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From health care charges and family payments to stamp duty, income and energy cost hikes, a number of new laws and regulations and fees come into effect from 1st July 2016.
Here is what to expect in the next financial year:
Australia’s lowest-paid employees are certain to get an additional $15.80 per week from July 1 after the Fair Work Commission passed down its annual minimum wage decision.
The minimum wage has been increased by 2.4%, which means employees are going to be paid $672.70 per week or $17.70 per hour. The determination impacts in excess of 1.86 million workers.
FAMILY TAX BENEFIT
From July 1, you will not be paid the Family Tax Benefit Part B, for anyone who is part of a couple and your youngest kid is 13 years old or over.
The alteration to the payment, with a highest possible rate of up to $4400 a year, brings age cut-off for your youngest kid straight down from 18 years.
Single parents, grandparents or great grandparent carers won't be impacted by the changes, nevertheless grandparents and great grandparents must register before July 1 to continue to receive the payment.
Individuals have already been cautioned of the “medical Armageddon” with the influx of new healthcare costs very likely to hit patients from July 1, though dreaded fee imposts for medical tests have been staved off once the federal government reached arrangement with the pathology sector.
The extension on the Medicare rebate freeze in this year’s budget is likely to drive GPs either to cease bulk-billing or increase co-payments by $15 to $25 per visit, the Australian Medical Association has cautioned.
To sustain inflation, charges for almost all toll roads across the country will rise on July 1, generally by a few cents essentially.
In Victoria, the maximum road toll for a car on CityLink will go up by three cents, from $8.66 to $8.69, and a trip across the Bolte Bridge will increase from $2.89 to $2.90.
In NSW, the M2 will rise for cars by between one cent and six cents, based on the number of toll points people pass.
And in Queensland, at the Murarrie toll point on the Sir Leo Hielscher bridges, road tolls will rise seven cents for privately registered cars to $4.39.
Energy bills across the nation are going to increase, particularly in NSW and South Australia, which currently has the Australia's highest energy costs.
In SA, AGL has introduced a rise of 10 %, which amounts to about $230 additional each year. Origin Energy is hiking its costs by 6.5%, or approximately $117 each year, while Energy Australia consumers are going to pay an extra $260 per year.
In NSW, total annual energy bills are going to increase by as much as $30 after the Australian Energy Regulator authorized a 1.5% increase consistent with inflation.
That increase was authorized as being a stop-gap measure following a judgment to reduce expenses at government-owned energy firms was controversially overturned, possibly adding 100's of dollars back on to energy bills.
In the ACT, electrical power costs will increase by 6% but customers utilizing a combination of electrical power and gas will approximately break-even, after ActewAGL declared it will decrease gas prices.
SMALL BUSINESS TAX CUT
Companies with the yearly turnover of under $2 million might get a tax cut from 28.5% to 27.5% from July 1. “This measure is not yet legislated but is supported by both parties,” CPA Australia head of policy Paul Drum said.
For those who operate a small business and have employees, remember to be SuperStream-ready.
“From July 1, a business with 19 or fewer employees will be needed to pay super contributions for employees electronically (EFT or BPAY) and send the associated data electronically,” Mr Drum said.
“If you are not prepared for Super Stream, speak to your accountant or visit the ATO website.”
FARM MANAGEMENT DEPOSITS
For farmers, from July 1, the absolute maximum level of farm management deposit (FMD) each and every eligible primary producer can hold will rise from $400,000 to $800,000.
“Also coming into effect from July 1, any primary producers affected by drought can withdraw their FMDs without losing their claimed tax benefits,” Mr Drum said.
“Provided they made their FMD in the earlier financial year, have held their FMDs for a minimum of 6 months, and can show that an area of their farming property have been impacted by a rain fall deficit for 6 consecutive months.”
UNFAIR TERMINATION CHANGES
The income threshold for workers who are protected by unfair dismissal laws and regulations increases once again, since it does every year due to the Fair Work Commission’s yearly wage reviews.
