At MartinCo, we offer our clients premium Accounting and Financial advice. We stay up to date with trending news topics to help our clients build their wealth and achieve their goals.

With the ATO’s compliance targeting of large businesses in the past few years reaping rewards, this tax time, its turning its attention to small businesses. As a small business owner, what do you need to be aware of to stay out of the ATO spotlight?

A recent interview with Tax Commissioner Chris Jordan revealed details of what the ATO will be paying particular attention to this year. Perhaps not surprising, the ATO will be targeting businesses that deal in cash. As a part of its cash and hidden economy operation, the ATO has compiled “data-maps” of cash-only businesses and those that do not frequently or readily use electronic payment facilities.

Using the data-maps the ATO is homing in on particular suburbs which have a high incidence of cash-only businesses. In Sydney, Cabramatta and Haymarket were cited as examples of areas that the ATO visited in relation to its operation. According to the Commissioner:

“People say to me: ‘it’s terrible – people steal the money, you’ve got to count it, you’ve got to reconcile it, you’ve got to have security around it, you’ve got to take it to the bank’ … There’s no compelling business reason to have cash only.”

With these cash and hidden economy visits the ATO is conducting, it is looking for several things: whether the business has undeclared income; whether the employees are allowed to work (visits in the past have been made in conjunction with the Fair Work Commission or the Department of Immigration); and whether the employees are receiving the correct amount of wages, conditions and superannuation.

Therefore, the other areas the ATO is targeting this tax time also include unpaid superannuation guarantee contributions and cash payments of wages without the associated conditions and benefits. According to the ATO, with the introduction of the single-touch payroll (STP), it will be able to receive information on unpaid superannuation contributions much earlier and act on it.

Even if you’re not running what the ATO deems to be a “cash business” there are other areas you will still need to be aware of this tax time. In particular, the ATO will be looking at small businesses wrongly claiming private expenses, and unexplained wealth or lifestyle.

Under tax law, you can generally deduct a business expense if it is necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income, provided the expense is not capital, private or domestic. Commissioner Jordan noted that small businesses intermingling their private expenses with their business expenses have been an issue for a long time, but this year he has decided to “renew the discussion to highlight that we are going to be focusing on these areas”. Hence if you’re running a small business you should make sure all your expense claims are in fact business related, any expenses that are both business and personal needs to be apportioned on a reasonable basis.

The unexplained wealth or lifestyle targeted by the ATO includes instances of business owning families that have low or average reported incomes, but have a lifestyle that far exceed those modest incomes. Commissioner Jordan considers that having kids in private schools and taking frequent business class flights on overseas trips would be considered to be unexplained wealth. He said the ATO will use all its resources including obtaining information from other government departments (ie Department of Immigration) and social media (ie Facebook posts).

Want to find out more?

If you think your business may have some issues with ATO’s tax time focus areas, we can help you sort them out before the ATO get involved. If you’re thinking of moving away from cash and transitioning into electronic payments, we can assist with those first steps.

At MartinCo we’re the Sydney Accountancy and Finance firm that makes a difference for their clients. We help you build your wealth so that you can achieve your goals! With the convenience of two Sydney offices, one in Hurstville and the other in Edgecliff, we’re more than equipped for you to contact us today!

If you have any questions feel free to contact MartinCo for more information.

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Key Taxation dates in May 2018

Please Contact MartinCo for more information >

Key Taxation dates in May 2018

Please Contact MartinCo for more information >

At MartinCo, we offer our clients premium Accounting and Financial advice. We stay up to date with trending news topics to help our clients build their wealth and achieve their goals.

With the FBT lodgement deadline fast approaching, we give you some tips on areas of FBT which may need particular attention, such as motor vehicles, employee contributions, the living-away-from-home allowance, car parking and the employer rebate. These are the areas that the ATO is focusing their efforts on in terms of compliance. So, when you put together your FBT return, keep in mind these focus areas and you could avoid some costly mistakes.

In the countdown to FBT lodgement time, there are some areas that may need particular attention, such as motor vehicles, employee contributions, the living-away-from-home allowance, car parking and the employer rebate. Apart from non-lodgement of the FBT return, these are some of the areas that the ATO focus their compliance action on. For example, employers who fail to identify and report fringe benefits where a vehicle is available for private travel of employees will raise a flag within the ATO’s systems for a more detailed look at the company’s FBT records.

Similarly, the ATO will also be looking at employee contributions to ensure that the employer has declared the amount on both their FBT return and the income tax return. As well as making sure that the employer hasn’t overstated employee contributions on their FBT return to reduce the taxable benefits provided, which may be particularly prevalent in smaller private companies where the shareholders/directors are also the employees.

