In this Issue:
- New superannuation rates and thresholds released
- Commissioner’s speech highlights ATO’s focus areas
- Super guarantee payable on ‘public holidays’ and ‘additional hours’!
- Memorable Quotes…
- FREE Tax Blaster Session
- Get ready for Single Touch Payroll
- Heard this one before?
- Business Performance Tip 2 – Does Your Business Plan Hit Its Targets?
- FREE Copy of Our Book
If you’re not well prepared for the End of Financial Year hustle and bustle, it could get a little bit stressful. To help our clients get ready for their 2017/18 tax return, we have compiled the latest rulings and information about business tax deductions in an easy Check List.
To obtain a copy of the 2017/18 Year-end Checklist for Business just contact us via email or give us a call.
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
New superannuation rates and thresholds released
The ATO has published the key superannuation rates and thresholds for the 2018/19 income year.
- The Non-Concessional Contributions cap will remain at $100,000 (although transitional arrangements may apply), and the Concessional Contributions cap will remain at $25,000.
- The CGT cap amount will be $1,480,000.
- The Division 293 tax threshold will be $250,000.
- The maximum super contribution base for superannuation guarantee purposes will be $54,030 per quarter.
- The maximum superannuation co-contribution entitlement for the 2018/19 income year will remain at $500 (with the lower income threshold increasing to $37,697 and the higher income threshold increasing to $52,697).
The superannuation benefit caps for the 2018/19 income year include:
- a low rate cap amount of $205,000;
- an untaxed plan cap amount of $1,480,000;
- a general transfer balance cap of $1.6m;
- a defined benefit income cap of $100,000;
- an ETP cap amount for life benefit termination payments and death benefit termination payments of $205,000; and
- the tax-free part of genuine redundancy payments and early retirement scheme payments comprising a base limit of $10,399 and for each complete year of service an additional $5,200.
Commissioner’s speech highlights ATO’s focus areas
Recently, the Commissioner of Taxation highlighted the areas in which the ATO has recently increased its focus, including:
- undeclared income;
- individuals’ unexplained wealth or lifestyle;
- incorrectly claimed private expenses;
- unpaid superannuation guarantee; and
- cash-only businesses and those with low usage of merchant banking facilities, with black economy visits to over 2,600 businesses across 8 locations in 2017.
The Commissioner also highlighted ongoing ATO concern with respect to the predicted ‘work-related expense claim gap’, which (at least by the ATO’s estimates) could amount to being greater than the ‘large corporate tax gap’ of $2.5 billion of lost revenue.
Super guarantee payable on ‘public holidays’ and ‘additional hours’!
The Federal Court has held that superannuation guarantee contributions were payable with respect to the ‘additional hours’ and ‘public holidays’ component of annualised salaries paid by BlueScope Steel, on the basis that these particular components formed part of ordinary time earnings (‘OTE’).
Under an enterprise agreement, primarily due to the specific working environment, the employees in question were required to be available (at short notice) 365 days per year and 24 hours per day, including a requirement to work additional hours and public holidays.
As such, the employees were paid an annualised salary, which was made up of a base rate, as well as a component which absorbed all additional payments, such as penalty rates, allowances, public holiday loadings and pay-outs, and payment for additional hours worked outside the normal rostered hours.
However, when paying superannuation, adjustments were made to the annualised salary, so that the additional hours and public holiday components were not included by BlueScope Steel as OTE for superannuation guarantee purposes.
Decision
The Federal Court did not agree with the employer’s adjustments, instead finding that, under the circumstances, the ‘additional hours’ and ‘public holidays’ formed part of an employee’s ‘ordinary hours of work’ and, therefore, were considered OTE for superannuation guarantee purposes.
This remained the case whether or not the employee actually worked the additional hours or the public holidays.
That is, the ordinary conditions of the employee’s work required them to be available outside their rostered shifts and on public holidays (on short notice) and, as this was factored into their annual salary, they were considered ordinary hours for these particular employees.
Memorable Quotes…
“Great works are performed not by strength, but by perseverance.”
—Samuel Johnson (1709-1784)
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.
Find out NOW how you could be making more money for your retirement and facing less financial stress now and in future.
Call our Team on 07 3399 8844 to book your FREE meeting NOW.
Get ready for Single Touch Payroll
Single Touch Payroll (or ‘STP’) is mandatory for ‘substantial employers’ (being those with 20 or more employees) from 1 July 2018.
All employers are required to count the number of employees on their payroll on 1 April 2018 to find out if they are a substantial employer (note that this can be done after 1 April, but they need to count the employees who were on their payroll on 1 April).
They must count each employee (not the full time equivalent), including full-time, part-time and casual employees, as well as those employees based overseas or absent or on leave (paid or unpaid).
Employers that are part of a company group must include the total number of employees employed by all member companies of the wholly-owned group.
