http://www.mcgillivray.com.au/news/category/news/6 en-us copyright 05/5/2010 720 http://www.mcgillivray.com.au/news/news/wayne_healy_ftia_member_profile_/29 "Continual professional development is one of your most effective tools." The Taxation Institute of Australia's magazine Taxation In Australia, published a Member Profile of Wayne Healy FTIA, Managing Director of McGillvrays. Click here to read the full article. 1/09/2010 http://www.mcgillivray.com.au/news/news/audit_insurance_wins_again/28 The value of Audit Insurance cannot be underestimated. Although McGillivrays offer Audit Insurance to our clients it is an individual decision as to whether it is appropriate for them. Some clients feel that unless they have a business or a SMSF Audit Insurance is not relevant to them. A recent case however shows that is just not true. We lodged a relatively straight forward personal Income Tax Return for one of our clients.  The ATO queried some of the returns details relating to a rental property. By the time we had collected the necessary information and dealt with the ATO queries our clients had incurred costs 9 times the cost of the premium paid for his Audit Insurance. Without Audit Insurance he would have needed to fund the cost of the ATO inquiry himself and that would have taken a chunk out of his eventual refund. Not everyone gets an audit from the ATO or some other statutory authority but if you do chances are it could be a costly exercise. For more information on Audit Insurance contact McGillivrays. 20/08/2010 http://www.mcgillivray.com.au/news/news/small_business_assistance_program_extended/27   The Commissioner of Taxation announced in a recent media release that the Tax Office would extend the measures to assist small businesses which were introduced as temporary incentives last year.    Under the current small business assistance package, there are currently almost 100,000 interest free payment arrangements in place worth $1.5 billion and over 6,600 deferrals of activity statement payment due dates have been granted. The package of measures was originally intended to expire on 30 June 2010 but will now run until 30 June 2011. The extension of the Small Business Assistance Package will mean that eligible businesses with a turnover of $2 million or less will continue to have access to: 1) a twelve month general interest charge (GIC) free payment arrangement with the Tax Office, 2) and a deferral of activity statement payment due dates. 22/07/2010 http://www.mcgillivray.com.au/news/news/when_financial_advice_is_not_tax_advice/26   An article in the West Australian recently highlighted how consumers and clients could easily end up much worse off despite believing they are doing the right thing and seeking financial advice. The story concerned the Governments planned financial planning reforms and the effect of a year long deferral of the application of consumer protection laws governing tax agents to financial planners. The deferral means that some financial planners give advice that they may not have the expertise to give. One quote noted that an industry source was "appalled at how several big superannuation firms had taken advantage of financial planners ability to give tax advice." The article also made reference to outsourcing which is where work is typically sent overseas to be done at a cheaper rate than it can be done locally. The fees charged however are still the standard local rates and often consumers are none the wiser. Consumers can find themselves in mess if a financial planner refers tax work overseas to be done but the planner is not involved in confirming the quality of the work. If errors are made how do you deal with a company that is thousands of kilometres away? The reality is that financial planners are not accountants and their ability to give clear and accurate tax advice should be accepted with a good dose of apprehension unless they have the accounting qualifications to back it up. As always our advice is to get the best advice from the most qualified person.  And in the case of tax matters that is a qualified accountant.   22/07/2010 http://www.mcgillivray.com.au/news/news/changes_to_fuel_tax_credit_rates/25   Those of you in the transport industry should be aware that the fuel tax credit rate for heavy vehicles using diesel and petrol and travelling on public roads changed to 15.543 cents per litre on July 1 2010. The rate has progressively decreased from 17.143 cents per litre from January 1 2009 and this change is due to the increase in the road user charge. Heavy vehicles are those with a gross vehicle mass (GVM) greater than 4.5 tonne. Diesel vehicles acquired before July 1 2006 can equal 4.5 tonne. If you have any questions or queries about the fuel tax credit rate and how it could affect your business contact McGillivrays on 6272 6888. 