Some of the common mistakes the ATO has found in relation to the living-away-from-home allowance (LAFHA) include:

• claiming reductions for ineligible employees;
• failing to obtain required declarations from employees;
• claiming a reduction in the taxable value of the LAFHA benefit for exempt accommodation and food components in invalid circumstances; and
• failing to substantiate expenses relating to accommodation and where required food or drink.

If you’re an employer and you lodge an FBT return with LAFHA benefits you can be sure that the ATO will be looking closely at the benefits that have been provided. This is particularly true where the LAFHA is paid for more than 12 months for any particular employee without a change in employment location.

In relation to the car parking fringe benefits, the ATO will be focusing their attention on the following aspects:

• market valuations that are significantly less than the fees charged for parking within a 1 km radius of the premises on which the car is parked;
• the use of rates paid where the parking facility is not readily identifiable as a commercial parking station;
• rates charged for monthly parking on properties purchased for future development that do not have any car park infrastructure; and
• insufficient evidence to support the rates used as the lowest fee charged for all day parking by a commercial parking station.

Remember however, if you’re a small business with a gross income of less than $10m, you may be able to get a car parking exemption in certain circumstances. An exemption is not the same as a rebate. The rebate, put simply, reverses the effect of the FBT gross-up method and is only available to certain non-government, not-for-profit organisations. The ATO will look very carefully at employers who claim the rebate to ensure that they are eligible. So, when you put together your FBT return, keep in mind these areas which need particular attention and you could avoid some costly mistakes.

Need help?

Do you know whether you’re entitled to a rebate? Or maybe you just want to find out whether you can access the exemption to car parking benefits? We can answer all your questions and help you with your FBT return. If you’re a little behind and think that you may miss the deadline for lodgement, we can help you get an extension.

At MartinCo we’re the Sydney Accountancy and Finance firm that makes a difference for their clients. We help you build your wealth so that you can achieve your goals! With the convenience of two Sydney offices, one in Hurstville and the other in Edgecliff, we’re more than equipped for you to contact us today!

If you have any questions feel free to contact MartinCo for more information.

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At MartinCo, we offer our clients premium Accounting and Financial advice. We stay up to date with trending news topics to help our clients build their wealth and achieve their goals.

FBT time is well and truly upon us, with only a month to go until the due date for the lodgement of the return. With the due date so close, most businesses would be in the middle of preparing or even finalising their returns. For those that have put it off, there is still time to lodge, we can help you understand any FBT issues you may have to expedite the process. If you need more time, we can help with an extended due date for lodgement. Remember if you’re a small business you may also be able to get exemptions.

FBT season is in full swing with only a month to go until the due date for the lodgement of the return on 21 May 2018. If you haven’t started getting the required information together, now is the time. Remember if you give benefits to any current, prospective or former employees or associates in connection with their current, prospective or past employment, then you may be liable to FBT.

The FBT rate for the 2017-18 FBT year (which runs from 1 April 2017 to 31 March 2018) is 47% and is the equivalent of the top marginal tax rate. If you’ve combed through your financial records and determined what you don’t need to lodge an FBT return, you must lodge an “FBT non-lodgement advice form” to let the ATO know of your situation.

If you’ve gone through your financial records and determined that you have provided a benefit to an employee, whether past, prospective or present, what do you do next? First, you have to determine the type of benefit you have provided. The most common types of benefit include car, car parking, loans/debt waiver, expense payment, giving of material goods, and entertainment (which includes meal entertainment).

All the above categories have their own special methods for determining the value of the benefit provided. Once the value is determined, an appropriate gross-up rate is applied to work out the taxable value. The taxable value is then multiplied by 47% to determine the FBT payable. Should the FBT payable exceed $3,000, you will need to pay FBT in quarterly instalments in the following year. The quarterly instalments will be based on the previous year’s FBT payable and is aligned with the BAS system.

If you’re running a small business (gross income of less than $10m) remember that you may be able to get a FBT car parking exemption provided the parking is not provided in a commercial car park. Small businesses can also provide their employees with multiple work-related portable electronic devices that have substantially identical functions in the same year and all the devices will be exempt from FBT.

However, this only applies to devices that are primarily used for work such as laptops, tablets and phones. These exemptions mean that the benefits are excluded from the definition of a fringe benefit and do not need to be included in any calculations.

What you will need to include is an employee’s “reportable fringe benefits amount” on their payment summary if their individual fringe benefits amount for the FBT exceeds $2,000. The actual amount shown on the payment summary is the grossed-up value of the individual fringe benefits amount. This will need to be done at the end of the financial year before the payment summaries are issued to your employees.

Too complicated?

FBT may seem daunting if you’re attempting to work it out for the first time, and even seasoned campaigners will come across some complex issues they are not quite sure what to do with. Don’t leave it too late! If you need help with the FBT process, talk to us first. We can also help you get more time, lodge through us and get an extended due date of 25 June for your return.

