As a business owner, there are many obligations that you need to consider and action over the next few weeks. Some of these will help to minimise your tax. We have outlined these action points below to assist you. Date Action Required BEFORE 30 June 2015 Ensure your employee superannuation payments are received and allocated by your employees’ super fund prior to 30 June 2015 to ensure a tax deduction for this year. Any payments made between 1 July 2015 and 28 July 2015 will count towards your Superannuation Guarantee requirement but will not be tax deductible until the 2016 financial year. If you operate through a trading company, review shareholder loan accounts and make minimum loan repayments. If you operate through a discretionary family trust, ensure that a Trust Distribution Resolution for each Trust is signed by 30 June 2015. Review 2015 LAST MINUTE strategies on our blog to reduce your tax prior to 30 June 2015. Carry out a stocktake by 30 June 2015. 1 July 2015 Superannuation Guarantee stays the same for 2015 at 9.5% 2% Temporary Budget Repair Levy continues Medicare Levy stays at 2% 14 July 2015 or before Provide 2015 PAYG Payment Summaries to all employees 21 July 2015 Taxable Payments Annual Report due for lodgement with the ATO (building and construction industry) 28 July 2015 Quarterly Superannuation contributions due for employees (for the period 1 April 2015 to 30 June 2015). THIS IS A KEY DEADLINE! (Note: If you fail to meet your requirements by 28 July 2015, you must complete a Superannuation Guarantee Charge Statement and forward it to the ATO together with underpaid superannuation plus administration fees and interest by 14 August 2015. Superannuation Guarantee Charge payments are NOT tax deductible.) 14 August 2015 or before Lodge your 2015 Annual PAYG Payment Summary Statement (for employees) with the ATO. Penalties apply for late lodgement. 1 April 2016 FBT rate is set to stay at 49% Key Changes from 1 July 2015 Please urgently check these key things: 1. Has your payroll software automatically updated for these changes? Or do you need to load these changes into your payroll software?
2. Check your first pay run from 1 July 2015 to ensure the changes are correct.
3. Review any salary packaging and calculations and make any adjustments to employee FBT contributions or other items where needed. Accelerated Depreciation
All small businesses with an aggregated annual turnover of less than $2 million will get an immediate tax deduction for any individual assets costing less than $20,000, purchased after 7.30pm (AEST), 12 May 2015. The previous threshold sits at $1,000. This $20,000 limit applies to each individual item. Small businesses can apply this $20,000 rule to as many individual items as they wish. These arrangements will continue until the end of June 2017. Company Tax Cut
To help all Australian small businesses grow, the Government is proposing to reduce the income tax rate to 28.5% for small business companies with annual turnover less than $2 million starting 1 July 2015. For those companies with an aggregated annual turnover of $2 million or above, they will continue to be subject to the current 30% tax rate on all their taxable income. The current maximum franking credit rate for a distribution will not be changed at 30% for all companies maintaining the existing arrangements for investors.
2% Debt Tax for High Income Earners From 1 July 2014 until 30 June 2017, a 2% Temporary Budget Repair Levy, or debt tax, will apply to individuals on their taxable income in excess of $180,000 per annum. This means that the tax rate will increase by 2% for every dollar of taxable income you earn above $180,000 in a financial year. Continue to be aware that if you have a one-off spike in income after 1 July 2014, for example from the proceeds of a sale of business or a capital gain from the sale of an investment property, the debt tax is likely to impact on this increase in personal income. If you have employees or directors affected by the debt tax, talk to us about strategies to lessen the impact. While the legislation dealing with the debt tax has not yet passed through Parliament, this is likely to occur soon. Trust Distributions – Timing of Resolutions Trustees (or directors of a trustee company) need to consider and decide on the distributions they plan to make by 30 June 2015 at the latest (the trust deed may actually require this to be done earlier). Decisions made by the trustees should be documented in writing by 30 June 2015. If valid resolutions are not in place by 30 June 2015, the risk is that the taxable income of the trust will be assessed in the hands of a default beneficiary (if the trust deed provides for this) or the trustee (in which case the highest marginal rate of tax would normally apply). You might not need to do a Stocktake Small Business Entities (operational businesses with an aggregated turnover below $2 million) have access to a range of tax concessions. One of these concessions is the simplified trading stock rules. Under these rules, you can choose not to conduct a stocktake for tax purposes if there is a difference of less than $5,000 between the opening value of your trading stock and a reasonable estimate of the closing value of trading stock at the end of the income year. You will need to record how you determined the value of trading stock on hand. If you would like to take advantage of the simplified trading stock rules, call us today to make sure you are eligible to use the simplified rules and to discuss how to use them properly. Deadline for 2015 PAYG Payment Summaries You need to provide your 2015 PAYG Payment Summaries to your employees and other workers by 14 July 2015.
