Posted on December 8, 2016 by editor
If I was given a dollar for every time someone asked: “so what’s going to happen to rates?” I’d be giving Trump a run for his money! Unfortunately the economic future doesn’t appear as I stare down into my mug of Lipton. However, it doesn’t take tea leaves to predict that we’re at the bottom of the current interest rate cycle, and rates only have one way to go… When will the RBA raise rates? Although the official cash rate is unlikely to increase in the immediate future, Reserve Bank Governor, Philip Lowe, has given many signals, including a recent remark that encouraging more borrowing “is unlikely to be in the public interest”, which show he’s not planning to make any further cuts either. So why are the banks increasing their rates now? Simply put, the “Trump effect” has set the expectation that higher inflation is on the horizon, causing bond rates to soar, which increases the banks costs of acquiring funds. Over the last few weeks there has been a sharp hike in fixed rate loans – with some lenders increasing their fixed rates by as much as 0.65%. Whilst out of rate cycle changes to fixed rates are not that unusual, what […]
Posted on November 5, 2015 by editor
As reported in today’s Age, The Australian Taxation Office will commence random audits of a sample of hundreds of small and medium businesses and individual taxpayers next year to identify the amount of revenue not collected because of tax evasion. The full article from today’s Age newspaper can be found here for your attention. We again remind you of Smith Feutrill’s Tax Audit Protection offer. The implications for not having an accurate response or managing the process carefully can be severe. While not targeted to our clients specifically, this is a risk to all taxpayers. As a result, we are being asked frequently to respond to regulatory bodies on our client’s behalf, including preparation of requested documentation and calculations. Even if no adjustments are required following investigation, significant costs can still be associated in dealing with the regulatory body. The average fee now exceeds $5,000 per review. If you wish to participate in this optional service, simply contact your Smith Feutrill Accountant for further information. If you have any questions in relation to the above, please contact our office on 03 9854 3200
Posted on September 2, 2014 by editor
Currently, there are plans to increase the level of compulsory superannuation contributions, paid by employers, from the current rate of 9.5% of salary to 12%. The increases, as currently planned, would occur in 0.5% increments over the next five years. However, due to pressure on the budget, the government wants to delay the first 0.5% increase for three years. This is because the significant tax concessions that are offered on superannuation contributions place an additional burden on government revenues. Treasurer Joe Hockey is proposing that the increases should be introduced at the discretion of the Treasurer, without the need to consult parliament. The new provision, which has yet to be presented to the senate, would not allow any scheduled increases to be delayed by over four years and would also not allow the Treasurer to decrease the rate of compulsory contributions.
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A capital gain is a profit made from the sale of an asset, for example, real estate investments (the family home is exempt), a business or shares. Your capital gain is calculated as the difference between what you paid for the asset and what you eventually sold it for. A capital gain is considered by the ATO as part of your assessable income and is taxed at your marginal rate. There is, however, a discount that may be applied to capital gains. If you have held the asset for over twelve months, you may be eligible for a 50% discount on the CGT. The CGT discount is also available to trusts and superannuation funds, although for superannuation funds the discount is only 33.3%. The discount is not available to companies. Of course, there are occasions where you may have to dispose of an asset for less than you originally paid for it. Unfortunately, you are unable to use ‘capital losses’ to reduce your assessable income. However, you are able to carry the loss over to the subsequent income year and use it to offset future CGT liabilities.
Posted on August 25, 2014 by editor
Outsourcing jobs used to be something that was only done by large corporations, as economies of scale were required to make it profitable. However, as technology has progressed, an increasing number of small to medium businesses have been outsourcing administrative and customer service roles, including outsourcing some jobs offshore, with the Philippines being a popular destination. Outsourcing your customer service or administration is something you need to consider carefully. It is advisable to consider what your business might lose, for example, a personal touch with some customers, and weigh this up against the savings you might make. Outsourcing administrative costs can be particularly cost effective for businesses who do not require a full-time administrative staff member. Additionally, if you need to complete a specific project, for example, the design of a new website, it is no longer necessary to limit your recruitment of freelancers to your locality. Interstate and even international freelancers may be able to perform the work just as effectively, and possibly for a lower rate.