At MartinCo we’re the Sydney Accountancy and Finance firm that makes a difference for their clients. We help you build your wealth so that you can achieve your goals! With the convenience of two Sydney offices, one in Hurstville and the other in Edgecliff, we’re more than equipped for you to contact us today!

If you have any questions feel free to contact MartinCo for more information.

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Last night, Treasurer Scott Morrison handed down the Federal Government’s Budget.

Please find enclosed a full report summarising the tax & accounting measures introduced that will come into effect from 1 July and onwards. The key measures that are likely to be applicable to the majority of our clients I have highlighted below.

If you wish to discuss any of these measures in further detail, please don’t hesitate to contact our office.

Individuals

• A seven-year Personal Income Tax Plan will be implemented in three steps, to introduce a low and middle income tax offset, to provide relief from bracket creep and to remove the 37% personal income tax bracket.
• The Medicare levy low-income thresholds for singles, families, seniors and pensioners will be increased from the 2017/18 income year.
• The 2017/18 Federal Budget measure to increase the Medicare levy from 2% to 2.5% of taxable income from 1 July 2019 will not proceed.
• Supplementary amounts (such as pension supplement, rent assistance and remote area allowance) paid to a veteran, and full payments (including the supplementary component) made to the spouse or partner of a veteran who dies, are exempt from income tax from 1 May 2018.
• Schemes to license a person’s fame or image to another entity such as a related company or trust to avoid income tax will be curtailed.
• The ATO will be provided with $130.8m from 1 July 2018 to increase compliance activities targeting individual taxpayers and their tax agents.

Income tax

• Significant changes to the calculation of the R&D tax incentive will commence for income years beginning on or after 1 July 2018. Additionally, a maximum cash refund will also apply for some entities.
• The $20,000 instant asset write-off will be extended for small businesses by another year to 30 June 2019.
• Amendments to Div 7A will strengthen the unpaid present entitlements (UPE) rules from 1 July 2019.
• The start date of targeted amendments to Div 7A will be deferred from 1 July 2018 to 1 July 2019.
• Deductions for expenses associated with holding vacant land not genuinely used to earn assessable income will be denied.

Black economy measures

• A package to reform the corporations and tax laws to deter and disrupt illegal phoenix activity and the black economy will be introduced.
• The taxable payments reporting system for payments to contractors will be expanded to include security services, road freight transport and computer system design industries, effective from 1 July 2019.

Superannuation

• The maximum number of allowable members in SMSFs and small APRA funds will be increased to six from 1 July 2019.
• The annual audit requirement for self-managed superannuation funds will be changed to a three-yearly requirement for funds with a history of good record keeping and compliance.
• Individuals whose income exceeds $263,157, and have multiple employers, will be able to nominate that their wages from certain employers are not subject to the superannuation guarantee (SG) from 1 July 2018.
• Individuals will be required to confirm in their income tax returns that they have complied with “notice of intent” requirements in relation to their personal superannuation contributions, effective from 1 July 2018.

Indirect taxes

• Offshore sellers of hotel accommodation in Australia will be required to calculate their GST turnover in the same way as local sellers from 1 July 2019.
• The luxury car tax on cars re-imported into Australia, following a refurbishment overseas, will be removed from 1 January 2019.
• Alcohol excise refund scheme cap increased from $30,000 to $100,000 per financial year from 1 July 2019, and lower excise rates will apply for smaller beer kegs.

If you wish to discuss any of these measures in further detail, please don’t hesitate to contact our office.

At MartinCo, we offer our clients premium Accounting and Financial advice. We stay up to date with trending news topics to help our clients build their wealth and achieve their goals.

Paying the right amount of super to your employees can at times be a complex exercise, with the threshold changes in the recent years and the contribution base which changes every year according to indexation factors. With the rise of the gig economy there’s also a grey area as to whether a certain person working for you is actually an employee or a genuine contractor. Find out what your super obligations are this year.

Are you paying the right amount of super for your employees? It’s that time of the year again, where the Australian Bureau of Statistics (ABS) release the indexation factors that are critical in determining various superannuation thresholds. While the super guarantee is still frozen at 9.5%, the maximum contribution base will increase to $54,030 per quarter (or $216,120) for 2018-19. Employers are not required to provide the minimum super guarantee for the part of employees’ wages above the maximum contribution base.

Besides the part employees’ wages above $216,120, you as an employer, are required to make minimum contributions of 9.5% of an employee’s ordinary time earnings by quarterly due dates to their nominated superannuation funds if you pay the employee $450 or more (before tax) in a calendar month. This is irrespective of whether an employee is full-time, part-time, casual, a family member, company directors, those who receive a super pension or annuity while still working, or temporary residents.

