Tax news, views and clues, November 2018
Transfer balance cap: ATO highlights admin issues
On 30 August 2018, ATO Assistant Commissioner Superannuation Tara McLachlan gave a speech on “Administration issues under the transfer balance cap” at the Tax Institute Sixth National Superannuation Conference.
TIP:The superannuation transfer balance cap is a limit on the total amount of super that you can transfer into retirement phase. The current cap is $1.6 million.
Ms McLachlan highlighted several issues regarding common superannuation events that will need to be reported to the ATO (such as the start of new pensions that began to be in retirement phase on or after 1 July 2017), multiple transfer balance events, excess transfer balance determinations and more.
Australian Small Business White Paper: tax reform a key
After more than 18 months of extensive research and consultation, the Institute of Public Accountants (IPA) and the IPA Deakin SME Research Centre have released the second edition of the Australian Small Business White Paper.
“Numerous policy recommendations have been adopted from the first edition which was launched in 2015. However, we recognise that the state of our economy is reliant on the productivity, growth and prosperity of the small business sector, so this work must be ongoing”, said IPA CEO Professor Andrew Conway.
The Paper covers a range of topics, including productivity, regulation and workplace relations, and makes several tax reform recommendations relevant to small businesses and personal income tax.
ATO expects 200,000 to miss out on refunds by failing to lodge
The ATO expects that 200,000 people could miss out on a tax refund this year because they haven’t lodged a tax return.
Assistant Commissioner Kath Anderson has said that many salary and wage earners end up with a tax refund, but some are missing out because they fail to lodge on time.
Taxpayers had until 31 October to either lodge their own return, or ensure they are on an agent’s books, Ms Anderson said. Failing to lodge by the deadline can attract a penalty of $210 for every 28 days that the return is overdue, up to a maximum of $1,050.
TIP:Have you run out of time to sort out your tax return this year? We’re here to help – get in touch to talk about your options.
Black economy: electronic sales suppression tools now banned
Activities involving electronic sales suppression tools (ESSTs) and that relate to people or businesses with Australian tax obligations are now legally banned under recent changes to the law.
ESSTs come in many forms, such as:
- an external device connected to a point of sale (POS) system;
- additional software installed into otherwise-compliant software; or
- a feature or modification, like a script or code, that’s part of a POS system or software.
These tools generally misrepresent or hide income by deleting or changing electronic transaction information, and falsifying sales or POS records.
TIP:The ATO recognises some businesses may have bought POS software without knowing it contains suppression functions. There is a grace period to self-report without penalty. If you think you may be affected, contact us to find out more.
People and businesses may face penalties of up to $1 million if they produce, supply, possess or use an ESST or knowingly assist others to do so.
Super work test exemption for recent retirees
The Government has released draft legislation and regulations to provide a one-year exemption from the work test for superannuation contributions by recent retirees aged 65–74 who have a total superannuation balance of less than $300,000. This proposal was announced in the 2018–2019 Budget.
Currently, people aged 65–74 must pass the “work test” – working at least 40 hours in any 30-day period during the financial year – in order to make voluntary super contributions.
Bringing forward small business tax cuts by five years
The Prime Minister has announced that the Government will bring forward its planned tax cuts for small business by five years. The Labor Party has also indicated it supports bringing forward the tax cuts.
This means businesses with a turnover below $50 million will pay a tax rate of 25% in 2021–2022, rather than from 2026–2027 as currently legislated.
Corporate tax rates and small business tax offset changes
The Bill to accelerate the reduced tax rates for base rate entities has passed through Parliament and will soon become law. Under the new law, the corporate tax rate will reduce from 27.5% to 26% in 2020–2021, before being cut to 25% for 2021–2022 and later income years.
The new law also increases the small business income tax offset rate to 13% for 2020–2021. The offset will then increase to 16% for 2021–2022 and later income years.
TIP: A“base rate entity” is a company that receives less than 80% of its taxable income from “passive” sources such as dividends, franking credits, interest, royalties and rent.
Residential rental property travel expenses: ATO guidance
Since 1 July 2017, people, self managed super funds (SMSFs), “private” trusts and partnerships have not been permitted to claim non-business travel costs connected to residential rental properties as tax deductible. These costs also cannot form part of the cost base or reduced cost base of a capital gains tax (CGT) asset.
The ATO has released new guidance about this, including details about the legal meanings of “residential premises” and “carrying on a business”.
TIP:Not sure if you can deduct the costs of maintaining your investment rental property?
Talk to us today to work it out.
Tax on compensation received for inappropriate advice
On the heels of the banking and financial services Royal Commission, the ATO has published information about how tax applies for people who receive compensation from a financial institution that provided inappropriate advice and/or did not provide advice it should have. This can include compensation for the loss of an investment, or a refund of fees or interest.
Capital gains tax comes into play, and the compensation amount may count as part of your assessable income if it’s a refund of adviser fees that you’ve already claimed as a tax deduction.
TIP:Contact us if you’ve received compensation from your bank or adviser and need to know more.
ATO set to issue excess super contribution determinations
The ATO has started issuing excess concessional contributions (ECC) determinations for the 2017–2018 financial year. Superannuation fund members will receive these ECC determinations if they have made super contributions above the concessional cap amount for 2017–2018.
TIP:“Concessional” contributions are taxed at the reduced rate of 15% in your super fund, but there’s a limit to how much you can contribute at this rate ($25,000 for 2017–2018).
