In the past few months, more than 10 million hectares of land has been burned by the devastating Australian bushfire, thousands of homes have been destroyed and millions of animals were dead. The country is suffering billions of dollars’ loss during the bushfire season. Returning life to normal is a long way to go for most of us. Therefore, we summarize some assistance available offered by the ATO and other agencies to those impacted by the recent bushfire.

What we can help with

If you are affected by the bushfire and need assistance and support from the government. We are here to help you out FOR FREE. Of course, we can also reach out to ATO on your behalf to seek some tax relief.  

Tax relief

If you live in one of the identified impacted postcodes, around 3.5 million enterprises, individuals and SMSF have received the relief and support which are listed below:

• Automatically deferred income tax, activity statement, SMSF, and FBT lodgement, and associated payments until 28 May 2020 
  • Defer does not apply to:
    1. Super Guarantee Contribution and Lodgements
    2. Large PAYG withholders (although they can apply for relief, it will be assessed by the ATO on a case by case basis)

• Fast tracking of refund due
• Tax payable can be deferred to 28^th May 2020
  • Impacted taxpayers can apply for special consideration. The ATO announced that if the applicant is under the ongoing difficult condition, they might be released from income tax and fringe benefit tax debts.
  • Remit penalties or interest charged during the time you have been affected by the bushfire.
• PAYG instalment can be adjusted to nil without any penalty

If you are not in one of the identified postcode but have been suffered from the bushfires, you might also be entitled to the relief. We can work with the ATO on your behalf.

Individual and families support

Australian social welfare agencies have mobile units to assist with families in the affected areas. People in the affected areas can also receive economic assistance and other forms of relief:

Disaster Recovery Payment

Disaster recovery payment is a tax free Federal Government payment for those who are seriously injured, have lost their immediate family member, have lost their home and had a significant asset loss during the bushfire period:

• $1000 for each eligible adult and
• $400 for children under age of 16
• Additional $400 of educational expense for the eligible children. These payments are automatic if you are the primary carer of a child affected by the bushfire after 30 June 2019.

Loss of Income: Disaster recovery allowance

You are entitled to apply for the government allowance, if you are an Australian resident over 16 years old who works in a bushfire affected area and have lost your income but haven’t received the Government allowance. The allowance provides the income support for up to 13 weeks (equivalent to the maximum Newstart or Youth Allowance).

To be eligible for this allowance, you are required to prove your income is below the relevant income threshold. Although these payments are normally taxable, the government has announced to put it in law and make it tax-free.

Mental health support

Provide up to 10 free support session through primary health networks. In addition, Medicare rebate for 10 psychological therapy session will be granted if you are treated by the eligible GPs, psychologists, occupational therapists and social workers. (you are not required to have a GP referral for these services)

Phone, internet and energy

Many telecommunication providers offer support package including free call diversion, extended payment period, bill waivers under the extreme hardship, to bushfire victims. Please get in touch with your provider for more information.

Many of the energy providers are also offering support such as freezing accounts.

Support for business

Businesses who are directly or indirectly affected by the bushfire are entitled to :

• Up to $50,000 recovery grant (tax free)
• Offer a concessional loan of up to $50,000 to the eligible small businesses (including farmers, fishers and foresters) and non-for-profit organizations who suffered a significant asset and monetary loss during the bushfire period. The loan period can be extended to up to 10 years with the intension to repair and replace damaged assets and working capital.

Besides, a series of State Government Grants are also available.

Support for volunteer firefighters

Volunteer firefighters in NSW and QSL may be entitled to the allowance up to $300 per day with a cap of $6,000.  These kinds of allowance will not to be tested and they are tax-free. The payment is initiated by Federal Government and administered by the State Government (please refer to NSW Volunteer Firefighter Payment and QLD Volunteer Compensation Package for more information).

If you are in public sector, you are entitled to an extra 20 days paid emergency service leave to work on the front lines on the top of your normal annual leave.

Many telecommunication providers offer support to volunteer firefighter and SES (State Emergency Service) volunteers. Optus and Telstra, for instance, waive the payment for them from Dec 2019 to Jan 2020. 

