April 2019

Hello and welcome to our April 2019 newsletter.  In this quarter’s issue, we have provided articles on the following topics:

Staff updates

It is with great pleasure that we advise that on 26th January 2019, Roshini Suraweera gave birth to a healthy baby girl.  Selena and Roshini are both home and doing very well.

There must be something in the water, because Allison Burman is due to have her first child in August 2019.  She will be going on maternity leave from mid-July, so after then any email queries that you would usually direct to Allison can be sent to admin@veritassolutions.com.au and they will be passed onto the most appropriate person.

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Minimum Pension Reminder

As the end of financial year is fast approaching, now is the time for a quick reminder for our SMSF trustees about the importance of withdrawing the minimum pension amount from your superannuation fund prior to Friday 28th June 2019. You will find each member’s minimum pension withdrawal requirements in the covering letter that was included with your 2018 financial statements. If you have any questions in regards to your minimum pension requirements, please call our office to discuss with one of our accountants.

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STP for All Employers from 1 July 2019

In previous newsletters we have explained about Single Touch Payroll (STP) and the effect it will have on your business. The legislation has been passed through Parliament, so STP reporting will be compulsory for all employers, including small businesses, from 1 July 2019.

The ATO understands that the move to real-time reporting will be a big change for many, particularly for micro employers with 1 to 4 employees who currently do not use payroll software. They wish to reassure you that you will not be forced to purchase software. The ATO is currently working with software providers to develop low and no-cost solutions including payroll solutions, portals and mobile apps. They have published a list at ato.gov.au/stpsolutions which details the current available solutions. If you are a small employer, it is important that you investigate and implement which is the best approach for you.

The ATO have proposed a flexible approach to implementing STP, with reassurance that they understand you may need more time to get the processes right. There will be no penalties for mistakes or missed or late reports for the first year, and any small business who requests additional time will be granted a deferral. Micro employers will be offered the alternative to report quarterly for the first two years through a tax or BAS agent. 

If you have any questions or concerns, you can contact our office or the ATO at 13 28 61 or visit the website for more information ato.gov.au/stp.

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Common SMSF Contraventions

The ATO have released figures that out of 8,215 SMSFs lodged for the 2018 financial year so far, there have been 16,909 regulatory contraventions.  50% of these are made up of 3 basic violations – loans to members, in-house assets and failing to keep SMSF assets separate to personal assets. 

The other most common contraventions include related-party loans, investing in related-party assets, failing the sole purpose test and other administrative errors.  Poor record keeping also rated a mention as people attempted to access the low tax rate via their SMSF without keeping proper documentation.

The main drivers of the contraventions tend to be financial stress and the ease with which trustees can access SMSF assets as well as poor record-keeping and the inability to substantiate transactions.

In the 2017-18 financial year so far, there have been 257 trustees disqualified, and 180 other enforcement actions such as notices of non-compliance, enforceable undertakings and directions to rectify.  So far this financial year, 75 trustees have been disqualified.

If you are unsure if you are allowed to invest in certain assets, withdraw money or otherwise deal with your SMSF please check with our accountants or financial advisers before you take action to get the correct advice.  It is much easier to sort out if breaches are avoided altogether.

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Financial Health Check

With the end of financial year fast approaching, now is a good time to start thinking about tax planning ideas to minimise your tax liability. There are many different strategies available, dependant on your personal situation. Some strategies may include setting up more tax effective business structures, for example, a company or trust; negative gearing your rental property; or salary sacrificing. These are of course more complex strategies, but they are worth discussing with your accountant, particularly if you are a higher income earner.

One of the more immediate tax strategies you can use is to bring forward any tax deductions that you may have prior to 30 June. Maximising your tax deductions can help to reduce your taxable income and in turn, the amount of tax you need to pay.

Some examples of deductions you may be able to bring forward include:
  • Paying rental expenses (including repairs and maintenance)
  • Giving gifts and donations to registered charitable organisations
  • Paying subscriptions to professional journals
  • Paying memberships to professional associations
  • Prepaying for business travel, seminars and conferences
  • Prepaying insurance premiums or rent on business premises
  • Purchasing office supplies and stationery
  • Business owners can pay employee’s super contributions into a complying super fund before 30 June
  • If you intend to claim work related Motor Vehicle expenses, remember to prepare a log book to document your private and business kilometres travelled for a continuous 12 week period as well as your motor vehicle expenses
  • Higher income earners could get private health insurance if they don’t already have it, to avoid the Medicare Levy Surcharge.

All of these ideas require spending money sooner rather than later in order to save money. If your cash flow prevents this or they are not relevant to your circumstances, it is still a good idea to plan and make sure you have all of your necessary tax documents together sooner rather than later. Not only will you then maximise your deductions on your tax, but you will also have your documents prepared in a timely manner so that you don’t get hit with late lodgement fees, and if you do have a tax liability, you have time to budget for it.

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