-
RSS Follow Become a Fan

Delivered by FeedBurner


Recent Posts

Rebranding
Employee/Contractor Characterisation
Rental Property Deductions
Your practical CGT framework
A Guide for Small Business and for SMSF trustees

Most Popular Posts

Large Proprietary Company
Get your business ready for the FBT year-end
Rental Property Tax Deductions 2011
Capital Gains Tax - Selling an inherited dwelling
Deceased Estates & Tax

Categories

Accounting
Business News
Misc
Tax
XERO Accounting Software
powered by

Information for Business Owners

Rebranding






















Basman Returns is now Beck Partners

New Brand - New Look - Same Service

Hi Everyone,

We are pleased to announce the launch of our new “Beck Partners” branding.

Our telephone numbers and postal address remain the same and the only changes you will notice are our fresh
new logo and updated email addresses:alan@beckpartners.com.au and jodie@beckpartners.com.au

Our old email addresses are still active but will be phased out over time so we encourage you to update your
address book and start using the new emails.

A new website is coming soon and we will announce its launch in the near future.

For those of you who have been fans of the “BASMAN RETURNS” brand we understand that you may be sad to
see it go. Never fear though, the superhero spirit of the Basman will live on. Accounting is serious stuff  but a sense
of humour and fun is a vital asset in life and business and we refuse to become boring accountants.

The new Beck Partners branding has been designed to better illustrate our professionalism and modern style whilst remaining approachable and genuinely interested in what our clients seek to achieve.

We hope you like the new look as much as we do and we take this opportunity to thank you for your ongoing support.

Regards
Jodie & Alan

Employee/Contractor Characterisation


The Undercover Employee.
The Tax Office’s ongoing compliance efforts have some constant focus. One of these is the often flawed
characterisation of an employee as a contractor by businesses.

Characterisation is fraught with elements of complexity. For instance, entitlement to annual leave, sick leave
and other benefits may arise. An employer’s liability to work cover and payroll tax in various states are also
driven by this characterisation.

Notwithstanding these other issues, the actual employee/contractor characterisation relevant to PAYG and
superannuation obligations are essential issues every business needs to be familiar with....Read More

Rental Property Deductions


Schedule tax depreciation into your return

Each year it seems that the Australian Taxation Office (ATO) announces its resolve to target a particular area of taxation.

This year, the ATO have indicated they will be ramping up investigations into rental property deductions for owners of residential property.

The crackdown may pertain to a variety of deductions, but one
 of particular relevance for income-producing property owners
is tax depreciation deductions.

Research suggests that eighty per cent of investors still don’t maximise the deductions they can claim from property depreciation. Yet the average deduction investors can claim in the first full financial year is around $5,000 to $10,000.

The deductions claimed from depreciation can make a significant difference in boosting a property investor’s cash flow,
so it is important that investors consider speaking with a specialist Quantity Surveyor who specialises in depreciation to request a tax depreciation schedule. Investor’s who don’t seek expert advice place themselves at risk of an audit by the
ATO which could lead additional costs and cause unnecessary issues.

So what is property depreciation you may ask? Depreciation is a deduction due to the wear and tear of the structure of
the building and the fixed and removable assets contained within it. Investor’s can claim capital works deductions for
items of a structural nature and depreciation of the plant and equipment assets for any income producing property.

The ATO does place some restrictions on claiming capital works for properties in which construction commenced prior
to the 15 of September 1987, however deductions for plant and equipment are not limited by age, it is the condition
and quality of each item which contributes to the depreciable amount. It is always worth the enquiry to discuss the
deductions any property has available. Particularly as often older properties have had renovations completed which may
also entitle the owner to deductions, even if these renovations were completed by a previous owner.

For investor’s who haven’t arranged a depreciation schedule for their investment property, don’t despair, the previous
two financial years can be adjusted if you have not been claiming depreciation. The fee to arrange a tax depreciation schedule is also 100% tax deductible; so it’s a win, win situation for investors.

To learn more about property depreciation, visit the BMT Tax Depreciation page for investors on their website by
clicking here. For a free estimate of the depreciation deductions available in your investment property, speak with one of
the friendly staff at BMT Tax Depreciation on 1300 728 726.

Alternatively, for obligation free advice about maximising the taxation benifits from your rental property,
contact Alan at Basman Returns on 0419 671602.




Your practical CGT framework

Your practical CGT framework

The term “capital gains tax” (CGT) is perhaps the biggest misnomer in tax.
It is not its own, separate taxon capital gains per se. For an individual, it is includedas part of that person’s assessable income and subjectto tax at their marginal tax rate. When a taxing pointfor CGT happens (referred to as a
CGT event) there is atorrent of rules that taxpayers must adhere to so they
can fulfil their tax obligations correctly.

Knowing where to start is the hardest part.

The most common CGT event which happens is when a taxpayer disposes of a CGT asset (such as shares orreal estate). Assuming that an asset has been disposed of, there’s a step-by-step framework to consider. The framework for working out the capital gain in the law
looks curly, but is simple when broken down. So here it is, broken down and mapped out.....READ MORE


A Guide for Small Business and for SMSF trustees

SuperStream
For small businesses

The government wants to improve thesuperannuation system and bring
it into the modernelectronic world through the introduction of
SuperStream, and this includes for SMSFs.
Under the new system, employers must interactelectronically using
approved software. Employers with 20 or more employees should have already startedusing SuperStream from July 1 last year, but smaller employers (those with 19 or fewer employees) have until July 1, 2015
to start to comply. Small business owners need to get their skates on to
be ready in time.One relatively easy option for small employers is to use
the Small Business Superannuation Clearing Houseto do all your superannuation for you. This online government service is already SuperStream-ready, sosmall employers can save themselves the hassle of implementing SuperStream.
The Tax Office has set out a nine-step process to help small employers. You are not required to follow all nine steps,
but it helps get your head around what needs to be done.......Read More



Fringe Benefits Tax - Your Business Basics


If you own a business that employs staff, and provide remuneration to your employees in a form other than straight salary, you may be up for fringe benefits tax (FBT). The upside for your workers is that they do not then have to pay income tax on the value of the benefits provided to them.

FBT is separate to income tax. The FBT regime has its own tax year, from April 1 to March 31 (with the FBT return lodgement deadline being May 21, but longer if you use the services of this office). FBT is calculated using a “grossed-up taxable value” of the relevant benefit provided. It is payable at the current FBT rate of 47% for the FBT year ended March 31, 2015. Note that the rate increases to 49% as a result of the Temporary Budget Repair Levy for the 2016 and 2017 FBT years.

Under the FBT law, a fringe benefit typically arises when one of the categories of benefits (see below) is provided by an employer, an “associate” of an employer, or a third party under arrangement with either of the former. An employer is providing a fringe benefit if, for example...Read More

Depreciation


Depreciation;
the key to increasing the return on an investment property

Owners of properties which generate an income are eligible for
significant taxation benefits.

The Managing Director of BMT Tax Depreciation Bradley Beer says “Research shows that 80% of property investors are failing to take full advantage of property depreciation and are missing out on thousands
of dollars in their pockets.”

Depreciation is often missed because it is a non-cash deduction.
The investor does not need to spend money to claim it. As a building
gets older, items wear out - they depreciate. The Australian Taxation Office (ATO) allows property owners to claim
this depreciation as a deduction.

Depreciation: An investor profile
An investor has purchased a property for $420,000 and is receiving $490 per week in rent for a total income of $25,480
per annum. The estimated expenses for the property include interest, rates and management fees, which total $32,000
per annum.The following scenario shows the investor’s cash flow with and without depreciation. A typical $420,000 unit
will depreciate by around $11,500 in the first full financial year.