If you are one of the bushfire victims and intending to apply and get assistance from the government, you are more than welcome to reach out to  Pitt Martin on 0292213345 or connect@pittmartingroup.com.au.

Disclaimer: This article is not providing a formal advice and may not suit to all scenarios. Please make an appointment with us to discuss.

Robert Liu CPA RTA MPA

Experienced Tax Accountant and Business Advisor with a demonstrated history of working in the accounting industry. Skilled in Tax, Accounting, Business Advisory and SMSF. Strong entrepreneurship professional with qualification Master of Professional Accounting, CPA Public Practice, Registered Tax Agent, Registered ASIC Agent, NSW Law Society External Examiner, Trust Account Auditor and Diploma of Finanical Planning. Specialised in SME, tax planning and international tax, he helped client save ample money and create wealth.

The proposal in 2017-18 Federal Budget for stopping foreign residents from claiming CGT main residence exemption has passed by the Parliament before Christmas 2019 and takes effect retrospectively from 9 May 2017. Unless special circumstances applied, all foreign residents are not able to claim a full or partial exemption from CGT for the sale of their main residence. All foreign (non-tax) residents, including Australian expatriate, will be affected by the new rule.

Before that, all taxpayers (residents, foreign residents, temporary tax resident) are entitled to a CGT exemption when they sell their property as main residence.

Under new rule

The new rule, which comes into effect from 9 May 2017, excludes foreign resident from the CGT main residence exemption. The exemption will not be granted because you are an Australian tax resident for a period of time or will not be partially granted on a pro rata basis according to the time of your tax residency. The result of exemption will be determined on your tax residency at the time when you dispose your dwelling.

As mentioned, if you are an Australian tax resident when you sell your home, you will satisfy with the main residence exemption requirements even if you become a foreign resident while owing your main residence. For example, if you are an Australian expatriate working overseas and own a home in Australia. It is highly likely that you are still entitled to the exemption as long as you returned back to Australian and re-established your residency prior to selling your main residence.

Australian tax residents will not be affected by the new rule.

With some changes from the rule proposed in the 2017-18 Federal Budget including an extension of the transitional provision period, there are some other new exceptions.

Transitional rules applied before 30 June 2020

Transitional rules apply to foreign residents who satisfy the CGT exemption under the current rule. Foreign residents whose dwelling was held as at 9 May 2017 and disposed on or before 30 June 2020 are entitled to the exemption.  Therefore, if you own your home in Australia and live overseas, this would be your last chance to sell the property to be exempt from CGT tax.

Exceptions under the new rules

The same as other rules, the new rule has some exceptions. For example, if you are still qualified to access to the CGT exemption under the current rule and become foreign resident less than 6 years, exceptions will apply to you when the following “life events” occurred:

“Life events” refers to

• The death of the individual’s spouse or the individual’s minor children
• Diagnosis of a terminal medical condition of the individual, spouse or their minor children
• Distribution of assets between the couple as a result of divorce, separation or similar maintenance agreements

When the above events occurred, you are still entitled to claim the CGT main residence exemption even if you are a foreign resident. 

However, you will lose CGT main residence exemption if you are a foreign resident for more than 6 years. That is, both you and your beneficiary are not entitled to CGT main residence exemption once the transitional period is over unless otherwise you become a tax resident at the time before you sell your dwelling.

Definition of Australian tax residency

Australian tax residency is hard to determine since it doesn’t have any quantitative criteria. Most people think they are tax resident as long as they’ve been living in Australia for more than 183 days which is wrong. In Australia, four residency tests have been placed to determine tax residency, namely resides test, domicile test, 183-day test and superannuation test. Each test is supported by many past cases and analysis always requires combining four tests and other multiple considerations together, which could be quite complex.

If you have any queries regarding this matter, please feel free to get in touch with Pitt Martin.

Robert Liu CPA RTA MPA

Experienced Tax Accountant and Business Advisor with a demonstrated history of working in the accounting industry. Skilled in Tax, Accounting, Business Advisory and SMSF. Strong entrepreneurship professional with qualification Master of Professional Accounting, CPA Public Practice, Registered Tax Agent, Registered ASIC Agent, NSW Law Society External Examiner, Trust Account Auditor and Diploma of Finanical Planning. Specialised in SME, tax planning and international tax, he helped client save ample money and create wealth.

