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As the Tax Season for  Financial Year 2015-16 has arrived and its time for filing Individual/Company Tax returns. To help with your preparations and filing the return, SSK Accountants in Dandenong will make the process easier . Please schedule the Appointment in above form and read  below guide for saving tax and filing to ATO with Certified professional Accountant CPA .

Income Tax Return Checklist – Individuals

Please use this checklist and bring any relevant information with you as we cannot be sure when the Australian Tax Office Portal will have these details available

Income

  • Payment Summaries
  • Lump Sum and Termination Payment Summaries
  • Government payment statements, if received
  • Interest income from banks and building societies
  • Dividend statements for dividends received or reinvested
  • Annual Tax Statements from Managed Funds
  • Other income:
    • Rental properties
    • Business
    • Foreign income
    • Capital gains
    • Employee share schemes

Deductions

  • Work related expenses:
    • Foreign income
    • Travel (fares and accommodation)
    • Uniforms/work-wear
    • Self-education and professional development
    • Union, registrations, tools, subscriptions, memberships
    • Home office, seminars, conferences
    • Telephone, computer, internet
    • Any other costs incurred earning income
  • Donations to charities or building funds
  • Income protection insurance

Offsets and Refunds

  • Health insurance and rebate entitlement statement
  • IAS statements or details of PAYG instalments paid
  • Spouse details including taxable and exempt income

Tax Refunds – the Tax Office no longer issues refunds by cheque so you must bring your bank account details, including the BSB and Account Number with you to your appointment.

Tax planning

There are many ways in which entities can defer income, maximise deductions and take advantage of other tax planning initiatives to manage their taxable income. Taxpayers should be aware that they need to start the year-end tax planning process early in order to maximise these opportunities. Of course, those undertaking tax planning should be aware of the potential application of anti-avoidance provisions. However, if done correctly, tax planning can provide a number of tax savings

Deferring assessable income

  • Income received in advance of services being provided is generally not assessable until the services are provided
  • Taxpayers who provide professional services may consider, in consultation with their clients, rendering accounts after 30 June in order to defer the income.
  • A taxpayer is required to calculate the balancing adjustment amount resulting from the disposal of a depreciating asset. If disposal of an asset will result in assessable income, the taxpayer may consider postponing the disposal to the following income year
  • Rollover relief may be available for balancing adjustments arising from an involuntary disposal of assets where replacement assets are acquired.

Maximising deductions

Business taxpayers

  • Taxpayers should review all outstanding debts before year-end to identify any debtors who may be unable to pay their bills. Once a taxpayer has done everything in their power to seek repayment of the debt, they may consider writing off the balance as bad debt.
  • The entitlement of corporate tax entities to deductions in respect of prior year losses is subject to certain restrictions. An entity needs to satisfy the “continuity of ownership” test before deducting prior year losses. If the continuity of ownership test is failed, the entity may still deduct the loss if it satisfies the same business test.
  • A deduction may be available on the disposal of a depreciating asset if a taxpayer stops using it and expects never to use it again. Therefore, asset registers may need to be reviewed for any assets that fit this category.
  • Small business entities are entitled to an outright deduction for the taxable purpose proportion of the adjustable value of a depreciating asset, subject to conditions.

A business with an aggregated turnover of less than $2 million using the small business entities
(SBE) depreciation regime can claim an immediate depreciation deduction for assets costing less
than $20,000.00.

Non-business taxpayers

  • Non-business taxpayers are entitled to an immediate deduction for assets that are used predominantly to produce assessable income and that cost $300 or less, subject to conditions
  • Self-employed and other eligible people are entitled to a deduction for personal superannuation contributions, subject to meeting conditions such as the “10% rule”.

Non-business taxpayers

  • Income received in advance of services being provided is generally not assessable until the services are provided
  • Taxpayers who provide professional services may consider, in consultation with their clients, rendering accounts after 30 June in order to defer the income.
  • A taxpayer is required to calculate the balancing adjustment amount resulting from the disposal of a depreciating asset. If disposal of an asset will result in assessable income, the taxpayer may consider postponing the disposal to the following income year
  • Rollover relief may be available for balancing adjustments arising from an involuntary disposal of assets where replacement assets are acquired.

Companies

  • Companies should ensure that all dividends paid to shareholders during the relevant franking period (generally the income year) are franked to the same extent to avoid breaching the “benchmark rule”.
  • Loans, payments and debts forgiven by private companies to their shareholders and associates may give rise to unfranked dividends that are assessable to the shareholders and their associates. Shareholders and entities should consider repaying loans and making payments on time, or have appropriate loan agreements in place.
  • Companies should consider whether they have undertaken eligible research and development (R&D) activities that may be eligible for the R&D tax incentive.
  • Companies may consider consolidating before year-end to reduce compliance costs and take advantage of tax opportunities available as a result of the consolidated group being treated as a single entity for tax purposes.

Trusts

  • Taxpayers should review trust deeds to determine how trust income is defined. This may have an impact on the trustee’s tax planning
  • Trustees should consider whether a family trust election (an FTE) is required to ensure that any losses or bad debts incurred by the trust will be deductible and that franking credits will be available to beneficiaries.
  • Taxpayers should avoid retaining income in a trust because it may be taxed in the hands of the trustee at the top marginal tax rate.

