TAX TIME 2018 We would like to thank you for your continued custom and support over the past year. This has been a particularly difficult year firstly with Marian s radiation treatment over September and October 2017 and now with the sudden passing of Bruce Kemp in April 2018. Bruce was the dearly loved husband of Marian and father to Joshua and Sarah. Bruce was an integral part of the team and is sadly missed, not only for his IT and business skills, but also for his ever present smile and cheerful nature. Understandably it is a difficult time for all of the team and we are endeavouring to continue to serve you, our valued clients, as best we can. We thank you for your understanding and patience while we reorganise the business to cope with Bruce s loss. Lodgement extensions have been obtained for all our income tax clients and we will deal with your tax and business matters before the extensions expire. We continue to progress our move to a paperless system within our office. We will continue to email tax returns and business correspondence, where possible via email. Please note, for privacy reasons identifying data such as Tax File Numbers, Dates of Birth and Bank Account Details are not transmitted on the emailed tax returns. Please ensure that your email address and other contact details with us are kept up to date. We do recognise that clients have different needs and concerns, depending on their circumstances. Please contact us by email info@ktas.net.au or phone us on (03) 6229 3697 for any feedback or concerns. For those without email we will continue to post your information and you are also welcome to pick up any information direct from the office. Let us know when you drop your work in and tell us how you would prefer to collect the work again. We are working towards standardising the accounting software being used by our clients. There is a vast range of software programmes from MYOB, Quicken and Xero which means that we need to hold a large range of software on our business computers. We would encourage all clients to update to the latest version of their preferred software to ensure that they comply with the latest tax requirements. All 1 MISSION, VISION AND VALUES... 2 STAFFING... 2 2017-18 TAX UPDATE... 2 ATO FOCUS... 5 FUTURE CHANGES... 5 CLOUD ACCOUNTING... 5 businesses will eventually have to comply with Single Touch Payroll Requirements in the coming years and if your software is not up to date you will not be able to comply. If you require assistance to update your software or would like to chat to us about updating to a new software program, such as Xero, please contact us. Updated checklists for the 2018 year will be available from our website early in July 2018. We encourage you to use the checklists to ensure that you have all the required information, before sending or dropping off your year-end information. Checklists will be available for download from the Newsletters and Resources menu on the
website www.ktas.net.au Please note hard copies of the checklists are available at our office or alternatively we can email you a checklist for reference. As authorised tax agents we lodge income tax returns continuously throughout the year. This helps us and you to organise and schedule work for that year. In order for us to complete all clients income tax returns before the relevant lodgement due date, we need to receive your 2018 tax information as soon as possible. Please do not leave things until the last minute as this makes it very difficult for us to meet all requirements. MISSION, VISION AND VALUES Mission Statement Every day we help clients understand, build and move towards achieving their financial and lifestyle goals. Vision Statement We will become the most trusted local professional business helping our clients achieve their goals through our holistic approach. Values Integrity, Accountability, Passion and Fun. STAFFING We have experienced some change to our staff since June 2017 and the team is now made up of these very competent individuals: Marian Kemp: Principal Certified Practising Accountant, Fellow of the Institute of Public Accountants, Chartered Accountant, Registered Tax Agent and Authorised Representative of Politis Investment Strategies Pty Ltd. Marian has over 30 years experience and her background includes working for the Australian Taxation Office, a chartered accounting practice and a non-profit organisation. Marian has a wealth of knowledge and has a passion for helping clients achieve their financial and lifestyle goals. Mandy White: Has been with us for 10 years and is our primary bookkeeper, individual income tax return preparer and Office Administrator. Mandy has over 25 years experience working in small businesses, has lots of experience using the MYOB accounting system and will be only too happy to help all clients where possible. Cory Bellchambers: Joined Cornerstone in July 2017. Cory has many years experience working in Chartered Accountant and Certified Practising Accountant firms in Tasmania, gaining experience with a broad spectrum of businesses and industries. Cory enjoys problem solving and is passionate about contributing towards individuals and businesses achieving their goals. Louise O Bryan: Certified Practising Accountant, with over 25 years of accounting and payroll experience working with small to medium size businesses. Louise has experience in all aspects of accounting and payroll within numerous difference industries. Louise has experience using MYOB, Reckon and Xero software products and gains tremendous satisfaction from assisting all clients with all of their accounting, payroll and taxation needs. 