



The Value Add – July 2014
While the general population doesn’t feel quite the same party atmosphere around 1 July as they do 1 January, this time of year is quite important for accountants, business owners, and investors alike.
As well as completing the regular compliance activities of preparing and lodging income tax returns, it is a time to review the performance over the last 12 months and plan ahead for the coming 12 months to make this new financial year bigger and better than the last one.
Not sure where to start? One of the best steps is to identify exactly where you are right now, so you know where you are starting from. How do you do that? Compile a summary of your assets and liabilities to determine your financial position. Then you can use the process of preparing your 2014 tax return to analyse your income and expenses to determine what your financial capacity for change is.
Once you have that information, decide what position you want to be in by 30 June 2015 (be realistic!), and then set the plan to make it happen.
From there, the only remaining piece of the puzzle is to make the conscious effort to take the necessary action so you can reach that goal – and that can start as early as today.
ATO Introduces the Tax Receipt
Starting from 1 July 2014, individual taxpayers will receive a document called a tax receipt as part of the process when they lodge their income tax return.
The tax receipt provides a breakdown of how your income tax has contributed towards government expenditure. It also includes information on the level of government debt (total value of all Commonwealth government securities issued) for the current and previous years.
The tax receipt will be sent out with your original notice of assessment after your income tax return is processed.
It will certainly be interesting information for each person to see where their tax dollars are spent, however it could also be an opportunity to be quite cynical about where the government is spending your hard earned dollars!
Changes for Financial Year 2014/2015
With the new financial year well under way, there are some key changes within the tax and superannuation system that must be kept in mind.
Superannuation Guarantee (SG) rate increased to 9.5%
If you employee anyone earning more than $450 per month, the rate of superannuation has increased from 9.25% to 9.50%. Most software accounting systems will have automatically updated (or tax tables need to be downloaded), so these changes should have already been made for you.
If the staff members total salary package is set to include superannuation, then their cash salary component will reduce because the superannuation rate has increased.
Keep in mind that the difference is $208 per year for every $100,000 in salary, so in some instances it might be more palatable to wear the increased cost.
Increase in Medicare Levy from 1.5% to 2.0%
Along with the increase in the Medicare Levy from 1 July 2014, this has also increased the PAYG withholding rates, thereby reducing the tax home salary for employees.
For someone on a $100,000 salary package (including superannuation) this reduces their tax home pay by approximately $450 pear year i.e. $38 per month, $17.50 per fortnight or $8.80 per week.
Immediate deduction for capital items for small business – is it $1,000 or $6,500?
With the proposed repeal of the mining tax, the threshold for an immediate write-off of capital items purchased by businesses with turnover less than $2 million was to be reduced from the previous $6,500 to $1,000 from 1 January 2014.
Due to the political process resulting in the Senate stalling the removal of the mining tax, the threshold still currently remains at $6,500. However, the legislation introduced to parliament is slated to start retrospectively from 1 January 2014.
So what do you do if you have bought or are thinking of buying an asset worth between $1,000 and $6,500? The ATO are allowing people to either use the lower threshold, or alternatively use the higher threshold and then amend without penalty if/when the threshold is reduced at a later date.
SuperStream data standard for employee superannuation contributions
From 1 July 2014, business that have 20 or more employees must start to move to using the SuperStream data standard for making and reporting superannuation contributions made on behalf of employees.
This standard will apply from 1 July 2015 to businesses with 19 employees or less.
The simplest way to comply with the standard is to use a software solution that conforms to SuperStream, or alternatively use a service provider that can arrange the necessary setup to comply to the standard.
ASIC fees increase from 1 July 2014
ASIC have increased a number of their fees from 1 July 2014. Importantly, the penalties related to late lodgement have also increased, so be aware of time limits for lodging documents with ASIC.
Annual review fee (Pty Ltd): $243 (up from $236)
Late fee – within 1 month: $74 ($72)
Late fee – more than 1 month: $308 ($299)
Change of company name: $377 ($357)
Business name – 1 year: $34
Business name – 3 years: $78




