2018 Federal Budget: Everything You Need to Know

The 2018 Federal Budget Essentials: Everything You Need to Know

Treasurer Scott Morrison has handed down the 2018 Federal Budget which contained many proposed changes for individuals, businesses and superannuation tax payers. With so much information to sort through, it can be daunting; so we’ve summarised the key points for you.

Personal Income Tax Changes

+ From 1 July 2018 the threshold of the 32.5% personal income tax bracket will increase from $87,000 to $90,000. This threshold will increase further from 1 July 2022 from $90,000 to $120,000.
+ From 1 July 2022 the top threshold of the 19% personal income tax bracket will increase from $37,000 to $41,000.
+ From 1 July 2024 the 37% tax bracket will be removed. The top threshold of the 32.5% personal income tax bracket will once again increase from $120,000 to $200,000.

Low & Middle Income Tax Offset

The Government will introduce a new non-refundable tax offset of up to $530 per year to low and middle income taxpayers. The offset is intended to be available from the 2018-19 to the 2021-22 income years.

Changes to Medicare Levy Low-Income Thresholds

Starting in the 2017-18 income year, the Medicare Levy low income threshold will increase for singles, families, seniors and pensioners.

Please note that the Government will not proceed with the previously announced increase in the Medicare levy from 2% to 2.5% from 1 July 2019.

Pension Work Bonus

From 1 July 2019, the Pension Work Bonus will increase from $250 to $300 per fortnight allowing pensioners to earn up to $7,800 per year without affecting their pension.

Extending $20,000 Immediate Write-Off

The Government will extend the $20,000 immediate write-off for small businesses up until 30 June 2019. This applies to businesses with an aggregated annual turnover of less than $10 million. This initiative was due to finish on 30 June 2018 but has been extended a further 12 months.

Removing Deductibility for Late Paying Employers

From 1 July 2019 employers who do not keep up with their PAYG obligations will not be able to claim a tax deduction for payments to employees, such as wages.

Businesses will also not be able to claim a deduction for payments made by a business to a contractor where the contractor has not provided an ABN and where the business does not withhold PAYG.

$10,000 Limit on Cash Transactions

From 1 July 2019, there will be a $10,000 limit for cash payments made to businesses for goods and services. Payments above this threshold will need to be made through an electronic payment system or a cheque.

Expanding Contractor Payment Reporting System

The Government has announced it will further expand the contractor payment reporting system to include the following industries:
+ Security providers and investigation services
+ Road freight transport
+ Computer system design and related services

Work Test Exemption

From 1 July 2019, there will be an exemption from the work test for voluntary contributions to superannuation for people aged 65-74 with a superannuation balance of less than $300,000.  This applies in the first year that they do not meet the work test.

Three-Year Audit Cycle for some SMSFs

For SMSFs who have a history of three consecutive years of clear audit reports and have lodged their return in a timely manner, the Government will change the annual audit requirement to a three-yearly requirement.

Increase in Number of Fund Members

From 1 July 2019, the Government will increase the number of allowable members in a new or existing SMSF and small APRA funds from four to six members.

Happy Birthday

We love celebrating birthdays (it may or may not have something to do with the chocolate cake) 🤣. Happy Birthday to Cameron and our Senior Manager, Nathan.

 

1 Quarter Down, 3 to Go…

Celebrating the end of 2018’s First Quarter with a little lunch 😉 and a lot of fun. We hope you’ve had a great start to the year.

 

2017 Team Christmas Celebration

Our team enjoyed a great night out for our annual end of year Christmas Celebration.  We worked up an appetite sleuthing our way out of locked rooms at Escape Hunt before heading to Misono Japanese Steakhouse at the Marriott Resort.

Naughty or Nice? Christmas Tax Checklist

Don’t Let the Tax Man Steal Your Christmas Cheer

With Christmas just around the corner, many companies are providing staff with gifts or celebrating the season with parties for their team.  It’s a great time to celebrate but there are some things you may want to keep in mind so your celebration doesn’t become a tax burden.
We’ve put together our Top Tips for a Generous and Tax Effective Christmas Season.

Planning a Christmas Party?

Whilst getting your team together to reward and recognise their hard work during the year sounds like it should be a tax-deductible expense, unfortunately Christmas parties are regarded as ‘entertainment’ and as such are not deductible. The provision of entertainment generally means entertainment by way of food, drink and recreation, and includes accommodation and travel associated with providing the entertainment.   To make things worse, where the cost of the Christmas party is more than $300 per person, per benefit, this can result in the added burden of being subject to Fringe Benefits Tax (FBT).

