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Taxation ruling on commercial website deductibility

An unfavourable opinion from the Australian Taxation Office sets out the tax deductibility of expenditure incurred in acquiring, developing, maintaining or modifying a commercial website for use in carrying on a business.

           

 

Broadly, the ruling explains that acquiring or developing a commercial website for a new or existing business is considered to be a capital expense, and is therefore not deductible.  “Developing” could include internal labour costs.  On the other hand, maintaining a website, including annual licence fees, remedying software faults, is generally a revenue expense, so may be deductible.

If you have a website and have incurred cost to enhance it, you need to carefully analyse all elements.

If there is new functionality or modification, even if piecemeal or incremental, this is likely to be capital.

Creating a presence on social media is deductible where the cost is trivial.

Unfortunately, this opinion creates many shades of grey to the characteristics of website costs beyond the knowledge of most small business people.

 

AcctWeb

SMSFs warned on ‘ticking time bomb’ with outdated deeds

A surprising number of older SMSF deeds pre-dating the 2008 financial year still remain, some of which contain inappropriate clauses exposing members to unforeseen risks, an industry lawyer warns.

         

 

DBA Lawyers senior associate William Fettes said while reviewing and updating a trust deed can be a costly exercise, it is generally recommended that SMSF trust deeds are updated every four or five years or when there is a major legislative change.

The last major legislative change to superannuation that warranted a wholesale update, he said, occurred in mid-2007.

“[So] I think these pre-FY 2008 deeds are very much in the category where it's a no brainer — it's strongly encouraged that you would get an update,” said Mr Fettes.

“The ones that are even older than that are going to be worse. They really can be ticking time bombs. For example, where you've got some sort of principal employer entity there that's associated with the fund.”

The client may not realise it, he said, but if they, for example, deregister that company, some deeds have provisions that say the fund just has to be wound up.

“There's no way around it, and you end up tainting the fund significantly without even really realising it,” he said.

“Occasionally you can resurrect the company in order to try and fix that, but that's a whole big exercise in itself to deal with ASIC around resurrecting a company, and so it can be a real ticking time bomb for clients that have those really old deeds and so we still see plenty of that around.”

While it may not be strictly necessary for a trust deed to be updated following the more recent changes to the system, SMSF trustees may still want to in order to take advantage of certain strategies, he said.

“There is an argument that you can be fully compliant with the law because a lot of the major [changes] that were implemented with the tax provisions, around the transfer balance cap, the different interactions with the caps and a lot of the other concessions, are imposed by tax law. But you're not going to have the type of flexibility and features that you necessarily want in order to take full advantage of the best strategies and so forth.”

 

By: Miranda Brownlee
22 NOVEMBER 2017
smsfadviser.com

Australia’s vital statistics

A truly fascinating set of numbers about our great country.  Almost 150 different items covered.

         

 

Please click on the following link to see all this interesting information.  The areas covered are:

  • Overview
  • ​Markets
  • GDP
  • Labour
  • Prices
  • Money
  • Trade
  • Government
  • Business
  • Consumer
  • Housing
  • Taxes
  • Climate    

 

Access all this data here.

 

tradingeconomics.com

 

Treasury finds Australia ‘increasingly uncompetitive’ as US moves on tax plans

Treasury has released a research paper detailing the implications of the US corporate tax reforms, highlighting its real potential to quash Australia’s competitiveness and stifle local wages.  

         

 

The US recently released a framework for US tax reform, including a reduction in the federal corporate tax rate from 35 to 20 per cent, sparking concerns that it might attract an investment boom, leaving Australia behind.

The research paper, US Corporate Tax Reform: Implications for the rest of the world, raises the concern that an increased investment in the US will result in a permanent reduction in the level of GDP and real wages in Australia.

“The US reforms have the potential to accelerate tax competition between jurisdictions, making Australia’s current corporate tax rate increasingly uncompetitive internationally,” stated the report.

“While the US would experience higher GDP and real wages, other countries, including Australia, could experience a permanent reduction in the level of GDP and real wages unless they take steps to maintain their competitiveness.”

The paper also examined how countries such as the UK, Singapore, and Canada have cut their rates over the past decade in a bid to spur investment and drive economic growth, with the current OECD average at 24 per cent, down from 32 per cent in 2000.

However, Treasurer Scott Morrison believes the Enterprise Tax Plan, which aims to reduce the tax rate to 25 per cent for entities with turnover of up to $50 million, will “shore up our competitiveness on investment”.

