SUPER GUARANTEE REPORTING
REDUCE GST COMPLIANCE COSTS
IS MY SUPER FUND AT RISK?
DEATH AND THE TAXMAN
MAKE THE BEST OF FBT
Some important changes have been made to make Superannuation Guarantee (SG) easier for your business.
For all SG contributions made on or after 1 January 2005, you will no longer have to provide written SG contribution reports to your employees.
Employees will still be able to find out about their superannuation contributions when their superannuation funds issue annual member contribution statements.
NO CHANGES TO SG PAYMENTS
There are no changes to your obligations to pay SG contributions ?? you still have to pay SG contributions at least quarterly for your employees.
The timing of your quarterly SG payments for 2005 will be as follows:
You should also be aware that there are still a couple of instances where you will have to report superannuation contributions to your employees:
-
if you are covered under Australian workplace legislation and award agreements that require you to report superannuation contributions on payslips, you must continue to report to your employees in accordance with these awards; and
- if you made SG contributions for the October-December 2004 quarter, you will still have to provide your employees with the required SG contribution report for that quarter.
|
Quarter |
Contributions due by |
|
1 Jan 05??31 Mar 05 |
28 Apr 05 |
|
1 Apr 05??30 Jun 05 |
28 Jul 05 |
|
1 Jul 05??30 Sep 05 |
28 Oct 05 |
|
1 Oct 05 ?? 31 Dec 05 |
28 Jan 06 |
Your last written SG reports
According to the ATO??s Practice Statement PSLA 2004/1, your compulsory written SG contribution reports should be given to your employees within 30 days of the final contribution being made for the quarter. For the October-December 2004 quarter, if you didn??t make your final SG contribution until the 28 January 2005 deadline, you have until 27 February 2005 to issue the written SG reports to your employees.
REDUCE GST COMPLIANCE COSTS ^ Back to TopSome changes have been made to the way GST operates that may help you reduce your current GST compliance costs.
Annual GST reportingYou may be eligible to report GST annually if:
- your projected annual 2004-05 GST turnover is less than $50,000 (or $100,000 if you are a non-profit body);
- you are not required to register for GST; and
- you have not elected to pay GST by instalments advised by the ATO.
A note of caution?
If you are required to register for GST, you aren??t eligible to take advantage of this change even if your annual turnover is less than the above thresholds. For example, taxi drivers are required to be registered for GST and can??t take advantage of this annual reporting concession.
GST instalment electionsIf you are eligible to pay GST by instalments, with effect from 1 July 2005, you will no longer have to re-elect this method each year.
Apportionment of creditable purposeWhen working out your net liability for GST, most businesses are aware that you can only claim a GST input tax credit to the extent that goods or services are acquired in the course of carrying out your enterprise.
If your annual turnover is $2 million or less, you will now be able to elect to determine your actual private/business usage of goods for GST purposes once a year.
IS MY SUPER FUND AT RISK? ^ Back To TopThe popularity of self managed super funds (SMSF) has soared in recent years as more people are attracted to the idea of increased control over their retirement income and planning.
However, running your own super fund involves more than choosing a portfolio of investments.
SMSFs also bring significant legal and administrative responsibilities for the fund trustees who must also be members of the fund.
A Trustee??s Life Is A Lonely One
You and your partner are the only members of your SMSF and both of you are trustees. You seek professional advice about operating the fund (eg, accounting, tax and investment advice from properly qualified professionals). As trustees, you and not your advisers will be brought to account for advice that may result in a breach of any laws and regulations governing the fund??s operation.
So, before setting up an SMSF, it??s worthwhile to weigh up the pros and cons of having your own fund against other superannuation and investment options.
Checklist for trustees
If you are a trustee of your SMSF, your main responsibilities include:
- compliance with all relevant superannuation laws including investment restrictions and administrative requirements;
- lodging the fund??s returns with the ATO annually and meeting any tax liability;
- appointing an approved auditor and arranging an annual audit;
- advising the Tax Office of contributions received by the fund for the superannuation surcharge; and
- ensuring the fund correctly reports for Reasonable Benefit Limits.
If you don??t meet your trustee obligations, in the first instance the ATO may accept your undertaking as trustee to rectify the breach.
However, in serious cases the Tax Office can impose a range of serious penalties (eg, making your fund non-complying, which removes its concessional tax treatment and exposes the fund to a potentially large tax bill!).
Will my SMSF be audited?The Tax Office is getting tough on SMSFs in 2005, moving from an ??education and assistance?? approach to a firmer clampdown on non-complying funds.
Be aware that the ATO will select funds to be audited based on certain ??risk criteria?? ?? so if your SMSF has triggered any of these criteria, the ATO may be interested in taking a closer look at what??s going on.
