A new financial year, and a new set of rules, rates and other changes applying from 1 July 2016! In this edition we cover the changes to tax rules on the purchase and sale of property, changes to the minimum wage, as well as helpful tips on the sharing economy (think Uber, AirBnB etc), using myGov for your tax, and renewing your WorkCover policy.
Raising Money for Mater Little Miracles – last chance
A reminder that on 24th July, Ian and Shanna will be tackling 5,000 steps around the Gabba as part of Stadium Stomp. with the goal to raise $1,000.00 for Mater Little Miracles. Remember, donations of $2 or more are tax deductible! We thank those who have already supported the efforts, and your money is already going a long way to towards helping those children in need.
http://stadiumstomp2016gabba.gofundraise.com.au/page/IanWood
Changes to Tax Rules on Property
Real property transfers reporting to the ATO
From 1 July 2016 all state and territory revenue collection agencies need to collect and report information to the ATO about all transfers of freehold and leasehold interest in real property located in their state or territory.
This means that the ATO will have regular information on the sale of property – so make sure you keep your records, and let us know if you have sold a property. If your tax return does not disclose that a capital gains tax event occurred (regardless of whether you made a gain or a loss), then you may find your tax return reviewed by the ATO.
Foreign Resident Capital Gains Withholding
From 1 July 2016, disposal of real property with a market value of $2 million or more to a foreign resident, will be subject to 10% withholding of the purchase price unless certain criteria are met. What is caught:
- real property
- taxable Australian real property with a market value of $2 million or more
- vacant land, buildings, residential and commercial property
- mining, quarrying or prospecting rights where the material is situated in Australia
- lease premiums paid for the grant of a lease over real property in Australia
- indirect Australian real property interests in Australian entities whose majority of assets consist of the above asset types
- options or rights to acquire any of the above asset types
If you are an Australian resident vendor, then you can avoid the 10% withholding by providing to the purchaser prior to settlement:
- for Australian real property, a clearance certificate obtained from the ATO;
- for other asset types, a vendor declaration that they are not a foreign resident
Whether you are buying or selling property worth over $2 million, you need to ensure that you meet the new requirements. If you have any doubts about your next property transactions, make sure to contact us at Value Beyond to review your situation and keep you within the new rules.
Tips for Renewing Your WorkCover Policy
WorkCover QLD policies are due for renewal from 1 July 2016, and this requires employers to report their wages for the year. It is compulsory for businesses who employ workers in Queensland to take out an accident insurance policy so that in the event of a work-related injury, their workers and their business are covered. Employers must declare their wages annually to ensure they have the right level of cover when renewing their policy.
Step 1 – Determine who you need to cover
A worker is defined by the Worker’s Compensation and Rehabilitation Act 2003 (QLD) and aligns with the ATO definition. Only an individual can be a worker. A person who works under a ‘contract of service’ is a worker. Typically this is a standard employer and employee relationship/ Even where a person calls themselves a ‘sub-contractor’, has their own ABN and is responsible for their own tax, if you engage them for work they may be considered a work under the Act.
Find out more on “Who do I cover“.
Step 2 – Determining what payments need to be included in your wage definition
When completing a renewal, you need to report actual wages for the last financial year, and estimated wages for the next financial year. Wages includes salary and similar payments, but superannuation payments and fringe benefits also need to be included in the wages declaration.
Find more on what are classified as wages.
Step 3 – Declaring your wages
You can renew your policy and declare your wages using Workcover’s online services, and you can login using your policy number and account number found on your renewal notice. This is the easiest way to report wages, however you can also report your wages over the phone or by post.
Payment
You can set up payment plans, and it is best to do this in July so you can spread the payments over a longer time. The payment plans are interest free and provided at no extra cost.
If you pay your premium in full, you can receive a 3% discount if wages are declared on time and you pay by 16 September. Note that the discount is not available for premiums of $290 or less, or for policies renewed after 31 August. Full payment is due by 30 September if not paying via a payment plan.
If you are stuck and need some assistance in either declaring your wages, or determining whether you need to have WorkCover policy in place, contact us at Value Beyond to review your situation.
Have you linked your tax to myGov? Read this first
If you have linked the ATO to your myGov account, most of your ATO mail will now go directly to your myGov Inbox, rather than through the post. This is aimed at helping you manage your taxation and superannuation affairs in one place and make record keeping easier and more secure.
The types of ATO mail you may receive in your myGov Inbox include:
- notices, such as notices of assessment
- statements of account
- confirmation and reminder notices
- activity statements or instalment notices.
ATO digital communications containing personal information, such as a tax file number, will be sent to your myGov Inbox, rather than your email account, due to legal and privacy requirements.
If you don’t have a myGov account linked to the ATO; you, or your tax or BAS agent, will continue to receive your ATO mail via the post.
What does this mean for me?
If you have linked the ATO to your myGov account, Value Beyond will no longer receive correspondence such as your notice of assessment. The ATO does not automatically advise us that correspondence has been sent to your myGov account.