The Government has restored the Superannuation Guarantee (SG) amnesty aiming to provide employers who have fallen behind with their SG obligations the one-off opportunity to “self-correct”. However, this time those continually fail to take any action will be heavily penalised.

The announcement of the Amnesty is proposed to have immediate effect from May, commencing on 24 May 2018 and ending on 23 May 2019. The original amnesty failed to go through Parliament as many claims that the Amnesty is unnecessary to the recalcitrant employers. 

Since the original announcement, the ATO reports that over 7000 employers have come forward to voluntarily disclose historical unpaid super. The government has estimated that around $2.85 billion in SG payments is currently owed in late or went unpaid.

When is the Amnesty effective?

The legislation to give effect to the Amnesty was introduced into Parliament on 24 May 2018, and if enacted, will apply retrospectively and end six months from the date it receives royal assent. During this six-month time frame, employers are required to voluntarily disclose underpaid or unpaid SG payment.

The Amnesty applies to disclosures of previously undeclared SG shortfall amount up to until March 2018 quarter.

How do employers qualify under the Amnesty?

To be eligible for the Amnesty, an employer must voluntarily disclose SG shortfall amounts. Employers are obligated to pay all that is owing to their employees. Alternatively, employers can set up a payment plan with ATO if your company is not able to pay off the full shortfall SG amount. Defaulting on a payment plan will expose the employer no longer qualify under the SG Amnesty.

Should bear in mind that the Amnesty only applies to voluntarily disclosure. The ATO are, in the meantime, continuing its compliance activities against employers during the Amnesty period. Employers will face full amount penalties if they are subsequently caught by paying late or not paying any unpaid superannuation in full. The Amnesty does not apply to the amounts that have been identified by ATO as unpaid SG shortfall or where the employer is subject to an ATO audit.

What do employers pay under the amnesty?

Normally, if employers fail to meet their obligation on time, they are liable to pay the SG charge (SGC) imposed in relation to this SG gap and lodge a Superannuation Guarantee Statement. The SGC cannot be waived even if you pay the outstanding SG soon after the deadline.

Under the quarterly superannuation guarantee, the interest charged is calculated on the employer’s quarterly shortfall amount from the first day of the relevant quarter to the date when the SGC would be payable (not from the date when the SG was overdue)

Under the Amnesty, employers who voluntarily disclose previously undeclared SG shortfalls are entitled to claim a tax deduction for these “catch-up” payments made in the Amnesty period.

If employers are late in making superannuation payments to their employees, special provisions in legislation applies to automatically protect employees from inadvertently breaching concessional contribution gap limits if the unpaid SG amount is paid to the Commissioner and then transferred to the employee’s superannuation fund. Where employers pay the superannuation directly to the affected employee’s superannuation fund(s), employees then would need to apply to the Commissioner requesting the exercise of discretion to either disregard the concessional contributions or carry them forward to the following year.

What happens if you don’t take advantage?

If an employer doesn’t take advantage of the Amnesty and are caught down the track, they are liable for the harshness fines, equal to double the amount of the SGC, i.e.200 percent of the SGC payable The Commissioner may remit all or part of the additional SGC payable by an employer. The legislation gives the power to the Amnesty to impose significantly higher penalties on employers who are not willing to voluntarily deal with SG gap by removing the ATO’s capacity to reduce the penalties below 100%. In fact, the Commissioner loses power for leniency even in cases where an employer has made a genuine mistake.

What to from here?

Even if you don’t think you have an outstanding obligation in relation to superannuation, it is wise to undertake an audit of your payroll in order to ensure your superannuation payable is calculated correctly and employees’ pay rates are in line with their entitlements under law and legislation.

If your business has engaged any contractors during the Amnesty period, reviews should be properly undertaken to ensure they are classified as employees under the SG provision even if two parties have reached the consensus that they should be treated as contractors. In other words, you cannot contract out of SG obligations.

If a problem is revealed, you can correct it without excessive penalties applying under the Amnesty. If you are uncertain about what Awards and pay rates apply to employees, there’s a pay calculator available on the FairWork Ombudsman’s website or you can contact them online or call them on 131394.

