Staff Updates
We are very pleased to welcome Holly Barnes to our team of accountants. Holly comes to us with 12 months experience, after graduating from University of Canberra in June 2016. She is available to contact by email at holly@veritassolutions.com.au from Monday to Wednesday.
We are also excited to advise that Tracey O’Brien has changed teams in our office. She will no longer be working on accounts and tax but instead, will use her considerable experience with our clients to assist the financial planning team in the administration assistant role.
Watch this space for the introduction to our new accountant in next quarter’s newsletter.
Income Tax Lodgement extension for SMSFs
This week the ATO has announced that lodgement due date for self-managed superannuation funds for the 2016-17 financial year will be extended to 30th June 2018 in light of the new complicated super reforms. As 30th June 2018 is a Saturday, the SMSFs can lodge their returns up to Monday 2nd July 2018 without penalty
Taxable Payments Annual Report
Currently, if your business is in the building and construction industry, you must report payments that you make to contractors if you pay them for building and construction services and you have an ABN. This is to ensure that the contractors themselves report their income properly to the ATO when they prepare their own income tax returns.
This existing reporting requirement is presently only applied to the building and construction industry, but that is about to change.
Effective from 1st July 2018, this reporting requirement will be applied to businesses in the cleaning and courier industries as well.
Courier services include activities where items or goods are collected from and delivered to any place in Australia, using all methods (car, truck, motorcycle, pushbike, on foot etc). It does not include bus and taxi services, transport of blood or freight transport.
Cleaning services include businesses that undertake any of the following activities on a building, residence, structure, place, surface, transport/vehicle, machinery or equipment and for events:
- Interior and exterior cleaning (except sand blasting or steam cleaning)
- Carpet cleaning
- Chimney clearing and gutter cleaning
- Road sweeping and street cleaning
- Swimming pool cleaning; and
- Park and park facilities cleaning
Businesses in these industries will need to collect details of payments made to contractors from 1 July 2018 and then report to the ATO in their first annual report for the year 1 July 2018 to 30 June 2019 which will be due 28th August 2019. You will need to provide the contractors ABN, name, address, the gross amount you paid them for the financial year including GST, and how much GST is included in the gross amount you paid. You must report the amounts that you actually paid to the contractors (eg don’t include invoices you haven’t paid them for yet).
If you are in these industries, then you will need to put systems in place to ensure correct collection of information.
Transparency of Tax Debts reporting
The ATO will begin reporting tax debts to credit reporting agencies under specific circumstances as soon as new legislation receives Royal Assent.
The measure is designed to support informed decision-making in the business community by making unpaid tax debts visible so credit providers and business can properly assess the credit worthiness of a business. It is also designed to reduce unfair advantage of business that do not pay their tax on time and encourage those businesses to engage with the ATO to manage their debts.
- There are 3 criteria that must apply before a debt will be reported:The business must have an ABNThe business must have a tax debt of which at least $10,000 is overdue by more than 90 daysThe business has not engaged with the ATO about the debt, either by arranging a payment plan or disputing the debt
- Businesses will be notified 21 days before the tax debt is reported for the first time, in order to provide the opportunity for them to take action to prevent it being reported. Once the tax debt is reported, the ATO will provide regular updates to the credit reporting agencies on the remaining balance.
- The easiest way to avoid being reported is to pay all tax debts on time. Alternatively, contact the ATO to set up a payment plan.
What Happens if My SMSF is Deemed to be Non-compliant?
When an SMSF is found to be non-compliant there are a number of penalties that can be imposed, none of which are good news for the super fund or the trustees.
Firstly, the fund will be taxed at the highest marginal rate of 45% as opposed to the standard 15%; as well as the entire fund income being classified as taxable, even if it is in pension phase. The ATO can then charge interest on the tax payable, which can, in some cases, be greater than the original 45% tax charged to the super fund. Excess contributions can also be taxed at a massive 93%.
Secondly, you can be disqualified, suspended or removed as a trustee. This process means that you will no longer be able to be a trustee of a SMSF. On top of this, the assets of the SMSF may be frozen until the non-compliance is revoked.