What attracts the ATO??s attention?Here??s a list of things currently attracting the ATO??s attention:
- reporting a significant drop in asset value but no benefit payouts
- establishing and winding-up the fund in the same year
- reporting borrowings
- reporting an acquisition from a related party
- claiming salary and wages
Death is traumatic enough without having to worry about fending off the taxman. Having your financial affairs in order will go a long way in helping your family manage your estate and minimise potential tax liabilities in the event of your death.
Essential points to follow
- Make a will and ensure that it??s up to date ?? dying without a will can cause considerable delays and potential financial hardship for your beneficiaries.
- Be aware of taxes that may impact on your estate, eg, capital gains tax (CGT) rules applying to your estate (GST applies from 20 September 1985).
- Seek professional advice ?? the treatment of assets after death can be a complex issue.
In nearly all instances, your death should not create a CGT liability (you may, however, have a CGT problem at the time of your death if you leave an asset to a tax-exempt body).
If there is going to be a CGT liability at all, this will usually fall on your beneficiaries if and when they sell an asset that passed to them from your estate.
So it??s important to think about planning ahead to make sure you minimise the potential impact of CGT on your beneficiaries.
Any ultimate CGT liability may depend on a range of factors that need to be taken into account.
Although there are CGT rules that may impact on particular types or classes of your assets (eg, personal-use assets and collectables, trading stock, the family home), as a general rule of thumb ??
For assets acquired by you pre-CGT
Your beneficiaries will be taken to have acquired these assets for their market value at the date of your death ?? this means that if a beneficiary then sells one of these assets, in working out any potential CGT liability, the cost base for this asset is this market value.
For assets acquired by you post??CGT
Your beneficiaries will be taken to have acquired these assets for your relevant CGT cost base at the date of your death ?? this means that if a beneficiary then sells one of these assets, in working out any potential CGT liability, the cost base for this asset will be your relevant CGT cost base.
Planning tip
In thinking ahead, you might consider putting in place plans to make sure your assets are properly valued at the time of your death. This will help your beneficiaries manage any potential CGT liability should they sell an inherited asset at some time in the future.
The family homeIt??s possible to leave the family home to your beneficiaries without any CGT problems if managed correctly. The CGT free status of your family home after you die is dependant on a number of factors, including:
- when you purchased it;
- how soon the beneficiary sells the home after it passes under your will;
- how the home was occupied before and after your death; and
- who occupied the home after your death; and
- whether the home has been used to produce income (eg, rent)).
So, it??s prudent to get advice to ensure any CGT liability is managed properly in the beneficiaries?? best interests.
MAKE THE BEST OF FBT ^ Back to TopWith the fringe benefits tax (FBT) year ending on 31 March 2005, now is the time for you to check if you have provided benefits to your employees during the FBT year that attract FBT.
It??s also time to review your FBT strategies for the upcoming new FBT year. Bear in mind that a key objective of FBT planning is to provide benefits to your employees in the most tax effective way for your business, while still keeping your employees happy.
Make use of exempt benefitsProviding your employees with FBT exempt benefits is tax effective for both you and your employees.
If you comply with the requirements that make a particular benefit FBT exempt, as well as being exempt from FBT as far as the employer is concerned, these types of benefits are generally not subject to income tax in the hands of your employees.
Some of the FBT exempt benefits you might consider providing include:
Certain work-related items
- mobile phones (must be used primarily for employment)
- laptop computers (only 1 per employee per year)
- computer software (eg, electronic diary software)
- briefcases and calculators
- protective clothing that is required for a job
- tools of trade (eg, loose tools like hammers, wrenches, chisels and hand operated power tools)
If you are a qualifying small business (your total business income for the last year of income is less than $10 million) you can provide car parking free of FBT, provided it??s not in a commercial car park.
Newspapers and periodicals
The costs of providing these publications to employees for business purposes.
Minor benefits ?? benefits of less than $100 in value that are infrequently provided and/or difficult to record and value, eg,
- use of a business vehicle by an employee for a special purpose
- stationery from the office that employees use for private purposes
- Christmas gifts to your employees
HAD AN OFFICE CHRISTMAS PARTY?
Now that the festive season is over, if you??ve had a party for your staff you should be aware that you may have an FBT liability. Any FBT implications will vary depending on:
- who received the benefit of the entertainment (staff, friends/associates of staff and/or your clients);
- where the function was held (in the office or offsite, eg, a restaurant); and
- when it was held (on workday or not) and the total amount spent.
Membership fees and subscriptions
Includes trade or professional association fees, subscriptions to their journals, an entitlement to use a corporate credit card, as well as an airport lounge membership.
Some travel by an employee
The cost of travel (eg, taxi fares) where the travel is a single trip beginning or ending at work or as a result of an employee??s sickness or injury.
Disclaimer
Taxwise® News is distributed quarterly by professional tax practitioners to provide information of general interest to their clients. The content of this newsletter does not constitute specific advice. Readers are encouraged to consult their tax adviser for advice on specific matters.