DECEMBER 2015 BUSINESS NEWSLETTER Example industries include; Exploration and Mining; Manufacturing; Education; Building and Construction; Offshore Oil and Gas Support Services; Retail and Hospitality; Not-for-profit Organisations; Technology; and Property Development. With this increased capacity and capability we are pleased to be able to offer our clients a full suite of Audit and Assurance services, including: IN THIS ISSUE MGI Perth Audit Services More small business tax issues are now law. Work-related car expenses, third party reporting, and other measures. What does the ATO do if you are late paying your employee s super? Moving your business to a trust. Data matching program credit and debit cards 2014-15. Data matching program Online selling. Tax and the Christmas party MyGov - ATO MGI Perth Audit Services We have recently expanded our Audit and Assurance division, including the appointment of an experienced Senior Audit Manager to join Lindsay Stagoll and his team. Our audit division boasts a wealth of experience in working with a wide variety of organisations in various industry sectors. Our experience includes the audits of unlisted public companies; companies limited by guarantee; large proprietary companies; local subsidiaries of overseas parent companies; and incorporated associations. Statutory Audits Not-for-profit organisation audits and financial acquittals; ASX listed company audits and half year reviews; Unlisted public company audits; Large proprietary company audits; and Trust account audits. Assurance Services Internal audits; Investigations, due diligence and forensic audits; Corporate governance reviews Financial modelling and budgeting; Financial acquittals; Agreed upon procedures engagements; and Litigation Support Services. More small business tax issues are now law On 26 August 2015 the Tax Laws Amendment (Small Business Measures No 3) Act 2015 received Royal Assent. The Act makes amendments in the following areas: tax discount for unincorporated small businesses; immediate deductibility for small business start-up expenses; fringe benefits tax exemption for portable electronic devices for small businesses. In summary: Tax rate cut for unincorporated business entities this involves a 5% tax discount for individual taxpayers capped at $1,000 with business income from an unincorporated business with an aggregated annual turnover of less than $2 million will be introduced from the 2015-16 income year. Address: Level 1, 322 Hay Street Subiaco WA 6008 Postal: PO Box 1310 Subiaco WA 6904 T: (08) 9388 9744 F: (08) 9388 9755 E: info@mgiparkinson.com.au W: www.mgiparkinson.com.au
Professional expenses new businesses will be able to claim an immediate deduction for professional expenses (e.g. for the cost of advice from lawyers, accountants and other professionals) associated with starting a business from the 2015-16 income year. Electronic devices and FBT this involves a fringe benefits tax exemption for portable electronic devices used primarily for work purposes will be expanded from 1 April 2016. Work-related car expenses, third party reporting, and other measures On 15 October 2015 the Assistant Treasurer introduced into the House of Representatives the Tax and Superannuation Laws Amendment (2015 Measures No 5) Bill 2015. The Bill will make amendments in the following areas: work-related car expenses; Zone Tax Offset; FBT concessions on salary packaged entertainment benefits; third party reporting. Detailed below are the new measures in this Bill that might be relevant to your business. a) Work-related car expenses The Bill will change the methods for calculating workrelated car expense deductions. Currently, there are four methods taxpayers can use to calculate workrelated car expenses (12% of original value method, one-third of actual expenses method, cents per kilometre and logbook method). The 12% of original value method and the one-third of actual expenses method will be removed from the law leaving the cents per kilometre and logbook methods as the only two methods available. The Bill will also provide a streamlined process for calculating the cents per kilometre method by providing a single rate of deduction which more accurately reflects the actual running expenses of a vehicle. In the 2015-16 income year, the cents per kilometre rate will be set at 66 cents per kilometre. The Bill gives the Commissioner the power to set the cents per kilometre rate for later years via legislative instrument. Changes to the income tax law for this measure will generally apply in relation to the 2015-16 income year and later income years. Changes to the FBT law for this measure will operate from 1 April 2016 and later fringe benefits tax years. b) FBT concessions on salary packaged entertainment benefits The Bill will amend the FBT law to limit the concessional treatment of salary packaged entertainment benefits by: removing the reporting exclusion in respect of salary packaged entertainment benefits; removing access to elective valuation rules when valuing salary packaged entertainment benefits to prevent unintended and excessively concessional values being applied to those benefits; and introducing a $5,000 cap on the total amount of salary packaged entertainment benefits that certain employees can be provided with that are exempt from or subject to fringe benefits tax at concessional rates. This measure will apply to the 2016-17 FBT year and later FBT years. c) Third party reporting The Bill will make amendments to improve taxpayer compliance by increasing the information reported to the Commissioner by a range of third parties by creating a new third party reporting regime. This regime will require certain entities (third parties) to report information to the ATO on transactions that could reasonably be expected to have tax consequences for other entities. The following third parties will be required to report under the regime: government related entities, other than local governing bodies, must report on government grants; government related entities must report on consideration they provide for services; states and territories must report on transfers of real property in their jurisdiction; the Australian Securities and Investments Commission (ASIC), market participants and trustees of trusts with an absolutely entitled beneficiary must report on transactions relating to shares and units of unit trusts; listed companies must report on transactions relating to their shares; trustees of unit trusts must report on transactions relating to their units; and administrators of payment systems must report on electronic business transactions. The Bill contains measures dealing with: reporting obligations; timing of reports; reporting exemptions; and transactions that entities must report.