15/07/2010 http://www.mcgillivray.com.au/news/news/henry_review_in_brief/24   There is still a lot of hysteria about the the Henry Review or more to the point the items the Government has chosen to adopt. The review made 138 recommendations but only a handful have been adopted and the rest appear to have been left alone. Although the mining "Super Profit Tax" has captured plenty of attention we should consider what won't be changing. There will be no increase of the rate or broadening of the GST Tax free superannuation payments for people over 60 will stay There will be no removal of the benefits of dividend imputation There will be no reductions to the CGT discount or applying of a discount to negative gearing deductions There will be no changes that negatively impact on the not for profit sector including anything that involves affecting income tax to clubs or changing the benefits of tax concessions. Personal income tax rates will remain as is There will be no changes to stamp duties or payroll tax   For those of you with families There will be no introduction of the family home into any means tests There will be no introduction of a federal land tax for the family home And for those of us who have enjoyed a long and happy life a bequest tax, more commonly called a death tax or duty is not on the agenda.   Of the items that have been adopted, clearly the mining Super Profit Tax (SPT) has generated the most debate. It has been suggested that its introduction is critical to the other adopted recommendations proceeding as it forms the basis of funding for these items. The detail is complicated and many mining organisations are still digesting the ramifications. In a nutshell the tax starts July 1 2012 and is a 40% tax on profits. It is a tax payable on resource extraction activites. SPT paymets will be deductible for income tax purposes but SPT refunds will also be assessable for income tax purposes. Exploration costs will be immediately deductible under the SPT.   There will be a reduction in the company tax rate to 28%. Businesses classifed as "Small Businesses" (what constitutes a small business is yet to be stated by the government) will have the reduced tax apply from the 2012/13 financial year. Other business will have a reduction to 29% in the 2013/14 year and then 28% in the 2014/15 year. There are ramifications here for Franking Credits, PAYG Installments and Top Up Tax. Small businesses will be able to write off assets costing under $5000 in the year of purchase effective from 1st July 2012. The query again is the definition of "Small Business".  Other areas affected are Depreciation Pools and Division 43 Building Allowances.   There will be changes to superannuation. The biggest is the increase in the Superannuation Guarantee from 9% to 12% on a gradual basis from 2014 to 2020. One of the ramification under current circumstances is that payroll tax and workcover costs would increase as these are calculated on remuneration inclusive of superannuation. Other super changes are an increase from age 70 to 75 for the Super guarantee age limit and the concessional super cap is to continue beyond 2012 for indivuals with a super balance below $500,000   13/05/2010 http://www.mcgillivray.com.au/news/news/smsf_estate_planning/22 A self managed superannuation fund can be a terrific planning tool for individuals and may also allow those individuals flexibility in determining how their superannuation monies are invested. However, it is important to recognise those benefits may not be paid to the chosen beneficiaries without an effective estate planning structure in place.   One court case which confirmed the importance of estate planning was Katz v. Grossman. A brief description of the case was that a couple (father and mother) were trustees of a self managed superannuation fund which held assets in excess of $1,000,000. This couple had two children, a daughter and a son. One of the trustees (the mother) passed away, and the father appointed his daughter to replace his deceased wife as the other trustee of the Fund. When the father passed away, the daughter subsequently appointed her husband in place of her deceased father. The father's will stated his superannuation benefits were to be divided equally between the son and daughter, however as trustee of the self managed superannuation fund, the daughter paid all of her father's death benefits to herself, leaving the son nothing. The son fought the decision in court and lost, as the court found that the trustee had to administer the fund in accordance with the SIS Act, but had no duty to do so in an equitable manner.   The outcome in the above case was different to the wishes of the late father. However, had he used more effective estate planning tools such as binding death benefit nominations, then the payment of his benefits may have then been in accordance with what was stipulated in his will.   A binding death benefit nomination is a document that compels the trustees of the self managed superannuation fund to pay the death benefit in accordance with the deceased persons wishes.   There are two types of binding death benefit nominations: lapsing and non-lapsing. Lapsing binding death benefit nominations last only three years, at which point the nominations cease to be binding. A non-lapsing binding death benefit nomination will remain in place until such time as the nomination is amended or revoked.   