As per the recent "My Business" article; as part of the ATO’s approach to reviewing outstanding taxes by small business, the ATO are investigating unpaid superannuation guarantee contributions by commencing a superannuation guarantee compliance crackdown.   The ATO have released figures showing that they feel $2.85 bn  is outstanding in unpaid superannuation from the 2014-15 financial year, and that this figure may have increased substantially between 2014-15 and now. 

Each employer is required to pay superannuation to their employees nominated superannuation fund at the rate of 9.5% on Ordinary Times Earnings. 

If you have any questions on what is included in Ordinary Times Earnings or your superannuation guarantee obligations, please contact our office to discuss in further detail.

Need a summary of the tax and accounting changes at 1 July 2017?

1 July 2017 marks some changes around tax, superannuation and small business.  Here's a summary of these changes:

• Small business $20k instant asset write-off extended until 30 June 2018
• Company tax rate reduction to 27.5% for entities with an aggregated turnover of less than $25m (companies with a turnover of less than $10m have been subject to this tax rate since 1 July 2016).
• Major Bank Levy introduced
• 2% temporary debt tax removed from high income earners
• Plant & equipment deductions limited for residential property investors (not yet legislated)
• Residential property investors no longer able to claim travel expenses (not yet legislated)
• First home saver scheme begins (not yet legislated)
• GST applies to digital products & services imported by consumers

Superannuation reforms come into effect:

• Cap on concessional contributions (before tax) reduces to $25,000 for everyone.
• Cap on non-concessional contributions (after tax) reduces to $100,000.
• $1.6 million transfer balance cap limits how much money a member can transfer into or hold in a tax-free pension account. Excess amounts are subject to a transfer balance tax.
• Threshold to access the tax offset for contributions to a spouse increased to $37,000 (partial offset available up to $40,000).
• Threshold for low income super tax offset increased to $37,000.
• The threshold at which high-income earners pay Division 293 tax on their concessionally taxed superannuation contributions reduced to $250,000 (from 300,000).

Please let us know if you have any queries regarding the above or would like to discuss in more detail.

Tasks (and their due dates) to complete around Tax Year End 2017

As we are just 1 week away from the end of another tax year, we thought it would be useful to provide a list of tasks that require completion before and after 30 June 2017.

Not all businesses will be required to complete all of these tasks, but please review your obligations, and contact us should you require assistance.

REMEMBER TO LODGE YOUR PAYMENT SUMMARY ANNUAL REPORT

The end of the financial year will be here soon.

What you need to do

As an employer, you need to:

1. provide payment summaries to your employees by 14 July
2. send the ATO your payment summary annual report
3. use the new tax rates for withholding from 1 July. You can check for updates to tax rates on the ATO website ato.gov.au/taxtables from mid-June

If you use accounting software, you should contact your software provider for payroll updates.

If you lodge your annual report as early as you can, it will help your employees complete their tax returns.

Please let us know if you require assistance in preparing and lodging your Payment Summaries and Annual Report.

As you may know the Government debated at length various “reforms” to Superannuation and there have been significant changes to the law.  Some of the key changes include:

-            Changes to the amount of concessional contributions (tax deductible contributions), reduced to $25,000 for all taxpayers from 1 July 2017. 

The maximum concessional contributions you can make for the year ended 30 June 2017are $30,000 if aged under 49 on 30 June 2016 and $35,000 if you are aged over 49 on 30 June 2016.

-            Changes to the amount of non-concessional contributions (after tax contributions), reduced to $100,000. 

The concessional contribution cap for the year ended 30 June 2017 is $180,000. 

If aged 64 or under on 1 July 2016 you are entitled to the 3 year bring forward rule making the total non-concessional contributions that you may be eligible to contribute prior to 30 June $540,000.  There will be a transitionally phased reduction of the bring forward rule post 1 July 2017.

-            Limiting the amount a member can have in a tax exempt pension account to $1,600,000.  This is based on the market value of pension assets at 1 July 2017, in all superannuation funds relating to you.