However, employers don’t have to include the following in the headcount:
- any employees who ceased work before 1 April;
- casual employees who did not work in March;
- independent contractors;
- staff provided by a third-party labour hire organisation;
- company directors or office holders; or
- religious practitioners.
Note that, although directors, office holders and religious practitioners are not included in the headcount, if the employer starts reporting through STP, the payment information of these individuals will need to be reported (because the payments are subject to withholding and are currently reported in the Individual non-business payment summary).
Employers don’t need to send the ATO the headcount information, but they may want to keep a copy for their own records.
Once an employer becomes a substantial employer, they will need to continue reporting through STP even if their employee numbers drop to 19 or less (unless they apply for and are granted an exemption).
Editor: Please contact our office if you need any assistance regarding the new STP regime.
Heard this one before?
Juan comes up to the Mexican border on his bicycle. He’s got two large bags over his shoulders. The guard stops him and says, “What’s in the bags?”
“Sand,” answered Juan.
The guard says, “We’ll just see about that. Get off the bike.” The guard detains Juan overnight and has the sand analysed, only to discover that ther is nothing but pure sand in the bags. he releases Juan and lets him cross the border.
A week later, the same thing happens. The guard asks, “What’s in the bags?”
“Sand,” says Juan.
The guard does his thorough examination and discovers that the bags contain nothing but sand. he give the sand back to Juan and Juan crossed the border on his bicycle.
This sequence of events is repeated every week for three years.
Finally, Juan doesn’t show up one day and the guard meets him in a Cantina in Mexico.
“Hey Buddy,” says the guard, “I know you are smuggling something. It’s driving me crazy. It’s all I think about… Just between you and me, what are you smuggling?”
Juan sips his beer and says, “Bicycles.”
New FBT rates for the 2018/19 FBT year
Editor: The ATO has released Taxation Determinations setting out the following rates for the FBT year commencing on 1 April 2018.
FBT: Benchmark interest rate
The benchmark interest rate for the 2018/19 FBT year is 5.20% p.a., which is used to calculate the taxable value of:
- a loan fringe benefit; and
- a car fringe benefit where an employer chooses to value the benefit using the operating cost method.
Example
On 1 April 2018, an employer lends an employee $50,000 for five years at an interest rate of 5% p.a., with interest being charged and paid 6 monthly, and no principal repaid until the end of the loan.
The actual interest payable by the employee for the current year is $2,500 ($50,000 × 5%). The notional interest, with a 5.20% benchmark rate, is $2,600.
Therefore, the taxable value of the loan fringe benefit is $100 (i.e., $2,600 – $2,500).
FBT: Cents per kilometre basis
The rates to be applied where the cents per kilometre basis is used for the 2018/19 FBT year in respect of the private use of a vehicle (other than a car) are:
| Engine capacity | Rate per kilometre |
| 0 – 2,500cc | 54 cents |
| Over 2,500cc | 65 cents |
| Motorcycles | 16 cents |
FBT: Record keeping exemption threshold
The small business record keeping exemption threshold for the 2018/19 FBT year is $8,552.
Editor: The ATO has also released Taxation Determinations setting out the indexation factors to value non-remote housing, and the amounts the ATO considers reasonable for food and drink expenses incurred by employees receiving a living-away-from-home allowance (LAFHA) fringe benefit, for the FBT year commencing on 1 April 2018.
Business Performance Tip 2 – Does Your Business Plan Hit Its Targets?
At the end of the day, if a comprehensive business plan (or a 60-page tomb) sits on the shelf it is not very useful. That’s why the best business plan is a one-page document that has key measurable targets and action plans for specific time frames.
Business planning is necessary, I hope you agree with me on that. What I don’t agree with is spending a huge amount of time creating a business plan that might look impressive on some 60 pages, but that no one ever looks at. It has become a cumbersome and big document that is not helping your staff to follow your business direction, because it’s not user friendly.
Here are some tips to get the most out of your business plan:
- Get the format right
- Make your plan dynamic
- Eliminate the hurdles
- Frequent planning makes for better business performance
- Use the worldwide proven Balanced Scorecard methodology
For more please visit the Aussie Painters Network Online Magazine, and read our guest article on page XX by Robert Bauman.
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”.
In this book, Robert Bauman lays out 10 steps anybody can follow to become truly wealthy, and reveals ‘money myths’ and ‘inside secrets’.
Just contact us on 07 3399 8844 to claim your gift and we will send it out to you.
About Straight Money Talk—A Straightforward Plan for Financial Independence
WHAT PEOPLE ARE SAYING ABOUT THIS BOOK:
“I’ve read many financial books and found this one to be up there with the best. It can really kick-start your journey to get your financial situation into great shape.”
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“Robert has done a fantastic job on this book. My views on how to handle money and how to educate my kids to learn the value of savings have totally changed now. This is an excellent book to guide you to creating great financial wealth in your life!”
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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.