2 Hayley Woolley: Is our newest team member and will be assisting Mandy in reception. Hayley will be trained to provide excellent customer service and will eventually be able to complete individual income tax returns. All our staff are involved with training throughout the year including software and tax updates. We will be continuing to learn and develop, in order to provide a great service experience to you. 2017-18 TAX UPDATE The Australian Taxation Office (ATO) has received a large boost in funding from this years Federal Budget, which will enable it to have a stronger focus on ensuring taxpayers claim only the work-related expenses to which they are entitled. Some of this additional funding will go to improving the checking of claims in real time, increasing data matching tools and technology, conducting additional audits and increasing prosecutions. Please note; if a case goes to review, penalties could range between 25% and 75% of the disallowed deduction. INDIVIDUALS Typical work-related expenses include employmentrelated mobile phone, internet usage, computer repairs, union fees and professional memberships and subscriptions, which have NOT been reimbursed. Essentially, for an expense to qualify; you must have spent the money yourself, it must be directly related to earning your income, it must NOT
have been reimbursed and you MUST have the records to prove it. It is important to remember that landlords can no longer allow travel deductions related to inspecting, maintaining and collecting rent for a residential property. If you are or have been involved in acquiring or disposing of cryptocurrencies, you need to be aware that the ATO takes the view that cryptocurrency is neither money nor currency. Rather it is considered property and is an asset for capital gains tax (CGT) purposes. A person involved in cryptocurrency transactions need to keep appropriate records for income tax purposes. From 1 July 2017 anyone under the age of 75 is able to claim contributions made to a complying superannuation fund as fully tax deductible in the 2017-18 tax year. To claim the deduction, you will first need to lodge a Notice of Intent to claim a deduction form with your superannuation fund by the earlier of the day you lodge your tax return or the end of the following income year. These contributions count towards your concessional contribution cap (see below for more details). purchased by 30 June 2018 that cost less than $20,000. Assets must be used by the business for an income producing purpose and they must be installed ready for use by 30 June 2018. Most companies with an aggregated annual turnover of less than $25 million will pay tax at the rate of 27.5%. However, some companies with a turnover of less than $25 million will continue to pay tax at 30%, especially companies that earn nearly all their income from passive investments such as rental or interest income. As always, trustees of discretionary trust are required to make and document resolutions on how trust income should be distributed to beneficiaries for the 2017-18 financial year by 30 June. There is currently a Superannuation Guarantee Amnesty available to employers until 23 May 2019. This gives any businesses the opportunity to make catchup superannuation payments without penalty. AND SELF-MANAGED FUNDS (SMSFs) The concessional superannuation contribution cap for the 2017-18 year has been reduced from $30,000 and $35,000 to a cap of $25,000 for all age groups. The non-concessional superannuation contribution cap for the 2017-18 has been reduced from $180,000 to $100,000. For 2017-18 there has been a $1.6 million cap introduced on Retirement Accounts. For those SMSFs paying pensions to member(s) the minimum pension payments for account-based pensions have not changed and are shown in the table below: Age of beneficiary Percentage Factor Under 65 4.00% 65 74 5.00% 75 79 6.00% 80 84 7.00% 85 89 9.00% 90 94 11.00% 95 or more 14.00% BUSINESSES Businesses with an aggregated annual turnover of less than $10 million can still get an immediate tax deduction for most individual assets 3
FUTURE CHANGES Individuals The new tax rates commencing 1 July 2018 are as follows: Updated rates, thresholds and offset entitlements linked to these changes New tax New tax New tax thresholds thresholds thresholds Rate (%) From 1 July 2018 Income range ($) From 1 July 2022 Income range ($) From 1 July 2024 Income range ($) Tax free $0 - $18,200 $0 - $18,200 $0 - $18,200 19% $18,201 - $37,000 $18,201 - $37,000 32.50% $37,001 - $90,000 $37,001 - $90,000 37% $90,001 - $180,000 $90,001 - $180,000 $18,201 - $37,000 $37,001 - $90,000 $90,001 - $180,000 45% >$180,000 >$180,000 >$180,000 New low and middle income tax offset Current low income tax offset New low income tax offset Businesses From the 1 July 2018 overseas businesses that meet the GST registration threshold of $75,000 will need to charge GST on goods that are; less than $1,000 in value, imported into Australia and not a GST free product. This means you will be charged