From July 1, the workers who are earning up to $138,900 will be protected by unfair dismissal, up from the prior $136,700 threshold.
SMSF COLLECTIBLES STORAGE
For those who have a self-managed super fund and it owns artwork, jewellery, vintage cars or other major “collectibles”, you will not be able to store those items at the SMSF trustee’s residence from July 1.
The reasoning is usually to avoid a collectable being “used” by the SMSF trustee. “This is how the ATO are circumventing the, ‘I store the painting at home, but of course it’s in the safe - wink, wink’ conversation,” Sonia O’Donnell from Superfund Partners writes.
“As the Auditors, or even the ATO can't be at your house to confirm the existence of the collectable or that it is actually not being used, the final decision is made to eliminate the temptation and take away the collectable from reach. Consequently, the new regulation states that any collectable must not be stored at the SMSF trustee’s residence.”
STAMP DUTY INCREASE
In Victoria, foreign real estate investors are now being whacked with enormous increases in stamp duty from July 1 and land tax from next year. Foreign buyers will have to pay 7% stamp duty, up from the current 3%, whilst the land tax surcharge on “absentee landholders” will rise from .5% to 1.5%.
The NSW government has already been in front of the game, imposing a 4% stamp duty surcharge on residential property purchases in its State Budget, and a .75% land tax surcharge from 2017.
FIRST HOME BUYERS GRANT
Queenslanders are able to access a ’souped up first home buyers grant from July 1, with the Great Start Grant being elevated to $20,000 in the State Budget. The grant, that was formerly $15,000, is for buyers of their first newly constructed property under $750,000.
LICENCES, REGO AND TRANSPORT
Drivers licence, motor vehicle registration and public transit charges are going to increase across the nation from July 1, generally by around 1.9% in line with inflation.
For more info on new all the new prices, check out your state government transport website.
Call Tax Accountants Cranbourne today at 1300 300 106.
The ATO has issued a warning to small business owners, advising those yet to implement Super-Stream to act now.
Super-Stream involves employers to send all superannuation payments and employee details electronically in a standard format. Using it will be mandatory from 1 July, 2016.
According to the tax office, nearly 35% of small business owners are still not Super-Stream ready.
ATO deputy commissioner said that implementing the Super-Stream set-up and using it prior to the 30 June deadline is doable, nonetheless emphasised the need to start now.
“The super industry is ready to help, so initiate contact and open the conversation with a Super-Stream expert,” says Mr O’Halloran.
Mr O’Halloran urged those advising small business owners to ensure their clients are ready for the impending deadline.
“Accountants and bookkeepers can provide this expert Super-Stream advice,” he said.
“Support is also available from the super fund, payroll system provider, messaging portal provider or by communicating your super clearing house. You don’t have to work it out alone.
“If you’re worried as you don’t operate electronically, or you only pay super to a few employees, be assured that there is a Super-Stream solution to suit every business.”
Setup is a one off job, and once done, using Super-Stream for each payment cycle is simple.
Contact BookSmart Accountants Cranbourne today at 1300 300 106 to get Super Stream ready
Gold Coast businesses under the ATO's microscope
As an element of a continuing, Australia-wide program, the Australian tax Office has cautioned that it's going to pay a visit to restaurants, cafés and take-aways, in addition to beauty salons and nail bars, on the Gold Coast.
Assistant Commissioner Matthew Bambrick mentioned “In all, we will be checking out about 250 businesses in the Gold Coast to discuss a variety of topics, such as business registration, record-keeping, superannuation and lodgement."
“Where taxpayers are not willing to work with us or continue to cause us concern, we are going to undertake additional investigation. In Sydney and Melbourne, for instance, we now have moved to auditing businesses that just didn't want to work with us.”
New rules for selling property over $2 million
From 1 July 2016, new regulations will affect sales of taxable Australian property (e.g., real-estate) with a market value of $2,000, 000 or higher. A 10% non-final withholding tax might apply to all contracts to sell such property entered into on or following 1 July 2016.
