where the contributions should be paid to

Please contact the team at McAdam Siemon if you would like further information regarding Superstream.