Super changes – transition-to-retirement pension

Currently, the earnings on assets used to support a transition-to-retirement pension account are tax-free.  Members who are over preservation age (but younger than 65) and have not retired may start a transition-to-retirement pension.  This enables the member to draw a pension from their superannuation account while still working.  This pension is designed to supplement the member’s income to enable them to “transition” into retirement.  The earnings on this pension account are tax-free.

From 1 July 2017, the earnings on a transition-to-retirement pension account will no longer be tax-free.  Existing capital assets that support a transition-to-retirement pension account will be eligible for capital gains tax relief.  This will be addressed in a separate article.

Call us today on 56656469 if you would like to discuss how these changes may apply to you.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent,

Super changes – CGT relief

The recent changes to superannuation have resulted in the earnings on some member accounts being subject to income tax (where previously they would have been tax-free).

For example, members can only have a pension account balance of $1.6 million as at 1 July 2017.  Any amount of the pension that exceeds $1.6 million will need to be commuted back to accumulation.  The excess amount commuted back to accumulation will now be taxed at 15% (whereas previously it would have been tax-free).  Under the current rules, where members dispose of capital assets and their entire account balance in pension phase, the disposal of the asset will be tax-free.  However, where there account balance exceeds $1.6 million and the excess is transferred back to accumulation, the disposal of capital assets after 1 July 2017 may result in a capital gains tax liability.

Further, there are some taxpayers that currently have a transition-to-retirement pension.  The earnings on these accounts are presently tax-free.  As such, the sale of capital assets supporting the transition-to-retirement pension account are also tax-free.  From 1 July 2017, the earnings on transition-to-retirement pension accounts will no longer be tax-free.  As such, the future sale of capital assets that support the transition-to-retirement pension account may result in a capital gains tax liability.

For funds with unsegregated assets, members have a choice to reset the cost base of their capital assets to market value as at 30 June 2017.  This choice will ensure that the gains already made on the asset are tax-free up to 30 June 2017.  The choice can be made on an asset-by-asset basis and once the choice is made, it is irrevocable.

The notional capital gain/loss on the asset will be shown on the 2017 tax return of the superfund.  If the asset makes a capital loss, the loss will be disclosed on the 2017 tax return and carried forward to offset against future capital gains.  If the asset makes a capital gain, the gain is disclosed on the 2017 tax return but will be tax-free to the extent is supports a pension account as at 30 June 2017.  Essentially, if the member makes the election to reset the cost base of the asset, there is a deemed sale and repurchase of the asset as at 30 June 2017 and the net capital gains tax implications of this deemed sale will be disclosed on the 2017 tax return.  

Superannuation funds and members will need to carefully analyse whether this election will be beneficial for their member accounts. 

Call us today on 56656469 if you would like to discuss how these changes may apply to you.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent,

Qld Government Grants – establishing or developing small businesses

Today the Queensland Government have opened another grant for small businesses. The Queensland State Government will provide matched funding of up to $5,000 to eligible businesses to engage a consultant, advisor or business coach to help establish or develop the business.

The advice must fall under one or more of the following categories:

* professional business, tax, computing, legal or financial (accounting) advice

* mentoring / coaching

* business and strategic planning

* market research and marketing strategies, including branding strategies and social media/digital strategies.

As part of the advice, the consultant will assist with developing a business action plan for the next 12 months to support and improve the business.  Providing an action plan is a mandatory requirement of funding.

 

Eligible Criteria

To be eligible the business must:

* have a business name registered within the last 4 years

* have fewer than 20 employees at the time of applying for the grant

* have an ABN and be registered for GST

* be based in Queensland

* declare if any of the owners or directors of the business are an undischarged bankrupt or insolvent.

 

Important dates

Round 1 opens 3 February 2017 and closes 3 March 2017.  Further rounds will be opened in July and December 2017.

All purchases approved for funding must be completed within 3 months of the date of approval.

 

Our comment

From 1 July 2016, small business rollovers were introduced into the tax legislation (in addition to the existing rollovers for certain types of restructures).  These rollover provisions allow businesses to change their operating structure and defer any potential tax implications that may arise from the restructure.  Given the availability of these rollovers and the announcement of this grant, now is a good time for businesses to review their operating structure.