If your pension assets (note a TRIS is no longer considered a pension from 1 July 2017) exceed $1,600,000 you have the option of rolling the excess back to accumulation or taking a lump sum payment.

Please note the option to reset cost bases and obtain CGT relief exists for assets rolled out of pension on 1 July 2017.  This resetting of cost bases is optional and should be considered on a case by case basis.  

You should also consider the impact of this on your estate planning (e.g. reversionary beneficiaries).

-            Effectively making redundant transition to retirement pensions (aka:  Transition to Retirement Income Stream – TRIS), previously these were tax free, from 1 July 2017 will be taxed at 15% (Capital Gains Tax may be eligible for a 1/3^rd reduction if the asset is owned for 12 months or more, reducing the tax to 10%) . 

Given the TRIS will be taxed, similar to the accumulation phase of superannuation from 1 July 2017, you may wish to consider:

• whether you wish to continue with a TRIS based pension,
• changing the pension type to an account based pension (note certain hurdles must be passed to be eligible for this change in pension type); or
• cease the pension.

-            Decreasing the income threshold for 30% contributions tax to $250,000.  Currently the threshold is $300,000.  Please note an adjusted assessable income is used to calculate both the $250,000 and the $300,000 amounts.

-            Allowing the ability for taxpayers with employer supported superannuation to claim personal superannuation contributions i.e. the removal of the 10% rule.

These changes all apply from 1 July 2017, however as shown by the above points it is of upmost importance that a number of decisions are made this financial year. 

The Directors at D J Grewar & Co have identified a number of clients that they feel will be impacted by these changes and will be making contact them with them prior to 19 May 2017.  If you feel the above changes will impact you and you haven’t received a phone call by 19 May, please contact our office to discuss.  

Should you have any queries please contact our office.

Any information I provided to you in this letter is purely factual in nature and does not take into account your personal objectives, situation or needs. The information is objectively ascertainable and is not intended to imply any recommendation or opinion about a financial product. This does not constitute financial product advice under the Corporations Act 2001 (Cth). It is recommended that you obtain financial product advice before making any decision on a financial product such as a decision to purchase or invest in a financial product. Please contact us if you would like to obtain financial product advice.”

Did you know that the Federal Court of Australia has handed down its decision that ride-sourcing (i.e. Uber) is taxable income?

This has various implications if you are earning income from Uber driving; for example:

• You are required to have an ABN and to be registered for GST regardless of your turnover, and submit Business Activity Statements (BAS returns).

• GST must be calculated on the full fare, not the net amount you receive after deducting any fees or commissions

• GST credits on your business purchases can be claimed, but must be apportioned between your business and private use.

• The income you earn from your ride-sourcing business is assessable income and must be reported in your income tax return.  This applies even if you run your ride-sourcing business on a casual basis to supplement your income from another job or other business activities.

More information can be found on the ATO website by clicking here

Please note that the ATO have direct access to Uber data, where they can confirm who is earning income from ride-sourcing activities (and exactly how much they are earning).  We are starting to receive ATO notices showing that clients have received Uber income without having declared it on a BAS return, which may result in ATO penalties being issued.

Please let us know if you require any more information on the above, or need assistance in registering for and ABN and GST, and lodging BAS returns.

I am writing to let you know of an exciting new development within the DJ Grewar & Co taxation and accounting practice. 

On the 3^rd of April we will merge a new shareholder into our practice, being the Chartered Accounting Firm, Williams Hall Chadwick.  This is part of a gradual transition process for me to find a long term partner to assist taking DJ Grewar & Co forward in the future.

Building and maintaining the practice in the Redlands has been an extremely rewarding period for me over the last 20 years and in particular developing the professional relationships that have emerged with many families and businesses as we have worked together on business, tax and advisory issues.

I have been investigating ways for some time now to enable the practice to continue to service its clients for the longer term.  The solution of a progressive merger over time to Williams Hall Chadwick provides this opportunity.

