Straight Numbers & Tax Talk for Individuals – December 2015

At this time of the year, most people rush like mad to finish all kinds of jobs incl. Christmas Gift shopping.
We also have a gift for YOU which could pay dividends for you next year. Read all about Robert Bauman’s book “Straight Money Talk—A Straightforward Plan for Financial Independence” on page 4.

When you finally get to have a breather, remember to take some time to reflect on your achievements of last year and celebrate them with your family or others who know how much this means to you.

We wish you a great Christmas holiday season and safe travels, wherever you spend your break. Catch you in the new year!

Best regards from the Team at Straight Talk Accounting & Tax

 

Visit www.straighttalkat.com.au to read a multitude of recent articles of vital interest… some are genuinely irreverent but all are relevant.

Wishing you all a Merry Christmas and a Prosperous New Year!

Christmas Holiday Business Closure

We are closed from Thursday, 24 December 2015 and re-open for business on Monday, 4 January 2016.

Data matching to be expanded on individual returns

The ATO has advised that last year, it cross-referenced information reported in tax returns against over 600 million transactions provided to it by third parties to identify omitted income and gains, or incorrectly-claimed offsets or entitlements to exemption from surcharges.

It also contacted nearly 400,000 taxpayers who had apparent discrepancies in the information they reported in their tax returns.

The ATO said that traditionally, it has focused on areas such as omitted interest and employment income, but this year it is expanding its data matching to encompass a greater range of areas, such as:

• capital gains tax (CGT) from the disposal of shares and property;
• employment-related foreign source income; and
• contractor income from payments made by government agencies.

Holiday rentals under the microscope

The ATO has advised that it is sending letters to taxpayers in approximately 500 postcodes across Australia, reminding them to only claim the deductions they are entitled to, for the periods a holiday home is rented out, or is genuinely available for rent.

They advise that, to avoid making mistakes on their tax return, property owners should:

• keep accurate records to ensure they declare the right amount of rental income and have evidence for claims made; and
• only claim deductions for the periods the property is rented out, or is genuinely available for rent.

If a property is rented at below market rates, for example to family or friends, claims for deductions must be limited to the income earned while rented.

Memorable Quotes…

“Everything is theoretically impossible, until it is done.”
—Robert A. Heinlein

A little bit of Trivia…

Eyeliner Trivia Facts

Millions of beauty lovers adore eyeliner and regard it as indispensable, but most people probably know very little about its strangely fascinating history.

Eyeliner has a very long history and can be traced all the way back to the year 10,000 BC in both Mesopotamia and ancient Egypt. Nor were women the only users back in the day, with many men also making use of heavy, black eyeliner to accent their eyes. Its original function, however, was less about aesthetics and more about both warding off the “evil eye” and protecting eyes against the sun god.

Despite its long history, eyeliner has fallen in and out of popularity, and Western culture eschewed its use between the first Millennia AD and the 1920s, when it came back into fashion after the highly publicized discovery of the tomb of King Tutankhamun. 1920s users did not have it easy as eyeliner lovers today though, with liner back then consisting of kohl, which gave it a smokier style than the modern smooth style to which we have become accustomed.

Credit and debit cards data-matching program

The ATO has announced that it will conduct a data-matching program on credit and debit card transactions for the 2012/13 and 2013/14 years.

Data will be collected from the following financial institutions:

• American Express Australia Limited;
• Australia and New Zealand Banking Group Limited;
• Bank of Queensland Limited;
• Bendigo and Adelaide Bank Limited;
• BWA Merchant Services Pty Ltd;
• Commonwealth Bank of Australia;
• Diners Club Australia;
• National Australia Bank Limited;
• St George Bank; and
• Westpac Banking Corporation.

Based on previous programs, it is estimated that over 8 million records will be acquired, relating to over 940,000 merchants. These records are linked to approximately 90,000 individuals and 850,000 non-individuals.

Taxpayers can apply to the ATO for a market value ruling

The ATO has issued an information sheet to help taxpayers get their property valuations right. They say that practitioners or their clients can apply for a market value private ruling, by either:

• asking the ATO to provide a valuation (they will be required to pay for the work of the valuer); or
• providing the ATO with a valuation and asking them to confirm it – this generally costs less, provided the valuation meets the ATO’s requirements.

There are several advantages to requesting a market value private ruling, as opposed to obtaining a private valuation, as a market value private ruling:

• gives the client greater certainty about their tax matters;
• is binding advice that the client can rely on;
• is completed by a professional valuer and the client can be involved in the selection and appointment of that valuer; and
• removes the risk of providing the ATO with a valuation that does not meet its requirements, which could lead to further costs for the client.

