As we put down the credit cards after the plethora of end of financial year sales events, we kick off what we all hope will be a prosperous new financial year. Despite the many uncertainties in global markets and governments, we wanted to take the opportunity to remind you of some important points as we move into the New Year:

Foreign resident capital gains tax withholdings rules apply NOW
Don’t let the name deceive you, as we’ve highlighted in our recent correspondences these new measures do not just apply to “foreign residents” and will apply to a broad range of property transactions over $2M. Online forms are now available on the ATO website for the following:

• Clearance certificate application form
• Variation application form
• Purchaser payment notification

You can find these forms and other useful information from the ATO by clicking here.

Tax Incentives for early stage investors
From today innovative new business start-ups will have easier access to capital, while investors will have access to generous tax offsets for early stage investments. After the bill received Royal Assent on 5 May, the first of July will have certainly been circled on the calendar for many. The Australian Government has a raft of information available here

Extended deadline for SuperStream compliance for small businesses
On the 22nd of June, Deputy Commissioner James O’Halloran announced that small businesses (less than 19 employees) that are not yet SuperStream ready now have until 28 October 2016 to be compliant.

Extended deadline for LRBA arrangements
On 6 April 2016, the ATO issued PCG 2016/5 which outlined the safe harbour terms upon which a trustee of a SMSF could choose to structure their Limited Recourse Borrowing Arrangement (LRBA) with related parties in order to show that it is consistent with an arm’s length dealing. The ATO has extended the original deadline of 30 June 2016 to 31 January 2017.

Real property transfer reporting
A reminder that the ATO are always willing to help! From today, all state and territory collection agencies will be collecting and reporting information to the ATO about all transfers of freehold and leasehold interests in real property located in all states and territories.

New checklist for Research & Development Tax Incentive
The ATO have recently updated their information, including helpful checklists on assessing whether your activities may be eligible for the R & D Tax Incentive. This can be a very generous tax measure assisting many businesses fund the research & development activities undertaken generating new and innovative activities.

Click here for a good source of information available from the ATO.

Should you have any queries, please don’t hesitate to contact our office on 07 3394 2311.
Regards, The Hoffman Kelly Team

Budget Summary

The budget was handed down last night, and there were several major announcements.  Issues dealt with include:

SUPERANNUATION
• Imposing a lifetime limit of $500,000 on non-concessional superannuation contributions
• Reducing the superannuation concessional contribution cap to $25,000
• Capping tax-free super to balance of $1.6 million
• Removing tax-free earnings on TRIS accounts
• Expanding the number of taxpayers with 30% tax on concessional contributions
• Abolition of anti-detriment deductions
• Expanding tax deductibility of contributions to employees and those over 65
• Refunds for low income earners contributing to super
• ‘Catch-up’ concessional contributions limits over 5 years

BUSINESS TAX
• Reducing the company tax rate to 25% over 10 years
• ‘Small business entity’ concessions being expanded to larger businesses

INDIVIDUALS
• Tax cuts for those earning over $80,000

OTHER
• New ATO anti-avoidance tax force

There are some pleasing changes and opportunities as a result of the budget, but the restrictions on superannuation will cause major headaches, especially given their retrospectivity. We especially encourage anyone who had plans to contribute to super before 30 June 2016 to reconsider and seek advice as to whether it is still possible to do so or not.

To read the full budget update, please click here to download.

Regards,

The Hoffman Kelly Team

The Australian Taxation Office (ATO) reports that more than 60% of small businesses are already on board with SuperStream, but also warns that if your business is one of tardy, you have a mere 100 days remaining to get it done.

With the June 30 deadline rapidly approaching, the ATO is encouraging small businesses to make becoming SuperStream ready a priority; please click here to view the full step-by-step guide.

SuperStream, the standardisation of how employers make super contributions on behalf of their employees, involves employers sending all super payments and employee information electronically in a standard format.

There are a number of options your business can choose to become SuperStream ready. These including using a payroll system that meets the SuperStream standard, a superfund’s online system, a super clearing house or a messaging portal.

Should you have any queries, please don’t hesitate to contact our office on 07 3394 2311.

