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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
The budget was handed down last night, and there were several major announcements. Issues dealt with include:
• 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
• Reducing the company tax rate to 25% over 10 years
• ‘Small business entity’ concessions being expanded to larger businesses
• Tax cuts for those earning over $80,000
• 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.
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.
The Hoffman Kelly Team
The Financial Service Inquiry has recently urged the government to consider changes to Australian’s superannuation system. The panel believes that direct borrowing in superannuation funds will increase risk in the financial system and has recommended that borrowing in SMSF to be prohibited. These broad changes, if implemented by the Government, will affect superannuation funds to borrow directly for limited recourse borrowing arrangements.
If you have any queries please do not hesitate to contact our office on 07 3394 2311.
It is now confirmed that the new Penalty Regime for SMSFs will apply to contraventions that occur or are unrectified from 1 July 2014.
The new Penalty Regime will provide the ATO with greater flexibility when dealing with a Fund’s non-compliance with the law, including the power to:
The below table is a summary of the administrative penalties that can be imposed on trustees.
The penalties are applied to each Trustee separately and the Trustee cannot reimburse themselves from the assets of the Fund. For instance, if an SMSF has two individual trustees that have lent money to themselves, they can be fined $10,200 each. However, if those two individuals were directors of a Corporate Trustee, it would be the Company that receives one $10,200 fine.
We recommend that if you are aware of any outstanding contraventions, that they be rectified by 30 June 2014 to avoid the below penalties. In addition, if you are unsure whether there is a contravention, please don’t hesitate to contact us.
In July 2012, changes were made to the Directors Penalty Notice regime, which have increased the liability of Companies and personal exposure of their directors. These changes were introduced to ensure that Companies are compliant with the reporting and remittance of their PAYG and Superannuation obligations. The ATO signalled that it is no longer prepared to support struggling businesses through financing business operations via unpaid tax and superannuation obligations. In recent months, there has been an increase in activity by the ATO against organisations who are behind in the lodgement of their business activity statements and returns. This recent crackdown means that many Companies and their directors face the possibility of prosecution or fines if they do not comply to their statutory obligations.
If a company is late in lodging their returns or activity statements, they will incur penalties and be charged a daily interest rate on any unpaid amounts.
Once a Company has received an ATO compliance notice and still fail to lodge its returns, the company could face the following repercussions:
• An audit and face further investigation from the ATO
• The ATO may estimate their net assessable amount or taxable income, and the tax they owe without further warning
• A business or individual could be referred for prosecution without further warning
• If prosecuted and convicted, an individual could be fined up to $8,500 or imprisoned for up to 12 months, for a company, the maximum fine is $42,500.
• Ensure any outstanding BAS and PAYG returns are lodged as soon as possible
• Pay all PAYG and superannuation charge amounts within the relevant time frames
• Keep all BAS and PAYG returns up to date and lodged within 3 months of the due date.
If a BAS return is lodged but PAYG is not paid, the ATO is required to issue a Director Penalty Notice. At the expiry of the 21 day notice period, personal liability can apply. Directors’ personal liability for a company’s unpaid PAYG will be avoided if a company enters into Voluntary Administration, or has a Liquidator appointed before the expiry of the Director Penalty Notice. If unpaid PAYG is not reported within 3 months of the due date, the Director will automatically be personally liable for any unpaid amounts, even if the company is placed into voluntary administration or liquidation after this date.
If you have any overdue BAS and/or PAYG returns and/or PAYG and Superannuation charge payments, please contact our office on 07 3394 2311 for advice and options available to deal with issues arising from this legislation.
*The daily interest rate is subject to changes based upon current interest rate variations.
In our last newsletter we covered the changes to the Director Penalty Notice regime that were introduced on the 29th June 2012. These changes affect all directors of companies and associates (including spouses) of directors. Due to the seriousness of the changes and the widespread use by the ATO we have summarised the changes.
THE MAIN CHANGES
1. Directors can be made personally liable for not only unpaid PAYG withholding tax (ie tax withheld on employee wages) but now also unpaid employees’ superannuation;
2. Directors can no longer remove their personal liability by placing the company into administration where the PAYG or superannuation guarantee remains unpaid and unreported for three (3) months after the due date;
3. In some cases a director and associate (including a spouse) will not be able to claim PAYG credits listed on their PAYG summaries in their personal tax return where the company has failed to remit those amounts withheld;
4. Associates (including spouses) can now be held personally liable for a company’s unpaid PAYG and super where the ATO is satisfied that, due to the relationship with the director, the associate knew or could reasonably be expected to have known, that the company failed to pay the amounts to the ATO and also, then having that knowledge, the associate (spouse) did not take reasonable steps to influence the director to cause the company to act or, alternatively actually report the director themselves to a relevant authority (ie ATO, ASIC or the police!).
WHAT TO DO?
1. All outstanding BAS and superannuation guarantee returns MUST be lodged and brought up to date regardless of whether they can be paid or not.
2. It is CRITICAL to ensure that ALL future returns are lodged within three months of the due dates.
3. If the returns are prepared and lodged but not paid then at least the ATO will know of the debt for the company and therefore the ATO must issue a formal Director Penalty Notice BEFORE any personal liability can apply. Therefore, if a company is placed into administration before the Director Penalty Notice expires, personal liability will be avoided.
If you have any concerns about the above or require any further information, please contact our office.