Australian resident vendors selling this kind of real estate will have to obtain a clearance certificate from the Australian Tax Office ahead of settlement in order to avoid the 10% non-final withholding tax.
Note: This new 10% withholding tax was actually only created to utilize to non-residents selling
Australian real estate. However, it equally applies to Australian resident vendors and pushes them to acquire a clearance certificate from the ATO to, in fact, demonstrate that they are Australian residents. In most cases, clients are going to be affected for sales of residential and commercial real estate, or companies or trusts that hold such properties.
Cancellation of Trust ABN’s
From February, 2016 onwards, the registrar of the Australian Business Register has begun cancelling the Australian business numbers (ABNs) of certain trusts.
The focused trusts are entities for which tax records suggest that they're no more continuing a business. The ABR anticipates that roughly 220,000 trusts might be lined up to get their ABN cancelled.
ABN cancellations will be started where by the ATO data matching signifies no lodgement of BAS and/or trust income tax returns in the last two years.
Exceptions to the ABN cancellations apply to trusts which are registered with Australian Charities and Not-for-profits Commission or are a non-reporting member of a GST or income tax group. Having said that, we have seen substantial activity in the deregistering of charities for dormant or no compliance activity.
Government states that the trustees will get a letter in the mail if their ABN is terminated. The notice will include the reason behind the cancellation, and a contact number to call to have the ABN reinstated. The government says this will be able to be affected immediately in case a trustee won't agree with the decision, even though it's not clear if proof activity or viability might be needed.
Our recommendation is that you check your myGov site and get in touch with your small business adviser.
In case you have a trust and its ABN is terminated you don't get a letter, it may imply your contact information is not up to date on the Australian Business Register’s ABN database.
Call Accountants Cranbourne at 1300 300 106 for further information.
The ATO released its small business fix-it teams that has a view to comprehend and deal with the problems many small business owners encounter, and ideally make things easier both for newer as well as established business owners not only to stay in small business (and keep paying taxes) but to also have a far better possibility of making their business a success.
It explains its small business fix-it teams as “rapid-design projects” where by small businesses, tax professionals, federal, state and local government agencies and intermediaries come together to evaluate issues impacting small businesses. The team then develops suggestions to fix the problem.
For instance, one particular fix-it squad discovered that many small business owners discovered that restructuring, as an example moving from running as a sole trader to a company, isn't as easy as they believed. The three key challenges the ATO recognized were that many small business owners:
• find it hard to choose the best trading structure for their situation and determine what it means for their business
• do not comprehend the obligations and responsibilities of being the director of the company
• have trouble with the intricacy of the process and having get in touch with different government departments at various stages in the process.
The fix-it squad developed numerous resources and made them available online (see illustrations on this business.gov.au page, as well as this ASIC page).
Other identified issues for small business owners include things like dealing with employees, starting up (particularly for younger business owners) and completing business activity statements (BAS).
The make-up of every fix-it group changes based on the issue the ATO is intending to resolve. If you would like to nominate a cross-government issue that affects many small business owners, you can send the ATO an email.
Would like to get involved?
Small business participants for the fix-it squads come from the ATO’s “small business consultation panel”. Members on the panel work with the ATO on an ad-hoc basis to create tailored tax, super and whole-of-government products for small business owners.
The panel is a list of small business operators who assist the ATO provide improved solutions by offering practical business and industry know-how. The ATO says it is always searching for new members.
Panel members are involved on the short-term, as-needs basis to take part in a variety of consultation routines, including:
• taking part in workshops, research sessions and focus groups
• taking part in online consultation exercises
• offering feedback on procedures and paperwork
• offering viewpoints through the perspective of a small business operator
• performing end-user testing of products.
The ATO states that panel members might be paid for activities they take part in, dependent upon time commitments and the type of activity, however participants might need to check this.