Please contact us as soon as possible if you would like to discuss whether this grant may apply to your business and whether your business may benefit from structuring advice.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent,

ATO to report tax debts to credit agencies

The current total outstanding tax debt owed to the ATO $19.2 billion.  Small businesses account for 65.2% of this debt (or $12.5 billion).  As part of its Mid-Year Economic and Fiscal Outlook, the Federal Government announced that from 1 July 2017 they would report certain tax debts to credit agencies.

The proposed measures will apply to taxpayers that are businesses with an ABN.  It is proposed that the ATO will report outstanding debts to credit agencies where those debts are:

* More than $10,000; 

* More than 90 days overdue; and

* Not being actively managed by the taxpayer and the ATO (eg. covered by a payment plan).

These notifications will then remain on credit files for 5 years.

We recommend that businesses:

1. Review cashflow and ensure sufficient funds are being put aside to meet tax obligations as and when they fall due;

2. Actively engage the ATO where to discuss tax debts where on time payment is not possible.

It is important that you communicate with your advisers or the ATO if you encounter cashflow issues as these proposed measures can adversely affect your business’ credit rating.  Call us today on (07) 5665 6469 if you would like to discuss your ATO liabilities and your potential available options.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent,

Employing staff

Is your business looking to employ staff?  There are many things to consider when you are about to employ staff for the first time.  Below is a general summary of the things you need to do to:

  • Get your business “employee-ready”

  • Obtain sufficient information from your new employee before they start

  • Comply with your ongoing obligations as an employer

 

Getting your business “employee-ready”

Before hiring an employee, at a minimum we recommend that you undertake the following steps:

  • Obtain advice from an employment lawyer to confirm the appropriate award(s) that apply to your employees and the minimum wages and conditions that will apply;

  • Have an employment lawyer prepare an appropriate employment contract for your new employees;

  • Register your business for PAYG withholding (this is the tax that is withheld from your employee’s pay each pay period and remitted to the ATO as part of your business activity statements);

  • Select a default superannuation fund for your employees (this will be the default fund for superannuation contributions for your employees if they do not choose another fund).  You will need to register with this default fund as an employer;

  • Setup a system to manage payments and keep records.Most accounting software packages have capabilities to manage and record payments to employees;

  • Prepare an employee information form to collect basic information from your employee (name, address, next of kin/emergency contact, bank account details);

  • Take out appropriate worker’s compensation insurance;

  • Consider possible liability to payroll tax and fringe benefits tax.

 

Our checklist above has focused on the financial and tax obligations of employing staff for the first time.  There are other legal factors you may need to consider.  Below are links to checklists provided by various government departments outlining other employment considerations.

 

Before your new employee starts

It is important to ensure that you have systems in place to collect all the relevant information from your employee before they commence.  Failure to collect this information may result in penalties for your business.  For example, if you do not collect the appropriate superannuation fund information from your employee, you may not be able to pay their superannuation contributions on time, for which you may be penalised.

We have outlined below the minimum forms you should have your new employees complete:

  1. Employment contract (prepared by an employment lawyer)

  2. Tax file number declaration form (https://www.ato.gov.au/Forms/TFN-declaration/)

  3. Choice of superannuation form (https://www.ato.gov.au/Forms/Superannuation-(super)-standard-choice-form/)

  4. Basic employee information form

 

This information must be obtained before your employee starts work.  If you do not get this information before your employee starts work and they subsequently leave your employment, it can be difficult to fulfil your obligations as their employer (eg. paying their superannuation guarantee and providing them with an end of year payment summary).

 

Ongoing obligations for employees

After your employee has started, you have ongoing obligations as their employer

Every pay period

Every pay period, you must ensure:

  1. Your staff are paid their appropriate wages and entitlements in accordance with their employment contract and awards;

  2. Sufficient tax is withheld from each pay (you can use the ATO’s tax withheld calculator (https://www.ato.gov.au/Calculators-and-tools/Tax-withheld-calculator/) or tax tables (https://www.ato.gov.au/Rates/Tax-tables/);

  3. Staff are provided with an appropriate payslip.

 

Every quarter

Every quarter, you must ensure:

  1. Your employees’ superannuation guarantee obligations are paid in full and on time (penalties apply for late payment).  Superannuation guarantee payments are due on the 28th day after the end of the relevant quarter.