In this example the investor uses property depreciation to go from a negative cash flow scenario, paying out $79 per week,
to a positive cash flow scenario, earning $3 per week on the property. By claiming depreciation this investor will save
$4,255 for the year.

To learn more about property depreciation, visit the BMT Tax Depreciation page for investors on their website by clicking
here. Alternatively, for obligation free advice about maximising the taxation benifits from your rental property,
contact Alan at Basman Returns on 0419 671602.

Article provided by BMT Tax Depreciation.

Employee or contractor?




Employee or contractor?
12 common myths






The Tax Office says that it has encountered several myths and assumptions adopted by both workers and employers
when it comes to trying to decide the tax status of a job appointment. It found that employers continually rely upon
some inaccurate factors when making distinctions about what makes a worker an employee or contractor
and therefore the tax treatment that applies in these cases.  
Here are 12 common myths the Tax Office says can often get both businesses and workers into hot water.

1. Having an Australian business number (ABN)

Myth:
If a worker has an ABN they are a contractor.

Fact:Just because a worker has an ABN does not mean they will be a contractor for every job. Whether the
worker has or quotes an ABN makes no difference and will not change the worker into a contractor.
To determine whether a worker is an employee or contractor, you need to look at the whole working
arrangement and examine the specific terms and conditions under which the work is performed. 

2.Common industry practice

Myth:“Everyone in my industry takes on workers as contractors, so my business should too.”

Fact: Just because “everyone” in an industry uses contractors does not mean they’re correct.
Don’t use “common industry practice” to make determinations.

3. Short-term work

Myth: Employees cannot be used for short jobs or to get extra work done during busy periods.

Fact: The length of a job (short or long duration) or regularity of work makes no difference to whether a
worker is an employee or contractor. Both employees and contractors can be used for:
• casual, temporary, on call and infrequent work
• busy periods
• short jobs, specific tasks and projects.

To determine whether a worker is an employee or contractor, you need to look at the whole working
arrangement and examine the specific terms and conditions under which the work is performed.


4. The 80% rule

Myth: A worker cannot work more than 80% of their time for one business if they want to be considered a contractor.

Fact: The 80% rule, or 80/20 rule as it is sometimes called, relates to personal services income (PSI) and how
a contractor:
• reports their income in their own tax return
• determines if they can claim some business-like deductions. It is not a factor a business should consider
when they determine whether a worker is an employee or contractor.


5. Past use of contractors

Myth: “My business has always used contractors, so we do not need to check whether new workers are
employees or contractors.”

Fact: Before engaging a new worker (and entering into any agreement or contract), a business should always
check whether the worker is an employee or contractor by examining the working arrangement. Unless a
working arrangement (including the specific terms and conditions under which the work is performed) are
identical to previous arrangements, it could change the outcome of whether the worker is an employee or contractor.

Sometimes a business may also have incorrectly determined their worker is a contractor. Continuing to rely
on the original “contractor” decision would mean the business is incorrectly treating all future workers as
contractors when they are employee.


6. Registered business name

Myth: If a worker has a registered business name, they are a contractor.

Fact: Having a registered business name makes no difference to whether a worker should be an employee or contractor for a particular job. Just because a worker has registered their business name does not mean they
will be a contractor for every job or working arrangement.

7. Contracting on different jobs

Myth: If a worker is a contractor for one job, they will be a contractor for all jobs.

Fact: If a worker is a contractor for one job, it does not guarantee they will be a contractor for every job.
The working arrangement and specific terms and conditions under which the work is performed will
determine whether a worker is an employee or contractor for each job.

Depending on the working arrangement, a worker could be an:
• employee for one job and a contractor for the next job
• employee and a contractor if completing two jobs at the same time for different businesses.

8. Paying super

Myth: “My business should only take on contractors so we do not have to worry about super.”

Fact: A business always needs to look at the working arrangement and examine the specific terms and
conditions under which the work is performed to determine whether a worker is an employee or contractor.
A business cannot decide to treat a worker as a contractor when they are an employee.
Additionally, businesses may be required to pay super for their contractors. If you pay an individual contractor under a contract that is wholly or principally for the labour of the person, you have to pay super contributions for them.

9. Specialist skills or qualifications

Myth: Workers used for their specialist skills or qualifications should be engaged as contractors.

Fact: If a business takes on a worker for their specialist skills or qualifications it does not automatically
mean they are a contractor. A worker with specialist skills or qualifications can either be an employee or c
ontractor depending on the terms and conditions under which the work is performed. Qualifications or the
level of skill a worker has (including whether they are “blue” or “white” collar) makes no difference to
whether a worker is an employee or contractor.


10. Worker wants to be a contractor

Myth: “My worker wants to be a contractor, so my business should take them on as a contractor.”

Fact: Just because a worker has a preference to work as a contractor does not mean your business should
engage them as such. Whether a worker is an employee or contractor is not a matter of choice, but depends entirely on the working arrangement and the specific terms and conditions under which the work is done.
If you give into pressure and agree to treat an employee as a contractor, you can face penalties, interest and charges for not meeting your tax and super obligations.

11. Using invoices

Myth: “If a worker submits an invoice for their work, they are a contractor.”

Fact: Submitting an invoice for work done or being “paid on invoice” does not automatically make a
worker a contractor. To determine whether a worker is an employee or contractor, you need to look at
the whole working arrangement and examine the specific terms and conditions under which the work is
performed. If based on the working arrangement a worker is an employee, submitting an invoice or being
paid on the basis of an invoice will not change the worker into a contractor.

12. Contracts

Myth: “If a worker’s contract has a section that says they are a contractor, then legally they are a contractor.”

Fact: If a worker is legally an employee, a contract saying the worker is a contractor will not make the
worker a contractor at law. Businesses and workers will sometimes include specific words in a written
contract to say that the working arrangement is contracting in the mistaken belief that this will make
the worker (who is an employee) a contractor at law. If a worker is legally an employee, a contract specifying
the worker is a contractor makes no difference and will not:
• override the employment relationship or change the worker into a contractor
• change the PAYG withholding and super obligations a business is required to meet.

The Australian Taxation Office website has more information and a handy decision tool that you can use to check if your workers are employees or contracts.


 

Tax Tips for Business Owners - February 2014












Tax Tips for Business Owners - February Edition

Hi Everyone,

Welcome to the February edition of Basman's Tax Tips for Business Owners.
To view the newsletter online please click here.

Different areas of the nation have already experienced bushfire, and summer hasn't finished with us yet. With natural disasters like fires and floods, the last thing anyone affected needs is problems with the Tax Office. There have therefore been put in place some protocols to help taxpayers through such difficult times.

With SMSFs continuing to gather strength, the weight of the sector's large investment holdings of certain asset classes is starting to be felt. Property continues to be the focus of a lot of SMSF trustees. We look at some salient tips - and point out some traps - about SMSF real estate investment.

Also covered in this month's newsletter is the tax implications of having a debt "forgiven", the concessionary treatment available to certain professionals, known as "income averaging", steps a partnership can take to smooth the transition, tax-wise, when a partnership business changes its makeup, and the common myths surrounding the contractor-vs-employee conundrum.

Should you require more information regarding any topic touched upon in this newsletter, please feel free to contact Alan on 0419 671 602 for personal advice.

Click here to view the newletter online.

Tax Tips November


Tax Tips for Business Owners - November Edition

Hi Everyone

Welcome to the November 2014 edition of Basman's Tax Tips for Business Owners.
To view the newsletter online please click here.