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For most Australians, superannuation is one of their most important assets, usually only coming second to the family home. Superannuation is a great way to plan for your retirement, offering you a lot of tax breaks and ensuring that you are putting money aside for the future you want. However, it can be unsettling when you do not know exactly where and how this crucial asset is being invested. It is natural to want to have more control over your super, and to understand exactly where your money is invested. Unfortunately, many industry, retail and corporate funds can be very vague in letting you know where your money is, for example simply saying ‘Australian shares’. Additionally, the choice of risk categories offered to members are often not specific enough to fully reflect your individual investment needs. Starting an SMSF is not just about choice, but also control. You can create a more sophisticated investment strategy that is perfectly aligned with your risk appetite, ensuring that your money is doing precisely what you want it to do. Recently, it has become possible for SMSFs to borrow money in order to purchase property. This means that when members reach pension age, they […]
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The ATO has issued its decision on the treatment of bitcoin, and other crypto-currencies, for tax purposes. Bitcoin is a form of virtual digital currency that has been gaining popularity worldwide. Based on the average number of daily transactions, bitcoin has overtaken western transfer and is fast approaching PayPal as the world’s most popular form of online transaction. Bitcoin is unregulated and operates outside of the global financial system. The ATO has ruled that making purchases with bitcoin essentially amounts to bartering, and as such the virtual currency will be treated as an asset, rather than as money, for tax purposes. In the eyes of the ATO, bitcoin will be treated similarly to shares. There is no need for individuals to declare bitcoin to the ATO until they dispose of it, in which case it may be be subject to capital gains tax. Individuals may also use bitcoin to purchase up to $10 000 worth of personal items, and it will be considered as personal assets use. If an employee receives bitcoin as part of their remuneration package then this may be subject to fringe benefits tax. Bitcoin enthusiasts across the country have expressed disappointment in the decision, claiming that […]
Posted on August 18, 2014 by editor
Many Australians have superannuation that they have lost track of over the years. The ATO estimates that the total amount of lost super in Australia adds up to billions of dollars. If you have ever changed your name or address it is possible that you have chunks of super that you’ve completely forgotten about. The same is true for super accumulated in a part-time or casual job, particularly if it was a long time ago. If you think that you might have some lost super, you should track it down as soon as possible. By splitting your super between funds, you are most likely paying unnecessarily high fees. Finding your lost super is easy with the ATO’s online SuperSeeker tool. You can also use the ATO app to do a quick search to determine whether or not you do have lost super. To do this, you will need to provide your name, date of birth and tax file number (TFN).
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Innovation is fundamentally important to long-term business success. While you may be able to take on the main role of envisioning breakthroughs for your business, it never hurts to get input from your employees. In order to ensure that your employees’ contributions towards innovation are as valuable as possible, you need to create a workplace environment in which new ideas are encouraged and celebrated. Here are some tips for creating a culture of innovation within your workplace: -Keep open lines of communication with your employees. This does not need be limited to your direct reports. If you believe that your frontline staff may have some valuable ideas, extend an open invitation for them to approach you. -Ensure that you have adequately considered innovation in your budget. The level of resources that should be directed towards innovation will vary greatly depending on the size of your business and the industry in which you operate. -Celebrate creative ideas, even if they prove to be unfeasible. This will help you employees to feel more confident in bringing ideas to the table.
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A new law that prevents taxpayers from benefiting from dividend washing has been enacted. The new integrity rule is intended to help taxpayers understand their tax responsibilities and comply with the legislation. Dividend washing occurs when a shareholder seeks to claim two set of franking credits. This is done by selling shares after a dividend payout has been announced ex-dividend, meaning that both the dividend and the franking credit remain with the investor. The investor then repurchases shares in the same company that have both the dividend and the franking credit attached. Thus, they have come to be in possession of two sets of franking credits for one set of shares. Investors who have entered into dividend washing in the past few years should have received written correspondence from the ATO requesting that they amend their tax returns for the relevant income years. If amendment requests are received by the ATO before the date specified in the letter no penalties will be applied. Individuals who have engaged in dividend washing but have not received correspondence from the ATO will be offered the same penalty remission if amendments are made by 22September 2014.