Action Step: If you have any doubt about how to correctly complete your 2015 PAYG Payment Summaries, please contact us for assistance BEFORE you prepare them. Building and Construction Industry Reporting From 1 July 2012, new tax reporting rules apply for businesses in the building and construction industry. Businesses will have to lodge an annual report with the ATO setting out details of payments made to contractors. This will assist the ATO to reduce the “cash economy” by ensuring tax is paid on all income including “cash” payments. From 1 July 2012, you will need to record the following details of all payments made to contractors from 1 July 2012 for building and construction services: • The ABN of the contractor
• The name and address of the contractor
• The gross amount paid for the financial year, including GST
• The total GST included in the gross amount paid If you use computerised accounting software, your system should be able to track this information for you and prepare the required Taxable Payments Annual Report. Action Step: Ensure that you lodge your Taxable Payments Annual Report with the ATO no later than 21 July 2015. Payroll Tax Payroll tax applies to all entities that have an Australian payroll that exceeds state-based limits. You should note that in addition to normal salaries and wages, the following items are generally also included in payroll expenses if payroll tax applies: • fringe benefits based on the grossed-up taxable value of fringe benefits;
• all employer contributions to superannuation on behalf of employees; and
• some contractor or sub-contractor fees. For more detailed information about whether payroll tax applies to your business, please contact our office. Action Step: The Annual Return/Reconciliation for payroll tax must be lodged by 21 July 2015 with your State Revenue Office. WorkCover/WorkSafe Your WorkCover/WorkSafe insurer sends an annual reconciliation to all registered employers at the end of the financial year. In completing your annual reconciliation, you will need to include the following items in addition to normal salaries and wages: • fringe benefits based on the taxable value of fringe benefits (do not gross-up);
• all employer contributions to superannuation on behalf of employees; and
• some contractor or sub-contractor fees. For more detailed information about what items to include in the reconciliation statement, please contact our office. Once the reconciliation is received and processed by your WorkCover/WorkSafe insurer, you will be issued with a final assessment or a refund depending on the instalments you have paid during the year. Action Step: Complete and lodge the Annual Reconciliation with your WorkCover/WorkSafe insurer by the due date. Goods and Services Tax (GST) A reconciliation of GST should be performed as at 30 June 2015 to determine if there has been an under or over-payment of GST in the 2015 tax year. If a discrepancy has arisen, then it is possible to amend a subsequent Business Activity Statement (BAS) to rectify the error, however there are limits imposed on adjustments that can be made in this way. Income declared on your BAS should be reconciled to income declared on your income tax returns. Also, please note that you are required by law to substantiate all Input Tax Credit claims with a complying Tax Invoice, and you need to retain these documents for a minimum of 5 years. Action Step: Complete the annual GST reconciliations, and check that you have all required tax invoices and other supporting documents. ATO Audit Activity Please note that the ATO and State Revenue Office are constantly increasing their audit activities. In particular, there has been an increase in audit activity for PAYG Withholding, Payroll Tax, WorkCover, GST, Division 7A loan accounts from companies, and Trust distributions from Discretionary Trusts. We are able to offer a review of your records and record-keeping procedures if you are concerned about your ability to satisfy an audit. Action Step: Please contact our office if you would like to request this service.
Last Minute Tax Minimisation Tips Here’s a few final reminders about ways to reduce your tax for 2015 1. Write-off Bad Debts
2. Write-off any trading stock that is damaged or obsolete
3. Review your asset register and scrap any obsolete plant and equipment
4. Pay for repairs, consumables, office stationery, and donations before 30 June 2015
5. Realise any capital losses you have before 30 June 2015 to offset against any capital gains you may have made Feel free to call our office any time on 03 5134 1778 or email us at email@example.com. We can’t wait to provide you with better advice now for a beautiful future.