June 2017 Newsletter
Our New Office
From Monday 3 July we will be moving to our new office at 5/231 Balcatta Road, Balcatta. The phone number will remain the same (subject to Telstra’s 0.01% chance that we cannot keep the number). The new postal address will be PO Box 889, Balcatta WA 6914.
We will also have a financial planner at the new office, Greg Meyers. For those who have yet to meet Greg, we have been referring clients to Greg for the past 10 years. Sharing the office with Greg’s business Integral Wealth Solutions will result in a better service model for our mutual clients.
We now have live access to all correspondence sent by the tax office to you. Therefore if you receive an email or SMS from the tax office, we can check its legitimacy by logging on to your account via the Tax Agent Portal.
Also, another reminder to be vigilant of the tax scam phone calls some clients are receiving. The ATO will never threaten you or be abusive towards you!
We are also hearing of fake emails purporting to be your business name renewal. If in doubt email it to Jacqui who will confirm its legitimacy.
A left field move by the ATO has resulted in the following:
Rental Properties bought after 9 May 2017 are no longer able to claim depreciation on assets that were part of the property purchase; i.e. depreciation on the air con unit, oven, carpets etc… are only claimable if you physically purchase the assets yourself. However, the 2.5% building claim is unaffected. Rental properties purchased prior to 9 May 2017 (even if unsettled) can continue to claim depreciation as normal,
As of July 2017, travel is no longer tax deductible against rental income.
Small Business Definition
The annual turnover test used to define which small business entities have access to the Small Business Tax Concessions has increased from $2m to $10m.
The main concessions are:
Simpler depreciation, including the $20,000 asset write-off and the general pooling of assets for depreciation,
Small Business Tax Offset,
Simplified trading stock elections,
Restructure rollover relief,
Immediate deductions for prepayment of expenses,
Access to the Small Business Super Clearing House.
$20,000 Asset Write-off
Unsurprisingly, the $20,000 asset write-off has been extended for a further 12 months and now expires on 30 June 2018. See the 30 June Checklist below for more information.
Tax breaks have been targeted towards companies, but all small business owners will receive a similar tax discount. From July 2016 the company tax rate for small businesses was further reduced from 28.5% to 27.5% i.e. now an 8% discount from the original 30% tax rate. This 8% discount also applies to an individual receiving income from an unincorporated small business (partnership, trust, sole trader) but is capped at $1,000 per individual.
Restating the Rules
Please note the current Primary Producer Concessions:
Farm Management Deposits maximum limit per individual is $800K,
FMDs allowed to be used to offset interest on farm loans. However, only Rural Bank currently offers this product,
FMDs now available to be drawn down in a “drought” year without losing tax benefit,
Immediate write off for fencing in the year of purchase,
Fodder storage is now tax deductable over three years,
Immediate tax deduction for new water facilities.
Please note the current rules from July 2017:
The tax exemption of earnings on transition to retirement income streams is lost and those earnings will be taxed at the super tax rate of 15%,
A $1.6 million cap on superannuation transfers from “accumulation phase” to “pension phase” has been introduced. Earnings on pension accounts under $1.6m remain tax free,
The concessional contributions cap (contributions that give rise to a tax deduction) has been reduced to $25,000. The current caps of $30,000 for under 50’s and $35,000 for over 50’s remains until 30 June 2017,
The non-concessional contributions cap (contributions that do not give rise to a tax deduction) has been reduced to $100,000. The current cap of $180,000 remains until 30 June 2017. The ‘three year bring forward rule’ for these contributions remains,
The requirement to pass the ‘work test’ in order to make super contributions has been removed.
30 June Checklist
With 30 June fast approaching, it’s time to make sure you have the following in order:
What expenses do you have for July/August that could be brought forward to June? Expenses such as employee superannuation (deductable once paid), repairs you have been putting off or equipment purchases that could be brought forward to bring the tax deduction into this financial year. Beware of prepaying for any expenses where you may not use them for 12 months,
With a turnover less than $10m, you are able to purchase an asset under $20,000 (GST exclusive but inclusive of freight, transfer and installation costs) and claim an immediate deduction.Note – 2017/18 is the final year of this concession,
If FMDs are utilised, please ensure they are processed by the bank before 30 June,
Super contributions should be made allowing enough time to ensure they are processed by the receiving super fund before 30 June,
Have you made any large capital gains?Are there some capital losses you could consider crystallising to reduce the capital gains?
Have you borrowed from your own private company but not repaid the loan?If so please call to discuss,
Has your SMSF met its minimum / maximum pension requirements?
If you require an updated tax estimate please contact us ASAP!