    For small businesses with less than 20 employees or a turnover of less than $2 million, we recommend using the government’s Small Business Superannuation Clearing House to pay your quarterly superannuation obligations.  It is a free service and will help you fulfil your superannuation obligations and provide appropriate information for SuperStream reporting.
     

  2. You report the gross wages and PAYG withholding on your quarterly business activity statement.  The quarterly PAYG withholding amount will need to be paid to the ATO as part of your business activity statement.  (Once your business is withholding more than $25,000 in PAYG withholding annually, you will be required to report and pay your PAYG withholding to the ATO on a monthly basis.)

 

Every year

Every year, you must ensure:

  1. Staff are provided with an end of year payment summary no later than 14 July each year for the payments made between 1 July and 30 June;

  2. A PAYG payment summary annual report (showing the gross wages to your employees and the total tax withheld) is sent to the ATO no later than 14 August.

 

Other considerations

There are some handy summaries provided by the following government departments about other factors you should take into consideration when hiring employees:

 

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent,

Personal Property Securities Register

The Personal Property Securities Register (PPSR) allows lenders and businesses to register their security interests. Other parties can search the register to find out if there is a security interest registered over the personal property.

Businesses who sell personal property on credit, consignment or on a retention of title arrangement should register their interest in the property on the PPSR.  It is also relevant where your business assets may be stored somewhere apart from your business premises (eg. on a worksite).

 

Consumers who are about to purchase personal property should check the PPSR to ensure the property is free of a security interest.

 

Examples of personal property include:

* art

* cars, boats and caravans

* plant and machinery

 

Registering your interest on the PPSR will help protect you businesses from incurring losses when a customer defaults on a loan or does not fulfil other obligations.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent,

Voluntary HECS repayments

From 1 January 2017, the government will remove the 5% voluntary repayment bonus for HECS/HELP loans. This 5% bonus currently applies to voluntary HECS/HELP repayments of $500 or more. If you were thinking about making a voluntary payment towards your HECS/HELP debt, do it before 31 December 2016 to take advantage of the 5% discount. Give us a call if you need details on how to make a voluntary repayment.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent,

Paying ATO liabilities

When dealing with taxpayers and their outstanding liabilities, the ATO have announced that they will be tailoring their communication based on the taxpayer’s previous behaviour and choices. 

The ATO will be using data about the taxpayer’s previous behaviour, obligations and risk profile to tailor how they respond to the late payment.  This will mean:

* The first notification you receive may be different than before;

* The ATO may contact you in different ways, including by letter and phone.  If you have linked your myGov account to the ATO, letters will be sent to your myGov Inbox;

* The ATO may take appropriate action after only eight days.If you are having trouble paying your ATO liabilities, please contact us immediately.  It is important that we communicate with the ATO to ensure no further action is taken.


Xavier Quenon from Go Mortgage (based in Helensvale) recently wrote an article recently about the impact of ATO debt on borrowing capacity.  You can access the article here.

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DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent,

Backpacker Tax

The Government has recently enacted legislation to change the tax rates for working holiday makers with visa sub-class 417 and 462 from 1 July 2017.  

If you employ working holiday makers, you will need to register with the ATO.  Once you are registered with the ATO, a 15% withholding rate applies to the first $37,000 of the working holiday maker’s income.  From $37,001, normal foreign resident withholding rates apply.

Employers who do not register must withhold 32.5% tax on the first $37,000 and then apply the normal foreign resident withholding rates after that.  Please contact us as soon as possible if you hire working holiday makers so we can assist you with the registration and tax withholding process.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent,

Qld Government Grants – Improving your digital presence

On 8 November 2016, the Queensland Government announced their Small Business Digital Grants Program.

It will provide matched funding of up to $10,000 to eligible businesses for the purchase of hardware, software and services (such as digital coaching).

The digital technology or service must fall under one of the five priority areas:

  • Digital marketing and social media

  • Digital content (web pages, mobile apps, media)

  • Receiving payments or selling online

  • Specialised digital technology or software

  • Digital planning and advice/training

To be eligible, your business must:

  • Have fewer than 20 employees at the time of applying for the grant; and

  • Have an Australian Business Number and be registered for GST; and

  • Have a Queensland headquarters or significant Queensland-based operations.

Round 1 opens 8 November 2016 and closes 9 December 2016.  For more information, please go to: https://www.business.qld.gov.au/business/support-tools-grants/grants/digital-grants

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent,