swanpartners: March 2018

Friday, 23 March 2018

Total superannuation balance

What is total superannuation balance?

The concept of ‘total superannuation balance’, which commences from the end of 30 June 2017, is a way to value your total super interests on a given date.

Your total superannuation balance is relevant when working out your eligibility for:

the unused concessional contributions cap carry-forward

the non-concessional contributions cap and the two- or three-year bring-forward period

the government co-contribution

the tax offset for spouse contributions.

If you are a trustee of a self-managed superannuation fund (SMSF) or a small APRA fund, your members' total superannuation balances will determine whether you can use the segregated assets method to calculate exempt current pension income (ECPI).

Total superannuation balance is generally calculated at the end of 30 June of each financial year. The first date it will be used to determine your eligibility for these measures is 30 June 2017.

For example, if your total superannuation balance at the end of 30 June 2017 is $1.6 million or more, then your 2017–18 non-concessional contributions cap is nil. Any non-concessional contributions you make in 2017–18 will be in excess of your cap.

Working out your total superannuation balance

Your total superannuation balance is calculated by:

adding together

the accumulation phase value of your super interests that are not in the retirement phase

if you have a super income stream in the retirement phase value, your 'transfer balance' or your 'modified transfer balance' (but not if it is less than nil)

the amount of any rollover superannuation benefit not already reflected in the accumulation phase value of your super interests or your transfer balance (that is, rollovers in transit between super funds on 30 June), then

subtracting any personal injury or structured settlement contributions that have been paid into your super fund(s).

Accumulation phase value

Your 'accumulation phase value' is the total amount of super benefits that would be payable if you had voluntarily ceased a super interest at the time of calculation. Generally, this is the withdrawal value for an accumulation fund.

Alternatively, the superannuation regulations may specify a different method for determining the accumulation phase value if you have a defined benefit interest and you are not in retirement phase.

The accumulation phase value also includes:

certain deferred super income streams

transition-to-retirement income streams, and

super income streams that have not complied with the pension or annuity standards or a commutation authority.

Retirement phase value

Your 'retirement phase value' is worked out using your transfer balance account at the end of 30 June, with modifications if you:

have certain account-based super income stream(s), or

have made structured settlement contributions to your super fund.

For account-based super income streams, the debits and credits in the transfer balance account are disregarded. Instead, your modified transfer balance includes the current value of the super interest that supports the account-based super income stream at the end of 30 June of the relevant financial year. The current value is the amount that would become payable if you were to voluntarily cease the interest.

If you only have account-based income streams, generally your retirement phase value will simply reflect the current value of those income streams.

All other super income streams retain the transfer balance account value, with modifications still required if you have made a structured settlement contribution to your super fund. In addition, certain transfer balance items are still taken into account (such as credits for excess transfer balance earnings and debits for non-commutable excess amounts).

Transitional arrangements for 30 June 2017

There are transitional provisions for working out your retirement phase value of your total superannuation balance at the end of 30 June 2017 because a transfer balance account does not commence until 1 July 2017.

The transitional arrangements apply, so that your transfer balance at the end of 30 June 2017 is equal to:

the sum of your transfer balance credits just after the start of 1 July 2017, less

any debits in relation to payment splits (if applicable).

This is subject to the transfer balance modifications for account-based income streams (see Retirement phase value).

What's affected by your total superannuation balance?

Your total superannuation balance affects your eligibility for a number of measures.

Unused concessional contributions cap carry-forward

You may be able to carry forward, and use in a later year, up to five years of your unused concessional contributions cap, from 2018–19. The first year in which you can use the carry-forward for any unused amounts is 2019–20.

To be eligible, your total superannuation balance must be under $500,000 at the end of 30 June of the previous financial year.

Non-concessional contributions cap and the bring-forward

If your total superannuation balance at the end of 30 June in the previous financial year is less than the general transfer balance cap, you will be eligible for a non-concessional contributions cap ($100,000 in 2017–18).

You may be entitled to a two- or three-year bring-forward period for your non-concessional contributions cap based on your total superannuation balance.

About Authors : Swan Partners is a progressive service provider dedicated in providing high quality tax consultancy, accountant in victoria park, bookkeeping service in perth, BAS lodgement service in perth and accounting services to individuals, sole-traders, partnerships, trusts, and companies.

Footnotes : Bookkeeper in Victoria Park | Bookkeeping Service in Perth |

Using social media? Be aware of tax scams

Next week is National Consumer Fraud Week and this year’s focus is social media. In the lead up to tax time, it's important to be aware of what you share on social media.

Scammers can use that information to impersonate you or your practice and send scam emails, SMS or social media messages to your clients and networks. These try to trick recipients into providing personal information or to release funds.

To help protect your clients and your practice:

ensure your computer security systems are up to date and you are protected against cyber attacks

regularly review staff access, cancel AUSkeys for anyone who shouldn’t have one and update passwords

talk to your staff and clients about the importance of keeping personal information secure (including user IDs, passwords, AUSkeys, TFNs)

do not click on downloads, hyperlinks or open attachments in unsolicited or unfamiliar emails, SMS or social media

check your online security practices by completing our online security self-assessment questionnaire.

Criminals may send you or your clients fraudulent communications that claim to be from us,

Footnotes : Bookkeeper in Victoria Park | Bookkeeping Service in Perth | Accountant in Perth

Woman Sentenced for $960,000 Tax Fraud

New South Wales woman Kathleen Noble was sentenced to 5 years jail, with 2.5 years to serve, in Orange District court on Friday after being convicted of refund fraud.

Between 25 July 2007 and 13 November 2012, and whilst receiving Centrelink benefits, Ms Noble lodged 140 false Business Activity Statements (BAS) on behalf of eight related entities claiming GST refunds for purported business expenditure of over $9 million. The expenditure claims were false.

The entities did not carry out an enterprise and the business expenditure claims never incurred. The entities were not entitled to receive any of the refunds.

Overall the accused claimed $957,710 in refunds. Of that amount $394,550 in GST refunds were paid into bank accounts she controlled and were not recovered. The remaining $563,160 in refunds were either credited to her ATO account, cancelled or recalled by the ATO.

Ms Noble had control of her parents’ bank accounts as well as the various accounts linked to the entities that received and attempted to receive fraudulent GST refunds.

As well as the jail sentence, a reparation order in the sum of $394,550 was also made of Ms Noble.

ATO Deputy Commissioner Michael Cranston said that tax refund fraud is not a victimless crime and those who attempt to thwart the law will be exposed.

“Refund fraud cheats the whole community and disadvantages Australians who do the right thing. Given the extensive range of controls and systems in place to detect potential refund fraud, people should realise it’s only a matter of time before they’re caught,” Mr Cranston said.

If you are aware of fraudulent behaviour in our community you can report it confidentially at ATO website is currently unavailable or call 1800 060 062. Source Australian Taxation office ATO

Footnotes : Bookkeeper in Victoria Park | Bookkeeping Service in Perth | Accountant in Perth

ATO Targeting the Profits of Organised Crime

Almost 200 outlaw motor cycle gang members have been targeted for tax evasion as part of a week of action undertaken by the Australian Taxation Office (ATO), the Australian Federal Police (AFP) and state and territory police.

The ATO issued tax notices for service last week to members of Outlaw Motor Cycle Gangs (OMCGs) for failing to comply with their tax obligations including the correct lodgment of returns, paying taxes, and correctly reporting income they have earned. To date, almost half the notices have been served, including 11 notices for tax debts totalling nearly $4m. The remaining notices will continue to be served over coming weeks.

Last week’s operation was Australia-wide.

It comes as the latest crackdown in National Taskforce – Operation Morpheus, a joint agency taskforce aimed at detection, deterrence and disruption of OMCGs and their members, and is part of the work undertaken by the AFP-led National Anti-Gangs Squad (NAGS) in all state and territories.

Targeting the financial operations of OMCGs is having positive long-term effects in disrupting organised crime in Australia, returning vital funds to the Commonwealth in the past few years.

In 2015-16 alone, Operation Morpheus targeted 668 taxpayers and raised tax liabilities of $13.3 million. A total of 193 tax returns were secured with $5.9 million cash collected, 35 people prosecuted for non-lodgment, and a further $55,000 raised in prosecution fines.

Previous action similar to that carried out last week has also resulted in frozen bank accounts and disrupted cash flows and supply chains, impacting the ability of OMCG members to engage in illegal activity.

Operation Morpheus Chair Victoria Police Detective Superintendent Peter De Santo said Australian law enforcement and Commonwealth agencies will continue to work together to detect, deter and disrupt the criminal activities of all Australian OMCGs through the taskforce.

“We will continue to target OMCGs using both traditional and non-traditional law enforcement methods and use our full arsenal of capabilities to exploit every opportunity to target the highest risk OMCGs in each Australian jurisdiction and detect their criminal activity”.

Under Operation Morpheus, the ATO works closely with other Commonwealth agencies including the Australian Criminal Intelligence Commission, AUSTRAC, Centrelink and the Department of Immigration and Border Protection to share data and provide a whole-of-government response to investigating criminal activity.

“An unprecedented level of available data and data-matching programs has increased our capacity to bring to light illegal activities that might previously have fallen under the radar,” an ATO spokesperson said.

“We investigate all serious tax-related fraud offences, and share information with our Commonwealth partners. Where the evidence warrants it, we refer cases to the Commonwealth Director of Public Prosecutions (CDPP) for prosecution.”

Recently Minister for Justice Michael Keenan announced a further $39 million funding for the NAGSExternal Link as well as the arrest of the 1000th offender.

To confidentially report tax evasion and fraud phone 1800 060 062 or use our online form at ATO website is currently unavailable

Footnotes : Bookkeeper in Victoria Park | Bookkeeping Service in Perth |

GST registration for your non-resident clients

On 1 July 2017, GST will apply to international sales of services and digital products to Australian consumers. If you have non-resident business clients who supply these services and meet the A$75,000 annual turnover threshold, they will need to register for Australian GST.

There are two ways you or your non-resident clients can register:

you can use our simplified online registration system from 26 June 2017.

To prepare before 26 June, you can request an application form to reserve an ATO reference number (ARN). You will still need to complete an online registration application from 26 June.
you can use our standard system. An Australian business number (ABN) is required, visit http://abr.gov.au External Link for details. It can take over 28 days to process GST registration using the standard system. Remind your clients to allow enough time to finalise their registration.

About Authors : Swan Partners is a progressive service provider dedicated in providing high quality tax consultancy, accountant in victoria park, bookkeeping service in perth, BAS lodgement service in perth and accounting services to individuals, sole-traders, partnerships, trusts, and companies.

Footnotes : Bookkeeper in Victoria Park | Bookkeeping Service in Perth | Accountant in Perth

Latest news on tax law and policy

Check out the latest news on tax law and policy page for the recently announced new measures – including those relating to large business.

International

OECD recommendations to eliminate hybrid mismatches that occur in cross border transactions known as 'Additional Tier 1' (AT1).

Toughening of the multinational anti-avoidance law (MAAL).

Foreign investment

Foreign investors who acquire residential property from 9 May 2017 will have to pay an annual fee if they don't live in or rent their property out for at least 6 months a year.

Residential fees for applications lodged with the Foreign Investment Review Board (FIRB) will increase by 10 per cent from 1 July 2017, for properties valued under $10 million.

The foreign resident capital gains withholding regime will see the current $2 million threshold reduced to $750,000, and the withholding tax rate will increase from 10% to 12.5%. These changes will apply from 1 July 2017.

Housing

From 1 July 2017 a managed investment trust (MIT) will be able to acquire, construct or redevelop housing to hold for rent – provided it derives at least 80% of its assessable income from affordable housing.

Other reforms

From 1 July 2017, a major bank levy will be introduced for authorised deposit-taking institutions (ADIs) with licenced entity liabilities of at least $100 billion.

Footnotes : Bookkeeper in Victoria Park | Bookkeeping Service in Perth | Accountant in Perth

Employers of working holiday makers

Any employer can hire a working holiday maker, especially when they need labour for a short period of time. You can identify a working holiday maker as they will hold a Working Holiday visa (subclass 417) or Work and Holiday visa (subclass 462).

Working holiday makers are taxed at 15% from the first dollar earned, regardless of their residency status. Working holiday makers can't claim the tax-free threshold and must provide you with their tax file number (TFN). If they don't, you need to withhold tax at the top rate (see Individual income tax rates).

Working holiday makers are entitled to superannuation, if they are eligible.

You should not employ or pay someone for work if they don’t have permission to work in Australia.

Footnotes : Bookkeeper in Victoria Park | Bookkeeping Service in Perth | Accountant in Perth

Simpler BAS is coming soon

We’re reducing the amount of information needed for the business activity statement (BAS) to simplify GST reporting.

From 1 July 2017, Simpler BAS will be the default GST reporting method for small businesses with a GST turnover of less than $10 million.

They will only need to report:

Total sales

GST on sales

GST on purchases.

This will not change their reporting cycle, record keeping requirements, or how they report other taxes on their BAS.

Simpler BAS will:

make it easier for you to classify your clients' transactions and lodge their BAS

reduce the time you spend on form-filling and making changes that don't impact the final GST amount.

What's next?

We will automatically transition eligible small business' GST reporting methods to Simpler BAS from 1 July 2017. To help the transition, we will email you to advise which of your clients are affected and how they can benefit.

Small businesses can choose whether to change their GST bookkeeping software settings to reduce the number of GST tax classification codes. You may wish to talk to your clients and help them decide whether reduced or detailed GST tax code settings are best for them.

If any of your clients are new small businesses that registered for GST after 19 January 2017, let them know they can start using Simpler BAS reporting straight away.

Footnotes : Bookkeeper in Victoria Park | Bookkeeping Service in Perth |

Thursday, 22 March 2018

Tax Time 2017

Find out about the key changes this tax time, our service commitment, what you can do to prepare, and things to consider before lodging to ensure your clients' tax returns are correct and to help prevent delays in processing.

We will start full processing of 2016–17 tax returns on 7 July 2017 and expect to start paying refunds from 18 July 2017.

We aim to finalise the majority of electronically-lodged current year tax returns within 12 business days of receipt.

You can access the majority of tax time publications now by visiting Forms and instructions and selecting Tax Time 2017. Others will be available soon.

Overview of key changes: What you need to know this tax time

Prepare for tax time: What you can do to get ready

Before you lodge: Help prevent delays in processing returns

After you lodge: Keeping informed of progress

Source: Australian Taxation Office

Footnotes : Bookkeeper in Victoria Park | Bookkeeping Service in Perth |

Electronic record keeping for Business Client

Once set up, electronic record-keeping packages can save you time.

How to choose

There are hundreds of packages available. Some are designed for specific business types. Here are some things to consider:

recording sales, voids, refunds and exchanges (per employee, over a period of time)

tracking and managing stock, work in progress, customers' orders, jobs or other task management requirements

producing invoices and receipts

payroll requirements, including wages, annual leave, long service leave

managing multiple bank accounts or businesses/franchises

dealing with foreign currency

doing budgets or forecasting cash flow

getting regular reports

back-up processes and security.

If you have a registered agent, invest in a package that is compatible with their software.

Electronic systems vary in complexity. We recommend you search online reviews to make sure the product meets your needs. You can also use our Software Developers Product Register to search for tax-related software products that meet our requirements and are commercially available.

New Medicare entitlement statement application form

If your clients aren't eligible for Medicare, they can claim a Medicare levy exemption in their tax return. To claim the exemption, they must have a Medicare entitlement statement from the Department of Human Services.

There is a new Application for a Medicare entitlement statement External Link you or your clients need to email or post to the Department of Human Services using the address on the form.

To help your clients get it right and avoid delays:

use the new form on the Department of Human Services website (don't use old printed copies)

send certified copies of supporting documents with the form

check documents are in a PDF file and not password-protected

send separate emails for each of your clients

send one email for a client who has multiple applications for different claiming periods.

See also:

Medicare entitlement statement External Link

Medicare levy exemption To complete the form electronically, save a copy of the form before you start filling it in.

Print, sign and scan the form and email it to the Medicare Entitlement Statement Unit. Source ATO

Footnotes : Bookkeeper in Victoria Park | Bookkeeping Service in Perth |