Deferral of income
Subject to cash flow considerations and anti-avoidance rules, consider deferring income to the following year, particularly if:
- • income in the following year is likely to be lower, and
- • tax rates for the following year are expected to be lower.
Capital gains
Where appropriate, consider realising capital losses by year's end so that they may be offset against realised capital gains of that year.
Donations
Donations or gifts of $2 or more to a deductible gift recipient (DGR) are tax deductible. A deduction is also allowed for gifts of publicly-listed shares that have been held for at least 12 months and which are valued at $5,000 or less.
Where spouses are on different marginal rates, consider ensuring that all deductible gifts are made by the spouse in the higher tax bracket so as to maximise the benefit of the deduction.
Prepayments
Subject to cash flow considerations, consider making deductible purchases by year's end in order to accelerate deductions. This applies particularly if the income in the following year is expected to be lower than in the current year.
In certain circumstances, an immediate deduction can be available for prepaid expenditure (eg interest on a loan relating to a rental property).
Personal super contributions
From 1 July 2017, an individual is able to make a personal deductible superannuation contribution regardless of whether they are self-employed or not. Individuals at a lower tax rate would need to make sure what contributions they can make before claiming a deduction. They can review their superannuation accounts to see their employer contributions to date.
Individuals need to be reminded that the concessional contributions cap is $25,000 for the 2018 financial year.
Additionally, individuals earning over $250,000 in taxable income need to be aware that Division 293 tax will apply to concessional superannuation contributions.
Spouse superannuation contribution rebate
A $540 tax offset is available for after-tax contributions (up to $3,000) to a complying superannuation fund on behalf of a spouse (married or de facto) where the spouse's annual taxable income is less than $37,000. A reduction of the maximum offset is available where spouse's income is between $37,000 and $40,000.
Superannuation government co-contribution
For low income earners, subject to certain conditions, the government makes a co-contribution of up to $500 if a taxpayer makes after-tax contributions of at least $1,000. The co-contribution begins to phase-out at a taxable income of $36,813, and is not available for taxable income above $51,813.
Individuals could also take advantage on increasing the amount that can be withdrawn under the First Home Super Saver Scheme. However, the co-contribution itself would not be included.
Proposed changes to HELP repayments
The MYEFO report from December 2017 announced that new HELP repayments level may exist from 1 July 2018. As a result, students with a HELP debt may need to start repaying the debt on earning $45,000. Delaying some deductions where appropriate may remove the repayment in the next financial year.
Nearing retirement
A taxpayer who is considering retiring near year end may find it worthwhile to defer discretionary income until after 30 June. In that subsequent year, their income will normally be smaller and the marginal rate may therefore be less.
When considering the timing of retirement, keep in mind the restrictions on the concessional treatment of employment termination payments that apply.
Property development and vacant land deductions denial
Using lead-time rules for non-commercial losses, as well as property development interest deductions, may only be available for this and next financial year. An announcement to remove these deductions from 1 July 2019 was announced in the Federal Budget. The proposal will also remove these interest amounts from the cost base of the asset.
Therefore, property development clients may need to act quickly to get their operations started.
Additional CGT discount available for investors
An additional CGT discount of up to 10% is now available for investors who invest in affordable housing from 1 January 2018. Conditions apply to get the additional discount, including holding the asset in affordable housing for three years.
FOR MORE INFORMATION:
CONTACT: ASHOK KARAN
DIRECTOR, MBA, CPA, ATI
PHONE: (02) 45 773800
MOBILE: 0415 076 032
EMAIL: ashok@ashdanpartners.com.au
Company tax cuts from $25m to $50m
The 2017/18 corporate tax rate will be 27.5% for companies that carry on a business and have an aggregated turnover of less than $25m. This turnover threshold will be increased to $50m for the 2018/19 financial year.
Single touch payroll
Single touch payroll has been introduced into the Australian tax system to combat areas of taxpayer non-compliance of PAYG withholding and superannuation guarantee obligations. This new payroll system commences from 1 July 2018 and "substantial employers" are required to be compliant.
A "substantial employer" at 1 July 2018 is a business who has a headcount of 20 or more employee as at 1 April 2018.
Taxable payments reporting system for couriers and cleaners
The taxable payments reporting system for contractors will be extended to entities in the courier and cleaning industries from 1 July 2018.
Entities who engage contractors, or subcontractors, will need to provide additional reports to the ATO. This treatment has the same requirements as salary and wage employees.
GST on offshore suppliers of low value goods
The GST and customs duty exemption for imported low value goods less than $1,000 will end on 30 June 2018. From 1 July 2018, offshore suppliers of low value goods sold directly to consumers will be liable to pay GST on those supplies.
Company tax rate lower for 'base rate entities' only (not yet law)
New legislation that restricts the lower company tax rate to base rate entities only is still under the parliamentary process. Pending approval, from the 2017/18 income year the 27.5% tax rate will apply to companies who are considered base rate entities. A base rate entity is a company who has less than 80% of assessable income from passive sources.
ATO debts now sent to credit reporting bureaus (not yet law)
Businesses with a tax debt greater than $10,000 may have that debt reported to credit reporting bureaus from 1 July 2018 by the ATO. This may affect a business' credit rating and their ability to obtain future finance in an attempt to increase the transparency of tax debts throughout business circles.
Similar business test (not yet law)
Legislation surrounding extending the same business test for company tax losses is yet to pass the parliamentary process. A company will be allowed to claim a prior year loss against business profits as long as it satisfies the similar business test from 1 July 2015. This test replaces the same business test, which was less flexible to pass.