Regards,

The Hoffman Kelly Team

As at the 2nd June 2016 Xero is changing their standard and premium plans for all existing and new subscribers due to advances in payroll and upcoming innovations. The biggest change is to their standard plan, where the limit of payroll employees has reduced from five to one. Xero has also introduced a Premium 5 plan for up to five payroll employees, and includes auto-super and multi-currency. If you’re on a standard plan, and do a pay run for more than one employee in May, you’ll be switched to the Premium 5 plan on June 2. Otherwise you’ll remain on the standard plan. If you’re on Premium 10 for multi-currency and you don’t do a pay run in May, you’ll be moved to Premium 5 on 2nd June 2016.

The charges are set out as follows:

Should you have any queries, please don’t hesitate to contact our office on 07 3394 2311.

Regards,

The Hoffman Kelly Team

The Federal Government has introduced legislation (to apply from 1 July 2016) which requires the purchaser of an Australian property to withhold 10% of the purchase price at settlement and pay this amount to the Australian Taxation Office (ATO). Whilst the withholding amount is designed to cover a “foreign resident” vendor’s potential capital gains tax liability, the legislation will apply to all property transactions unless an exception is applied (see below). A foreign resident can be both an individual or a company.

The purchaser’s obligation to withhold the 10% amount will NOT apply where:
(a) The market value of the asset is less than $2m; or
(b) A clearance certificate has been obtained from the ATO by the vendor and provided to the purchaser BEFORE settlement; or
(c) The transaction is conducted through an approved stock exchange; or
(d) The transaction is a securities lending arrangement; or
(e) The amount is already required to be withheld as withholding tax for some other reason; or
(f) The vendor is under external administration or in bankruptcy

It is important to note it is the PURCHASER’S RESPONSIBILITY to withhold and remit the funds. If the purchaser fails to withhold and remit, the purchaser can be subject to a penalty equal to the CGT amount which should have been withheld.

Regards,

The Hoffman Kelly Team

Should you have any queries, please don’t hesitate to contact our office on 07 3394 2311.

The trust accounting requirements for real estate agents changed in Queensland on 1 December 2014 with the introduction of the Agents Financial Administration Act 2014 and associated Regulations (replacing the Queensland Property Agents and Motor Dealers Act 2000). Hoffman Kelly has now conducted a number of audits of trust accounts under the new legislation and have noticed some policy changes from the Office of Fair Trading in their approach to the audit reports we have submitted to them:

  • There is a much greater focus on breaches that are reported.  We have experienced telephone and email follow-ups by OFT staff and some clients have had phone or personal visits by OFT staff to discuss the breaches further;
  • There is a focus on the ‘End of Month Reconciliation’ date being the last day of the month.  While it has always been a requirement for reconciliations to be prepared at the last day of a calendar month immediately after that month finishes, we are aware that many agents with rent rolls have adopted a process of closing the month a few days before this date to enable owners to receive their money before the end of the month.  In past years we have not seen this process objected to by the OFT despite it not being in accordance with the technical rules.  This year however, it has become clear that the OFT does require this to be strictly adhered to and we expect this will therefore be a challenge to some agencies in terms of changing processes.  For example, the October end of month close MUST be performed at the date of 31 October, after this date has passed (ie it could be done on 1 November).
  • More information is being collected by the OFT as part of the audit reporting.  Previously, as part of our audit report, we would send a copy of the bank reconciliation at the last day of the audit year.  Currently, the OFT is requesting far more information than this and now also require lists of outstanding cheques and unpresented deposits, breakdowns of any adjustments and trial balances for all ledgers in addition to the basic reconciliation.

As well as focussing on licensees, we have also become aware that the Office of Fair Trading is also focussing on auditors of trust accounts to ensure they comply with all their professional responsibilities.  This should be a positive step to ensuring that all auditors conduct their audits to the same high standards as Hoffman Kelly does.  If you have any concerns about how the new approach may affect your agency and what you should do to make sure you do not attract unwanted attention, we recommend you contact your auditor to discuss any changes that you need to make as soon as possible.

Should you have any troubles completing your checklists, please don’t hesitate to contact our office on 07 3394 2311.

A must read for building & construction clients!

Clients in the building and construction industry who pay contractors for building and construction services are required to report the payments to the ATO on the Taxable payments annual report.

Taxable payments annual reports are due for lodgement on the 21st of July 2014. Penalties may incur if you do not lodge your annual report by this due date.

For further information on the taxable payment reporting please click here or visit https://www.ato.gov.au/Business/Building-and-construction/In-detail/Taxable-payments-reporting/Taxable-payments-reporting/.

If you need assistance completing your report, please don’t hesitate to contact us on 07 3394 2311.