To apply, go to this page and complete the application form.
Call Accountants Lynbrook for further information at 1300 300 106.
On Tuesday, 3 May 2016, the Treasurer, Scott Morrison, unveiled his very 1st Federal Budget. The Budget announcements include things like some significant superannuation tax changes, and other actions that will influence individual, small business, and corporate taxation.
We at BookSmart Accountants are here to enable you to grow, manage and protect your interests for you to have a wonderful financial future. One of many ways we do that is certainly via very careful income tax planning! In case you have not met with us yet, NOW is the time get in touch with us to arrange an income tax planning meeting, so that we can assist you to limit your tax payments, and increase your wealth.
Here is a brief summary of a few of the key Federal Budget features with regards to taxation and superannuation.
Small business entity threshold - increases from $2M to $10M
At present, small enterprises have access to the small business tax concessions if their aggregated annual turnover is less than $2 million. From 1 July 2016, the small business turnover threshold will increase from $2 million to $10 million! Having said that, the $2 million threshold will continue to apply to small business Capital Gains Tax (CGT) concessions.
Examples of small business tax concessions include:
simpler depreciation rules, which include immediate tax deductions for buying assets costing less than $20,000;
simpler trading stock rules, for example the choice to avoid a year-end stocktake if particular conditions are met;
the opportunity to account for Goods and services tax (GST) using a cash basis;
simpler Pay-As-You-Go (PAYG) instalment payment calculations;
12-month prepayment deduction rules;
various Fringe Benefit Tax (FBT) exemptions for portable electronic devices (e.g. smartphones, laptops and tablets).
Reduced income tax rate for small business companies
From 1 July 2016, the company income tax rate for small business companies (aggregated turnover less than $10 million) will be reduced to 27.5%.
Few changes pertaining to individual income tax were announced. The key item of note is the increase in one of the personal income tax thresholds.
From 1 July 2016, the upper taxable income threshold for the middle income tax bracket (32.5%) will increase from $80,000 to $87,000. This proposal will mean an income tax saving of $315 for individuals with a taxable income of at least $87,000.
Lifetime cap for non-concessional contributions
The Federal Government has suggested enhancing a lifetime non-concessional contributions cap of $500,000, effective from the Budget, i.e. 7:30pm AEST 3 May 2016. This new cap would replace the current non-concessional cap of $180,000 per year (or $540,000 every 3 years under the ‘bring-forward’ rule for individuals aged under 65). It would also include all non-concessional contributions made on or after 1 July 2007.
For those who have already contributed in excess of $500,000 prior to budget night, you won't be penalised or required to repay the excess, however you won't be in the position to contribute anything further.
Concessional contributions cap decreased to $25,000
At present, the concessional contributions cap is $30,000 each year for people aged below 50, and $35,000 for anyone aged 50 or older. From 1 July 2017, this threshold will be lowered to $25,000 for all individuals, irrespective of their age.
Introduction of a $1.6 million pension cap
From 1 July, 2017 the federal government will bring in a $1.6 million pension cap. This implies that members are going to be restricted to the amount they have in pension phase where the fund pays no tax on its earnings. This change will require members who are already in pension phase with balances over $1.6 million to transfer any excess into accumulation phase where earnings will be taxed at the concessional rate of 15%.
Tax deductions for personal superannuation contributions
From 1 July 2017, everyone up to age 75 will be in a position to claim an income tax deduction for personal superannuation contributions. People that are both self-employed and wage and salary earners, and people whose employers don't provide salary sacrifice arrangements, will also reap the benefits of these changed arrangements.
Lowering of the cut-in income threshold for 30% tax on concessional contributions
From 1 July 2017, the income threshold at which high income earners pay extra contributions tax will reduce from $300,000 to $250,000. Generally, an extra 15% tax will be payable on concessional contributions, to the extent that the threshold is exceeded.
Call Accountants Cranbourne at 1300 300 106 for further information.