An allowance for necessary travel made by employees is written into the tax law, which we run an eye over in
this issue. But as there are two concessions for travel - the "living away from home" and the "travel" allowances - frequently both employers and employees confuse which is applicable. We spell out the differences.

If you are sick of your business's high electricity bills, and have thought of the option of solar panels, you may
also be able to take comfort from not only reduced energy bills but helpful tax outcomes for your operating
expenditure.

We also examine the web-based accommodation networking service Airbnb, which from a tax treatment point
of view is one out of the box as there is no specific legislation that exactly covers the Arbnb business model.

There is also a warning about a renewed Tax Office focus on income splitting within professional firms, and a
timely reminder about a looming deadline for an amnesty on disclosing certain assets.

Should you require more information regarding any topic touched upon in this newsletter, please feel free to
contact Alan on 0419 671 602 for personal advice.

Click here to view the newletter online.

Disclaimer: All information provided in this newsletter is of a general nature only and is not personal financial or investment advice. Also, changes in legislation may occur frequently. We recommend that our formal advice be obtained before acting on the basis of this information.

October Tax Tips


Tax Tips for Business Owners
October 2014

Welcome to the October 2014 edition of Basman's Tax Tips for Business Owners.
To view the newsletter online pleaseclick here
.
If you are about to set up a website for your business, or are making changes to an existing website, some of
the costs incurred from doing so may be available to either write off immediately or depreciate over a number
of years. How these expenses are treated for tax purposes depends on certain factors. We run over the ins and
outs of website expenditure claims to help you get your claim right.

The living away from home allowance can help many workers who are required to move away to secure employment.
We look at the details of this fringe benefit. Also the categorisation of profits as either revenue or capital using
trusts (and the subsequent tax treatment) is ruffling feathers again within property development circles. We look
at a Tax Office pronouncement on the issue, and what it means for your tax outcome.

We also flag changes to the eligibility criteria for the Seniors Health Card, finally have some firm dates for the
repeal of certain small business tax concessions (some have been backdated), and spell out some tips to ensure
prompt payment of your invoices.

Should you require more information regarding any topic touched upon in this newsletter, please feel free to
contact Alan on 0419 671 602 for personal advice.

Click hereto view the newletter online.

Disclaimer: All information provided in this newsletter is of a general nature only and is not personal financial or investment advice. Also, changes in legislation may occur frequently. We recommend that our formal advice be
obtained before acting on the basis of this information.

Tax Tips - September 2014



Welcome to the September 2014 edition of Basman's Tax Tips for Business Owners.
To view the newsletter online please click here.

Packaging a vehicle into a remuneration arrangement via a novated lease is a popular salary option - we run
over the details of how this is achieved and the outcomes for both employer and employee.

The tax concessions that have been made available to small businesses can be a valuable boost to the bottom
line for many players in the "engine room" of the economy. We look at what's available, but also underline the
more common mistakes that businesses make when claiming the CGT concessions.

We also see how the Small Taxation Claims Tribunal can help you with your more minor tax disputes, how to
turn tax into super by using salary sacrifice, and uncover the scenarios that could trigger some otherwise
unforeseen FBT liabilities.

Should you require more information regarding any topic touched upon in this newsletter, please feel free to
contact Alan on 0419 671 602 for personal advice.

Click here to view the newletter online.

Disclaimer: All information provided in this newsletter is of a general nature only and is not personal financial
or investment advice. Also, changes in legislation may occur frequently. We recommend that our formal advice
be obtained before acting on the basis of this information.

Tax Tips for Business Owners - August 2014












Hi Everyone

Welcome to the April 2014 edition of Basman's Tax Tips for Business Owners.
To view the newsletter online please click here.

A vindication for your making the sensible decision to seek out professional advice can be to find that the costs
of doing so are deemed tax deductible.

While the deduction rules for professional consultation on tax affairs are typically straightforward, when it comes
to investment advice there are certain differences in regulations you should be aware of.

We have also uncovered a possible tax deduction where tax advice is provided by a financial planner. This is due
to a recent law change to the Tax Agents Services Regime.

We look at what the Tax Office says are common tax deduction errors made by rookie property investors, spell
out the Tax Office’s powers under the law when it comes to accessing to your information, and run through the
areas coming under its scrutiny for SMSF compliance issues in the year ahead.

On a positive note, the Tax Office is also seeking input from savvy small business owners to help it build its small business expertise. You can apply to join its consultation panel and even be paid for your efforts if successful.

Should you require more information regarding any topic touched upon in this newsletter, please feel free to
contact our office for personal advice.

Click here to view the newletter online.

Disclaimer: All information provided in this newsletter is of a general nature only and is not personal financial or investment advice. Also, changes
in legislation may occur frequently. We recommend that our formal advice be obtained before acting on the basis of this information.

Tax Tips for Business Owners - July 2014













Tax Tips for Business Owners
July 2014


Welcome to the July 2014 edition of Basman's Tax Tips for Business Owners.
To view the newsletter online please click here.

Many of you will have at least heard of Bitcoin, and some may have even used the new digital currency.
Bitcoin looks set to revolutionise monetary transactions, and perhaps sooner than many imagine. The virtual
currency even has the attention of the Tax Office. We examine the ramifications, and the pros and cons, of
Bitcoin prior to the release of official guidance from the Tax Office, which is due out soon.

It's an unfortunate but likely reality that many of us will have some sort of dealings with a deceased estate.
Having an idea of what to expect from a tax perspective can go a long way to easing this heavy burden and
ensuring your loved one passes on their assets in accordance with their wishes in a fair and equitable manner.

Other highlights in this edition are a look at the "taxable payments annual report" for businesses in the building
sector, which is due this month, and the winding back of the net medical expenses tax offset. Finally we include
a reminder to SMSF trustees about the new penalty regime that is now in force.

Should you require more information regarding any topic touched upon in this newsletter, please feel free to
contact Alan on 0419 671602 for personal advice.

Click here to view the newletter online.

All information provided in this newsletter is of a general nature only and is not personal financial or investment advice. Also, changes in legislation may occur frequently. We recommend that our formal advice be obtained before acting on the basis of this information.

Super Guarantee increase from 1 July 2014










Change to Employee Super Rate from 1 July 2014

From 1 July 2014, you must pay a minimum of 9.5% of each eligible employee's ordinary time earnings in super.

You have to pay super guarantee contributions for each eligible employee by the quarterly cut-off dates:

 Quarter
 Period
 Payment cut-off Date
1
1 July - 30 September
28 October
2
1 October - 31 December
28 January
3
1 January - 31 March
28 April
4
1 April - 30 June
28 July

Contact Alan Beck at BASMAN RETURNS  on 0419 671 602 for all your business accounting & taxation needs.

Tax Tips June 2014







Tax Tips for Business Owners
June 2014

Hi Everyone

With the imminent arrival of the new financial year, there are a few changes to the tax system to get used to.
We sketch out the post-July 1 tax and super landscape, and also list the announcements from the Federal Budget
that may also prompt a strategic re-think, should the proposals make it through Parliament.

The “debt tax” (Temporary Budget Deficit Levy) which was announced in the recent Federal Budget is not just a
concern for anyone earning more than $180,000. There are also some flow-on effects for businesses due to the
resulting increase in the top marginal tax rate, which is used to calculate a number of other taxes.

We also cover some tactical end-of-year deductions for businesses, as well as year-end tax tips for individuals,
and have (relatively) good news for business owners who have been left in limbo over the possible changes to the i
nstant asset write-off provisions.

