Interaction

Improvements to small business concessions - Bill introduced into parliament

From 2012-2013 the small business low value asset immediate write-off will increase from $1,000 to $6,500. The general business pool and long life small business pool will be consolidated into a single pool to be written off at one rate. The 25 per cent Entrepreneurs Tax Offset will be cancelled. Small Businesses will be able to claim $5000 initially in accelerated depreciation for motor vehicles acquired in the 2012-2013 and later tax years. 

(Reminder: a small business has aggregated turnover less than $2 million)

Off-Market Share Buy Backs - Release of exposure draft and explanatory memorandum

The amendments aim to define the appropriate method used to work out the capital/dividend split of share buy-backs and 
provided that where the approved method is used to determine the dividend/capital split certain tax avoidance measures will not apply (i.e. streaming rules). Where a listed company undertakes an off-market buyback notional losses on the disposal of the shares/interests will be denied. The market value uplift will be removed and the time to provide a distribution statement will be extended. 

Increase in Superannuation Guarantee - Bill introduced into Parliament 

From 1 July 2013 the Superannuation Guarantee percentage will gradually be increased from 9 per cent to 12 per cent in the 2019-20 financial year and the Superannuation Guarantee age limit will increase from 70 to 75 years.

Directors of Companies to be personally liable for outstanding Super Guarantee and PAYG withholding.

The ATO are seeking to reinforce a director's obligation to ensure their company complies with its PAYG and Super Guarantee requirements by making the directors personally liable for their company's overdue amounts. The new measures will allow the ATO 90 days after the relevant due date to commence proceedings to recover from Directors any amounts that are unpaid and unreported by making directors and their associates personally liable.

Default Assessment Notices

The ATO has announced that they will be issuing default assessment notices based on the information they have received from third-parties e.g PAYG payment summaries, interest and dividend etc to individual tax payers with overdue lodgement returns. The taxpayer will first receive a letter titled 'Default assessment warning' if the overdue returns are not lodged by the date specified, they will issue a default assessment based on the estimated taxable income included in the letter. 

Standard work-related and tax-related deduction

The government have released draft legislation about the announcement made in the May Budget to introduced a standard work-related / tax-related deduction for individuals. To refresh your memory, the amount of the deduction is set to be $500 for 2013 tax return and $1000 for the 2014 tax return and onwards. The deduction aims to cover all work-related items including clothing, telephone, subscriptions, travel, self-education and home office and tax related items such as your tax preparation fee. If your actual deductions are more than the standard deduction you are entitled to claim but you must maintain records to support all claims. Importantly the standard deduction does not include motor vehicle or car expenses so a claim can be made in addition to the standard deduction.

CGT relief for natural disasters

The Government have released a discussion paper regarding Taxpayers affected by a natural disaster and who are eligible to participate in the Australian government agency replacement asset programs or receive assistance such as cash grants to be exempt from paying CGT or to be able to retain pre-CGT asset status for their replacement assets. Importantly the proposed date of the effect is 1 July 2011 which may be of no benefit to the taxpayers who were affected by the storms and floods earlier this year. We will keep you updated.

The big news this month is centred around the two-day Tax Forum which kicked-off in Canberra today. The forum brings together around 200 representatives of the community, business, unions, government, academics and other tax experts, to discuss priorities and directions for further tax reform in light of the Henry Tax Review. The outcome of day 1 is that small business, big business and unions have failed to find common ground on most issues including cutting the corporate tax rate to 29% however most agree that simplifying the tax system is the way forward.


Tax Update

Tax Law Amendment to Research and Development has received Royal Assent. 
From 1 July 2012 The R&D tax concession will be replaced with the new R&D tax incentive.

The R&D tax incentive provides a:
 
• 45 per cent refundable R&D tax credit for eligible companies with aggregated turnover of less than $20m; 
• 40 per cent non-refundable R&D tax credit for other entities.

This equates to 150% tax deduction for eligible companies. The eligibility criteria for amounts that can be claimed has been restricted. Click here for more details


Proposed Changes to claiming GST upfront on Hire Purchase Agreement for small businesses who are on a cash-basis 
An Exposure draft titled GST financial supply provisions from 1 July 2011 allows small businesses accounting on a cash basis to access full input tax credits upfront when they enter into hire purchase agreement

 
Draft legislation for Small business tax law amendments
 The amendments are due to be effective from 1 July 2012 but will only be introduced if the mineral resources tax passes. If the Government is defeated in the Carbon Tax the existing rules will stay in place:
 
• increase the small business instant asset write-off threshold from $1,000 to $6,500
• consolidate the long life small business pool with the general small business pool, resulting in a single pool
• enable small businesses to claim an initial deduction of $5,000 for motor vehicle purchases
• abolish the Entrepreneurs Tax Offset  

Email Scenario

A client has alerted us to an email they have received appearing to be from the ATO. 

Please know that the ATO never sends emails regarding tax returns or tax refunds. All correspondence is by mail and will come to via Interactive Accounting first. Below is a copy of the email that was received. 

If you recieve this email or similar please mark as spam or delete immediately.

Below is an example of what has been received

 

Dear Beneficiary,

A tax re-fund of $2,875.96 has been credited to your Account.

To complete your tax refund you will need to log on to your

Account, Click on the "Confirm" button below

to complete this process. Confirm

Please, note: you cannot reply to this e-mail, as the e-mail address 
used to send you this e-mail cannot respond to any issues or requests. 
To help you address your particular question or comment, please visit our website