ATO warns about doing your own valuation

According to the ATO, taxpayers who undertake their own valuations – or use valuations from people without adequate qualifications – risk incorrectly reporting their tax, and may be liable to pay administrative penalties.
However, taxpayers who use a qualified valuer or equivalent professional for taxation purposes will generally not be liable to a penalty if they have provided the valuer with accurate information should the valuation ultimately prove to be deficient.

Data matching program – on eBay online sales

The ATO has announced that it will acquire online selling data relating to between 15,000 and 25,000 individuals who sold goods and services of $10,000 or more on eBay between 1 July 2014 to 30 June 2015.

Data will be sought from eBay Australia and New Zealand Pty Ltd, a subsidiary of eBay International AG which owns and operates www.ebay.com.au.

The data requested will include information that enables the ATO to match online selling accounts to a taxpayer, including name, address and contact information, as well as information on the number and value of transactions processed for each online selling.

These records will be electronically matched with certain sections of ATO data holdings to identify non-compliance with registration, lodgement, reporting and payment obligations under taxation laws.

Laughter is the best medicine

Thoughts to Ponder

These “words of wisdom” may not be so wise, but they just might tickle your funny bone:

• For every action, there is an equal and opposite criticism.
• Never do card tricks for the group you play poker with.
• You never really learn to swear until you learn to drive.
• The problem with the gene pool is that it doesn’t have a lifeguard.
• Support bacteria – they’re the only culture some people have.
• The only substitute for good manners is fast reflexes.
• I drive way too fast to worry about cholesterol.
• The sooner you fall behind, the more time you’ll have to catch up.
• A conclusion is the place where most people get tired of thinking.

ATO and United States IRS share bank information

The ATO has announced that it has undertaken its first ever automatic sharing of bank information with the United States (US) Internal Revenue Service (IRS).

Details of over 30,000 financial accounts worth over $5 billion are being provided to the US.

The information provided on US citizens and tax residents with Australian bank accounts is the first step in transparency measures being implemented globally by Governments and tax administrations.

Beginning in 2017, close to 100 countries will be sharing non-resident data under the OECD Common Reporting Standard.

In return, the ATO will receive data from the IRS about Australians with financial accounts in the US, and will use that data to detect cases of undeclared offshore income and tax evasion.

The ATO and its regulation of SMSFs

Editor: In a recent speech, Kasey Macfarlane, Assistant Commissioner, SMSF Segment, Superannuation, discussed the issues facing SMSFs and their aging trustees. The following is an excerpt from her speech.

Planning ahead – cognitive decline

“I’d like to touch on the increasingly important topic of cognitive decline. Dementia is on the rise and currently affects one in ten people over 65, and three in ten over 85.”

“Even mild dementia will affect a person’s ability to make financial decisions. SMSF numbers continue grow, and… require a high level of financial decision making.”

“While many trustees remain perfectly capable of effectively managing their financial affairs well past retirement age, there is a risk that some with diminished capacity to effectively manage their fund may nevertheless continue to do so.”

“As my colleague Matthew Bambrick said back in March, ‘These issues are a time bomb waiting to go off if not addressed now’.

“It’s essential to ensure that all trustees are genuinely involved in managing SMSF funds, to agree in advance about decision points and exit decisions, to have a will, and appoint an enduring guardian and power of attorney.”

Editor: If you would like to discuss this important issue further, please contact our office.

Change to the way taxpayers claim work-related car expense deductions

Currently, taxpayers have an option to use one of four methods to determine their work‑related car expense deductions.

The government is proposing to reduce the number of methods by removing the ‘12% of original value method’ and the ‘one-third of actual expenses method’.

These methods have been used by fewer than 2% of those who claim work-related car expenses.

The other two methods, the ‘cents per kilometre method’ and the ‘logbook method’ are being retained.

The ‘cents per kilometre method’ is also being changed by replacing the three current rates based on engine size with one rate set at 66 cents per kilometre, which applies to all motor vehicles.

The government says that these changes will enable taxpayers who drive electric and hybrid vehicles to claim on a cents per kilometre basis, which is not currently an option for them.

The amendments apply to the 2015/16 income year and later income years.

FREE Copy of Our Book for Christmas

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

 

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– Keith Abraham CSP – Professional Speaker and Best Selling Author

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.