Are you Superstream ReadyFrom 1 July 2016 all employers must electronically pay super contributions for employees. While this will mean a change for some employers who currently manage superannuation payments manually, the changes should reduce your administration burden, as all super payments can be managed though the one channel.

There are several SuperStream compliant options available to you, such as the ATO’s free Superannuation Clearing House, Xero premium plans, and MYOB’s PaySuper.

If you are not currently SuperStream compliant, and you would like assistance in upgrading your software package, please contact Samantha in our office for further assistance.

Are you a SMSF Trustee? If the only contributions you make are for yourself and to a related self-managed super fund (SMSF), you are exempt from these SuperStream compliance requirements.

Tax Deductible Super Contributions

With end of financial year fast approaching, businesses need to keep in mind that superannuation contributions are only a deductible expense to the business when paid. The means that if you want to claim a tax deduction in the current year for your employee’s June quarter super contributions, then the payment needs to be made and received by the superannuation fund BEFORE 30 June 2016. Any contributions paid in July 2016 will only be deductible in the 2016/2017 financial year.

Another important factor is that all super contributions are only deductible if paid on or before the legislated due date. Any employee superannuation that is paid late is no longer a valid tax deduction and additional penalties may also be imposed by the ATO for late payment.

 Age at 30 June 2015  2015/16 Concessional (Deductible) Contribution Caps
48 or under $30,000
49 or over $35,000

Changes to Superannuation

The 2016-17 Federal Budget announcements on superannuation have caused a lot of concern.  These include:

  • A $500,000 lifetime non-concessional contributions cap from Budget night
  • A reduction in concessional contribution cap from 1 July 2017
  • The removal of the tax exemption on earnings supporting transition to retirement income streams (TRIS) from 1 July 2017
  • The extension of the 30% super contributions tax on high income earners
  • Tax free super balances capped at $1.6m from 1 July 2017

Many clients have asked, what should we be doing? With a Federal election looming, and differing superannuation policies proposed by the two major political parties, the final legislative changes won’t be known for several months. We will certainly keep you updated on the changes as they occur. Whatever the changes, please be assured that we will continue to work with you to help you maximise your superannuation, and achieve your retirement goals. A seminar will be held later in the year to help disseminate the new rules. Please register your interest for our upcoming seminars on our website, or by emailing events@hfbgroup.com.au

Got your car log book ready?

ATO Alert! The ATO’s extensive data matching program includes checking compliance of individuals and businesses involved in buying and selling motor vehicles. The program is far-reaching with the ATO accessing data from state and territory motor vehicle registering authorities and is designed to catch:

  • Those who are not in the system
  • Businesses that are not reporting the sales of motor vehicles (for income & GST purposes)
  • Identify those whose expenditure is in excess of their reported income

The measures also aim to address potential non-compliance in:

  • Income tax
  • Superannuation
  • GST
  • Fringe Benefits Tax
  • Luxury Tax

The initial appeal to family businesses in acquiring a car through a company or trust is understandable, but in order to avoid unnecessary FBT obligations businesses need to understand their FBT obligations and associated record requirements.

The purpose of log book and odometer records is to determine the business use percentage of the vehicle. As a general rule, the higher the business use percentage the greater the deductions that may be claimed for work-related car expenses, or the lesser the amount of FBT payable for car benefits. Things to be mindful of when using a log book include:

  • The log book is valid for five years, although a new one can be started at any time
  • The log book must be kept for at least a continuous 12 week period
  • For two or more cars, one log book must be maintained for each car
  • The log book must reflect the business use of the vehicle – this can be tricky where there is home to work travel, travel between workplaces, or if the individual’s work is itinerant in nature – please contact us if you are not sure.
  • Odometer records must also be kept – this is crucial for working out the total distance travelled during the year and also for the relevant period that the log book is kept.
  • In the Tax Office’s view, when recording the purpose of the journey, an entry stating “business” or “miscellaneous business” will not be enough. The entry should sufficiently describe the purpose of the journey so that it can be classified as a business journey.

Rental property owner claims: ATO focus on “initial repairs”

The ATO is focusing on claims that investment property owners make for repairs to rental residences that it deems to in fact be “improvements” – and therefore a capital expense, and not specifically deductible.  The scenario where investment properties have work done on them often happens shortly after the property is purchased, and has led to the term “initial repair” being commonly used when discussing the tax implications of such property works.
If the outlay is not specifically deductible under the rules, then a deduction may be claimable for depreciation under the uniform capital allowance provisions or the capital works provisions. Some taxpayers have been asked by the ATO to provide evidence that such costs are not initial repairs if they disclose repairs and maintenance costs in their tax return. If you are unsure, please don’t hesitate to contact our office for further clarification.

Employee Payment Summaries

Reminder: The due date for giving your employees their annual PAYG Payment Summary is 14 July, with the information then to be forwarded to the ATO by 14 August – unless you have an exemption for later lodgement. Harsh penalties may apply for late or non-lodgement.

Building & Construction Taxable Payments Annual Report

The due date for lodging your Taxable payments annual report with the ATO is 28 August. This report is required if you are a business in the building and construction industry and have made payments to contractors for building and construction services. Again, remember that the ATO can impose harsh penalties for late or non-lodgement.