Fund members may also receive an amended income tax return assessment together with the ECC determination and may need to pay additional amounts to the ATO. This is because any super contributions you make over the concessional cap need to be included in your assessable income for the financial year, and an interest charge applies.
Clients should not act solely on the basis of the material contained in this article. Items herein are general comments only and do not constitute or convey advice per se. Also, changes in legislation may occur quickly. We, therefore, recommend that our formal advice be sought before acting in any of the areas. This article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval.
Community values & professional services - two key pillars to success for Marriot Support Services
Janine Simpkin, CEO, Marriott Support Services speaks with us today about the organisation she is proud to lead. In this interview, Janine shares how the organisation creates exceptional opportunities and support for people with disabilities, what it takes to lead a business in today's times and how others can get involved in such a wonderful and much needed support service. Thank you, Janine and congratulations on the success of Marriot Support Services, its social enterprises and the fantastic work you, your team and the volunteers conduct.
- Where does the funding come from to support Marriott Support Services and what does the organisation do?
We are moving to The National Disability Insurance Scheme [NDIS] which is a new way of providing support for people with a disability, their families and carers. Marriott supports over 100 people with more significant disabilities. We focus on their strengths and help them to reach their potential in whatever space they choose like employment, volunteering, social connection or skills development and learning. Sometimes that is by accessing their community with help and other times by upskilling them in areas where they can learn to be more independent like learning to use public transport. Many of the younger ones in this group will move to less support or employment options as their skills increase. It is all based on individuals and their goals in life.
- Can you explain about the two social enterprise businesses which Marriott operates?
We have two social enterprises. The first, Marriott Industries employs about 85 people with disability to work in our warehouses. We pack gifts for Xmas, repack items from overseas and pack sample bags for new mums or events. We pack spices into jars to sell in gourmet shops and complete light assembly jobs; these are a snapshot of some of the work that we do.
Our second social enterprise is the Enviro-Management Services which is classified as a large business that tenders for work in the open market. Enviro integrates people with disability into crews and work is always off-site. We hope to expand this service to training people with disabilities with the skills to work in the open employment market.
Both social enterprises contribute to our bottom line – thus allowing us to be innovative and strategic in the way we deliver services. However, we do rely on financial assistance for the added extras that can change someone’s life forever. Our new Enviro project will not start until this happens.
- If an organisation is looking to recruit and support a person with a disability what advice could you offer them?
Look at someone’s strengths. Design a job around the person, what can they achieve – chances are the time you spend doing this will create a loyal employee who will be hard working and dedicated. With the NDIS there is customised employment support which will help the individual learn a new skill or modify an existing one. Everybody, regardless of education, race, socioeconomic situation or abilities have strengths and areas that need some work – a person with a disability is no different. They can learn, adapt and will always work harder if they are doing something that they are naturally good at – as we all do. People with disability have been found to be very loyal employees with less absenteeism.
- What types of volunteers can add value to Marriott Support Services and how can someone get involved?
Marriott loves volunteers. Our Community program has volunteers to support art, tennis, dancing, cooking, basketball competition and gym– and so the list goes on. Volunteers also help out with admin – as we run on the “smell of an oily rag” and want to use our resources in more direct support. We have skilled volunteering too like with marketing or IT; almost any skill is great to have in a volunteer and can be short term or long term. We also have corporate volunteers, like from NAB, who come in groups as part of their corporate social responsibility programs.
- How would you describe the auditing team at McPhail and Partners?
Very reliable, approachable, pleasant and communicative. Let’s not forget extremely thorough, all of the qualities we admire and need in an auditor.
- What makes you smile at work?
My staff and the way they communicate with everybody – regardless of their abilities. Corridor chats with staff and the people we support uncover so many good stories, and we tend to be very open.
- What makes you feel frustrated at work?
Compliance to the extreme, however absolutely required in this field. We work with a marginalised and vulnerable group who need extra support and protection.
- How would you describe your leadership style?
Open, honest, consultative, and I work to people’s strengths. I believe a CEO should be the face of an organisation and lead by example, especially in this field.
- Industries are extremely competitive nowadays, how does Marriott Support Services remain relevant and competitive?
We are honest about what we do well and work to our strengths. We work well with “behaviours of concern”, these may limit someone’s ability to participate in the community, and we have great success in enabling people with behaviours of concern to be able to engage with the community by learning to manage their behaviours. It is life changing for the individual and their families. Another strength is getting people into employment, and that is also life-changing, giving some financial independence, developing skills and peer connections is excellent for the individual, their family and the community.
We use our local community and partner with them to expand opportunities and build social inclusion. For example, we have a small group volunteering in a commercial kitchen in an aged care facility to develop their skills and social connection and maybe a pathway to training and employment. We will do everything we can to help an individual reach their goals. We are also not afraid to say that someone may be better with another organisation that better suits their interests or needs. This will always be with an organisation that we trust and know well. We are “niche” in the support we provide and work closely with our community to develop and grow to meet their needs.
- How important is social media to Marriott Support Services?
In the past, we have worked on “word of mouth” and reputation. We recognise that to remain viable and grow in the spaces that we wish to expand we need social media. Social media is a wonderful way for the people we support to connect and grow and to reach new customers. We use stories to inspire people to aim high and to follow a dream and to inform people about what is out there, for example, helping people understanding the NDIS. Social media is an excellent way for us to communicate and we are always looking to improve.
For more information about Marriott Support Services visit their website by clicking here.
