In the ever-changing tax landscape, a GST Bill currently before Parliament is bound to have significant ramifications for both purchasers and property developers. If the Bill passes in its current form, from 1 July 2018, purchasers of new residential premises or new residential subdivisions will need to remit the GST on the property’s purchase price directly to the ATO as part of the settlement process.
This is a significant change from the current arrangement where the developer collects the full proceeds and remits GST to the ATO in the next BAS (which can be up to three months after settlement). The reforms, which are intended to target developers who avoid remitting the GST by dissolving the business before the next BAS lodgement, will put a significant burden on purchasers.
For some developers there will be a significant cash flow impact because the purchaser will be required to pay 1/11th of the full sale price directly to the ATO, even if the developer’s GST liability on the sale would be less than this (e.g., where they can apply the GST margin scheme). In these cases, developers will need to seek a refund from the ATO.
As many are now aware, Uber drivers need to register for GST by the time they complete their first drive. The ATO is well aware of the identity of Uber drivers and has begun to send “please explain” letters to drivers who have overlooked registering for GST. What many are unaware of however is that the GST registration applies to any other businesses that they run as a sole trader. Take the example of someone who has a micro business that turns over less than $75,000. Under GST law, the business owner is not required to be registered for GST and there should be no GST on the things they sell to customers. However, if this same micro business person starts driving for Uber, the GST registration applies not only to their Uber activities but to their micro business as well. It will be easy for some to be caught out by this requirement.
The ACNC celebrated its fifth birthday in December 2017. As provided for in the original legislation, the Government is now conducting a review, the terms of reference indicating that it should:
- Examine the extent to which the objects of the ACNC Acts continue to be relevant.
- Assess the effectiveness of the provisions and the regulatory framework established by the ACNC Acts to achieve the objects.
- Consider whether the powers and the functions of the ACNC Commissioner are sufficient to enable these objects to be met.
- Consider whether any amendments to the ACNC Acts are required to enable the achievement of the objects and to equip the ACNC Commissioner to respond to both known and emerging issues.
The ACNC has made its response to the review available on its website: http://www.acnc.gov.au/ACNC/Comms/LN/LN_20180119.aspx
Its recommendations include:
- Increasing its powers to allow the ACNC to reveal reasons for its various decisions, such as why a charity has had its registration revoked.
- Requiring charities with revenue over $250,000 to comply with the accounting standard addressing related party disclosures.
- Allowing administrative penalties to be charged for late lodgement of reports.
- The ACNC and the Australian Accounting Standards Board to work together to develop suitable reporting requirements, including additional disclosures for related party transactions.
The public has also been invited to provide written submissions by 28 February 2018. See https://consult.treasury.gov.au/people-and-communications-division/acnc-legislation-review/ for more details.
For some of you reading this blog, 1987 will seem like ancient history – way before you were born. For others, the share market crash of that year remains unforgettable.
As a young accountant at the time, it seemed like the world was about to end, with investments on 19th October 1987 worth a fraction of what they were just days before.
This week marks 30 years since that memorable day. In a recent article written by Geoff Wilson of WAM Capital fame, he reminds us of some lessons learnt from this historic event:
- Never panic and always take a long-term view – the world of finance did not end on 19 October 1987.
- Be patient – the Dow Jones Industrial Average only took two years to recover the loss of October 1987.
- Work against your emotions – be excited about buying when others are panicking.
- “The time to buy is when there’s blood in the streets” – Baron Rothschild has been proved right after many market crashes.
Despite such advice coming from a seasoned player, history shows that few will follow it. Most will panic in the moment, and repeat the mistakes of those before. Don’t fall into that trap. Partner with a financial planner who will give you an objective perspective and a clear head, when the emotions are begging to take control.
The ATO is critically looking at car log books to make sure they have been correctly completed. Generally you need to keep a log book for at least 12 weeks, and once you have kept it, you can in most cases rely on it for 5 years. It needs to record the following for each trip:
- The date it commenced;
- The date it ended;
- The odometer reading at the start and end of the trip;
- The kilometers travelled on the journey;
- The purpose of the trip (be specific – who did you visit and briefly state why)
You need to complete the log book entry as soon as possible after each trip, and keep a summary of certain other data. It does not have to be a paper record – there are a number of apps available for your smartphone.
It’s not rocket science, but if you don’t do it properly you may have to say goodbye some handy car tax deductions.
The ACNC has recently announced that it will move to deregister almost 90 charities for failing to submit their Annual Information Statements for two years (“double defaulters”). As a result, these charities will lose their Commonwealth tax concessions.
The ACNC has been warning for some time that it is getting tough on charities that fail to lodge as requested, and after writing to double defaulters and not getting a response, it has taken action. While the ACNC generally takes a co-operative approach in its dealings with Charities, it has over time migrated towards enforcing the legal obligations applying to charities, in accordance with its role as the industry regulator. Our firm helps a large number of charities ensure they meet their obligations. How can we help you?
With real estate prices booming, and the supply of land in inner-suburban suburbs falling well short of demand, there have been instances where homeowners have sliced off a portion of the house block for a bit of extra cash, only to find themselves in the sights of the taxman.
It would seem straightforward enough; it’s your home it should be exempt from capital gains tax. The key issue is that the exemption of the home from CGT hinges on actually selling the home (i.e. the building that was inhabited), not just the surrounding land. Many unassuming homeowners who sliced off and sold the vacant part of their block have been left with a nasty surprise.
Tax is complex, so check with your RDL accountant each time; you’ll be glad you did.
The $20,000 immediate write-off was introduced in the May 2015 budget, to give “small” businesses an immediate tax deduction on the purchase of most assets (eg cars, equipment, etc) where the cost of each item is below the $20,000 threshold.
The concession has had a good run and is due to finish on 30th June 2017, so small businesses have a window of opportunity before then to purchase assets and claim an immediate tax deduction.
This concession has only been available to “small businesses” which until 30th June 2016 meant businesses with a turnover under $2m. However, the announcement in the 2016 Federal Budget to expand the definition of a small business to businesses with a turnover under $10m has significantly broadened the scope for larger businesses to take advantage of this concession, albeit in the short run to 30th June 2017.
Talk to your RDL advisor about how you can benefit from this concession.
Some people would think that a visit from the ATO would be about as enticing as root canal. Nonetheless, the ATO has announced that it plans to make contact with small businesses to discuss its range of digital services. The ATO may directly contact taxpayers who are new to small business or whose circumstances have changed, and offer to visit (lucky you!) to demonstrate the ATO products and services. In an attempt to provide some assurance, the ATO has said that such visits will be covered by the ‘Commissioner’s Guarantee’ i.e. no information gathered in those visits would be used for any other purpose. I guess time will tell.