Williams Hall Chadwick (WHC) is a second tier firm based in the CBD and with a strong regional presence in Queensland.  WHC are part of the Hall Chadwick national association and also part of Prime Global.  While the firm is larger than ours, the partners are focused on the same things that DJ Grewar & Co has always focused on which is personal and professional service.  Two of the WHC partners live in the Redlands, Michael Cameron and Craig Torry, and Craig will be spending more time working out of the DJ Grewar & Co office. 

Overall not a lot will change in relation to the way DJ Grewar & Co currently operates.  The overriding theme in discussions between WHC and DJ Grewar & Co has been “business as usual”.  The practice will retain the DJ Grewar & Co name, all current staff will remain employed, including myself and we’ll remain in the same premises.

Over time Craig will have a greater presence and the DJ Grewar & Co practice will have access to a greater range of professional services which will assist with our consolidation and growth in the future.

We look forward to continue servicing our existing clients and if you have any queries at all about these changes, please do not hesitate to contact me. 

Kind regards

DEREK GREWAR

Director

The wide ranging superannuation reforms originally announced in the 2016-17 Federal Budget have passed Parliament.

As the majority of the reforms start from 1 July 2017, it’s important to consider how these might impact on you and whether you need to take any action before then.

Key reforms include:

• Non-concessional contributions capped at $1.6 million – Once your super balance has reached $1.6m, from 1 July 2017 you will no longer be able to make non-concessional contributions to super.  This does not stop you from making non-concessional contributions in the current 2017 financial year.

• If the balance of your superannuation pensions exceed $1.6m at 1 July 2017, the Tax Commissioner will direct your fund to reduce your retirement phase interests back to $1.6m and you will be subject to an excess transfer balance tax. Your overall super balance can be more than $1.6m but only $1.6m can be in a tax-free pension. Keeping the excess balance in super, albeit in accumulation phase, may still be worthwhile because of the low 15% tax rate.

All businesses who employ staff should now be superstream compliant as we have passed the extended deadline for compliance of 28^th October 2016.

The superstream process should enable you to make superannuation contributions far more efficiently and securely.

Please note, however, that contributions are only classed as being paid on the date they reach the employees superannuation fund (NOT ON THE DATE THAT YOU PROCESS THE SUPERSTREAM PAYMENT IN YOUR SOFTWARE).  The only exception to this is when the ATO’s small business clearing house is used, in which case the contribution is considered to be paid on the date it reaches the small business clearing house. 

This means that for employers using superstream functionality in software such as MYOB and Xero, contributions need to be authorised and sent well before the due date of the 28^th of the month following the end of each quarter.  You should check with your software provider to confirm the time it will take for the funds to pass through the superstream process and reach the employee’s superannuation fund.  You are likely to have to process and pay your superannuation contributions at least a week before the quarterly due date.

The timing of contribution payments will be particularly important at the end of the financial year, where contributions will need to be processed well before 30 June to be considered deductible in the financial year.

In the May Budget the government announced changes to individual tax rates for the 2016-17 income year. Legislation dealing with those announced rates was introduced to Parliament on 31 August 2016. As a result a number of tax tables have been updated to apply from 1 October 2016. Those tax tables that have not been updated will continue to apply.

Updated tax tables do not include any catch-up component for the portion of the year which has already passed. Individuals affected will receive the full benefit of the tax changes upon assessment of their income tax return for the 2016-17 income year.

Please ensure that the payroll tables on your software are updated by 1 October 2016, or if you calculate wages manually, refer to the updated tax tables which apply from 1 October 2016.

More information and the updated tables can be found at: https://www.ato.gov.au/Rates/Tax-tables/

For MYOB users, a software update will soon be available via your my.myob login for you to install before running the pays from 1 October 2016 onwards.

For Xero users, the tax tables will automatically update at 1 October 2016 and any pay runs processed from 1 October 2016 will use the updated tax rates.  Xero users do not need to update their software at all, but should take note of the new net pay amounts calculated on pay runs after 1 October 2016 to ensure that the correct amounts are paid to staff.