Straight Numbers & Tax Talk for Business – December 2018

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Vintage Christmas TreeIn this Issue:

What a great time of the year with Christmas and the New Year approaching fast… and I say this with gratitude to my family and my team. We also want to thank YOU for your support this year.

We hope 2018 was a good business year for you and that you’re looking forward to a relaxing time with family and friends, like our Team.

The Team at Straight Talk Accounting & Tax wish all our valued clients a safe and enjoyable Christmas Holiday break and a prosperous and healthy New Year.

The Christmas season is traditionally a time of giving and generosity. So this month we have included an article on drought relief initiatives and their tax implications.

If you have any questions about the items published in this newsletter, please don’t hesitate to give us a call on 07 3399 8844… or stop by at our office for a coffee. We’re never too busy to sit down and talk to you.

Best regards from Robert and the Team

Christmas Holiday Business Closure

Christmas Holiday Business Closure
We are closed from Monday, 24 December 2018 and re-open for business on Monday, 7 January 2019.

Crowdfunding donations to help drought-affected farmers

Editor: The ATO is currently offering various support measures to individuals and businesses from drought-affected communities to help with managing their tax and super obligations or who are struggling with their mental health.

It has also recently provided a summary of the potential tax impact of making donations to, or raising funds via a crowdfunding platform for drought relief (as outlined below).

For taxpayers wishing to make a contribution to a drought relief fund, it is important to be aware of the tax implications associated with making such donations.

For example, donations of $2 or more to an organisation that is a deductible gift recipient will be tax deductible.

To check to see if a particular appeal is a registered charity, the ATO has advised that taxpayers should use the ‘ABN lookup’ function on the Australian Business Register website before donating.

For those looking to raise funds through crowdfunding platforms to assist their farming business, payments received from the crowdfunding platforms may be assess-able income, depending upon how the funds are used.

For example:

  • Where the funds are used for emergency relief (i.e., such as food and clothing), then the amounts are not assessable.
  • Where the funds are spent on deductible expenses (i.e., such as purchasing feed for live-stock), the amount is assessable income, but will be offset by the relevant deductions obtained, en-suing there is no net taxable outcome.

SG Amnesty still pending

The proposed superannuation guarantee (‘SG’) amnesty is a one-off, 12-month opportunity to self-correct past non-compliance (i.e., from 24 May 2018 to 23 May 2019).

It will apply to previously undeclared SG shortfalls for any period from 1 July 1992 up to 31 March 2018.

The ‘carrot’ currently on the table is that employers who voluntarily disclose previously undeclared SG shortfalls during the amnesty (i.e., importantly, before the commencement of an ATO audit) will:

  • not be liable for the administration component and penalties that may otherwise apply to late SG payments, and
  • be able to claim a deduction for catch-up pay-ments made during the relevant 12-month period.

This means that employers will still be required to pay all employee entitlements, including any unpaid SG amounts owed to employees and the nominal interest, as well as any associated general interest charge.

Employers who are not up-to-date with their SG payment obligations and who do not come forward during the proposed SG amnesty have been put on notice by the ATO that they may face higher penal-ties in the future.

Editor: While the SG amnesty is being actively promoted by the ATO, it is important to be aware that the proposed concessions currently on the table are not guaranteed until the relevant legislation be-comes law.

Note that the Treasury Laws Amendment (2018 Superannuation Measures No.1) Bill 2018 will not be considered again at least until Parliament resumes on 10 September 2018.

Memorable Quotes…

“I have always believed that the way you treat your employees is the way they will treat your customers, and that people flourish when they are praised.”

– Richard Branson

FREE Tax Blaster Session

There are a number of ways that individuals and small business operators can legally slash their tax. We find that many of our clients only begin to realise after a chat with one of our professional tax agents how much tax they could have saved if they had taken action earlier.

Don’t delay it any longer and book in for your FREE 20-minute Tax Blaster session. We’ve got limited spaces available for people who want to increase their earnings, save on taxes and put more money into their retirement fund.

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Call our Team on 07 3399 8844 to book your FREE meeting NOW.

Heard this one before?Smiling Elvis

Christmas Spirit

It was just before Christmas and the magistrate was in a happy mood. He asked the prisoner who was in the dock, ‘What are you charged with?’

The prisoner replied, ‘Doing my Christmas shopping too early.’

‘That’s no crime’, said the magistrate. ‘Just how early were you doing this shopping?’

‘Before the shop opened’, answered the prisoner.

Going Away for the Holidays?