Our Tip…

To avoid FBT, keep the cost of your party to less than $300 per person and per benefit, (separate ‘benefits’ include things like the gift, the party, taxi travel, etc.).   By keeping the cost under $300 per person, per benefit, you can avoid FBT, however it’s important to note that, unfortunately, the costs will still be regarded as entertainment and will not be tax-deductible.

Christmas Gifts for Staff

Certain gifts are not regarded as ‘entertainment;’ are tax deductible and are not subject to FBT, (where they are less than $300 each). These include Christmas hampers, bottles of wine or other alcohol, gift vouchers, perfume, flowers, pen sets, etc.  NB: If any of these items exceed the $300 limit, they will be subject to FBT.   Other gifts, such as tickets to movies, sporting events, theatres, restaurant meals, holidays, airline tickets, tickets to theme parks, etc., are regarded as entertainment. As such, where these are less than $300 each, they will not be deductible. Where they are greater than $300 each, they are subject to FBT.

Our Tip…

To avoid FBT, keep the cost of your gifts to less than $300 each and ensure they are not provided regularly throughout the year; i.e: monthly gym memberships or multiple gift vouchers amounting to more than $300 can be regarded as one gift and may push the value over $300.   To avoid FBT and obtain a tax deduction, choose items that are not regarded as entertainment, as outlined above, (Christmas hampers, bottles of wine or other alcohol, gift vouchers, perfume, flowers, pen sets, etc.). NB: Gift vouchers (e.g. movie vouchers) that entitle the holder to redeem for entertainment (e.g. movie tickets) would be regarded as entertainment and therefore not be tax deductible.   Gifts of cash from the business are treated as salary and wages and are subject to PAYG withholding and superannuation contribution rules.

What About Your Customers?

The most effective way of sharing the Christmas joy with customers is not necessarily the most tax effective. If, for example, you take your client out to a nice dinner or entertain them in any way, the costs unfortunately will not be tax deductible.  This is because such costs are regarded as ‘entertainment’, regardless of whether there is an expectation of generating goodwill and increased business sales.  Restaurants, a show, golf, and corporate race days all fall into the ‘entertainment’ category.

Our Tip…

If you send your customers a gift, the gift is tax deductible, as long as there is an expectation that the business will benefit (and assuming the gift is not considered entertainment, as listed above).

Remember, our team are here to help you. If you need assistance ensuring you’re looking after your staff without looking after the Tax Man, simply contact us and we’ll help you and your team have a merry Christmas.

Time to Get Your Ducks in a Row

Are You Making Super Contributions?

If you are making super contributions for the June 2017 quarter, to obtain a tax deduction in the 2017 year, the contributions need to be received and cleared by the super fund before 30 June. If so consider making the payment at least three days before then.

Using the Small Business Write-Off?

Whilst the Government has recently announced the Small Business Immediate Write-Off for business assets up to $20,000, would be extended into the 2018 year, if you are seeking a deduction in the 2017 year, remember the asset must be bought and used, or installed, ready for use in the 2017 year.

Do You Hold Trading Stock?

If you hold trading stock, you are required to undertake a stocktake as close as possible to 30 June each year. You can choose to value each item using one of three methods: Cost Price, Market Selling Value or Replacement Value. The lower the value, the greater the deduction available. NB if you are a Small Business, you may have access to Simplified Trading Stock rules.

Review Your Trade Debtors

30 June is a good time of year to review your trade debtors to ensure you aren’t carrying any debtors that have gone bad. A bad debt is one that is no longer recoverable; and to claim a tax deduction for a bad debt in 2017, you need to have physically written it off in your books prior to 30 June 2017. This means you can no longer pursue recovery of the debt post 30 June. To write the debt off, it should be removed from your trade debtor ledger and recorded as a Bad Debt expense.

Don’t Forget your Payroll Obligations

If you pay wages, you will need to issue your employees with their Payment Summaries by 14 July. In addition, don’t forget to lodge your Annual PAYG Payment Summary Statement and all “ATO Original” copies of the PAYG Payment Summaries that you have issued, with the ATO by 14 August 2017. When preparing these reports, it’s important to ensure the information disclosed is accurate and matches to other wage and PAYG Withholding details previously reported to the ATO in your BAS’s. To assist you or your bookkeeper with this reconciliation, feel free to contact us for your AABS Payroll Reconciliation Worksheet.

