Super Guarantee Charge Amnesty Announced

The federal government’s recently announced 12 month Amnesty on underpaid super is welcomed news for employers, providing a one-off opportunity to self-correct past super guarantee (SG) non-compliance without penalty.

If the legislation is passed as announced, the Amnesty will be available from 24th May 2018 to 23rd May 2019. Employers who voluntarily disclose previously undeclared SG shortfalls during the Amnesty, and before the commencement of audit activity will:
• not be liable for the administration component and penalties that may otherwise apply to late SG payments, and
• (perhaps more importantly) be able to claim a tax deduction for catch-up payments made in the 12-month Amnesty period.

Employers will be required to pay all employee entitlements, including the unpaid SG amounts owed to employees and the nominal interest, as well as any associated general interest charge (GIC).

The Amnesty is applies to previously undeclared SG shortfalls for any period from 1 July 1992 up to 31 March 2018. It will not apply to the period starting on 1 April 2018 or subsequent periods.

It represents a good opportunity for employers to get their super obligations in order. The government has signaled that there will be higher penalties for correcting past sins once the Amnesty is over.

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Victorian Long Service Leave changes soon to begin

In May this year, the Long Service Leave Act 2018 (Vic) received Royal Assent, signalling some significant changes to the Long Service Leave entitlements of Victorian employees, and impacting all Victorian employers

The changes, which will take effect from 1st November 2018, will affect the entitlements of Victorian employees, unless they are specifically exempted.

Some of the more significant changes are as follows:
• Entitlement to take Long Service Leave to arise after 7 years (currently 10 years);
• Greater flexibility for employees in taking long service leave (will be able to take as little as a day at a time);
• Unpaid parental leave up to 52 weeks will count as part of the employee’s service period (it currently does not count)
• More generous provisions for employees who have transitioned to working a different number of hours (eg from full-time to part-time)
• Failure to comply with the Act will attract criminal penalties (previously attracted civil penalties)

Victorian employers are advised to familiarise themselves with the new rules.

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Proposed tax shock for those engaging contractors or employees

The May 2018 Federal Budget has left little doubt that anyone looking for a tax deduction for payments to contractors or employees had better get their house in order.

Currently payers are required to withhold the required amount of tax from payments to employees, and either obtain an ABN from a contractor, or withhold tax if no ABN is provided. Where such withholding does not occur, the payer is required to pay the tax, although in practice this is generally only enforced in the case of a tax audit.

From 1st July 2019 the government will amend the tax law to deny a tax deduction where a withholding obligation exists but no tax was withheld. The announcement, which was a recommendation contained in the final report of the Black Economy Taskforce, significantly changes the playing field, creating a financial disincentive for businesses to engage in Black Economy behaviour.

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Proposed changes to Public Fund Bank Accounts

In December 2017 the Federal government announced that it would be seeking to remove the requirement for certain Deductible Recipient Funds to operate a separate fund bank accounts, managed by a majority of people deemed to be more responsible.

There is currently no legislation, so this requirement is still in place for public funds including school building, overseas aid and necessitous circumstances funds. Even when the legal requirement is removed, the governing documents of impacted Funds might require such funds to continue to operate under the old rules. Those seeking to reduce the level of administration by closing a bank account should consult their governing rules, as they may need to be amended.

charity

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Xero Online Accounting Software

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Xero is the new and innovative way to complete your accounting records. Have you ever asked any of the following questions? 1. How can I spend less time working on my books? 2. Can bookkeeping be simplified? 3. Everythings on … Continue reading

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Big changes ahead for GST on property developments

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.

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Uber drivers beware!

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.

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ACNC Review well underway

The ACNC celebrated its fifth birthday in December 2017.  charityAs provided for in the original legislation, the Government is now conducting a review, the terms of reference indicating that it should:

  1. Examine the extent to which the objects of the ACNC Acts continue to be relevant.
  2. Assess the effectiveness of the provisions and the regulatory framework established by the ACNC Acts to achieve the objects.
  3. Consider whether the powers and the functions of the ACNC Commissioner are sufficient to enable these objects to be met.
  4. 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.

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The Sharemarket Crash: 30 years on

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.

 

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Log books: keeping you out of trouble

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.

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