As a part of the ATO’s move to more online services, from 1st of July 2014 once an activity statement is lodged through an electronic channel they will no longer issue paper activity statements.

Some clients however may be excluded from this change and will continue to receive paper activity statements. Clients that may be excluded from this change are those whose activity statements are consistently lodged by paper for monthly periods and electronically for quarterly periods. Clients will need to have their activity statement lodgement up to date to be excluded from the change.

The ATO recommends clients to consider lodging monthly activity statements electronically and they will be reviewing those who continue to receive paper activity statements to determine a suitable time for all activity statements to be issued electronically.

As a result of the changes, Hoffman Kelly recommends that clients diarise the due date of their activity statements instead of relying on paper activity statements as a reminder. In addition, we encourage all business clients to register for the Business Portal (click here), which allows you to view your statement of accounts and lodge activity statements electronically.

For more information, please click here or contact our office on 07 3394 2311.

Changes recently introduced mean that businesses that deal with an individual’s personal information in any way must take steps to comply with the new privacy legislation.  There are penalties of up to $1.7 million for breaches by corporations and up to $340,000 for breaches by individuals. ‘Personal information’ is defined broadly and includes information such as names, addresses, financial information, sensitive information (e.g. health, religion, etc.), email addresses or any other ‘information about an identified individual, or an individual who is reasonably identifiable’. The amendments will apply to any business that has an annual turnover of more than $3 million (and may also apply to others).  If your business is caught by the changes in order to comply you must:

  • Have a clearly expressed and up-to-date privacy policy that is easily accessible
  • Only collect personal information for permitted reasons
  • Deal with the personal information in accordance with the new principles
  • Notify individuals of certain privacy matters before collecting personal information
  • Follow strict procedures for dealing with unsolicited information (there is a prohibition on using personal information for direct marketing purposes unless you satisfy an exception)
  • Take steps before you disclose information to overseas recipients to ensure they do not breach the privacy principles (e.g. outsourcing or cloud computing).

The penalties that can apply to breaches are severe.

The credit reporting provisions have also been comprehensively revised and include similar requirements to those in the privacy principles. Any business that issues invoices with deferred payment terms of 7 days or more will be subject to these rules.  Credit providers will also be able to access further information when assessing an individual’s credit worthiness.

To ensure your business complies with the new law we recommend that you should seek advice as to how the amendments affect you and consider revising your privacy policy and data collection processes; review your existing arrangements (including outsourcing arrangements or cloud computing); and educate your staff on the new amendments.

If you need more information on the changes, please contact one of our team members on 07 3394 2311.

Don’t miss out on this (generous) tax credit!

Accessing the federal government’s research and development tax incentives is often considered or assumed to be too complicated by many small to medium business owners. However the benefits can be well worth the effort, particularly given that the tax credit can be in the form of a cash rebate where a resulting tax loss occurs.

In recent times some of our clients have had great success accessing their R&D entitlements by engaging experts to review their entitlements and assist with the preparation of the necessary documentation. That is, someone else has come in and done all the hard work for them which resulted in either a reduction in tax payable or a tax refund.

If eligible for the R&D Incentive, Companies will receive a Tax Offset based upon their turnover as follows:

• For Companies with Group Turnover Less Than $20M: 45% Refundable Offset (equal to a $0.15 tax saving for every dollar of eligible R&D expenditure)

• For Companies with Group Turnover Exceeding $20M: 40% Non-Refundable Offset (equal to a $0.10 tax saving for every dollar of eligible R&D expenditure)

Companies in a tax loss position that qualify for the Refundable Offset are also able to receive a cash refund of $0.45 for every dollar of eligible R&D Expenditure to the extent of the company’s tax loss amount.

Companies who submitted their 2012 claims near last year’s deadline should be aware of changes to the registration application introduced in October 2013. This includes the additional requirement for:

• Details of the new knowledge intended to be produced by the core activities and how this is different from current knowledge in the relevant field;

• Details of how the outcome of the registered core activities could not have been known in advance based on current knowledge, information or experience;

• Details of how each core activity can be shown as an experiment including a statement on the relevant hypothesis, experiment, observation and conclusion;

• Details of how supporting activities contribute to a corresponding core activity.

If you would like to review the eligibility requirements further, please refer to the attached document prepared by us…..but you must act very quickly if claiming for the 2013 financial year!

Companies are still able to claim their Eligible R&D Expenditure for the 2013 Year by registering with AusIndustry by the April 30, 2014 Lodgement Deadline. Please call us for further information or assistance