Sam Greco & Co News

Personal Tax Return Checklist

Monday 12th May, 2014 (5:27 am)


View the personal tax return checklist

   

 


DIVISION 293

Friday 4th April, 2014 (2:16 am)

In the budget of May 2013 it was announced that high income earners would lose access to some of the tax concessions for Superannuation purposes.  Division 293 sees an additional 15% (added to the standard 15% tax) on superannuation income.  Individuals with an ADJUSTED income over $300,000 will have the option of pay this Division 293 tax personally or from their superannuation fund.

The ADJUSTED income comprises of:

  • Your taxable income (from your Income Tax Return – ITR/Notice of Assessment NOA)

  • Total reportable fringe benefits amounts (on ITR)

  • Net financial investment loss (on ITR)

  • Net rental property loss (on ITR)

  • Amounts on which family trust distribution tax has been paid (on ITR)

  • *Low tax contributions (from Superannuation Fund)

  • Super lump sum taxed elements with a zero tax rate (on ITR)

*Low tax contributions information is obtained from the superannuation fund and equals the member’s contribution statement.  This includes amounts from:

  • Employer Contributions amounts

    • Super guarantee

    • Salary sacrifice

  • Other family and friend contributions

  • Assessable foreign fund amounts

  • Assessable amounts transferred from reserves

  • Notional employer contributions (defined benefit contributions)

Example calculation:

John

        Taxable Income per ITR/NOA                  265,000

        Superannuation Paid   by employer          16,000

        Salary sacrificed super                                   9,000

        Rental property losses                                  18,000

        Total Earnings for Div 293                           308,000

The income in excess of $300,000 is taxed a further 15% ð $8,000 x 15% = $1,200

If John chose not to salary sacrifice the $9,000, he would still have a Division 293 tax issue - he would pay 46.5% tax + 1.5% Medicare levy on the $9,000 plus the 15% on the $8,000.  He is still saves considerable in regards to taxation if he salary sacrifices but not as much as he would have prior to Division 293 introduction.

 

Cassandra

Taxable Income per ITR/NOA                  285,000

        Superannuation Paid   by employer              16,000

        Salary sacrificed super                                8,000

        Adjusted Reportable Fringe Benefit             20,000

        Rental property losses                                  12,000

        Total Earnings for Div 293                           341,000

For Cassandra, Division 293 allows use of the lower of two amounts:

·         Low tax contributions $24,000 ($16,000 + $8,000) or

·         The excess over $300,000 ($41,000)

Therefore Cassandra’s Division 293 tax would be $24,000 x 15% = $3,600.

NB:  If Cassandra’s fringe benefit can be “cashed out” (i.e. cancelled out by an employee contribution) she may be able to reduce the total earnings by $20,000.  If you have a novated lease or cashable item which you are salary sacrificing, and you are in the Division 293 category of tax payers, please TALK TO YOUR ACCOUNTANT.

Payment of Divison 293 Tax

Division 293 tax is due 21 days after the notice of assessment is issued.  This is payable by:

·         The individual.

·         A division 293 tax release authority.  This will be issued with the notice of assessment allowing payment through the superannuation fund using members contribution, or

·         Splitting the payment between the two options.

NB:  Defined benefit funds are treated slightly different and you should talk to your accountant regarding these.

Websites:

How to calculate:

http://www.ato.gov.au/Tax-professionals/News-and-updates/Practical-tips/How-Division-293-tax-is-calculated/

General information:

http://www.ato.gov.au/Individuals/Super/In-detail/Contributions/Division-293-tax---information-for-individuals/

Produced by Sam Greco & Co

Ph 07 3263 5200

 

Email info@taxonline.com.au



COMMON GST MISTAKES

Thursday 25th October, 2012 (6:02 am)

COMMON GST MISTAKES

  • GST claimed on loan repayments, including Chattel Mortgages, credit cards, HPs.
    These items are NOT included at G11
  • Drawings included at G11 – these should be excluded & don’t have GST.
  • Merchant Fees have GST
  • Bank Fees don’t have GST
  • Insurance has GST but it isn’t 1/11. Stamp Duty portion has no GST.
  • There is no GST on income protection.
  • Registration for MV. Can only claim GST on the CTP if you have already stated that it is a business vehicle.
  • GST in not 100% of the purchase price of a motor vehicle e.g. Government fees, registration are GST Free.
    Purchase goes in G10.
  • Assets costing more than $1,000 need to go in G10 not G11.
  • GST claimed on GST free supplies
    -e.g. rates, stamp duty, water,
    -some staff amenities e.g. milk, sugar
    -ATO payments and fines (N-T)
  • Government Licencing does not have GST e.g. ASIC fees, BSA, Business Registration
    (BSA insurance has GST)
  • Residential properties – cannot claim GST
  • Sale of any business equipment (including motor vehicles) need to have GST on the sale and is included at G1
    G1 includes ALL income including those without GST e.g. Grants, interest, overseas
    sales but does not include ATO Refunds, bank loan funds, capital contributed by directors.
  • Entertainment expenses – generally only 50% of the GST is claimable
  • Wages & Superannuation do not have GST on them and are not reported at G11.
  • Protective and logoed clothing is deductible and has GST. Underwear and socks are not protective and are unlikely to have your business name on them.