Should you require more information regarding any topic touched upon in this newsletter, please feel free to
contact Alan on 0419 671 602 for personal advice.

Click here to view the June 2014 Newsletter online.
Click here to view the May 2014 Budget Edition Newsletter online

Disclaimer: All information provided in this newsletter is of a general nature only and is not personal financial or investment advice. Also, changes in legislation may occur frequently. We recommend that our formal advice be obtained before acting on the basis of this information.

Tax Tips May 2014











Hi Everyone

Welcome to the May 2014 edition of Basman's Tax Tips for Business Owners.
To view the newsletter online please click here

Recent changes have been made to some social service, family benefit and other entitlements, which we run
through and explain. There are also changes looming for superannuation contribution caps (the good news here is
that they are increasing).

And did you know that the basis to determine the costs of aged care accommodation is being given a shake-up?
Read our summary of the impending transition from income tested cost determination to one that includes
asset holdings, and what this change entails going forward.

We also touch upon the tax implications of marriage (including the implications of the main residence exemption
for CGT and treatment of interest income from joint bank accounts). And if you are considering winding up your
SMSF, we also spell out the steps necessary to make that happen.

Should you require more information regarding any topic touched upon in this newsletter, please feel free to
contact Alan on 0419 671602 for personal advice.

Click here to view the newletter online.

Disclaimer: All information provided in this newsletter is of a general nature only and is not personal financial or investment advice. Also, changes in legislation may occur frequently. We recommend that our formal advice be
obtained before acting on the basis of this information.

Tax Tips April 2014



Tax Tips for Business Owners
April 2014

Hi Everyone

Welcome to the April 2014 edition of Basman's Tax Tips for Business Owners.
To view the newsletter online please click here

While most people know that the fees for preparing and lodging tax returns are deductible, far fewer are
aware that the specific regulations operating in this area of tax law also allow for extra deductions to be claimed
in certain circumstances.

While the repeal of the mining tax (the Minerals Resource Rent Tax) is yet to pass the Senate, there are some
perhaps surprising negative implications for small businesses regarding asset write-offs and depreciation.
We run over the details.

We also warn of the fast-approaching deadline to apply for the R&D Tax Incentive, provide an overview of what
it takes to set up your own SMSF, and look at the different investment asset classes and the tax implications
of each.

Should you require more information regarding any topic touched upon in this newsletter, please feel free to
contact Alan on 0419 671 602 for personal advice.

Click here to view the newletter online.

Disclaimer: All information provided in this newsletter is of a general nature only and is not personal financial or investment advice. Also, changes in legislation may occur frequently. We recommend that our formal advice be obtained before acting on the basis of this information.

Do I need a Business Bank Account?











If you’re operating as a sole trader or partnership you don’t have to open a business bank account, but………
it’s a much better idea to have one.

Read on for the details!

Benefits of a business bank account
While there is no legal requirement for sole traders and partnerships to have a business account, it’s still a
good idea to open one.

With a business account, you’ll find it easier to:

  • do your bookkeeping with less stress, less time and less cost
  • track and control your business expenses and income so you can manage your business
  • extract the information you need to give to your accountant to do your tax return

It also helps to present your business in a more professional manner when dealing with your customers.

BASMAN RETURNS recommends separate business bank accounts

If you operate a business (using an ABN), we recommend you open a separate business bank account for your
business income and expenses. This means you can easily keep your business transactions separate from your
personal finances.

If you operate your business as a company or trust, you must have a separate bank account for your business.

If you have a business bank account, BASMAN RETURNS recommends that you avoid paying personal expenses
from it. This will make your business accounting clearer, simpler, faster and cheaper.

Find out more Contact Alan Beck at BASMAN RETURNS- Chartered Accountants if you need any assistance with
accounting and taxation requirements for your business.

Do I Need to register for GST?











What is GST?

GST is a tax on most goods and services sold or consumed in Australia. Goods and services tax, often known as GST,
is collected by registered businesses.
If your business is registered for GST, you will have to collect some extra money (one-eleventh of the sale price) from
your customers and pay it to the Australian Taxation Office (ATO) when it is due.

Do I need to register?
You must register for GST if your business has a gross income (also known as ‘GST turnover’) of $75 000 per year or
more GST turnover is your business’ gross income, not your business’ profit.
For example, if you run an online clothing store and you sell $80 000 worth of clothes, you’d have to register for GST because your GST turnover is over the $75 000 threshold. This rule still applies, even if you only get to keep $40 000.

When do I need to register?
If you haven’t registered for GST, and you become aware that your GST turnover will exceed the $75 000 per year threshold, you will have to register for GST within 21 days.
It’s a good idea to check each month to ensure you’re not likely to go over the over the limit. Keeping an eye on your
GST turnover is important so you can register if necessary.

How do I register?
You’ll need an ABN to register for GST. Your ABN will also become your GST registration number.
If you anticipate that your GST turnover will be over $75 000, you can register for GST and apply for your ABN at
the same time.If you already have an ABN, but haven’t registered for GST, find out how to register for GST on
the ATO website.

What are GST credits?
GST credits are a potential amount of money your business might be able to claim from the ATO.
If you are registered for GST, you can ‘claim back’ the GST that has been included in the purchase price of something you’ve bought for your business.
For example, Laura runs an consultancy firm and has just bought a new computer for the office. The computer cost
Laura $1100, including GST. Because GST is one-eleventh of the sale price, Laura would have paid $100 in GST.
Laura is registered for GST because her business’ GST turnover is more than $75 000. She is able to claim GST
credits for the GST included in the sale price of her computer ($100).If her GST credits are higher than the amount
of GST she has to pay the ATO, she will be able to get a refund.

What happens if I don’t register for GST?
If your GST turnover is under $75 000 and you don’t register for GST, you won’t include GST in your fees. You also
can’t claim GST credits for your business purchases.

Want more information?
Contact Alan Beck at BASMAN RETURNS- Chartered Accountants if you need any assistance with accounting and taxation requirements for your business.

Tax Tips March 2014











Tax Tips for Business Owners
March 2014

Welcome to the March 2014 edition of Basman's Tax Tips for Business Owners.
To view the newsletter online please click here.

Selling a property will typically see things like stamp duty, land tax and other considerations ticked off the
"to do" list, but there are some instances where GST will also have to be factored in. We run through the
scenarios where this will arise.

Work-related deductions are the most common claimed, and the most popular of these are car expense
claims. However as this is an area of tax law that is very regulated, good guidance is essential to stay on
the right side of the taxman.

We also cast an eye over the changing FBT landscape, examine the outcome of a court case that could have
far reaching implications for any business's GST position, and find that there are some instances where a
partnership can claim the interest on a loan.

And finally we run through the new penalty regime for SMSFs that's set to bite from July 1 this year.

Should you require more information regarding any topic touched upon in this newsletter, please feel free
to contact Alan on 0419 671 602 for personal advice.

Click here to view the newletter online.

Disclaimer: All information provided in this newsletter is of a general nature only and is not personal
financial or investment advice. Also, changes in legislation may occur frequently. We recommend that our
formal advice be obtained before acting on the basis of this information.

BAS - Act Now to avoid Late Lodgment Penalties.

If you lodge your activity statements quarterly, remember to lodge and pay your quarter 2 activity statement (October–December 2013) by 28 February 2014.

Even if you can’t pay on time, you still need to lodge your activity statement by the due date.
By checking your activity statement before you lodge, you can avoid future penalties and charges by making sure all the information you’ve entered is correct.