GST on low value items if you are not registered for GST or if registered for GST but importing the goods for personal use. You should not be charged GST on low value items, if you are registered for GST, import goods for business use in Australia and provide your ABN to the supplier and a statement that you are Up to $530 Up to $445 Up to $645 Up to $645 registered for GST. If you are charged GST incorrectly you should contact the supplier to let them know that you re registered for GST, and request a refund. New legislation commenced 1 July 2017, and as part of the legislation, most electronic payments made from 1 July 2017 will be reported to the ATO including payments made via; credit and debit cards, Bpay and all other electronic payment transactions. The ATO can then use this data to match against client records. There will be a progressive increase in the small business income tax offset, for small businesses with a turnover of less than $5 million. For the 2016-17 year the tax offset is 8% with a limit of $1,000. In 2024-25 the tax offset increases to 10%, then increases to 13% in 2025-26 and then to 16% in 2026-27. AND SELF-MANAGED FUNDS (SMSFs) From 1 July 2018 if you had a superannuation balance of less than $500,000 on 30 June of the previous financial year, you may be entitled to contribute more than the general concessional contributions cap and make additional concessional contributions for any unused amounts. The first year you will be entitled to carry forward unused amounts is the 2019-20 financial year. Unused amounts are available for a maximum of five years and after this period will expire. AUSTRALIAN TAXATION OFFICE FOCUS As well as the ATO focussing on work related expenses another ATO focus is on rental properties. 4
The ATO will be taking a closer look at rental deductions as well as rental income. Technology developments allow the ATO to data match properties from surrounding areas and compare what other taxpayers are lodging in relation to rental properties on their income tax returns. The key to remember is ensuring your rental deductions are claimed on the basis that your property is genuinely rented out, or available for rent. The ATO is also watching popular holiday spots to understand market rental rates. So if you are renting your property to family or friends at a discounted rate, you can only claim part of the deduction in line with the percentage of market rent paid. A significant growth in Airbnb in Australia has caused the ATO to advise that they will be devoting resources to ensure that taxpayers who derive income from providing Airbnb services, by renting out part or their entire home, are complying with tax legislation. The ATO will be reviewing the income declared from these activities along with the deductions claimed in relation to these business activities. Ride share drivers are also on the watch list for the ATO. All ride share service providers need to be registered for GST and have an ABN number. With the increase in individuals earning income from providing ride share services, the ATO will be ensuring that only business portion of the deductions are claimed. So remember to include all your business income and only claim the business portion of your deductions. CLOUD ACCOUNTING There is an increasing opportunity from software providers to upgrade or migrate over to cloud based accounting services. Cloud accounting is basically a web based system, which is hosted on a remote server that allows you to log into your accounting system (MYOB, Quicken, Xero, etc.) from any internet enabled device. Providers offer many features and you need to look closely at these features to ensure you are not paying for features you do not need. Pricing is normally based on the amount of features in the software and providers normally have several options available to suit your business needs. We can assist you with advice on cloud based software if you are interested in migrating to a cloud based system. 5 Items to review: Look at the prices of services available (normally a monthly charge) Are there any additional charges for extra features (e.g. automatic bank feeds)? Does the cloud software offer you the feature you need? Find out what happens to your data if you stop subscribing How good is your internet connection? (a cloud based system required the internet for use and if you have a slow connection you might find this very frustrating) If others will be accessing the cloud based system at the same time, will this affect the usability of the system? A final reminder about back-ups. It is good practice to get into the habit of backing up all your computer files to an external hard drive or cloud based service such as Dropbox. This is especially important with photos, business documents and personal documents.
accounting services financial services 19 Beach Road Kingston Beach TAS 7050 TEL: 03 6229 3697 EMAIL: info@ktas.net.au Our office hours are Mon Fri, 9am 5pm A is an important quality on which something depends or is based. We hope our businesses provide you, our clients, with the basics or fundamentals, through quality, professional and personal advice. We are pleased to be able to provide you with comprehensive services and advice including accurate and professional accounting and taxation services, and financial advice. 6