Your 2017 EOFY Tax Minimisation Tips

Another financial year is about to finish! As a business owner, there are many obligations that you need to consider and action just before and after 30 June. Some of these will help to minimise your tax. We have outlined these action points below to assist you.

Tax season is comingReady for tax season?

 

 

 

 

 

 

Date Action Required
BEFORE

30 June 2017

  • Ensure your employee superannuation payments are received and allocated by your employees’ super fund prior to 30 June 2017 to ensure a tax deduction for this year. Any payments made between 1 July 2017 and 28 July 2017 will count towards your Superannuation Guarantee requirement but will not be tax deductible until the 2018 financial year.
  • If you operate through a trading company, review shareholder loan accounts and make minimum loan repayments (may need to declare dividends).
  • If you operate through a discretionary family trust, ensure that a Trust Distribution Resolution for each Trust is signed by 30 June 2017.
  • Review 2017 LAST MINUTE strategies below to reduce your tax prior to 30 June 2017.
  • Carry out a stocktake by 30 June 2017 (companies with turnover over $10 million)
1 July 2017
  • Superannuation guarantee rate is still 9.5%
  • 2% Temporary Budget Repair Levy ceases.
14 July 2017 or before
  • Provide 2017 PAYG Payment Summaries to all employees
28 July 2017
  • Quarterly Superannuation contributions due for employees (for the period 1 April 2017 to 30 June 2017).  THIS IS A KEY DEADLINE!

(Note: If you fail to meet your requirements by 28 July 2017, you must complete a Superannuation Guarantee Charge Statement and forward it to the ATO together with underpaid superannuation plus administration fees and interest by 14 August 2017. Superannuation Guarantee Charge payments are NOT tax deductible.)

14 August 2017 or before
  • Lodge your 2017 Annual PAYG Payment Summary Statement (for employees) with the ATO. Penalties apply for late lodgement.
28 August 2017
  • Taxable Payments Annual Report due for lodgement with the ATO (building and construction industry)

 

 

Key changes from 1 July 2017

Businesses need to take note of many key tax changes that apply from 1 July 2017. These include:

  • Small Business Entity (SBE) threshold turnover increased to $10 million. This allows many more business to access tax concessions that improve cashflow, simplify reporting, and bring forward tax deductions.
  • SBE Company Tax Rate reduced to 27.5%.
  • The temporary budget repair levy for high income earners is abolished. This reduces the highest marginal tax rate from 49% to 47%.

 

Your 2017 EOFY Reminders & Action Items

SBE Company Tax Rate reduced to 27.5%

Effective 1 July 2017, the company tax rate for SBE (Small Business Entities) reduces by 1% from 28.5% to 27.5%.  To be considered an SBE, your group aggregated turnover must be less than $10 million.  This key concession for 2017 applies again in 2018.

 

$20,000 Immediate Deduction for SBE’s

From 7:30pm on 12 May 2015, small business entities (SBEs) were able to claim an immediate deduction for depreciating assets costing less than $20,000.

Depreciating assets costing $20,000 or more will be allocated to the SBE’s general small business pool and will depreciate at a rate of 15% in the income year in which the assets are first used or installed ready for use. The assets will then be depreciated as part of that pool at 30% in subsequent income years.

If the balance of the general small business pool is less than $20,000 at the end of the income year, this balance is also written off.

 

Trust Distributions – Timing of Resolutions

Trustees (or directors of a trustee company) need to consider and decide on the distributions they plan to make by 30 June 2017 at the latest (the trust deed may actually require this to be done earlier).  Decisions made by the trustees should be documented in writing by 30 June 2017.

If valid resolutions are not in place by 30 June 2017, the risk is that the taxable income of the trust will be assessed in the hands of a default beneficiary (if the trust deed provides for this) or the trustee (in which case the highest marginal rate of tax would normally apply).

 

Please contact our office before 30 June 2017 so that we can properly prepare this document for you to sign.