The Bill has been blocked by the crossbench due to be similar business test being linked with the proposal for self-assessment of effective life of intangible assets.
R&D tax incentive proposed from 1 July 2018
The R&D tax incentive will be amended for income years commencing 1 July 2018. Under the announcement, the incentive will be based on uplift of the entity's corporate tax rate in the particular income year.
Also, changes will occur to companies that have an aggregated turnover of $20m or more. The rate of the R&D tax incentive will be determined by the company's "R&D intensity percentage". The intensity percentage is the rate of R&D expenditure compared to overall expenditure for the year, where a marginal rate of offset will be applied.
Budget announcements - but not due until 1 July 2019
The recent Federal Budget has plenty of announcements which may affect small businesses. However, these following Budget announcements are not due to commence until 1 July 2019.
– Individual's fame or image
All remuneration provided for the commercial exploitation of a person's fame or image will be included in the assessable income of that individual.
– Cash receipt limit for businesses
Cash receipts for a business will be limited to under $10,000.
– Director Penalty Notice regime
DPN regime to be extended to include GST, luxury car tax and wine equalisation tax, making directors personally liable for the company's debts.
– Australian government tenders
Businesses seeking to tender for large Australian government contracts will be required to provide information on the status of their tax obligations. Under the proposed arrangements, contracts over $4m (including GST) will be affected.
FOR MORE INFORMATION:
CONTACT: ASHOK KARAN
DIRECTOR, MBA, CPA, ATI
PHONE: (02) 45 773800
MOBILE: 0415 076 032
EMAIL: ashok@ashdanpartners.com.au
The Federal Treasurer, Mr Josh Frydenberg, handed down the 2019/20 Federal Budget at 7:30 pm (AEDT) on 2 April 2019.
Mr Frydenberg said the Budget is "back in the black", announcing a budget surplus of $7.1 billion, and forecasting a surplus of $11 billion in 2020/21, $17.8 billion in 2021/22 and $9.2 billion in 2022/23. The budget focuses on "restoring the nation's finances", further strengthening the economy to create more jobs and to "guarantee the essential services".
To know more about the federal budget and the economic and political overview on it. Click here.
In its June 2017 audit of foreign farm ownership, the Australian Taxation Office found just 13.6 per cent of agricultural land is in in foreign hands.
The Australian Bureau of Statistics (ABS) estimates that foreigners own 12 per cent of farmland.
British owners are the biggest foreign landholders, with more than 9.7 million hectares, but Chinese come a close second.
The National Farmers' Federation estimates that 99 per cent of farm businesses are Australian owned.
Do super funds still represent a safe bet for young Australians?
By SUSAN MULDOWNEY
Should young Australians put money into superannuation or do they risk investing in a scheme that might not be around by the time they retire?
Australia's superannuation industry is widely viewed as a secure investment. Personal contributions in the March quarter reached A$5305 million, up from A$3848 million last year. Super funds recorded their fifth consecutive year of positive returns in 2016, but do they still represent a safe bet?
Your autopilot mode can make you wealthy or poor.
Intelligence, talent and charm are great, but more often than not these aren't what separate the wealthiest among us from the poorest.
Instead, the differences are in our daily habits. Do you realize that these subconscious, second-nature activities make up 40 percent of our waking hours? That means that two out of every five minutes, all day and every day, we operate on autopilot. It's true: Habits are neural pathways stored in the basal ganglia, a golf ball-size mass of tissue right in the center of our brains, in the limbic system.
This neural fast lane is meant to save the brain energy: When a habit is formed and stored in this region, the parts of the brain involved in deeper decision-making cease to fully participate in the activity. However, we all know there are good habits and bad habits.
I spent years studying the difference between the habits of our country's rich and poor, questioning hundreds of individuals. On the rich side, these were people with annual gross income north of $160,000 and net liquid assets of $3.2 million or more. I defined the lesser-off as those with gross income of $35,000 or less and no more than $5,000 in liquid assets. When I was done, I analyzed the results of my research and boiled down the responses to create a picture of what allows the wealthy to prosper where others do not. My ensuing book became a sort of instruction manual for how to become wealthy.
Read more…
Predicting the future isn't easy, especially in business. But Canadian psychologist Philip Tetlock says it's a skill that can be cultivated to provide a more accurate picture of what lies ahead.
Anyone who stays in business will face the problem of trying to see into the future. When you think about hiring a new employee, you ask: "Will we have enough new business to keep them occupied?" When you pitch for a new piece of business, you think: "How many hours will it take us to complete this job?" You have to forecast.
Read more…
We all make mistakes but the people who thrive from their mistakes are the successful ones.
"Never go back." What does that mean? From observations of successful people, clinical psychologist and author of Never Go Back: 10 Things You'll Never Do Again (Howard Books, June 2014), Dr. Henry Cloud has discovered certain "awakenings" that people have-in life and in business-that once they have them, they never go back to the old way of doing things. And when that happens, they are never the same. In short, they got it.
"Years ago, a bad business decision of mine led to an interesting discussion with my mentor," Dr. Cloud says. "I had learned a valuable lesson the hard way, and he reassured me: 'The good thing is once you learn that lesson, you never go back. You never do it again.'
"I wondered, what are the key awakenings that successful people go through that forever change how they do things, which propel them to succeed in business, relationships, and life? I began to study these awakenings, researching them over the years."
Although life and business have many lessons to teach us, Dr. Cloud observed 10 "doorways" of learning that high performers go through, never to return again.
Successful people never again…
Read more…