If you have not previously fulfilled your obligation in relation to superannuation and has the entitlement to the Amnesty, you should start working on this issue or get in touch with Pitt Martin on 0292213345 or connect@pittmartingroup.com.au.

Disclaimer: This article is not providing a formal advice and may not suit to all scenarios. Please make an appointment with us to discuss.

Robert Liu CPA RTA MPA

Experienced Tax Accountant and Business Advisor with a demonstrated history of working in the accounting industry. Skilled in Tax, Accounting, Business Advisory and SMSF. Strong entrepreneurship professional with qualification Master of Professional Accounting, CPA Public Practice, Registered Tax Agent, Registered ASIC Agent, NSW Law Society External Examiner, Trust Account Auditor and Diploma of Finanical Planning. Specialised in SME, tax planning and international tax, he helped client save ample money and create wealth.

Cash flow is one of the most important components of success for a SME business. Without cash, profits are meaningless. Organisations that don’t implement good cash management may not be able to make the investments needed to compete, or they may have to pay more to borrow money to operate.

Most business owners don’t really have a handle on their cash flow because they are too busy running their business. Inadequate cash flow management is causing more business failures today than ever before.

Cash flow is basically the movement of cash in and out of the business. You should be tracking this either weekly, monthly or quarterly. Positive cash flow occurs when the cash channelling into your business from sales is more than the amount of the cash leaving your businesses through expenses. On the other hand, negative cash flow occurs when your outflow of cash is greater than your inflow of cash. This generally brings concern for a business, but there are steps you can take to remedy the situation and generate more cash while maintaining expenses. You should review operating costs such as electricity, phone and internet frequently ensure you are getting the best deal.

You should have a clear debt collection process because late payments can put a significant strain on your cash flow. You could put your clients on direct debit with pre-authorisation checks so that the banks can draw against their accounts at scheduled intervals. You could also try offering discounts to clients if they pay invoices quickly.

As a small business owner, you might have areas that you are not so strong in. Perhaps you are great at sales but struggle with accounting, tax and bookkeeping. Hiring a professional or consultant who’s an expert in the areas that you need support with makes business sense. At the same time, you won’t have to pay a full-time additional salary ongoing. The consultant can work ‘in’ your business and you can focus ‘on’ your business.

Moving to a cloud accounting solution is a must because you can access your financials at anywhere and anytime. This means you can stay on top of your bookkeeping from overseas, home or on the road. Cloud accounting solution has made it easy for you to log in and add expense as you generate them, track overdue payments or review your profit and loss statement. You can securely share your financial information with your consultant, so they always have a live and up to date data to provide you with any advice as needed.

Most small business owners see growth as the solution to a cash flow issue. They often achieve their goal of growing the business only to find they have increased their cash flow issues in the process. Plan for growth and the related cash expenses in advance, so they don’t come as a surprise.

Cash flow shortages are often hard to predict, largely if they’re caused by a large unpredicted expense or unexpectedly slow payment from a major client. You should always have a plan in place to access additional capital if you need it.

One way to keep the situation under control is by tracking your cash flow results every week, month or quarterly to determine if your management is generating the type of cash flow your business needs. This also helps you get better at creating cash flow projections you can rely on as you make business decisions about expanding your business and taking care of your existing invoices.

Should you require any assistance regarding your accounting and bookkeeping, please do not hesitate to contact Pitt Martin Accountants & Tax Advisers on 02 9221 3345 or connect@pittmartingroup.com.au

Robert Liu CPA RTA MPA

Experienced Tax Accountant and Business Advisor with a demonstrated history of working in the accounting industry. Skilled in Tax, Accounting, Business Advisory and SMSF. Strong entrepreneurship professional with qualification Master of Professional Accounting, CPA Public Practice, Registered Tax Agent, Registered ASIC Agent, NSW Law Society External Examiner, Trust Account Auditor and Diploma of Finanical Planning. Specialised in SME, tax planning and international tax, he helped client save ample money and create wealth.

A new law has come into effect through the Parliament last month, denying the deductions for holding expenses associated with vacant land, which currently would be deductible in the ordinary course. The legislation is not only retrospective but also go beyond purely vacant land. Before, the old law allows those who hold vacant land with an intention to build a rental property on it to claim the tax deduction for costs of holding the land such as interest expenses, council rates and other ongoing cost.