Binding Death Benefit Nominations are but one of the planning areas which should be carefully considered. If you would like to discuss estate or other planning matters for your Self Managed Superannuation Fund, please contact one of our experts at McGillivrays   Andrew Hobson     27/04/2010 http://www.mcgillivray.com.au/news/news/why_you_need_succession_planning/21 Are you a baby boomer with your own business and intend to retire within the next 10 years? Then you are not alone but you could also be in a high risk situation. The vast majority of baby boomers in this profile have no exit strategy out of their business either through a sale or transfer to other family members. In fact a 2006 study by RMIT found at that time the average age of business owners in Australia was 55 and 81 percent intended to retire within 10 years but 75 percent had no exit strategy.  Most of these people have their retirement plans tied up in one asset - their business. Therefore it is critical that business owners have a game plan. Added to this are two other twists. First if you are the baby boomer hoping to sell your business will you be selling into a market already saturated with businesses of similar types? Then even more reason to have a plan that takes into account this very situation. With careful planning and a good exit strategy you can make your business more attractive to a purchaser,  giving you the edge in the market place. On the other side of this there could be a real business opportunity. If you are looking to buy or expand your existing business a profitable business with a clean entry and exit point can be a very attractive proposition. Baby boomer business owners should also be careful about "cruising to the line". That is, pulling back from your business in the last few years before retirement by working shorter hours and taking more time off. If you can do that without losing market share and profitability good luck to you but if it means your growth slows or profit goes down then this could seriously affect what you can sell your business for when you finally decide to retire. At McGillivrays we can assist you with business reviews, succession planning and exit strategies for your business. For more information on how we can help you call our office number 08 6272 6888.      14/04/2010 http://www.mcgillivray.com.au/news/news/high_court_hands_down_bamford_decision_but_the_questions_remain/20 The High Court has handed down it's decision in the case of Bamford vs ATO but the result is more questions exist now than ever before. The High Court agreed with the ruling of the lower courts in that a Trust Deed can determine how income is treated. This is a win for taxpayers that have  trusts and who wished to treat capital gains as income and a loss for the ATO who contended capital gains could not be considered anything else but captial gains. On the down side for the taxpayer they lost a complicated argument about the interpretation of how beneficiaries "shared" income.  The taxpayers case was that a share of income was a fixed sum that could not be altered (often called the quantum approach) while the courts determined that the term "share" is a proportion or percentage (known as the proportionate approach). The ramifications for both sides are still being assessed but everyone agrees the decision has left the situation more complicated than ever and that the government needs to step in to put clearer legislation in place so all parties can operate with greater ertainty. There will be more discussion of this case when the full impact of the High Court ruling is analysed further.      1/04/2010 http://www.mcgillivray.com.au/news/news/investment_allowance-does_your_finance_contract_make_your_purchase_ineligible_for_the_concession/19 The Small Business and General Business Tax Break was a measure implemented by the government to help stimulate new capital investment by Australian businesses to help boost the economy through the "GFC". The tax break is available for eligible assets where an ‘investment commitment” was made between 13 December 2008 and 31 December 2009(eligible period). The thresholds and deduction rates vary depending on size of business, the date of purchase and when the asset is installed ready for use. The ATO Guide to the Small Business and General Business Tax Break (which represents the ATO's interpretation of the legislation) identifies that there "may be an issue in claiming a deduction on an eligible asset depending on the type of finance used to acquire the asset.” This is a technical issue which has only recently surfaced and relates to the wording used on some finance contracts. In particular, this issue is important in situations where a large eligible asset was ordered before 31 December 2009 but delivered after that date- the type of finance used is crucial in identifying whether a deduction for the investment allowance is available. If you are about to receive the delivery of an eligible asset and sign the finance contract, we recommend you contact McGillivrays urgently so we can assist in reviewing the contract and ensure that your business remains eligible for the Investment Allowance. 29/03/2010