If you’re having trouble lodging or paying on time, contact Alan BEFORE the due date on 0419 671 602 to see if we can make alternative arrangements for you.


Getting ahead with good accounting records

Research shows businesses that are good at meeting their GST and activity statement obligations tend to run more successful businesses. This can be because the business systems and processes they use to manage their tax affairs help them keep track of their business performance and make sound business decisions.

By maintaining proper records of dates, fees for service, expenses, wages and other costs, you can use this information to help you:

  • manage your cash flow
  • complete your activity statements more easily
  • avoid reporting errors, such as not reporting the correct amount of GST
  • keep track of creditors and debtors
  • demonstrate your financial position to banks.

If you run a small business and would like to find out what records your business should be keeping or help evaluating how well your business is keeping records contact Alan at BASMAN RETURNS on 0419 671 602 or email alan@basman.com.au



Small Business Income Tax Concessions










Small Business Income tax concessions

There are four income valuable tax concessions available to small businesses:

You can choose whether or not to do an end-of-year stocktake and account for changes in the value of trading stock, if the value of your trading stock has not increased or decreased by more than $5,000 over the year.

You can generally pool your assets to make depreciation calculations easier. You can claim an accelerated deduction for motor vehicles and an immediate deduction for most assets costing less than $6,500 each.

You can claim an immediate deduction for prepaid expenses where the payment covers a period of 12 months or less that ends in the next income year.

You generally have a two-year time limit (from the day that the Commissioner issued your notice of assessment) for reviewing an assessment.

If you need help with your small business accounting and tax contact the BASMAN  for more information.


Last Minute Tax Tips












A few things to check to ensure you have taken all the possible steps to minimise your tax liability before 30 June:

  ·         BAD DEBTS - Review your debtors and write off the bad debts before 30 June to get the deduction.

  ·         CONSUMABLES - Buy any necessary loose tools, stationery, printer toners, paper, water etc before 30 June.

  ·         DEFER INCOME - Delay issuing this week’s bills to customers until 1 July.

  ·         EMPLOYEE/DIRECTOR BONUS - Consider committing (in writing) to employee/director bonuses before 30 June.

  ·         INVENTORY/STOCK - Review stock on hand and write off (throw out, give away) obsolete items before 30 June.

  ·         MINOR ASSETS  - Small business owners can claim up to $6,500 per item instant asset write offs.

  ·         MOTOR VEHICLES - Make a note of the odometer reading of your car(s) at 30 June.
            Start a new logbook before 30 June if you don’t already have one or if yours is more than 4 years old.

  ·         PRE-PAY EXPENSES - Consider pre-payment of expenses before 30 June to get the deduction this year
            (e.g. rent, interest, income protection insurance, subscriptions).

  ·         SALARY SACRIFICE - Consider salary sacrificing bonus payments into super (watch you don’t exceed limits).

  ·         SUPER CONTRIBUTIONS - Pay employee super contributions before 30 June to get a tax deduction this year.

  ·         TRUSTS - Trustees should ensure that they take necessary steps to create present entitlement prior to 30 June.



Of course, any tax planning must take into account the potential application of anti-avoidance provisions (tax laws). Alan can help ensure that you get the most out of your tax planning and stay within legal guidelines.

It is easier to get your tax paperwork organised now than it will be later.

As always, call Alan on 0419 671 602 if you have any questions.

BASMAN RETURNS - Chartered Accountants Tax Tip #5

BASMAN RETURNS - Chartered Accountants Tax Tip #5 - Small Business taxpayers can pre-pay expenses before 30 June and get the deduction now. For example you can prepay up to the next 12 months Interest or Rent or Subscriptions and claim the full tax deduction in the current year. 















BASMAN RETURNS - Chartered Accountants Tax Tip #4 - Motor Vehicle Log Books

BASMAN RETURNS - Chartered Accountants Tax Tip #4 - Motor Vehicle Log Books

To maximise tax deductions for motor vehicle expenses ensure you have a valid log book that covers the minimum 12 week period.

Its not too late - start your logbook before 30 June and make a a claim this year. The logbook can overlap a year end.

If you already have a log book, don't forget that you also need to take a note of your odometer reading on 30 June every year











Tax Tip # 3


Small businesses can claim an immediate tax deduction for assets costing less than $6,500. So if you need office equipment or other assets and you have a small business entity, purchase these items before 30 June to get the deduction this year.

As always, don't spend your hard-earned money on things you don't need just to get a tax deduction. Its not worth spending a dollar to save 30 cents.


Gold Coast Accountant

Changes to the super guarantee rate

To help grow Australian workers' savings for retirement, the compulsory super guarantee rate will gradually increase from 9% to 12%. When you make super payments on behalf of your employees based on the minimum 9% super guarantee rate, you will need to increase this rate on which you base your calculations to 9.25% on 1 July 2013.

The Super Guarantee rate will increase gradually from 9% to 12% from 1 July 2013 as follows: 

                        2013/14             9.25%
                        2014/15             9.5%
                        2015/16           10%
                        2016/17           10.5%
                        2017/18           11%
                        2018/19           11.5%
                        2019/20           12%

What you need to do

  • Update your payroll and accounting systems to apply the appropriate increase to the super guarantee rate.
  • From 1 July 2013, increase the rate you use to work out the super guarantee payments you make for your employees from 9% to 9.25%.
  • Continue to increase the rate you use to work out the super guarantee payments you make for your employees each year until 1 July 2019.

If you require any assistance contact BASMAN RETURNS for Superhero Service for your business.


Gold Coast Accountant




Tax Tip # 2

BASMAN RETURNS - Chartered Accountants - TAX TIP # 2 - Lodge your tax returns on time - Penalties for not lodging on time range from $110 to $4,250 depending on how long the return is overdue and the size of the entity.

Contact the BASMAN for superhero service for your business.


TAX TIP # 1

BASMAN RETURNS - Chartered Accountants - TAX TIP # 1 - Physically pay super contributions before 30 June to secure the tax deduction. 

Note that the concessional superannuation cap (Limit) for 2013 is $25,000 for persons of any age. Contributions in excess of $25,000 for the year will be taxed at 46.5%.


Your ABN is more than just a number











Hands up if you only think about your Australian Business Number (ABN) when filling out your quarterly Business Activity Statement?  

Most of us only think about our ABN in the context of fulfilling our taxation obligations but your ABN is more than just another number helping to distinguish your business from hundreds and thousands of others.   When you apply for an ABN, your business identity information becomes part of the Australian Business Register (ABR).   A whole-of-government community asset, the public rely on ABR information to confirm the identity of businesses they use to supply goods and services through the ABN Lookup website.  

ABR information is used by local, state and federal governments to support planning and decision making for economic development, infrastructure investment and disaster recovery - helping to build and support communities throughout the country.   

How is ABN information used?
Local councils across Australia use ABR information to identify emerging businesses and sectors to prepare for growth and to plan for and provide necessary services and infrastructure for their communities.

More and more, local councils are turning to ABR information to assist with disaster recovery. With the recent recurrent flooding in Queensland, local councils are geo-coding ABR information to identify businesses and industries in and around flood zones, helping to contribute to flood mitigation, response and recovery strategies.  

ABR information was also used to identify home-based businesses and primary producers impacted by the Victorian Black Saturday Bushfires to provide these businesses with information on government assistance programs available to help them rebuild including emergency grants, low-interest loan schemes, and free business advice and counselling services.  

What do I need to do?
There is one easy thing that you can do to help improve the ABR and be a good corporate citizen - check that your details are up-to-date on the ABR.   

If your details have changed, it is a legal requirement that you update your ABN listing within 28 days.