When the new law enacted, deductions will be denied mostly for individuals, closely held trusts, and self-managed super funds (SMSFs). It applies retrospectively to costs or outgoings incurred on or after 1 July 2019, regardless of whether the land was held prior to this date. Without the grandfathering provision, the new law is likely to have a significant impact not only on those intending to develop vacant land but also those who have already acquired land for development purpose. This is the same target as previous tax changes that carve out travel claims to visit rental properties and depreciation claims on plant and equipment in some residential rental properties.

The new laws, however, go beyond purely vacant land for residential purpose. Deductions would be denied on land if there is no substantial structure on it. The only problem is that there is no clear definition of “substantial” given by the legislation. The Bill suggests that, for example, a silo or shearer is substantial, but a residential garage is not.

The non-deductible holding costs of vacant land under the measure will be added to the cost base of the asset if the expenses otherwise meet the cost base rules for CGT purposes, which will give relief against any capital gain or loss when the taxpayer ultimately sells the property. Please be aware that the cost of holding capital gains assets purchased before 21 August 1991 cannot be added to the cost base, which means it cannot be used to reduce capital gains or increase capital losses.

Is there any exception to the new law? The answer is YES. Some holding costs that relates to vacant land may continue to be eligible for deductions. For example, land leased to third parties under an arm’s-length arrangement who carries a business activity on the land or land used in a primary production business. However, deductions would be apportioned (at least to some extent) if there are residential premises on the land or being constructed on the land.

In addition, vacant land that is affected by natural disasters or out of control by the owner for a certain period are also exempt from the new law.

There is no denial of any deductions where the person or certain related parties use the land in carrying on a business or where the land is owned by companies, superannuation funds (other than SMSFs), managed investment trusts or certain public trusts.

If you have any tax queries about your ongoing and upcoming property development project, please get in touch with Pitt Martin Accountants & Tax Advisers. We are located at the Sydney CBD. Our contact number is 02 92213345 and email connect@pittmartingroup.com.au.

Disclaimer: This article is not providing a formal advice and may not suit to all scenarios. Please make an appointment with us to discuss.

Robert Liu CPA RTA MPA

Experienced Tax Accountant and Business Advisor with a demonstrated history of working in the accounting industry. Skilled in Tax, Accounting, Business Advisory and SMSF. Strong entrepreneurship professional with qualification Master of Professional Accounting, CPA Public Practice, Registered Tax Agent, Registered ASIC Agent, NSW Law Society External Examiner, Trust Account Auditor and Diploma of Finanical Planning. Specialised in SME, tax planning and international tax, he helped client save ample money and create wealth.

We have received questions from our taxpayers wanting to know the recent tax relief of $1080. Although the immediate relief has been introduced in the 2019 Federal Budget, this article will explain in more detail aiming to provide you with a better understanding about this tax cuts. Firstly, tax offset of $1080 will not automatically come to you when you lodge your tax return. So what is the Low and Middle Income Tax Offset?

From 1^st July 2018

The new LMITO was firstly introduced by the federal government as part of 2018-19 Federal Budget, which helps low and middle income earners (taxable income is at or below $125,333) lowers the amount of tax they need to pay. The new LMITO increases from a maximum amount of $530 to $1080 and the base amount increases from $200 to $255 per annum. The maximum threshold increased from $125,333 to $126,000 to ensure tax relief will be delivered to more taxpayers.

First thing to remember is that the LMITO is a tax offset. It can only be used to lower the amount of tax that you owe and not to generate a tax refund. ATO points out on their website:” it doesn’t mean you will automatically get an extra $1080 in your tax return.

