The months leading in to the end of the financial year are very important to ensure you are maximising superannuation opportunities and complying with legislative requirements.
The following lists the top 8 things to consider before 30th of June:
1. Deducting Contributions: For those carrying on a business, if you want to receive a tax deduction for superannuation contributions they must be received by the superfund on or before 30 June 2016 - give yourself plenty of time especially if made by electronic funds transfer.
If you are eligible to claim a personal tax deduction for a contribution to superannuation then you will need to lodge a "Notice of intention to claim a tax deduction" with your superannuation trustee before you lodge your personal income tax return. We would recommend holding off on lodging this form until we confirm the amount with you
2. Review your contribution Caps: Depending on your age you have a concessional contribution cap of $30,000 or $35,000. Review your superannuation fund and determine what contributions have physically been received by the superannuation fund between 1/7/15 and 30/6/16. This cap includes any salary sacrifice contributions you made throughout the year. If you are under this cap you may want to make a further contributions before then end of the financial year. If you have breached this cap, the time to sort it out is before 30 June 2016.
3. Minimum pension payment: Ensure that the minimum pension amount is paid by your superannuation by 30 June 2016 in order to receive the tax exemption. If you are accessing a pension under the "Transition to Retirement", then ensure you do not exceed the maximum limit also.
4. Valuation: The assets in your self-manager superannuation fund (SMSF) must be valued each financial year based on objective and supportive data. You may need to get a valuation done on some of the assets in the SMSF.
5. Collectables: The rules on these types of assets held in a SMSF including artwork are getting a whole lot tougher on 1 July this year. Do you comply with the new rules? Or maybe it's time to sell this asset out of your SMSF?
6. Strategy: you need to ensure you have a signed current strategy for your SMSF.
7. Pension and Re-contribution Strategies: have you consulted an advisor to determine whether you could benefit from starting a pension or implementing a re-contribution strategy.
8. Contribution splitting: The maximum amount that can be split for a financial year is eighty-five per cent (85%) of concessional contributions up to the concessional contributions cap. You must make the split in the financial year immediately after the one in which your contributions were made. This means you can split concessional contributions you have made during the 2014/2015 financial year in the 2015/2016 financial year. You can only split contributions you have made in the current financial year if your entire benefit is being withdrawn from your SMSF before 30 June 2016 as a rollover, transfer, lump sum benefit or a combination of these.
Superannuation is a very complex area and we have kept explanations short and sweet above. If you are impacted by something on this list or simply want to know more please contact your Harris Black team member.
Small businesses will soon be able to change the legal structure of their enterprise without incurring a capital gains tax (CGT) liability. Instead, the CGT liability can be deferred until eventual disposal.
'Tax Laws Amendment (Small Business Restructure Roll-over) Bill 2016' will apply from July 2016, providing an optional rollover for small business owners who change the legal structure of their business when transferring assets from one entity to another.
The effect of the rollover is that the tax cost of the transferred asset/s is rolled over from the transferor to the transferee, providing greater flexibility for the small business. Rollovers will apply to any gains and losses which occur from the transfer of active assets that are:
Businesses that qualify for the rollover are ongoing businesses who transfer asset(s) as part of a genuine restructure.
Whether a restructure is "genuine" is determined by the facts and circumstances of the restructure, such as:
- Whether a bona fide commercial arrangement is undertaken for the purpose of enhancing business efficiency;
- Whether the transferred assets will continue to be used in the business; and
- Whether or not it is a preliminary step to facilitate the economic realisation of assets.
To be eligible for the rollover, each party to the transfer must be either:
- a "small business entity" with less than $2 million in turnover for the income year during which the transfer occurred;
- an entity that has an "affiliate" that is a small business entity for that income year;
- "connected" with an entity that is a small business entity for that income year; or
- a partner in a partnership that is a small business entity for that income year.
Since the new rules are rather technical in nature, obtaining professional advice may be in a small business's best interest to ensure they can take advantage of the restructure rollover.
To know more about these, please contact you Harris Black team member.
The number of unfair dismissal applications lodged last year suggests that employers are still struggling with unfair dismissal laws.
Around 14,800 unfair dismissal claims were filed in 2015, keeping the Fair Work Commission (FWC) very busy. And while most cases were settled before a formal hearing, they do create an unproductive distraction for employers.
Australia's unfair dismissal jurisdiction does not cover all workers; employees that earn over $133,000 per year cannot access unfair dismissal laws unless they are covered by an award or enterprise agreement. Casual employees, on the other hand, who have worked on a regular and systematic basis for more than six months can access unfair dismissal.
For an employee to be covered by the unfair dismissal laws they must be employed for either six months (for most employers) or 12 months (for small businesses).
An employee's termination is considered to be unfair if it is 'harsh, unjust or unreasonable'. The FWC considers the following factors when determining whether the termination was unfair:
- If an employer has a valid reason based on the employee's conduct or capacity;
- If an employee was notified of that reason and provided an opportunity to respond before a decision was made to terminate; and
- If the reason for dismissal is unsatisfactory performance, whether the employer gave any warning about it.