 

You might not need to do a Stocktake

Small Business Entities (operational businesses with an aggregated turnover below $10 million) have access to a range of tax concessions.  One of these concessions is the simplified trading stock rules.  Under these rules, you can choose not to conduct a stocktake for tax purposes if there is a difference of less than $5,000 between the opening value of your trading stock and a reasonable estimate of the closing value of trading stock at the end of the income year.  You will need to record how you determined the value of trading stock on hand.

If you would like to take advantage of the simplified trading stock rules, call us today to make sure you are eligible to use the simplified rules and to discuss how to use them properly.

 

Deadline for 2017 PAYG Payment Summaries

You need to provide 2017 PAYG Payment Summaries to your employees and other workers by 14 July 2017.  These must then be submitted to the ATO by 14 August 2017 or penalties will apply.

If you have any doubt about how to correctly complete your 2017 PAYG Payment Summaries, please contact us for assistance BEFORE you prepare them.

 

Building and Construction Industry Reporting

From 1 July 2012, new tax reporting rules apply for businesses in the building and construction industry. Businesses will have to lodge an annual report with the ATO setting out details of payments made to contractors. This will assist the ATO to reduce the “cash economy” by ensuring tax is paid on all income including “cash” payments.

You will need to record the following details of all payments made to contractors for building and construction services:

  • The ABN of the contractor
  • The name and address of the contractor
  • The gross amount paid for the financial year, including GST
  • The total GST included in the gross amount paid

If you use computerised accounting software, your system should be able to track this information for you and prepare the required Taxable Payments Annual Report.

 

Ensure that you lodge your Taxable Payments Annual Report with the ATO no later than 28 August 2017.

 

Payroll Tax

Payroll tax applies to all entities that have an Australian payroll that exceeds state-based limits.

You should note that in addition to normal salaries and wages, the following items are generally also included in payroll expenses if payroll tax applies:

  • fringe benefits based on the grossed-up taxable value of fringe benefits;
  • all employer contributions to superannuation on behalf of employees; and
  • some contractor or sub-contractor fees.

 

For more detailed information about whether payroll tax applies to your business, please contact our office.

 The Annual Return/Reconciliation for payroll tax must be lodged by 21 July 2017 with your State Revenue Office.

 

 

WorkCover/WorkSafe

Your WorkCover/WorkSafe insurer sends an annual reconciliation to all registered employers at the end of the financial year.

In completing your annual reconciliation, you will need to include the following items in addition to normal salaries and wages:

  • fringe benefits based on the taxable value of fringe benefits (do not gross-up);
  • all employer contributions to superannuation on behalf of employees; and
  • some contractor or sub-contractor fees.

For more detailed information about what items to include in the reconciliation statement, please contact our office.

Once the reconciliation is received and processed by your WorkCover/WorkSafe insurer, you will be issued with a final assessment or a refund depending on the instalments you have paid during the year.

 Complete and lodge the Annual Reconciliation with your WorkCover/WorkSafe insurer by the due date.

 

 

Goods and Services Tax (GST)

A reconciliation of GST should be performed as at 30 June 2017 to determine if there has been an under or over-payment of GST in the 2017 tax year. If a discrepancy has arisen, then it is possible to adjust a subsequent Business Activity Statement (BAS) to rectify the error, however there are limits imposed on adjustments that can be made in this way.

Income declared on your BAS should be reconciled to income declared on your income tax returns.

Also, please note that you are required by law to substantiate all Input Tax Credit claims with a complying Tax Invoice, and you need to retain these documents for a minimum of 5 years.

Complete the annual GST reconciliations, and check that you have all required tax invoices and other supporting documents.

 

 

ATO Audit Activity

Please note that the ATO and State Revenue Office are constantly increasing their audit activities. There has been an increase in audit activity for PAYG Withholding, Payroll Tax, WorkCover, GST, Division 7A loan accounts from companies, and Trust distributions from Discretionary Trusts.