Lastly, there may be civil or criminal penalties through the courts, depending on the seriousness of the issue.
Here at Veritas Wealth Solutions, we try to ensure that all of our clients remain compliant; however, it does mean that we need your help by providing the appropriate documentation in a timely manner. As a trustee of an SMSF, it is your responsibility to make sure your annual return is lodged to the ATO before the due date, as well as operating the fund in accordance with your trust deed and the superannuation regulations.
If you have any concerns about whether or not your super fund is at risk of becoming non-compliant, please make an appointment to discuss your situation with our qualified staff.
What documents should you keep for tax purposes?
In order to prepare an accurate tax return and support the claims you make, you need to keep careful records. The records you need to keep depend on your personal circumstances. If you are not sure, it is better to keep too many records than not enough.
- You should keep enough documentation:
- To provide written evidence of your income and expenses;
- To ensure that you are able to claim all of your entitlements;
- In case the ATO requires you to prove the information in your tax return; and
- To minimise the cost of managing your tax affairs.
Types of records you should keep:
- Income received – Example: payment summary, interest income, dividend statements, statements from managed funds, government benefits & pensions, and rental property income;
- Expenses related to income received – Example: car – kilometres travelled or log book, receipts for other travel, uniform & dry cleaning receipts, invoices for self-education and rental properties expenses;
- Contracts for the purchase and sale of an asset – shares and real estate – Example: contract notes, corporate actions, purchase & sale documents, holding statements, tax statements, dividend reinvestment statements;
- Receipts for donations
We recommend that you keep a copy of your documents, either electronically or paper, for at least 5 years from the date you lodge your tax return.
New Year: smart saving tips
The New Year is the perfect time to think about what you want to achieve in the next 12 months and beyond. It’s also a great opportunity to think about whether your circumstances have changed, or will be changing, and how this might impact your financial situation. You are more likely to achieve your goals, whether they be financial or personal, if you have a plan. As the saying goes, fail to plan – plan to fail.
Sorting out your finances doesn’t have to be complicated, as even small savings can add up over the year.
Here are some tips to help you get started.
Write down your financial goals and current spending
Make a note of where you’d like your finances to be this time next year. Now jot down your income and expenses for the last month. How much is left over? Are your goals realistic? It’s only by taking a close look at your current financial situation that you can begin to take control of it.
Most banks can show you how you spend your money. Make use of this feature to see where you spend each month to help you work out where you can make cuts to meet your goals.
Make a list of your lifestyle wants and needs
If you want to save or invest more money this new financial year, you may need to consider whether there is anything that you’re willing to sacrifice to get ahead. Do you really need to update your smartphone again? Do you have to buy a coffee everyday? It all adds up.
Build a budget
To get the most from your money, build a budget and stick to it. However finding the right balance is key. If you make your budget too restrictive you’ll likely break it. Alternatively, if you make it too light you might miss out on some financial benefits. And don’t worry if you’re not a fan of spreadsheets; there are a range of digital tools to help you organise your finances. Look at moneysmart.gov.au for a range of budget planners, calculators and apps available.
Track your spending
Once you have a budget, it’s important you stick to it. That means tracking your expenses. A great way to do this is to use a digital money tracker such as the TrackMySpend app from moneysmart.gov.au.
Review your regular expense plans
Review your plans and regular outgoings to ensure you’re getting the best possible value for your money. There are a range of websites that provide direct comparisons of different suppliers offering mobile phone, internet, pay TV and utilities plans.
Sort out your super and consider the caps
If you haven’t sorted out your super yet, now is a good time to do it. If you have multiple super accounts, finding and consolidating them in the one account could help you cut down on fees and grow your money faster with compound interest.
Before consolidating your super you must consider a few important points, such as weighing up benefits and insurance options, comparing the fees and checking potential tax and preservation implications. In addition, if you intend to claim a tax deduction for certain personal contributions, ensure your ‘Notice of intent to claim a deduction for personal contributions’ is made and is acknowledged by the existing fund before combining.