Going Back To Paper Mail
If you have a myGov account linked to the ATO, you will automatically receive your ATO mail via your myGov Inbox.
If your circumstances mean you need to receive your ATO mail through the post, call the ATO on 13 28 61.
If you unlink the ATO from your myGov account, you will still be able to see the ATO messages you have already received in your myGov Inbox. However you will no longer be able to view your ATO mail using the links within those messages.
Your Tax Or BAS Agent
If you have a tax agent, they will be able to see a copy of the mail, SMS and emails that we have sent you. Your tax agent or BAS agent does not have access to your myGov Inbox – instead they will see copies via their own Tax Agent Portal.
If you have a BAS agent, we will advise them when we send you a notification that your activity statement or instalment notice is ready to view.
They can still act on your behalf.
Tax Implications For The Sharing Economy
If you earn income through the sharing economy you have tax obligations that you should know about.
The sharing economy refers to the sharing of goods and services where the buyers (users) and sellers (providers) are connected through a facilitator who may be operating through an app or a website. Popular examples include Uber and AirBnB.
Examples of sharing economy services include:
- ride-sourcing – providing taxi travel services to transport passengers for a fare
- renting out a room or a whole house or unit on a short term basis
- renting out parking spaces
- providing personal services, for example
- web or trade services
- completing odd jobs, errands, deliveries, etc.
If your provide sharing economy services, you may need to:
- determine whether you carry on an enterprise
- register for an Australian business number (ABN) and/or GST
- account for GST when you make taxable supplies of goods and services
- declare your income
- determine if you can claim GST credits/input tax credits and income tax deductions for your expenses.
As is usual under the GST and income tax law, the nature of the goods or services you provide and the extent of your activities will determine what you need to do for tax purposes. If you have any concerns about whether your activities will be affected by tax, contact us at Value Beyond to discuss your situation.
Is It A Business Or A Hobby?
You may be unsure whether you’re in business, or if your activity is just a hobby. A hobby is a spare-time activity or pastime pursued for pleasure or recreation.
Unlike a hobby, a business is run with the intention of making a profit and has basic reporting requirements, such as declaring income and claiming expenses. It’s important to know the difference between a hobby and a business as this can affect your tax position.
Characteristics of a business
There is no single rule that determines if you’re in business, but below are indicators that you may be.
- You’ve made a decision to start a business and have done something about it, such as registered a business name or got an ABN.
- You intend to make a profit or genuinely believe you’ll make a profit from the activity, even if you’re unlikely to do so in the short term.
- You repeat similar types of activities.
- The size or scale of your activity is consistent with other businesses in your industry.
- Your activity is planned, organised and carried out in a businesslike manner. This may include
- keeping business records and account books
- having a separate business bank account
- operating from business premises
- having licenses or qualifications
- having a registered business name.
If you’re an artist, creative or maker and receiving or plan to receive money from creating things such as jewellery, paintings or baked goods, you can use the Hobby or Business tool on business.gov.au to work it out.
If you determine your activities are a hobby, you don’t have any additional tax or reporting obligations. You should check regularly to make sure your activities still qualify as a hobby.
If your activities are a hobby but you supply goods or services to businesses, they may request your ABN when they pay you. As you don’t need an ABN, you can use the Statement by a supplier form to avoid the business withholding an amount from their payment to you for not having an ABN.
Statement by a supplier not quoting an ABN
Share Trading
Whether you are carrying on a business of share trading involves a number of different factors from those used to work out if you are carrying on a business.
For more details see: Carrying on a business of share trading
Minimum Wages Set To Increase
If you employ people, make sure you’re aware of the coming increases to award rates and the national minimum wage. The increases take effect from the first full pay period starting on or after 1 July 2016. If you employ people, make sure you’re aware of the changes!
Who does the 2.4% wage increase apply to?
The 2.4% increase will apply to employees who get their pay rates from:
- a modern award (most employees are covered by an award)
- the national minimum wage
- a registered agreement (only in certain cases).
The 2.4% wage increase does not apply to employees who are already getting paid more than the new rate applicable under their award or registered agreement.
What will the minimum wage increase to?
Most employees get their pay rates from an award or enterprise agreement. However, if there is no award or enterprise agreement that covers an employee’s job – they are entitled to the national minimum wage.
The new national minimum wage will be $672.70 (up from $656.90) per week or $17.70 per hour (up from $17.29). What do I need to do?
For now you don’t need to do anything. The Fair Work Ombudsman is currently updating their pay tools with the new pay rates for each award.
Once the new rates are available, you can go to Fair Work’s Pay page to work out how much to pay your affected employees from 1 July 2016
More information….
- Visit the Fair Work Ombudsman website to find out more about the 2.4% national wage increase.
- Subscribe to the Fair Work Ombudsman’s email updates to stay updated on when the new rates will be available in their online pay tools.
Sign up for the Fair Work Ombudsman’s My Account service and save links to your award and pay guides for quick access to the new rates once they’re available.