Sam Greco & Co News

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.

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.

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

One of Brisbane's largest suburban accountants has urged business owners who use a family trust to talk to their accountant today.

Mr Greco said the Australian taxation Office (ATO) had imposed a new deadline. "Make sure you prepare a 'minute' today or risk paying tax at 46.5% on all your family trust income", he warned.

"In the past accountants would usually prepare a minute to allocate the family trust's income and the ATO would not ask to see the minute. However this year the ATO may ask to see this minute and how the income is to be distributed", he explained. Without this minute the ATO can charge 46.5% tax on all the trust's income.

The way the family trust deeds are written it does require the distribution of the income to be minuted before 30 June each year. The problem being, it is difficult to work out how much the income will be and decide who should get the income before the end of the financial year.

It is also a good opportunity to review your trust deed to make sure it caters for some recent court decisions that all for certain types of income (dividends and capital gains) to be allocated or streamed to beneficiaries.

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