Third party reporting obligations in relation to transfers of real property (reported by States and Territories) and ASIC market integrity data (reported by ASIC) will apply to transactions happening on or after 1 July 2016. All other third party reporting obligations will apply to transactions happening on or after 1 July 2017. What does the ATO do if you are late paying your employee s super? If an employer is late making the required amount of super contributions to an employee, the employer is liable for the super guarantee charge (SGC), and they may need to lodge a superannuation guarantee charge statement. The ATO has recently released details of their practical compliance approach which explains the circumstances when they are unlikely to take action against generally compliant employers for the lodgement of SGC statements. If employers are experiencing difficulties in implementing their SuperStream solution and believe they may miss a super guarantee quarterly due date, they should make paying super guarantee their first priority. Practical compliance approach While the law requires employers to lodge an SGC statement, if they do not make the required amount of super contributions to a super fund by the end of the contribution cut-off date, the ATO may not check the current compliance of those employers who are viewed as low risk (as a result of having a good compliance history) and who have appropriately compensated their employees. The compensation in this instance should be an additional super contribution to reflect the amount of interest similar to that which the employees could reasonably expect to have received if the super contributions had been made to the fund by the due date. As a guide, the SGC nominal interest rate is 10% per annum. Ongoing late payment of super contributions due to cash-flow issues or other reasons would indicate a poor compliance history. Employers who make a one-off late super contributions payment, within one month of the contribution cut-off date, are considered low risk, and therefore the ATO are unlikely to take compliance action against them, especially if the additional contribution to 'top up' the employee s super fund account includes a reasonable amount of interest. If the late super contribution is a one-off, and the contribution was made more than one month after the contribution cut-off date, the ATO is likely to still consider this low risk and may decide not to take compliance action against those employers who fail to lodge an SGC statement if the affected employees have been appropriately compensated for lost earnings. If employers choose not to lodge SGC statements, they should consider making an additional contribution (based on a 10% p.a. interest rate) into the super fund as compensation for lost earnings on the late super contribution from the contribution cut-off date up to the date the contribution is actually made. Moving your business to a trust Following the 2015 Federal Budget announcement, the Government has recently introduced draft legislation to broaden the availability of roll-over relief for small businesses. The proposed legislation will provide much more flexibility for small businesses to change their existing business structures, such as from individuals or companies to family trusts and from trusts to trusts, without being subjected to adverse tax outcomes. There are broadly two types of business entities that may be eligible for the roll-over: 1. An entity that satisfies the small business entities definition (that is, its aggregated annual turnover is less than $2 million) and the $6 Million Maximum Net Asset Value ( MNAV ) test in the income year in which the transfer takes place. 2. An entity that is connected with, a small business entity for the income year that satisfies the MNAV test at the time of the transfer. The second type enables passively held assets that are used by the small business entity in their business to be transferred to another entity, say from an individual to a trust. One key requirement is that the transfer must not have the effect of changing the ultimate economic ownership of the asset or assets transferred, which is the individual who, directly or indirectly, beneficially owns an asset. If there is more than one such individual (tenants in common), the individuals' share of that ultimate economic ownership must be unchanged, maintaining the same proportionate ownership in the asset. In the case of discretionary trusts, a transaction will be taken as not having the effect of changing the ultimate economic ownership of assets where: immediately before or after the transaction took effect, the asset was included in the property of a discretionary trust that was a Family Trust (that is, by making a Family Trust election); and