If you need any assistance or advice for your business do not hesitate to contact Alan Beck at Basman returns




We Love Xero - Online Accounting System

BASMAN RETURNS loves Xero

Doing the books and staying on top of cash flow can be a chore and headache for many small businesses. To help you stay in control without the stress, we've partnered with the world's easiest accounting system Xero.

Xero is online so you can receive automatic bank statement feeds into your XERO accounting system daily. No more data entry or downloads. You'll have much greater visibility of your cash flow and it's and quick and easy to reconcile your bank transactions.























Tax Deductions for Business





Following are details of some changes to the small business tax deduction rules that apply from the 2012-13 year:

You can now claim (write off) an outright deduction for most depreciating assets purchased that cost less than $6,500 each. This has increased from $1,000.

From 2012-13, if you buy a motor vehicle for use in your business, you can claim an immediate $5,000 deduction. The remainder of the cost is deducted through the general small business pool at 15% for the first year and 30% for later years.

From 2012-13, most depreciating assets that cost $6,500 or more (regardless of their effective life) can all be 'pooled' under the simplified depreciation rules and deducted at a single rate of 30%. The exception is newly acquired assets which are deducted at 15% for the first year.

If you had a long life pool (which no longer exists), its closing balance is rolled over to form part of the opening balance of the general pool for the 2012-13 income year (to be depreciated at a rate of 30% instead of 5%).

For more information on any of these changes contact Alan at alan@basman.com.au or on 0419 671 602

Benefit from your BAS Returns

Your business can benefit from timely and accurate BAS Return preparation and lodgement.

Lodging your BAS on time, every quarter, provides you with a snapshot of your business' financial position. From quarter to quarter you can use this information to track your business performance and growth.

Lodging your BAS on time means that you maintain a good lodgement history with the ATO.If you find yourself in a situation that may require a deferral of payment or if you need to organise a payment arrangement, a good lodgement history will give you an advantage.
Grow your business with a Gold Coast Accountant
To find out more about using BAS preparation work to generate useful information that will help you to Improve Your Business Performance contact Alan Beck at BASMAN RETURNS to find out more (for FREE).

Phone: 0419 671 602
email: alan@basman.com.au
Website: www.basman.com.au

Employing Staff - A Guide for new Employers

You may have tax and superannuation obligations if you employ or contract workers into your business, either full-time or part-time. This includes your family members and you, if you are a director. Your obligations may include:

  • pay as you go (PAYG) withholding
  • superannuation guarantee
  • fringe benefits tax (FBT).

You have responsibilities from the day your employee (or contractor) starts working for you to the day they stop. You also have some responsibilities if you stop being an employer altogether.

Preparing to engage workers If your business is about to engage workers (either employees or contractors) for the first time, you will need to know how to set up the necessary taxation and superannuation arrangements.

Worker's first day When a worker starts work you will need to:

  • determine whether they are an employee or contractor if you have not already done so
  • provide employees with a Tax file number declaration (NAT 3092) and, if applicable, a Withholding declaration (NAT 3093), which they must complete and return to you
  • provide a Standard choice form to employees who are eligible to choose a super fund - you can download a copy of our Standard choice form (NAT 13080)
  • accept a voluntary agreement on a voluntary declaration form if offered by your new contractor.

Worker's payday On payday you will need to determine the rate of tax that you need to withhold from payments you make.

Payments and reporting Most reporting and payment responsibilities occur when you complete and lodge your activity statement, usually monthly or quarterly. An annual report and a balancing payment (or refund) may be required. Superannuation payments are required at least quarterly.

Worker's last day When an employee or contractor stops working for you, you'll have final reporting and payment obligations. If they are eligible for an employment termination payment (ETP), you will have additional PAYG withholding obligations.

No longer an employer Once you stop engaging workers, you need to ensure you have met all your final payment and reporting obligations. You also need to cancel your PAYG withholding registration.

Keeping records Keeping employment and contractor records is an essential part of running your business and helps you to claim all your deductions. You must keep your records in an accessible form (either printed or electronic) for five years.

If you would like any further information or assistance contact Alan at BASMAN RETURNS on 0419 671 602 or send an email to alan@basman.com.au

Employee or Contractor ?

The Tax Office's new Employee or contractor homepage has information you need to work out whether your workers are employees or contractors including:

Grow your Gold Coast business
  • the basics - things your business needs to know

  • the common reasons businesses get the decision wrong

  • industry specific information

  • an Employee/contractor decision tool

  • summary of the obligations you need to meet for your employees or contractors.

If you get the decision wrong, you risk having to pay penalties.

For more information, visit Employee or contractor or contact Alan at BASMAN RETURNS

BASMAN partners with XERO

Doing the books and staying on top of cash flow can be a chore and headache for many small businesses. To help you stay in control without the stress, we've partnered with the world's easiest accounting system Xero.

Because Xero is online you can receive automatic bank statement feeds into your XERO accounting system daily. No more data entry or downloads. You'll have much greater visibility of your cash flow and it's and quick and easy to reconcile your bank transactions.
XERO Cloud Accounting Software on the Gold CoastFeatures include:

  • Dashboard - A real-time view of your business at a glance, including bank balances and money coming in and going out.
  • Banking - Connects with bank accounts making reconciliations simple and accurate.
  • Online - Access to your accounts anywhere and at anytime. Your data is secure even if your computer is lost or stolen.
  • Work Together - Give BASMAN RETURNS access so they can work on your books from anywhere and offer better advice.
  • Unlimited users - All for one monthly fixed price. Invoicing - Customise, create, send and receive invoices. See at a glance who owes you money.
  • Reporting - Generate and view interactive reports with ease
 
Contact Alan Beck CA on 0419 671 602 to find out more







Personal Services Income

Personal services income (PSI) is an issue currently drawing the attention of the ATO

PSI is income that an individual taxpayer earns predominantly as a direct reward for his or her personal efforts by, for example, the provision of services, exercise of skills or the application of labour.

Examples of PSI are fees earned by a professional person on his or her own account, income payable under a contract for services or where the payment under the contract relates wholly or principally to the labour of the person concerned.

Income Tax Returns and BAS returns for small businessThe PSI rules in the tax law limit deductions available to individuals in receipt of PSI if they are not able to satisfy the required personal services business tests. The fundamental rule is that an amount is not deductible to the extent it relates to gaining or producing PSI if the income is not payable to the individual as an employee and the amount would not be deductible if the income were payable to the individual as an employee.

The rules also attribute income derived by an interposed entity, after allowing for a limited range of deductions, to the individual providing services to the interposed entity. The PSI rules do not apply to individuals or interposed entities carrying on a "personal services business".

For the average person, these rules rapidly descend into a complicated mess and the ATO is concerned that people are not applying the law correctly.

If you have any concerns about PSI in your business contact Alan at Basman Returns on 0419 671 602 to find out more.

Small Business Tax Changes

Tax changes that will apply to small businesses from the 2012-13 income year onwards include:

  • An increase in the small business instant asset write-off threshold from $1,000 to $6,500.

  • The long-life small business pool and the general small business pool, have been consolidated into a single pool to be written off, at the one rate of 30%. Newly acquired assets are to be deducted at half this pool rate, that is 15% in the year of allocation. 

  • Small businesses can claim an initial deduction of up to $5,000 for motor vehicles costing at least $6,500 acquired in the 2012-13 and subsequent income years. The remainder of the cost is depreciated through the general small business pool at 15% in the first year and 30% in the following years.

  • The entrepreneurs tax offset has been abolished from the 2012-13 income year onwards.