New Scams Targeting ASIC Customers

In the past we’ve made you aware of hoax ATO phone calls and emails.  Now scammers are posing as agents from the Australian Securities and Investments Commission (ASIC) in an attempt to hack into your computer and obtain personal and financial information.
Some ASIC customers have received bogus emails asking them to pay fees and give personal information to renew their business or company name.  These emails often have a link that provides an invoice with fake payment details or infects your computer with malware if you click the link.
An email is probably a scam and is not from ASIC if it asks you:

  • To make a payment over the phone,
  • To make a payment to receive a refund,
  • For your credit card or bank details directly by email or phone.

Here is a recent example of a scam email:

If you received an email similar to this one above, it is not from ASIC

 

How to Protect Yourself from Scam Emails

There are a few things you can do to protect yourself from hoax ASIC emails.  By far the safest option is to have us handle all your ASIC services.  Many of our business clients have taken advantage of our ASIC Compliance Service.  This service not only means we will manage your compliance, renewals and registrations but will also be your point of contact for ASIC, so all correspondence will come to us.  This provides an added layer security as well as removing any uncertainty about whether or not an email is genuine or fake.
If you would like more information about our ASIC Compliance Service, please give us a call or send us an email.     Alternatively you can:

  • Keep your anti-virus software up to date,
  • Be wary of emails that don’t address you by name or misspell your details and have unknown attachments,
  • Don’t click any links on a suspicious email.

Remember, we’re here to help you. Having our firm manage your ASIC correspondence adds an extra layer of protection against potential fraud.  Don’t fall victim to these scammers; if we can help with your ASIC compliance, let us know so we can have ASIC contact our office on your behalf.

Special Announcement

 

Congratulations to our Director, Kim Davis and her husband, Andy who have welcomed their first child into the world.

Arriving two weeks early, Ruby Lynn Davis was born at 1:37am last Thursday 16 March, weighing 6lb 8oz.

Both Mum and baby are doing well.

Not one to slow down, Kim has continued working, to ensure it’s business as usual.

For matters relating to your tax or financial affairs, please contact our office, as per usual.

Claim Your Deductions Now

Time is Nearly Up to Claim the $20,000 Immediate Tax Deduction on Assets

Are you a Small Business?  Are you planning to purchase a big-ticket item in the future?  Now might be the time to do so.  As of 30 June 2017, the instant asset write-off amount will revert back to the previous threshold of $1,000.
Since 12 May 2015, Small Businesses have been eligible to claim an immediate tax deduction for assets they start to use or have installed ready for use, which cost up to $20,000.
If you are considering a purchase of this nature perhaps consider doing so prior to 30 June 2017, so you can take  full advantage of the current threshold before it’s reduced.

Do You Meet the Criteria?

To be eligible to claim the deduction, the following criteria apply:
The business is a Small Business Entity – your aggregated turnover for the current year is likely to be less than $2 million.
All depreciating assets, (including new and second hand), are eligible with exception of:

  • Horticultural plants;
  • Capital works;
  • Assets allocated to a low-value pool or software development pool;
  • Primary production assets depreciated using the normal depreciation rules; and
  • Assets leased out to another party on a depreciating asset lease.

What does the $20,000 Include?

The cost price of $20,000 includes the cost of acquiring the asset plus any incidental costs required to install the item and have it ready for use.  These may include:

  • Remuneration for services provided;
  • Costs of transfer;
  • Stamp duty or similar duty;
  • Cost of a conveyancing kit; and
  • Borrowing expenses.

If you are GST registered, then the GST exclusive amount is taken to be the cost of the asset.  If you are not GST registered, then the GST inclusive amount is taken to be the cost of the asset.

 

New Tax Rates for Working Holiday Makers

dcd82542-cb91-4c9e-bb87-26f86769528aYou may recall the ‘Backpacker Tax’ being discussed in the news late last year.  Well, these changes came into effect on 1 January 2017 and they impact more than just backpackers.  Known as the ‘Working Holiday Maker Tax Rates’, these new tax rates will affect all employees who hold a 417 and 462 visa.

What You Need to do Next

If you employ a working holiday maker who is in Australia on a 417 or 462 visa, you:
  • Must register with the ATO before 31 January 2017, to withhold tax at the working holiday maker rate
  • Can visit border.gov.au/vevo to check if a worker has a 417 or 462 visa using the Visa Entitlement Verification Online service
  • Must withhold tax at 15% on income up to $37,000 and apply foreign resident tax rates on income over $37,000

Click here for the Working Holiday Maker Employer Registration

What Happens Next

The working holiday tax rates only apply to income earned from 1 January 2017.
If you currently employ holiday makers you will need to issue two payment summaries this year:

  • One for the period 31 December 2016
  • A second for any period to 30 June 2017