The new LMITO threshold is available for the 2018/2019, 2019/2020, 2020/2021 income years. If you are entitled to LMITO, it will automatically apply on your 2018/19 tax return. Before you lodge your tax return, check if LIMTO is visible on your tax return lodgement. See the diagram below to check your entitlement:

* Your taxable income is your assessable income minus your allowable deductions

**LMITO is $255 plus 7.5% of the portion of your taxable income that exceeds $37,000

***LMITO is $1080 less 3% of the portion of your taxable income that exceeds $90,000, up to Nil

For example, if you earned taxable income in 2018-19 of:

• Less than $21,885, while you have an entitlement to LMITO of $255. Your taxable income is under the tax-free threshold, you don’t have any tax to pay. Therefore, you cannot utilise the offset.
• $45,000, you will receive a the LMITO of $855, ($255 plus 7.5% of the portion of your taxable income that exceeds $37,000, in this case $8,000). You may also be eligible for the LITO, see below.
• $85,000, you are entitled to the full $1080 LIMITO.

The LMITO applies in addition to the existing Low Income Tax Offset (LITO). Taxpayer whose taxable income is at or below $66,667 will receive this benefit. The maximum LITO $445 applies to those with taxable income at or below $37,000. For taxpayers whose taxable income exceeds $37,000 but is not more than $66,667, the entitlement is reduced by 1.5 cents for each dollar over $37,000. Similarly, LITO can only be used to lower your tax paid and not a cash bonus given by ATO if you do not owe money to ATO.

From 1 July 2022

New changes come into effect from 1 July 2022

• Income tax rate thresholds change —— the upper income threshold of the 19 per cent tax bracket increases from $37,000 to $45,000 with effect from 1 July 2022, intending to benefit all taxpayers with a taxable income over $18,200. The change will apply to resident taxpayers and working holiday makers.
•  
• The LITO increases —— for taxpayer with a taxable income at or below $66,667, the maximum LITO will be increased to $700 from current $445. However, the LITO reduces quicker than it currently applies. The increased LITO will be withdrawn at a rate of 5% every dollar between taxable incomes of $37,500 and $45,000. LITO will then be reduced at a rate of 1.5% every dollar between taxable incomes of $45,000 and $66,667.

These changes assume that Government does not withdraw the income tax changes in their future budget.

From 1 July 2024

From 1 July 2024, the 32.5% marginal tax rate will be reduced to 30%, The number of taxpayers benefit from such tax rate cut will be increased by the top threshold of the middle tax bracket jumped from $12,000 to $200,000. Tax relief applies to resident taxpayers and working holiday makers. Once again, this assumes that no more changes will be delivered to the future federal budget.

If you have any query about the above contents, please do not hesitate to contact Pitt Martin. We are located at the Sydney CBD. Our contact number is 02 92213345 and email connect@pittmartingroup.com.au.

Disclaimer: This article is not providing a formal advice and may not suit to all scenarios. Please make an appointment with us to discuss.

Robert Liu CPA RTA MPA

Experienced Tax Accountant and Business Advisor with a demonstrated history of working in the accounting industry. Skilled in Tax, Accounting, Business Advisory and SMSF. Strong entrepreneurship professional with qualification Master of Professional Accounting, CPA Public Practice, Registered Tax Agent, Registered ASIC Agent, NSW Law Society External Examiner, Trust Account Auditor and Diploma of Finanical Planning. Specialised in SME, tax planning and international tax, he helped client save ample money and create wealth.

Government has passed a legislation right before Christmas 2018 which will prevent a deduction from being claimed for salary and wages (and certain other payments) by a business that fails to meet its PAYG withholding obligations. This change will apply to payments made from 1 July 2019 onwards. The existing penalties for failing to comply with PAYG withholding obligations are already significant, this adds another financial incentive for businesses to ensure that they are compliant with PAYG withholding obligations.

 What is Pay As You Go (PAYG) withholding?

When you make payments to employees and some contractors, you need to withhold an amount and send it to the Australian Taxation Office (ATO) at regular intervals. This amount will be sitting as refundable credit amount to offset your actual tax when you lodge your tax return.

What the new legislation says?

If taxpayers do not meet their PAYG withholding tax obligations, from 1 July 2019 they will not be able to claim a tax deduction for payments:

 •             of salary, wages, commissions, bonuses or allowances to an employee;

•             of directors’ fees;

•             to a religious practitioner;

•             under a labour hire arrangement; or

•             made for services where the supplier does not provide their ABN.