We can offer a review of your records and record-keeping procedures if you are concerned about your ability to satisfy an audit.

Please contact our office if you would like to request this service.

 

 

Want to talk?

Feel free to call our office any time on 02 9267 1688 or email us at admin@gockcpa.com.au  – We can’t wait to provide you with better advice now for a beautiful future.

 

General advice disclaimer

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

Client Document Portal is here!

We are pleased to announce that our new Client Document Portal is up and running.  This is a convenient and secure way of communicating with your James Gock & Co accountant.  You no longer need to deliver hard copy documents to our office or email files or spreadsheets.

Tax returns and financial statements can also be signed using a secure digital signature.  Contact your James Gock & Co Accountant to setup your Client portal login today.

 

Client Portal

James Gock & Co – Client Document Portal

Seven tips to save around the house

One of the most effective ways to boost your savings and/or add to your super is to cut costs around the house. Here we outline some effective opportunities for spending less without feeling as if you’re going without.

1 Dress for success

Using an air conditioner or heater in Australia, especially with increasing electricity costs, hits the hip pocket directly. Think of how you might avoid using the air conditioning for a few hours or a few days each week, by dressing differently or better insulating your home. Consumer body Choice says adjusting your air conditioner by a degree cooler in summer and warmer in winter will increase running costs by 10–15%.1

2 Be entertained

Check the entertainment options for which you’re paying. It’s no surprise that a high number of households now have broadband and/or a pay TV subscription. Weigh up the options and determine if you’re getting ‘bang for your buck’ from these services. How much are you spending on TV and movies, and how much do you really use? And are you paying for movies and documentaries when you’re only watching sport channels? Check with your service provider to see what package options are available and customise your subscription accordingly.

 3 Shop around

From car insurance to mortgage costs to mobile phone plans, there could be better options that you’re missing out on. Figure out the services that cost you the most then have an honest conversation with the providers about how you might reduce those costs and then shop around. If they want to keep your business they will often find ways for you to save money or get more value out of the amount you’re paying.

4 Lose the landline

With the availability of unlimited mobile phone contracts, increasing options and quality of voice-over-internet protocol (VOIP) systems, you might find that you no longer require the traditional landline telephone. This will not only save money but it will reduce the chances of receiving human and recorded telemarketing calls. If you can do without it, don’t pay for what you don’t need.

5 Waste less, spend less

When shopping, look at your options when buying individual-sized cartons of juice, yoghurt, fruit, baked beans etc. They cost more and create more waste. It’s likely to be more cost-effective to buy in bulk, which will in turn keep money in your pocket.

6 Do you need it now?

When people begin to properly record their household expenses, many are surprised by the fact that they have become so comfortable with the ‘need it now’ mentality. Do

you need to buy the latest technology when last year’s still does the job? How about the newest mountain bike, running shoes, the most up-to-date fashion or a new car? This is a great way to save yourself thousands of dollars a year – by giving yourself permission to be happy with what you’ve got.

7 Budget, budget, budget

The savings tips highlighted above will only have an impact if you effectively map out your inputs vs outputs. Set yourself goals to work towards and implement the above tactics to give yourself the best chance of achieving them, and speak to your financial adviser to hear more cost-saving tips.

1. http://www.choice.com.au/reviews-and-tests/household/heating-and-cooling/home-cooling/ducted-reverse-cycle-air-conditioning-buying-guide/page/how-much-to-buy-and-run.aspx

Important information

Andrew Gock of James Gock & Co (ABN 19 372 236 695) is an Authorised Representative of Count Financial Limited ABN 19 001 974 625, AFSL 227232, (Count) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.

This document has been prepared by Count Financial Limited ABN 19 001 974 625, AFSL 227232, (Count) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. ‘Count’ and Count Wealth Accountants® are trading names of Count. Count advisers are authorised representatives of Count. Count is a Professional Partner of the Financial Planning Association of Australia Limited. Information in this document is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document. This document is not advice and provides information only. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.