If you have any queries call Alan at BASMAN RETURNS on 0419 671 602


TRUST RESOLUTIONS REQUIRED BY 30 JUNE

From the 2011-12 income tax year, all trustees who make beneficiaries entitled to trust income by way of a resolution must do so by 30 June 2012.

The ATO previously provided an extension to make resolutions by 31 August however the extension was withdrawn as a result of a Federal Court decision. If you have relied on this practice previously, you will no longer  be able to do so.

What do you need to do?

You need to ensure that any resolution you make to distribute your trust's income for the 2011-2012 year is made in accordance with the terms of the trust deed and by 30 June 2012

The issue is more complex than it appears and I will be contacting clients with Trusts to provide a solution. If you are unsure if this applies to you, please contact Alan Beck on 0419 671 602 or via the website at www.basman.com.au



Tax Minimisation vs. Tax Avoidance

 
It's important to understand that there is a difference between avoiding tax and minimising tax.

It's only natural to want to minimise the amount of tax you pay and there are many legal ways to do this. At this time of year particularly, you might be considering entering into a tax-effective investment or other tax planning arrangement. However, you need to be cautious of ending up in a tax avoidance scheme. There's nothing to like about the consequences of that!

If you've been investing for a while, or you're quite financially savvy, you might think it couldn't happen to you. Apart from the fact that, on face value, many tax avoidance schemes appear legitimate, often people promoting these arrangements also use pressure tactics or offers of exclusivity to influence you to 'sign on the dotted line' before you have a chance to really investigate what you're getting into or seek any external advice.

It's always worth taking the time to check things out where your money is concerned. A little time and effort now might save you a lot of trouble later. And a lot of money. 

For more information call Alan Beck at BASMAN RETURNS on 0419 671 602 or email alan@basman.com.au



Increases to the 9% Super Guarantee

The Superannuation Guarantee (Administration) Amendment Act 2012 received royal assent on 29 March 2012.

In the legislation:

  • the superannuation guarantee (SG) rate will gradually increase from 9% to 12% between 1 July 2013 and 1 July 2019

  • the SG age limit of 70 will be removed from 1 July 2013, and employers will be required to contribute to complying super funds of eligible mature age employees aged 70 and older.

If you require any assistance contact Alan Beck CA on 0419 671 602 or visit the website at www.basman.com.au


Reporting Payments to Contractors to the ATO

From 1 July 2012, businesses in the building and construction industry will need to report to the ATO each year, the total payments they make to each contractor for building and construction services.

Business operators in the industry are encouraged to check how they keep their records to make sure they have the details that will be required for the new Taxable payments annual report.

The first annual report is due 21 July 2013 for payments made in the 2012-13 financial year. In the first year businesses that lodge their business activity statements quarterly, may lodge by 28 July 2013.

For more information, refer to:

Get your business ready for the FBT year-end

If you own a business that employs staff, and provide remuneration to your employees in a form other than straight salary, you may be liable for fringe benefits tax (FBT). The upside for your workers is that they do not then have to pay income tax on the value of the benefits that attract FBT.

FBT is separate to income tax, is based on a 'taxable value' of the benefits provided, and is payable at the current FBT rate of 46.5%. The Tax Office has even given FBT its own tax year, from April 1 to March 31 (with the FBT return lodgement deadline May 21, but possibly later if you use the services of your tax agent).

Under the tax law, a fringe benefit is deemed to arise when one of the categories of benefits (see below) is provided by an employer, an associate of the employer, or a third party under an arrangement with either of the former. The benefit might be provided to the employee or an associate (widely defined).

Fringe benefit categories

The law contains several different categories of fringe benefits, which include:
·         car fringe benefit
·         debt waiver
·         loan fringe benefit
·         expense payment
·         housing fringe benefit
·         living away from home allowance
·         airline transport
·         board (accommodation)
·         entertainment
·         tax-exempt body entertainment
·         car parking
·         property fringe benefit
·         residual benefits (that is, any that are not covered by the preceding).

The rules for calculating the taxable value of a fringe benefit are subject to two separate 'gross-up' rates – a higher and a lower gross-up rate. Grossing-up means increasing the taxable value of benefits you provide to reflect the gross salary employees would have to earn at the highest marginal tax rate (including Medicare levy) to buy the benefits after paying tax.

The higher gross-up rate is used where the employer is entitled to a GST credit for GST paid on benefits provided to an employee, known as GST-creditable benefits. The lower gross-up rate is used where there is no entitlement to a GST credit.

Exemptions from FBT

Minor benefits (that is benefits that have a GST-inclusive value of $300 or less) are generally exempt from FBT. However a condition to maintain this exemption is that such minor benefits must be offered with ‘infrequency and irregularity’. There can also be other conditions (check with us). Examples of minor benefits can include the occasional lunch, birthday gifts, flowers on special occasions, the Christmas party, or a one-off interest free loan. Note also that there can be multiple minor benefits (that is, each can have a value of less than $300) – for example Christmas lunch on one hand plus a Christmas gift on the other.

Providing certain work-related items to staff will not make you liable for FBT. These include protective clothing, a briefcase, a mobile phone, calculator or tools of trade, portable computer (limited to one per year for each employee) and other items. There are other benefits that escape the FBT net, however a condition of exemption is that the benefit or item is primarily used to enable your employee to do their job.

Salary of course is not a fringe benefit, and a super contribution is exempt. Entitlements under employee share acquisition schemes are not deemed to be a fringe benefit, nor are termination payments.

Not exempt

You are providing a fringe benefit if, for example, you allow a staff member (or their associates) to use a work vehicle for private purposes, provide a loan or reimburse a worker for a private expense, such as school fees.

Also a car provided to an employee by the popular 'novated lease' arrangement is considered a fringe benefit, and typically gives rise to an FBT liability for the employer (see more on novated leases for cars in our last newsletter, or ask us for a copy).

The FBT rules pertaining to cars changed recently for situations where a vehicle is available for private use and the ‘statutory formula’ method is used to determine the taxable value. The value of the car benefit (on which the amount of FBT is based) is taken on the actual purchase price of the car. Under the statutory formula method the number of kilometres travelled determines the statutory fraction applied to determine the taxable value.

The position up to 7.30pm on 10 May 2011 was:

Kilometres travelled during the FBT year
Statutory percentage
 
 
Less than 15,000km
26%
15,000 - 24,999km
20%
25,000 - 39,999km
11%
Over 40,000km
7%
 
For example, an employee using a car valued at $34,000 would get a tax liability of $6,528 if they drove 24,000km, but that liability would drop to only $3,591 if they drove more than 25,000km.

But starting on 10 May 2011, the government introduced a flat 20% to be applied across all bands, but to be introduced over four years, as per the following table.

New contracts entered into after that date will operate under the new rates, but contracts existing before then will still run out under the old rules, unless a significant change occurs to the arrangement after 10 May 2011 (such as extending the term of a car lease).

The impact of the changes will generally be dependent on the number of kilometres travelled annually by the employee. For example: an employee travelling less than 15,000km annually would benefit from a reduction in the fraction from 26% to 20% once the new rules become applicable.

Record keeping and registration

The FBT record keeping regime for small businesses contains a threshold under which full records need not be kept (although you will still need to show the value of benefits on employee payment summaries). The threshold for 2011-12 is $7,391, but it increases each year. As long as benefits paid do not exceed 20% more than the previous year, the exemption can still apply.