The main exception is where you realised there is a mistake and voluntarily corrected it. For example, if you made payments to a contractor but then later realised that they should have been paid as an employee and no PAYG was withheld. In these circumstances, a deduction may still be available if you voluntarily correct the problem but penalties may still apply for the failure to withhold the correct amount of tax.

Salary and contract fees are a big portion of tax deduction for almost every business. Losing such tax deduction, business can be ending to pay massive tax therefore business owner should make sure the PAYG withholding obligation is complied all the time.

Pitt Martin Accountants and Tax Advisers can look after your PAYG withholding obligation. If you have any query about the change of new legislation and your PAYG withholding obligation, please feel free to call us on +61292213345 or email connect@pittmartingroup.com.au.

Disclaimer: This article is not providing a formal advice and may not suit to all scenarios. Please make an appointment with us to discuss.

Robert Liu CPA RTA MPA

Experienced Tax Accountant and Business Advisor with a demonstrated history of working in the accounting industry. Skilled in Tax, Accounting, Business Advisory and SMSF. Strong entrepreneurship professional with qualification Master of Professional Accounting, CPA Public Practice, Registered Tax Agent, Registered ASIC Agent, NSW Law Society External Examiner, Trust Account Auditor and Diploma of Finanical Planning. Specialised in SME, tax planning and international tax, he helped client save ample money and create wealth.

• full-time employees
• part-time employees
• casual employees and seasonal workers who were on your payroll on 1 April and worked any time during March – there are exemptions to counting seasonal workers who were employed for a short time only
• employees based overseas
• any employee absent or on leave (paid or unpaid).

• 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
• office holders
• religious practitioners.

• Need to upgrade their payroll software to have the Single Touch Payroll function
• No need to provide employees payment summary and submit PAYG withholding payment summary annual report to ATO
• Automatically get the new employee tax file number and superannuation details through existing Single Touch Payroll reporting system
• PAYG tax withheld information will be prefilled on the Business Activity Statement or Instalment Activity Statement.

• Can review the payroll information such as gross payment, PAYG withholding, super payment, etc instantly in Mygov account
• May not receive the payment summary from employer anymore as it wll shows in Mygov account too
• No need to provide tax file number and superannuation details to employer anymore.

Disclaimer: This article is not providing a formal advice and may not suit to all scenarios. Please make an appointment with us to discuss.

Robert Liu CPA RTA MPA

Experienced Tax Accountant and Business Advisor with a demonstrated history of working in the accounting industry. Skilled in Tax, Accounting, Business Advisory and SMSF. Strong entrepreneurship professional with qualification Master of Professional Accounting, CPA Public Practice, Registered Tax Agent, Registered ASIC Agent, NSW Law Society External Examiner, Trust Account Auditor and Diploma of Finanical Planning. Specialised in SME, tax planning and international tax, he helped client save ample money and create wealth.

Recently, the Australian government has introduced a new GST legislation on the imported low value goods. The new legislation will be effective from 1 July 2018 and it will affect thousands of online platform overseas sellers whose annual GST turnover is over $75,000, such as Ebay, Amazon sellers etc. These overseas sellers under the new legislation will be required to registered GST and reporting their GST on a monthly, quarterly or annually return.

GST is a type of tax enforced by Australian government on the provision of goods and services. Once the business registers GST, it has to charge GST on the goods and services it provides which is 10% of the original price unless the goods or service is a GST free or input taxed item. Every month, quarter or year, the business needs to remit the collected GST on sales to Australian Taxation Office; in the meantime, it will also get credit of the GST charged on the consumptions. For those online platform overseas sellers, once they register GST, they will be requested to do exactly the same as described above except they choose simplified GST registration which cannot claim GST credit at all.

The new legislation doesn’t affect the old rule that GST paid at border on the imported goods over $1000. So that means the business doesn’t need to charge GST on the invoice when a bundle of goods valued over $1000 imported through custom and GST paid at border.

The government haven’t given explicit measure how to scrutinize the compliance of the overseas seller. However, some discussion is on stopping the IP address of the online seller if their GST is not complied, so they cannot continue to sell on the online platform to the Australian consumers. Some others argue that the online platform or other operators can charge and collect the GST on behalf of overseas sellers and remit to the Australian Taxation Office. No matter how, since the new legislation has been kicked in, overseas sellers had better to prepare for registering and complying the government’s request as earlier as possible to avoid the penalty notice from the Australian Taxation Office and business damage caused by blocking of IP address.