every individual who, just before or just after the transfer took effect, had ultimate economic ownership of the asset was a member of the family group of that family trust. The new rules should apply from 1 July 2016. These changes are a welcome move and will provide more tax planning opportunities for small businesses in considering their current business structures. Primarily we see benefits in moving business assets held by individuals, either personally or as tenants in common, into a Family Trust. Finally, consideration should also be given to the WA transfer duty implications of undertaking such restructures because at this point, the WA Government still imposes duty of the transfer of business assets. Data matching program credit and debit cards 2014-15 The ATO is going to be collecting data relating to credit and debit card payments to merchants for the periods from 1 July 2014 to 30 June 2015. The data will be collected from the following financial institutions: American Express Australia Limited Australia and New Zealand Banking Group Limited Bank of Queensland Limited Bendigo and Adelaide Bank Limited BWA Merchant Services Pty Ltd Commonwealth Bank of Australia Diners Club Australia National Australia Bank Limited St George Bank Tyro Payments Limited Westpac Banking Corporation. The data requested will include information that enables the ATO to match merchant accounts to a taxpayer, including name, address and contact information as well as information on the number and value of transactions processed for each merchant account. This acquired data will be electronically matched with certain sections of ATO data holdings to identify possible non-compliance with taxation law. The purpose of this data matching program is to ensure that merchants are correctly meeting their taxation obligations in relation to their business income. These obligations include registration, lodgement, reporting and payment responsibilities. Data matching program Online selling The ATO is undertaking a data matching program through which information about registrants who sold goods and services to a value of $10,000 or more during the period 1 July 2014 to 30 June 2015 online will be obtained. Data will be sought from ebay Australia and New Zealand Pty Ltd, a subsidiary of ebay International AG which owns and operates www.ebay.com.au. The data requested will include information that enables the ATO match online selling accounts to a taxpayer, including name, address and contact information as well as information on the number and value of transactions processed for each online selling account. This information will be matched electronically with certain sections of ATO data holdings to identify possible non-compliance with taxation law. It is estimated that records relating to between 15,000 and 25,000 individuals will be matched. Tax and the Christmas Party Entertainment The costs (such as food and drink) associated with Christmas parties are exempt from FBT if they are provided on a working day on a client s business premises and consumed by current employees. However, a taxable fringe benefit will arise in the following circumstances; 1. Where an associate of an employee attends the party, unless the minor benefits exemption applies; and 2. Where the Christmas party is held off premises, unless the minor benefits exemption applies. Where you provide a Christmas party for your employees and partners you need to look at the cost of the benefit provided to each person. Each benefit provided that is less than $300 (incl GST) may be a minor benefit and exempt if certain conditions are met. The cost of providing a Christmas party is income tax deductible only to the extent that it is subject to FBT. Therefore any costs exempt under the minor benefits exemption, will be non-deductible for income tax purposes.
Gifts for Employees The costs of gifts such as bottles of wine, vouchers and hampers should be looked at separately to determine if the minor benefits exemption applies to these benefits. MyGov - ATO Please note that if you have a MyGov account and have linked your tax file number to this service, then all ATO correspondence including your Notice of Assessment will be sent electronically by the ATO to your MyGov inbox. Please make sure you check this regularly. Merry Christmas The Partners and Staff at MGI Parkinson would like to wish everyone a very Merry Christmas and a safe and prosperous New Year. Please note our office will be closed from 25 December 2015 until 4 January 2016. DISCLAIMER MGI Parkinson Business Newsletter is distributed quarterly to provide information of general interest to their clients. The content of this newsletter does not constitute specific advice. Readers are encouraged to consult us for advice on specific matters.
Services We Provide MGI Parkinson is a fully integrated chartered accounting and business advisory practice. We provide extensive accounting and business services. These include: Tax and Business Services Our Tax and Business Services Division is designed to meet all your business and compliance needs. We have extensive experience preparing tax returns, financial statements and providing tax advice across a wide range of industries from individuals to large companies. Key People David Fong Lindsay Stagoll Sam Pigliardo Sam Acquaviva Rocco M Fazari Ian Bond Audit Services We provide audit services for companies, not for profit organisations and trust accounts. Financial Planning We provide superannuation, retirement planning, estate planning, insurance and investment advice. Superannuation We provide advice on Self Managed Superannuation Funds (SMSF). We attend to all compliance issues (accounting, tax and audit), provide SMSF consulting advice, pension planning and all superannuation related administrative functions. Litigation Support Services We have extensive experience in providing litigation support services to the legal industry. We offer Expert Witness Reports, Business Valuations, Calculations of Economic Loss, Analysis of Reports & Financial Information. Valuation Services We provide valuations for business acquisition or disposals, succession planning & retirement strategies. Company Secretarial and Advisory Services The Corporate Advisory Services offered encompass all aspects of ASIC compliance, advising on roles and duties in relation to the Corporations Act and / or company s constitution. Our services also include acting as company secretary as required.