You should note that the ATO considers certain contractors that are paid mainly for their labour to be employees for super guarantee purposes. This is the case even if the contractor quotes an ABN. According to the ATO, you as an employer must make super guarantee contributions of 9.5% on what you pay your contractors if they are paid:

• under a verbal or written contract that is wholly or principally for their labour;
• for their personal labour and skills which may include physical labour, mental effort or artistic effort; or
• to perform the contract work personally.

If you’re not paying the right amount of super for your employees and some contractors, beware, the ATO uses sophisticated data analytics to identify employers at high risk of non-compliance.

It also takes a differentiated approach to compliance and penalties depending on the compliance history of the employer and how actively they engage to meet their superannuation obligations. Therefore, it pays to be in the good books of the ATO as they may take a more accommodating approach should your business have any discrepancies in super guarantee payment to your employees.

However, employers who are unwilling to meet their super guarantee obligations should expect the ATO to take firm compliance action including the imposition of penalties such as the super guarantee charge, a Part 7 penalty (up to 200%) for late lodgement of the super guarantee statement or failing to provide information when requested, and an administrative penalty (up to 75%) may also apply for an employer who makes a false and misleading statement.

At MartinCo we’re the Sydney Accountancy and Finance firm that makes a difference for their clients. We help you build your wealth so that you can achieve your goals! With the convenience of two Sydney offices, one in Hurstville and the other in Edgecliff, we’re more than equipped for you to contact us today!

If you have any questions feel free to contact MartinCo for more information.

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At MartinCo, we offer our clients premium Accounting and Financial advice. We stay up to date with trending news topics to help our clients build their wealth and achieve their goals.

Whistleblowers in Australia are about to get more robust protection. In this two-part look at the new legislation introduced by the government, the implications of changes in whistleblower protections under corporations law will be examined firstly. While the introduction of the completely new whistleblower protections under the taxation regime will be examined in part 2.

Currently, Australia’s corporate whistleblowing regime has significant gaps in protection. Whistleblowers have to navigate a maze of different laws to find out whether they are protected from civil or criminal liability and/or victimisation.

For example, no statutory protection exists for whistleblowers who:

• Report conduct in breach of consumer credit laws; and the coverage for disclosures concerning corporate corruption, bribery, fraud, money laundering, terrorism financing and other serious forms of misconduct are either scattered between various Acts or are unavailable.

The protection that does exist has also been criticised as being limited and overly complex. Specifically, to qualify for protection as a whistleblower under the current regime, individuals must be a current officer/employee/contractor of the company in question. This raises issues where past officers/employees/contractors make appropriate disclosures and are not afforded protections as they do not qualify as a whistleblower.

In light of these criticisms, the government has introduced legislation to consolidate the existing piecemeal whistleblower protections into a coherent and complete set of protections. The new legislation seeks to cover all regulated entities and expand the definition of a qualifying disclosure to include misconduct, contravention of any law administered by ASIC and/or APRA, any conduct that represents a danger to the public or the financial system, or an offence against any law of the Commonwealth that is punishable by imprisonment for a period of 12 months or more.

In addition, under the new legislation, eligible whistleblowers are defined as any individual who is or has been in a relationship with the entity about which the disclosure is made. This takes the motivation and currency of the relationship of the whistleblower out of the equation and enable a wider range of individuals to qualify as whistleblowers.

The new regime also allows for a category of “emergency disclosure” to a member of Parliament or a journalist in certain circumstances, which is not permitted under the current regime.

The level of protection has also been strengthened under the introduced legislation including:

• no longer requiring whistleblowers to identify themselves when making a disclosure and ensuring relevant persons cannot the required to disclose the identity of a whistleblower to a court or tribunal without a court order;
• information disclosed cannot be used as evidence against whistleblowers in a prosecution;
• adding a civil penalty option for prosecution in relation to victimisation;
• providing that generally a court may not make a cost order against a whistleblower seeking remedies for victimisation; and
• require public companies, large proprietary companies and registerable superannuation entities to have whistleblower policies and make them available to their officers and employees.

Beware though, if you’re thinking of becoming a whistleblower, these protections have not yet passed Parliament and are not yet law, so you will still have to wade through the existing law to find out how you are protected. Once Parliament passes the legislation, these consolidated and strengthened protections will apply to disclosures made on and from 1 July 2018.

At MartinCo we’re the Sydney Accountancy and Finance firm that makes a difference for their clients. We help you build your wealth so that you can achieve your goals! With the convenience of two Sydney offices, one in Hurstville and the other in Edgecliff, we’re more than equipped for you to contact us today!

If you have any questions feel free to contact MartinCo for more information.

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Key Taxation dates in April 2018

Please Contact MartinCo for more information >

Key Taxation dates in March 2018

Please Contact MartinCo for more information >