For businesses, it makes no difference whether you are a sole trader, partnership, trustee, corporation, unincorporated association or government body, or whether you pay other taxes such as income tax – as an employer providing taxable benefits in connection with employment, you will be liable to the FBT provisions. All that is required is that the employee receives the benefit in their capacity as an employee of the business. Also an employee is deemed to have received a fringe benefit if that benefit is directly received by the employee's 'associates' – in the main, these would be family members and relatives. So this catches the school fees paid for an employee’s children or the interest-free loan made out in the wife's name.

While an item’s ‘primary use’ is important to determine if a taxable benefit has been provided, the Tax Office bases its decisions on the employee's 'intended use' at the time the benefit is provided.

Other documentation and declaration requirements can seem very particular. For travel, for example, a diary of the trip will need to be kept only if the employee is away for six continuous nights or more, but documentary evidence of travel expenses need to be kept no matter the duration of travel. If the trip is within Australia and not entirely for business purposes, receipts must be kept for food, drink, accommodation and incidentals. But if the trip is deemed to be entirely for business, these are not needed. And if overseas and solely for business, only accommodation receipts are required.
Once a business registers for FBT with the Tax Office it will be allocated an FBT number (which is actually the same as the tax file number)

Can you pay less FBT?

There may be strategies available to reduce the amount of FBT you are required to pay. The most obvious of course is to replace fringe benefits with straight salary, or simply focus on providing only those fringe benefits that are deemed exempt under the FBT law. Or share some of the cost and use employee contributions to reduce the taxable value of the benefit. With a car, for example, an employee could agree to contribute to some of the operating costs, such as fuel, that you do not then reimburse. This then reduces the taxable value of the fringe benefit provided.

You can also provide a benefit that your employee would normally be able to claim as an income tax deduction, had they paid for it themselves. Operating under the 'otherwise deductible' rule, you can reduce the taxable value of the fringe benefit by the amount your employee would have been able to claim. Assume a staff member incurs a work expense that would have been a one-off wholly deductible amount for the employee in their own tax return, such as a subscription to a professional accounting body for an employee of an accounting practice. If you reimburse the employee for this expense (as a fringe benefit for them) the taxable value would be zero (but the employee won't get the deduction).

Please contact Alan Beck at BASMAN RETURNS if you require any assistance.

DISCLAIMER: All information provided in this publication is of a general nature only and is not personal financial or investment advice. It does not take into account your particular objectives and circumstances. No person should act on the basis of this information without first obtaining and following the advice of a suitably qualified professional adviser. To the fullest extent permitted by law, no person involved in producing, distributing or providing the information in this publication (including Taxpayers Australia Incorporated, each of its directors, councillors, employees and contractors and the editors or authors of the information) will be liable in any way for any loss or damage suffered by any person through the use of or access to this information. The copyright is owned exclusively by Taxpayers Australia Inc (ABN 96 075 950 284). This content has been researched, authored, reviewed and produced by Taxpayers Australia staff. This paper takes into account the law and related matters of which the author is aware at 1 March 2012.


FREE Webinars for Business Owners

The Queensland Government is running a series of 1 hour webinars (web-based seminars) in 2012 to help small business owners improve their skills and their business.

The free webinars cover a variety of topics, including:
  • cloud computing
  • using Facebook, Twitter & LinkedIn for business success
  • local search marketing and search engine optimisation
  • pay per click online advertising.

All webinars are interactive and allow you to give, receive and discuss the topic in more depth.
To find out more, including how to register, visit the QLD Business and Industry  website

Cheers

Personal Tax Cuts from 1 July 2012

From 1 July 2012, the tax-free threshold will rise from $6,000 to $18,200, and the maximum value of the Low-income tax offset (LITO) will be reduced from $1,500 to $445.

The first marginal tax rate will be increased from 15 per cent to 19 per cent, and will apply to that part of taxable income that exceeds $18,200 but does not exceed $37,000.

The second marginal tax rate will be increased from 30 per cent to 32.5 per cent, and will apply to that part of taxable income that exceeds $37,000 but does not exceed $80,000.

For more information contact BASMAN RETURNS

Tax & Super obligations for Employers

You may have tax and superannuation obligations if you employ or contract workers into your business, either full-time or part-time and including family members or yourself as director. 

If your business is about to engage workers (either employees or contractors) for the first time, you will need to know how to set up the necessary taxation and superannuation arrangements.

When a worker starts work you will need to:
  • determine whether they are an employee or contractor if you have not already done so
  • provide employees with a Tax file number declaration (NAT 3092) and, if applicable, a Withholding declaration (NAT 3093), which they must complete and return to you
  • provide a Standard choice form to employees who are eligible to choose a super fund - you can download a copy of our Standard choice form (NAT 13080)
  • accept a voluntary agreement on a voluntary declaration form if offered by your new contractor.

On payday you will need to determine the rate of tax that you need to withhold from payments you make.

Prepare ahead for super and FBT
While your super guarantee and fringe benefits tax payments are not linked to your workers' payday, you need to understand these payments, record keeping and reporting obligations and plan to meet them.

Most reporting and payment responsibilities occur when you complete and lodge your activity statement, usually monthly or quarterly. An annual report and a balancing payment (or refund) may be required. Superannuation payments are required at least quarterly.

When an employee or contractor stops working for you, you'll have final reporting and payment obligations. If they are eligible for an employment termination payment (ETP), you will have additional PAYG withholding obligations.

Once you stop engaging workers, you need to ensure you have met all your final payment and reporting obligations. You also need to cancel your PAYG withholding registration.

Keeping employment and contractor records is an essential part of running your business and helps you to claim all your deductions. You must keep your records in an accessible form (either printed or electronic) for five years.

National Business Name System

The current state based business names system is to be replaced by a National system after 28 May 2012

The registration process will be online and will be linked to the ABN application process.

Costs will be around $30 for one year and $70 for three years - A cost reduction in most states and territories.

Existing businesses do not need to do anything, their existing business
names will transfer automatically to the national register.

If you have an queries contact the BASMAN on 0419 671 602 or by email at alan@basman.com.au

Cheers & Best wishes for a safe and happy Christmas & New Year

Alan

Property and Tax - An Overview

Your home
In most cases there are no tax implications for the home that you live in, and no tax implications when you sell it. This situation may change if you rent out part of your home or use it for work, or it's on more than 2 hectares of land. If you're saving for your first home, you may be eligible for government contributions to help you build your savings quickly.

There are usually no capital gains tax implications at the time you inherit a dwelling. Capital gains tax may apply when you subsequently sell or otherwise dispose of the dwelling.

If you rent out property to others, you must declare the income in your tax return, and you can claim tax deductions for many of the related expenses. You may have to pay capital gains tax when you sell the property.

Vacant land is generally a capital asset that is subject to capital gains tax. However, if you purchase the land for resale to earn a profit, or use the land in a business-like way, it is considered trading stock. In this case you treat proceeds from the land as ordinary income, and you may need to register for GST.

If you subdivide land - including if you subdivide land adjacent to your home - the subdivided land will generally be subject to capital gains tax. However, if you purchase land to subdivide and resell for a profit, or use the subdivided land in a business-like way, the proceeds may be treated as ordinary income and you may need to register for GST.

If you build new residential premises for sale, you'll be liable for GST on the sale and entitled to claim GST credits for related purchases. If you renovate a property and sell it for a profit, there could be implications for income tax, capital gains tax and GST.

If your property is used to run a business - whether it's commercial premises like a shop or office, or even your own home - there will be income tax implications while you own it and capital gains tax implications when you sell. You may also be liable for GST, and entitled to claim GST credits, when you buy, sell, lease or rent commercial premises.

Source: www.ato.gov.au