Small business entities

  • From 2015–2016, the tax rate applicable to small business entities that are companies is 28.5% (rather than the standard 30% rate) and other types of small business entities are entitled to a tax discount in the form of a tax offset
  • Small business entities are entitled to an immediate deduction for certain pre-business expenditure incurred after 30 June 2015
  •  Eligible small business entities can access a range of concessions for a capital gain made on a CGT asset that has been used in a business, provided certain conditions are met.
  • An optional rollover has been introduced for the transfer of business assets from one entity to another for small business owners who change the legal structure of their business.
  • A CGT “look-through” treatment for eligible earnout arrangements has been introduced.
  • From the 2016–2017 FBT year, small business entities will be able to provide more than one work-related portable electronic device to an employee and claim the FBT exemption for each device, even if the devices have substantially identical functions and are not replacement items.
  • Taxpayers may consider crystallising any unrealised capital gains and losses to improve their overall tax position for an income year.

Superannuation

  • Individuals who wish to take advantage of the concessionally taxed superannuation environment should keep track of their contributions.
  • Individuals with salary sacrifice superannuation arrangements may want to have early discussions with their employers to help ensure contributions are allocated to the correct financial year.
  • Individuals earning above $300,000 are subject to an additional 15% tax on concessional contributions. However, despite the extra 15% tax, there is still an effective tax concession of 15% (ie the top marginal rate less 30%) on their contributions up to the relevant cap
  • Self managed super funds (SMSFs) have been reminded that if they have investments in collectables or personal-use assets that were acquired before 1 July 2011, time is running out to ensure they meet the requirements of the superannuation law for these assets.

Fringe benefits tax

  • The rules for individuals claiming car expense deductions have changed. As a result, if employers reimburse expenses relating to an employee’s use of their own car, only two methods are available for calculating the taxable value of this fringe benefit (when employers apply the “otherwise deductible rule”).
  • A separate gross-up cap of $5,000 has been introduced for salary sacrificed meal entertainment and entertainment facility leasing expenses for certain employees of not-forprofit organisations. Affected individuals may want to discuss it with their employers.

Individuals

  • For the 2015–2016 income year, the general tax-free threshold available to Australian resident taxpayers is $18,200.
  • Australians who have student debts and are travelling or living overseas will soon have the same repayment obligations as people who are still living in Australia.
Tax Changes
 

1.1 Individuals and Families:

From 1 July 2016, the government will increase the 32.5% personal income tax threshold from $80,000 to $87,000 . This measure will reduce the marginal rate of tax on incomes between $ 80,000 and $87,000 from 37% to 32.5%, preventing around 500,000 taxpayers facing the 37% marginal tax rate.

1.2 Good News for Small Businesses: Unincorporated small business tax

discount increased (‘SBITO’):

From 1 July 2016, the government will increase the current 5% tax discount (referred to as the SBITO) to 8%. The discount is currently available to an individual in receipt of income from an unincorporated small business entity (‘SBE’) (i.e., basically, an entity with an aggregated turnover of less than $2 million), and applies to the income tax payable on the business income received from such an entity.

The discount will be increased in phases as follows :

Income year Discount rate
2016-17 to 2023-24 8 per cent
2024-25 10 per cent
2025-26 13 per cent
2026-27 and later 16 per cent

The current tax discount (or SBITO) cap of $1,000 per individual for each income year will be retained. Furthermore, access to the discount will be extended to individual taxpayers with business income from an unincorporated business that has an aggregated annual turnover of less than $5 million.

1.3 Staggered cuts to company tax rates :

The government will reduce the company tax rate to 25% over 10 years (i.e., by 1 July 2026). This measure will commence from 1 July 2016, whereby the government will cut the small busines company tax rate to 27.5%, and make this tax rate available to small companies with an annua aggregated turnover of less than $10 million. This turnover threshold will then be progressively increased to ultimately have all companies eligible for the 27.5% tax rate in 2023/24. The progressive increase in the annual aggregated turnover thresholds for companies eligible for the 27.5% tax rate will be as follows:

Income year Annual threshold
2018/19 $50.0 million
2019/20 $100.0 million
2020/21 $250.0 million
2021/22 $500.0 million
2022/23 $1 billion

In the 2024/25 income year, the company tax rate will be reduced to 27% and then be reduced progressively by 1 percentage point per year until it reaches 25% in the 2026/27 income year. Franking credits will be distributed in line with the rate of tax paid by the company

1.4 Increasing the small business entity (‘SBE’) turnover threshold:

From 1 July 2016, the government will increase the SBE turnover threshold from $2 million to $10 million. The current $2 million turnover threshold will be retained for access to the small business capital gains tax (‘CGT’) concessions, and access to the SBITO (i.e., the increased 8% tax discount) will be limited to entities with turnover less than $5 million (as noted above). The increased $10 million turnover threshold will allow an additional 90,000 to 100,000 business entities to gain access to certain small business concessions, such as the following: ? The lower (27.5%) small business corporate tax rate (noted above). ? The simplified depreciation rules in Subdivision 328-D of the ITAA 1997 (including the ability to claim an immediate deduction for an asset purchased costing less than $20,000 until 30 June 2017). ? Simplified trading stock rules, giving businesses the option to avoid an end of year stocktake if the value of their stock has changed by less than $5,000. ? The option to account for GST on a cash basis and pay GST instalments as calculated by the ATO.