Camping Trip Tips

Family camping trips can be no picnic, and meticulously planning out such a weekend is vital, especially for those attempting the endeavor for the first time. Fortunately, some helpful tips can make life easier for all the family.

One good tip is to make sure you bring along some of the more portable toys for your kids, such as water guns, soccer balls, or a pair of binoculars to ensure that the little ones are kept entertained while you set up the tent and the campfire.

A spacious and comfortable tent is always a great thing to have, but in the event of unexpected rainfall make sure you also bring along multiple tarps so that your sessions of bonfire can still continue uninterrupted regardless of the weather.

Another good tip is to bring along some glow sticks, as they not only make it a lot easier to see when darkness falls, but are also great fun for the kids.

Profit Improver Strategy | Ask for a Rent Reduction

This strategy involves asking the landlord for a rent reduction. Landlords will be more open to reducing the rent where:

  • You are a good tenant that pays their rent on time and doesn’t cause any trouble.
  • Falling rents and increased vacancy rates mean you are paying above-market rental rates.

Implementation process:

  • Use property websites to research the rent paid for comparable business premises located in the same area.
  • Send your landlord/property manager an email with links to other comparable properties in the area with a request to reduce the rent by X%.
  • Set up a meeting with your landlord/property manager to discuss why your rent should be reduced.

Division 7A benchmark interest rate for 2019

The benchmark interest rate for 2019, for the purposes of the deemed dividend provisions of Div-sion 7A and the associated complying Division 7A loan agreements, has been set at 5.20% (i.e., down from 5.30% for 2018).

Year-end (and other) staff parties

Editor: With the well earned December/January holiday season on the way, many employers will be planning to reward staff with a celebratory party or event. However, there are important issues to consider, including the possible FBT and income tax implications of providing ‘entertainment’ (including Christmas parties) to staff and clients.

FBT and ‘entertainment’

Under the FBT Act, employers must choose how they calculate their FBT meal entertainment liability, and most use either the ‘actual method’ or the ’50/50 method’.

Under the actual method, entertainment costs are normally split up between employees (and their fam-ily) and non-employees (e.g., clients and suppliers).

Such expenditure on employees is deductible and liable to FBT. Expenditure on non-employees is not liable to FBT and not tax deductible.

Using the 50/50 method instead?

Rather than apportion meal entertainment expenditure on the basis of actual attendance by staff, etc., many employers choose to use the more simple 50/50 method.

Under this method (irrespective of where the party is held or who attends) – 50% of the total expenditure is subject to FBT and 50% is tax deductible.

However, the following traps must be considered:

  • even if the function is held on the employer’s premises – food and drink provided to employees is not exempt from FBT;
  • the minor benefit exemption* cannot apply; and
  • the general taxi travel exemption (for travel to or from the employer’s premises) also cannot apply.

ATO contact regarding business cars and Fringe Benefits Tax (‘FBT’)

The ATO has recently advised that it will be contacting taxpayers (and tax agents on behalf of their clients) that have been identified as having cars registered in their business name who have not lodged an FBT return.

The ATO has reminded businesses that:

  • a car fringe benefit will occur when a business owns or leases a car and makes it available for an employee’s private travel or use (including garaging the car at or near an employee’s home and making it available for private use); and that
  • business directors are also ’employees’ for FBT purposes.

Christmas Straight Talk Accounting & TaxChristmas Joys

Christmastide   
by H. P. Lovecraft

The cottage hearth beams warm and bright,
The candles gaily glow;
The stars emit a kinder light
Above the drifted snow.

Down from the sky a magic steals
To glad the passing year,
And belfries sing with joyous peals,
For Christmastide is here!

External collection agencies to enforce ATO lodgment obligations

The ATO has finalised a trial relating to sending overdue taxpayer lodgment obligations to external collection agencies.
As a result, it may now refer taxpayers to an exter-nal collection agency to secure tax return lodgment.

The ATO has stated that it will only refer a taxpayer to an external collection agency where the taxpayer takes no action in response to its initial correspondence letters.

FREE Copy of Our Book

We hope that you’ve enjoyed this edition of the Straight Numbers & Tax Talk.

As a Thank You to our readers we’ll give away a FREE copy of our highly sought-after book titled ‘Straight Money Talk – A Straightforward Plan for Financial Independence” (worth $17.95), PLUS the accompanying workbook “5 Steps to Financial Independence”.

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Just contact us on 07 3399 8844 to claim your gift and we will send it out to you.

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Amazon screen shot 8.15 am 23 may

 

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Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.