While the majority of employers understand that there must be a valid reason for the dismissal of an employee, it appears that they fail to realise that a termination can be considered harsh even when a valid reason exists.
Employers must be able to demonstrate that they have taken careful consideration of an individual incident and any surrounding or mitigating circumstances before dismissal.
Accounting add-ons have evolved recently in the world of accountancy. Each month we will feature a range of add-ons that will help you focus and become more efficient within your own practice.
In this month's edition of our HB featured add-on, we will showcase how one centralised platform can manage employment and seamless integration with the main cloud accounting players such as MYOB & Xero through Employment Hero.
Employment Hero is Australia's first complete HR system for small and medium sized businesses. As Australia's only fully integrated cloud HR system with a free jobs board, integrated payroll and live HR support, Employment Hero makes managing employment easy. Designed for business of all sizes, it delivers all the tools that you need manage employment from hire to retire.
From paperless on boarding, through to employment contracts and policy templates developed by employment lawyers, you can rest assured that your business remains compliant. By combining HR content, employee management tools, an employee portal and employee benefits in the cloud, Employment Hero will help you navigate through the employment landscape.
Employment Hero comes with integration into the major cloud accounting packages. Should you wish to continue using cloud accounting package as your payroll system, Employment Hero's integration wizard allows you to easily set up all of your employee files with a click of a button. Your employees can self-manage aspects of their employee files (with Employee Self Service, ESS), while keeping your cloud accounting package up to date.
Employment Hero is a partnership with leading employment lawyers, payroll legends and HR specialists.
To know more about Employment Hero, contact your Harris Black team member today.
Almost anyone that has a smartphone or tablet is constantly looking for ways to improve their business through mobile apps. To get things done efficiently every day, you should be equipped with the right mobile tool.
In this month's edition of Harris Black Top 10, our team came up with some of the best mobile apps that will surely help you manage not only your personal transactions but your business as well.
|Expensify makes capturing receipts, tracking time or mileage, business travel and creating expense reports quick and easy.
|myDeductions makes it easier and more convenient for you to keep your individual income tax-related deductions all in one place.
|Evernote gives you the tools you need to keep your work effortlessly organised.
|Wunderlist helps millions of people around the world capture their ideas, things to do and places to see.
|5. QuickBooks Online
|Run your entire business with the world's No. 1 small business Cloud accounting solution and enjoy the freedom of working anywhere from your smartphone or tablet.
|Organize your travel plans in one place with TripIt. Access itineraries anytime on any device.
|7. Office Mobile
|You can access, view and edit your Word, Excel and PowerPoint documents from virtually anywhere. Documents look like the originals, thanks to support for charts, animations, SmartArt graphics and shapes. When you make quick edits or add comments to a document, the formatting and content remain intact.
|This app complies with the Australian Tax Office (ATO) where the logbook method is used to record business use of a vehicle.
|9. Shoeboxed Australia
|You can just snap pictures of your receipts while traveling and let Shoeboxed take it from there. When you get home, generate an expense report in seconds and you're done.
||The free GoToWebinar mobile app lets you not only see and hear webinars, but take part in them as well. No matter where you are, you can ask questions, take part in polls and more.
For many employers, it can be easy to forget the responsibility of managing your superannuation obligations amidst the busy lifestyle of operating a business.
However, those who fail to meet their super obligations risk facing severe and even damaging liabilities.
Employers who pay their workers $450 or more before tax in a calendar month must pay superannuation on top of the employee's wages. If an employee is under the age of 18 or is a private or domestic worker, they must work for more than 30 hours per week to qualify. The minimum an employer must pay is called the super guarantee (SG).
The SG is current 9.5 per cent of an employee's ordinary time earnings, and must be paid at least four times per year. Employers who fail to pay the SG on time may have to pay a super guarantee charge (SGC).
Employees can choose the fund you pay their super into. However, if an employee is not eligible to choose or does not make a choice, the employer must pay their contributions into an employer-nominated or default fund.
The employer-nominated or default fund must be a complying fund (meets specific requirements and obligations under super law) and be registered by the Australian Prudential Regulation Authority (APRA) to offer a MySuper product.
Some super funds may ask that an employer becomes a 'participating employer' before they can pay contributions to them. Participating employers may have to make super payments more frequently; such as monthly instead of quarterly.
Employers can claim a tax deduction for super payments they make for employees in the financial year they make them. Contributions are considered to be paid when the employee's super fund receives them.
Missed payments may attract the SGC (superannuation guarantee charge). While the SGC is not tax-deductible, employers can use a late payment to reduce the charge or as pre-payment of a future super contribution (for the same employee), which is tax-deductible.
Last year's changes to tax law have made claiming car expense tax deductions for individuals much simpler.
Before July 1, 2015, there were four methods available to employees for claiming car expenses:
- cents per kilometre (capped at 5000 business kilometres);
- logbook (unlimited kilometres);
- 12 per cent of original value;
- one-third of actual expenses.
Now, the cents per kilometre and logbook methods are the only two available to use.