Directors Penalty Notices and Personal Liability Amendments

Thursday 2nd August, 2012 (4:41 am)

Director Penalty Notices and Personal Liability Amendments

On 29 June 2012, new laws were passed in parliament expanding personal director liability for unpaid Australian Tax Office debt and increasing the severity of non-compliance. All company directors (including not for profit organisations) should be aware that the new laws substantially increase the circumstances in which they will personal liable for PAYG and superannuation liabilities of the company.


The law was introduced to counter fraudulent phoenix activities. A phoenix activity is where a company intentionally accumulates debts to improve cash flow or wealth and then liquidates to avoid paying the debt. The business then continues to operate as another corporate entity, controlled by the same person or group but free of the previous debts and liabilities.


While we would not expect this kind of actions from our clients, the new laws will affect all directors.

The effects include:


• The directors’ penalty regime has been extended to superannuation guarantee amounts, making directors personally liable for a company’s failure to pay employee superannuation.

• The ATO also has the right to issue estimates of the PAYG and superannuation for any unreported and unpaid liability exceeding three months. They have been given the power to commence recovery action against directors, without providing a 21 day grace period, for these liabilities.

• Liquidating the company does not liquidate the debt to the director for the PAYG or superannuation liability.

• In certain circumstances directors and associates of directors will be prevented from obtaining personal tax refunds for withheld amounts in their individual tax returns where the company has failed to pay withheld amounts to the ATO.

• Director Penalty Notices can now be served at the director’s tax agent’s address.
What does this mean?

• If PAYG or superannuation is unpaid 21 days after the due date, the directors will be personally liable for the debt without notification. The ATO can seek recovery from the directors or their associates’ (family) personal bank accounts.

• If a company goes into liquidation, the debt for unpaid superannuation and PAYG will be passed to the directors. “I didn’t know or I was ill at the time” will not be a defence.

• If you do not lodge your BAS or Superannuation Guarantee forms, the ATO is able to prepare estimates after three months of what they judge the company would owe and seek recovery of that estimate!

• New directors can be liable after 30 days for liabilities incurred prior to their becoming a directors.

• The ATO can take directors and their associates personally refunds in satisfaction of company PAYG and superannuation liability.


BEWARE: If resigning as a director and endeavouring to settle a directors’ penalty notice, please seek advice prior to payment.


Building and Construction Industry Reporting

Wednesday 1st August, 2012 (7:29 am)

Document can be downloaded here

#Press Highlighted (Here) above to get further details.

#Please let us know if you would be interested in attending an information evening.

Copy of letter email sent to clients below

From the 1st July 2012 the government brought in additional reporting requirements for businesses in the building and construction industry. It requires the completion of a “taxable payments annual report.” The reporting requirements cover numerous occupations in building and construction and occupations boarding on it, such as engineers, pipeline workers, cleaners, earthwork plant operators, architects, and decorators. In essence the requirement is to complete a form similar to a PAYG Summary (group certificate) for every business who’s invoice has a labour component greater than a delivery fee. It is irrelevant whether the contractor/subcontractor is running their business as an individual sole-trader, a partnership, a trust or as a company. It is also irrelevant if that business has or does not have employees/contractors.

Sam Greco & Co has posted information and pro-forma worksheets to help you collate the information on our webpage www.taxonline.com.au. It is important that you keep these sheets up to date. The lodgement date for the “Taxable payments annual report” will need to be lodged with the ATO by 21 July 2013. The ATO has advised that no extensions will be given. Please be aware that the ATO has stated that BAS providers (external bookkeepers) are not allowed to prepare these forms. Accountants, business owners and employees are allowed.

The ATO will be using these forms for data matching and if you fail to obtain the necessary information to complete the form, penalties maybe imposed.

We are aware that many clients will have questions on this topic and as such we are considering having an information evening within the next couple of weeks, should sufficient clients be interested in attending. If you are interested in attending this information evening please let us know by 17 August 2012.


Sam Greco & Co Chartered Accountant