Pitt Martin Accountants and Tax Advisers are here to look after your business. If you think the new legislation might be affecting you and you are concerning about it, please feel free to call us on +61292213345 or email robert@pittmartingroup.com.au.

Disclaimer: This article is not providing a formal advice and may not suit to all scenarios. Please make an appointment with us to discuss.

Robert Liu CPA RTA MPA

Experienced Tax Accountant and Business Advisor with a demonstrated history of working in the accounting industry. Skilled in Tax, Accounting, Business Advisory and SMSF. Strong entrepreneurship professional with qualification Master of Professional Accounting, CPA Public Practice, Registered Tax Agent, Registered ASIC Agent, NSW Law Society External Examiner, Trust Account Auditor and Diploma of Finanical Planning. Specialised in SME, tax planning and international tax, he helped client save ample money and create wealth.

If we metaphorize a business to a building, structure to the business will be as important as foundation to the building. A suitable structure can provide tax effectiveness and assets protection to a business. Contemporarily, sole trade, company and trust are common structures used in business. Next, we will use a table to illustrate the difference between these structures. 

As you can see, cost wise, sole trader is cheaper than company and trust to be set up and managed. As a sole trader, you can either use your own name or register a business name. Like other business entity, a sole trader can register ABN, GST, PAYG Withholding, etc. Because of the complexity of company and trust, in addition with government and document platform charges, the cost of company and trust’s setting up and management are comparatively higher.

In terms of the tax rate, sole trader used to be the same to individual tax rate. There is an 8% discount capped with $1000 however for the sole trader with less than $5 million business turnover from 1 July 2016 due to the government new legislation announcement. The discount rate will be gradually increased to 16% in about a decade time and the capped amount is so far is still the same. Company tax rate has been dropped from 30% to 27.5% since 1 July 2016 for business turnover under $10 million and the turnover threshold will be increased to $25 million from 1 July 2017. The company tax rate will be finally reduced to 25% for all business with less than $50 million turnover in about a decade time. Trust net income is usually taxed in the hands of beneficiary. Therefore, if beneficiary is an individual, individual tax rate will be applied; likewise, company tax rate will be applied to corporate beneficiary.

Sole trader business runs under the personal capacity; therefore, the business owner’s personal assets will be exposed to all creditors. Assets protection is vastly low in the sole trader business structure. Proprietary limited gives company comparatively higher assets protection to both shareholders and directors. However, director may be forced to be personal liable to company debt under the Corporate Act 2001. Since trust structure separate the legal ownership and beneficiary of trust assets, trust assets generally protected well from beneficiary’s personal bankruptcy. Nevertheless, care needs to be taken of when trust structure is set up and trust income is distributed.

Employer superannuation guarantee is not compulsory to sole trader him or herself but they are still liable for employee’s superannuation guarantee payment. Company and trust need to pay superannuation guarantee if they hire  employee and pay them over $450 a month. This includes director himself.

Compared to sole trader and company structure, one of trust structure’s advantage is that it can stream the prior-taxed income to beneficiaries at different proportion each year. Therefore, it can fully use the tax free threshold of each beneficiaries and their tax loss if any. This strategy is often used by a family trust and hence the family members can overall pay less tax.

Pitt Martin Accountants & Tax Advisers is located at Martin Place in Sydney CBD. We can be reached on +61 2 92213345 or connect@pittmartingroup.com.au.

Disclaimer: This article is not providing a formal advice and may not suit to all scenarios. Please make an appointment with us to discuss.

Robert Liu CPA RTA MPA

Experienced Tax Accountant and Business Advisor with a demonstrated history of working in the accounting industry. Skilled in Tax, Accounting, Business Advisory and SMSF. Strong entrepreneurship professional with qualification Master of Professional Accounting, CPA Public Practice, Registered Tax Agent, Registered ASIC Agent, NSW Law Society External Examiner, Trust Account Auditor and Diploma of Finanical Planning. Specialised in SME, tax planning and international tax, he helped client save ample money and create wealth.