The cents per kilometre method was changed to use a standard rate of 66 cents per kilometre, irrespective of the car engine's size for the 2015-16 income year. These rates were previously based on a car's engine size and whether the car had a rotary or non-rotary engine.
The ATO set the PAYG (Pay-As-You-Go) withholding rate for cents per kilometre car allowances at 66 cents per kilometre from July 1, 2015. Failing to withhold any amount over 66 cents for all future payments of a car allowance may result in an employee having a tax liability when they lodge their tax return.
The ATO has also stated that employers who have already paid employees a car allowance at a higher rate should discuss with the employees if they want the employer to increase the withholding amount for the rest of the financial year to make up for the shortfall.
Under the logbook method, claims are based on the business-use percentage of the expenses for the car, such as running costs and decline in value. Capital costs like the car's purchase price and improvement costs are not included.
To determine the business-use percentage, taxpayers need a logbook and odometer readings for the logbook period (which is a minimum, continuous 12 week period).
If you have any questions, please contact your Harris Black team member.
The ATO has reminded trustees of self managed super funds (SMSFs) that if they have investments in collectables or personal-use assets that were acquired before 1 July 2011, time is running out to ensure their SMSFs meet the requirements of the superannuation law for these assets. Assets considered collectables and personal-use assets include artwork, jewellery, antiques, vehicles, boats and wine.
From 1 July 2011, investments in collectables and personal-use assets have been subject to strict rules to ensure they are made for genuine retirement purposes and they do not provide any present day benefit. SMSFs with investments held before 1 July 2011 have until 1 July 2016 to comply with the rules.
The ATO says SMSF trustees have had since July 2011 to make arrangements, and it expects that they will take appropriate action to ensure the requirements are met before the deadline.
Appropriate actions may include reviewing current leasing agreements, making decisions about asset storage and arranging insurance cover.
From 1 July 2017, anyone with a Higher Education Loan Programme (HELP) or Trade Support Loans (TSL) debt who is living overseas and earning above the minimum repayment threshold will be required to make loan repayments to the Australian Government, just as they would if they were living in Australia. The HELP minimum repayment threshold for 2016–2017 is $54,869.
If you have a student loan debt and are planning to move overseas for longer than six months, you need to provide the ATO with your overseas contact details within seven days of leaving Australia. You should also factor in potentially having to make repayments from 1 July 2017.
In January 2016, the ATO advised it was working with insurance providers to identify policy owners on a wider range of asset classes, including marine vessels, aircraft, enthusiast motor vehicles, fine art and thoroughbred horses. The ATO has since formally announced the data-matching program that covers these "lifestyle" assets, and will acquire details of insurance policies for these assets where the value exceeds nominated thresholds for the 2013–2014 and 2014–2015 financial years.
The ATO said it will obtain policyholder identification details (including names, addresses, phone numbers and dates of birth) and insurance policy details (including policy numbers, policy start and end dates, details of assets insured and their physical locations). The data-matching program will provide the ATO with a more comprehensive view of taxpayers' accumulated wealth, as well as assist in identifying possible tax compliance issues.
It is estimated that records of more than 100,000 insurance policies will be data-matched. The ATO has released a list of insurers involved with the data-matching program.
Please contact your Harris Black team member for further information.
Nikki White originally started with Harris Black on 3 August 1998, and has recently celebrated her 10 years as a Senior Manager. After working for several years at Harris Black and completing her studies to become a Chartered Accountant, Nikki then left for several years to work in London, where her experience included working at Credit Suisse First Boston.
Upon her return from London, Nikki had a brief stint in Commerce, started a family and again returned to Harris Black as a Manager.
Nikki has played a major role in mentoring staff and contributing to the growth of Harris Black over almost 18 years.
We have recently upgraded our anti-virus and SPAM filtering software. Typically products such as these often take a few weeks to bed down. At Harris Black, we pride ourselves in responding to your emails within 24 hours of their receipt. If we haven't done so, please contact your Harris Black team member.
- Quarterly activity statement, quarter 3, 2015–16 – paper lodgements – due date for lodging and paying.
- Quarterly instalment notice (form R, S or T), quarter 3, 2015–16 – due date for payment. You only need to lodge if you are varying the instalment amount.
- Super guarantee contributions for quarter 3, 2015–16 – employers must make contributions to the fund by this date.
Employers who do not pay minimum super contributions for quarter 3 by this date must pay the super guarantee charge and lodge a Superannuation guarantee charge statement – quarterly (NAT 9599) with us by 28 May 2016.
Note: The super guarantee charge is not tax deductible.
- TFN report for closely held trusts for TFNs quoted to trustees by beneficiaries in quarter 3, 2015–16.
- Lost members report for the period 1 July 2015 to 31 December 2015.
- 2015 tax returns for all other entities that did not have to lodge earlier (including all remaining consolidated groups), and are not eligible for the 5 June 2016 concession.
Due date for:
- company and super funds to pay if required.
Note: Individuals and trusts in this category to pay as advised on their notice of assessment.