To boost your balance, consider setting up additional regular contributions. Depending on your income, you may even qualify for government co-contributions.
Before you decide to invest more in super, you need to be aware that restrictions and caps apply to different contribution types. Penalties may apply if you exceed the relevant cap or contribute to super when you were not eligible to contribute. You also need to consider that amounts contributed to super generally can’t be accessed until you reach your preservation age and retire or meet another condition of release. Therefore, unless you’re saving for your retirement, you’ll need to consider other options.
Review your insurance cover
Make sure you are getting the best deal with your current general insurance policies such as House and Contents and car insurance. Update your home and contents cover if you have made changes to your home or purchased new items. Review regularly the home value covered, building prices can go up significantly year on year and you want to make sure the cover will not leave you grossly underinsured. It is easy to get quotes online or over the phone to check if your policy is cost competitive for the features you need.
For personal insurance, it is important to make sure the cover you have is adequate for your current situation. This should be reviewed every few years or if a major life event has occurred, for example, marriage, a new child or increase in debt obligations. The majority of Australian’s are underinsured for temporary or permanent disability and death. Considering the average family debt is now over 200% of household income that puts most Australian families into significant distress if something unexpected occurs (hence the need also to build an emergency fund!).
Pay off debt
If you’re paying off multiple debts with a range of interest rates, you should consider the appropriateness of prioritising paying down the debt with the highest interest (while continuing to meet your repayment obligations in relation to your other debts). Alternatively, you may be able to combine your debts with a debt consolidation loan. If you can continue to make the same level of repayments, this may significantly reduce the amount of total interest payable and help you pay off your debt sooner, however you must be disciplined in your repayments. Often consolidation, due to longer loan terms, can be more expensive over the long run if you continue to pay minimum repayments.
For those with large credit card debts and find them difficult to manage, cut them up, pay them off. There are alternatives to using credit cards, Visa/Mastercard debit cards most banks offer on transaction accounts, prepaid Visa/Mastercard gift cards and newer payment providers such as Apple Pay, Google Pay and PayPal which you can set up using your own funds.
Start building an emergency fund
Having approximately three months of living costs put into a high interest savings account that is not easily accessible is a great buffer to have when something nasty strikes. Building an emergency fund should be on everyone’s money goals list. It provides peace of mind knowing you don’t have to borrow funds or incur additional stress during a time that may already be difficult.
Review your investments
Review your investments regularly. Check that your asset allocation and level of risk are appropriate for your age and plans. A financial adviser can help you understand and manage your portfolio more effectively.
Continue your financial education
Improving your financial knowledge is something we should all do and understanding the financial world will empower you to make better decisions for you and your family.
Moneysmart.gov.au has excellent resources available for all phases of life and are trying to improve the financial literacy of our children by providing excellent teaching resources. The more we can help children understand the basis of finances, the better prepared they will be when they become independent adults.
Get financial advice – how we can help
Financial advice is about far more than just making money. It’s about creating new opportunities to help you achieve whatever you desire in life. Our financial planners can help you work out what’s important to you and help you develop a plan that aligns your financial decisions to your lifestyle goals. Whilst there are many things you can do yourself, receiving advice from a professional can help you stay on track and assist with the more technical complexities involved in financial planning. We believe in having long term partnerships with our clients to help them navigate the financial ups and downs of life and have expertise in assisting clients with money management, growing wealth (including superannuation), retirement planning, taxation and estate administration services.
Please contact our office on 02 6162 1522 to make an appointment to discuss how we can help you with your financial goals.
Gift Vouchers Now Available @ Veritas – Help your children and friends reach their financial goals
Gift vouchers are now available from Veritas Wealth Solutions for an initial consultation session (usually 60 – 90 minutes) with Certified Financial Planner Ken Wild (a cost of $220). An initial consultation will help your children and friends plan for their future in setting financial goals and developing plans on how to achieve them.
Please contact our office if you would like to organise a voucher.
Disruption and the future of Energy
The following link is something we found could be of interest to all.