Other Budget announcements

2.1 Medicare levy low income thresholds for 2015/16:

For 2015/16, the Medicare Levy low income thresholds will be as follows:

Individuals $21,335 (previously $20,896)
Families $36,001 (previously $35,261)

The family income threshold (i.e., $36,001) will be increased by $3,306 (previously $3,238) for each dependent child or student. For single seniors and pensioners with no dependants who are eligible for the seniors and pensioners tax offset, the threshold will be increased to $33,738 (previously $33,044).

2.2 Applying GST to low value goods imported by consumers:

From 1 July 2017, GST will be extended to low value goods imported by consumers. The intent of this measure is to ensure that low value goods imported by consumers face the same tax regime as goods sourced domestically. Overseas suppliers that have an Australian turnover of $ 75,000 or more will be required to register for, collect and remit GST for low value goods supplied to consumers in Australia, using a vendor registration model.

Superannuation Developments

3.1 Lifetime cap for non-concessional superannuation contributions:

The government will introduce a $500,000 lifetime non-concessional contributions cap. The lifetime cap will take into account all non -concessional contributions made on or after 1 July 2007 (i.e., from the 2008 income year) and will be indexed in $50,000 increments in line with average weekly ordinary times earnings

3.2 Changes to TRIS :

From 1 July 2017, the government will remove the tax exemption on earnings of assets supporting Transition to Retirement Income Streams (‘TRIS’), being income streams of individuals over preservation age but not retired. Earnings from assets supporting a TRIS will be taxed at 15%. Importantly, this change is proposed to apply irrespective of when the TRIS commenced.

3.3 Superannuation transfer balance cap of a $1.6 million introduced :

From 1 July 2017, the government will introduce a $1.6 million ‘superannuation transfer balance cap’ on the total amount of accumulated superannuation an individual can transfer into pension phase. Subsequent earnings on this pension balance will not be restricted.

3.4 Reducing the concessional contributions cap :

From 1 July 2017, the government will lower the annual cap on concessional superannuation contributions to $25,000. Until this time, the existing concessional contributions caps, being $30,000 for those aged under age 50 years, and $35,000 for those aged 50 years and over, will apply.

3.5 Harmonising contribution rules for people aged 65 to 74:

From 1 July 2017, the government will remove the current restrictions on people aged 65 to 74 from making superannuation contributions for their retirement. Specifically, the government will remove the requirement that an individual aged 65 to 74 must meet the ‘work test’ before making voluntary or non- concessional contributions to superannuation.

3.6 Restrictions on personal superannuation contribution deductions eased :

From 1 July 2017, the government will change the law to allow all individuals under age 75 to claim an income tax deduction for personal superannuation contributions. Individuals who are, for example, partially self-employed and partially wage and salary earners, and individuals whose employers do not offer salary sacrifice arrangements will benefit from the proposed changes.

3.7 Changes to the ‘high income contribution rules’ (Division 293):

Currently, Division 293 imposes an additional tax of 15% on certain concessionally taxed contributions (e.g., certain concessional contributions) where an individual’s total ‘income’ (basically, ‘income for surcharge purposes’ less reportable superannuation contributions) plus certain ‘concessionally taxed contributions’ for an income year exceed $300,000. Concessional contributions subject to tax under Division 293 are effectively taxed at 30%.

3.8 Low income spouse tax offset threshold increased:

From 1 July 2017, the government will increase access to the low income spouse superannuation tax offset by raising the income threshold for the low income spouse to $37,000 (from $10,800). The offset is gradually reduced for income above this level and completely phases out at income above $40,000. The low income spouse tax offset provides up to $540 per annum for the contributing spouse. In addition to the above, the government will make additional changes to support older Australians, including allowing individuals to make contributions on behalf of their spouse who is under age 75, without the need for the spouse to satisfy the work test.

3.9 Low Income Superannuation Tax Offset (LISTO) introduced :

From 1 July 2017, the government will introduce a Low Income Superannuation Tax Offset (‘LISTO’) to reduce tax on superannuation contributions for low income earners. The LISTO will provide a non-refundable tax offset to superannuation funds, based on the tax paid on concessional contributions made on behalf of low income earners, up to a cap of $500. The LISTO will apply to members with adjusted taxable income of up to $37,000 that have had a concessional contribution made on their behalf. Source: NTAA, CPA,TheAge

 

About SSK Accountants

SSK Accountants is a certified Practising Accountants (CPA) and registered tax agent practice located in Dandenong CBD.Our vision is to provide professional services to all the clients be it large or small, in a pleasant and amicable manner.

At SSK Accountants we provide services to Family Businesses, Partnership, Corporates and Individuals.

Book your appointment by calling today on 03 8759 0629 or email to info@sskaccountants.com.au