“This is why the Turnbull government’s fully-funded Enterprise Tax Plan currently before the Parliament, will act to ensure Australia remains an attractive destination for investment,” said Mr Morrison.

According to Treasury modelling however, the size of the Australian economy will permanently increase by just over 1 per cent in the long term following the 5 per cent reduction in the corporate tax rate.

BDO national tax director Lance Cunningham believes that while tax reforms in Australia will now be a necessity, it has called for rational decision making, while cautioning against “knee jerk reactionary responses”.

“If the government is not careful, the US tax rate cut may result in Australia implementing protectionist counter measures rather than well thought-out tax reform driven by a need to boost the Australian economy,” Mr Cunningham said.

“Whatever the outcome, Australia should refrain from embracing unilateralism which is a path of incoherence and ultimately lower growth.”

 

By: Jotham Lian
​09 NOVEMBER 2017
accountantsdaily.com.au

 

Our Advent calendar for 2017

On behalf of all our staff we wish our clients a Merry Christmas, Happy New Year and a great holiday period.

Come back each day for an inspirational quote or poem about Christmas, summer and life in general from the likes of Banjo Paterson or Charles Dickens.

         

 

Open the Advent Calendar

 

 

 

 

 

 

 

Resources on our site to help you, your family and your friends.

Your Financial Planner supplies you with more tools and resources than most others and at no extra cost.  Use them to improve your planning for the future.

24/7 access to website based tools you, your family (children as well), your friends, colleagues and associates can all benefit from. *

  • Latest News. Our articles are chosen from amongst 30-35 to ensure the best are included in our news updates. The range of topics covered has also been broadened to include insurance, bookkeeping, and health issues.
  • Comprehensive financial tools to help you understand your Personal or family Cash Flow position or simply complete a Budget or work on some Superannuation scenarios.
  • Research your questions at the ATO, ASIC, Centrelink and other relevant sites to better understand what happening in areas such as Superannuation, Employer responsibilities, Awards, Pensions, etc. Then discuss your questions with your Planner. Use eWombat for doing this research, type in keywords or phrases.
  • Your information is private and confidential and should be treated that way. Using Secure File transfer or a vault means your information and plans are encrypted when sent in either direction.
  • Portfolio logins. Utilise the ability to login to your Portfolio 24/7 to see how it is going compared to your Plans.
  • Online forms. More and more forms are now website based versions to save time and effort with printing and posting. By using such resources many Planners can also keep abreast of changes in your circumstances and this will always help them better plan your financial future.
  • ASX Prices and Charts. Many sites will have these resources to allow you to quickly see how the market is going and check any stocks you’d like a price on. All such information is, though, delayed by 20 minutes.
  • A stock ticker that displays 5 minute delayed information for the top 100 Australian stocks by market capitalisation.

* Not all services are on every planner’s website but most are.

No Special Circumstances to allow Excess Super Contributions

Another case confirms that taxpayers making large superannuation contributions need to be diligent.

         

 

The Administrative Appeals Tribunal denied a taxpayers request to ignore excess contributions tax.

The taxpayer claimed that her situation and the complexity of her superannuation arrangements, meant that special circumstances should allow the Commissioner to overlook her excess contributions.

She had contributed what she thought was the maximum in year one and used the bring forward rule to contribute $450,000 in the year two.  She argued that part of the complexity was an industry fund, a defined benefit fund and her SMSF.  Having exceeded the maximum concessional contributions in year one, the bring forward rule was not available in the year two.  

The tribunal considered that her superannuation arrangements were not out of the ordinary and emphasised her failure to seek advice and disregard reports from her superannuation fund, in favour of spreadsheets prepared by her husband.

The decision is quite predictable, again emphasising great care when endeavouring to take maximum advantage of tax concessions.

 

 

AcctWeb

Super for housing measures enter Senate

The bills for the First Home Super Saver Scheme and the downsizing measures for Australians over the age of 65 have now passed the House of Representatives.

         

 

The bills for the First Home Super Saver Scheme and the downsizing measures for Australians over the age of 65 have now passed the House of Representatives.

The First Home Super Saver Tax Bill 2017 and Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 1) Bill 2017 were introduced into Parliament last month, and are now before the Senate.

The First Home Super Saver Tax Scheme, first announced in the federal budget in May this year, will enable prospective first home buyers to save for a deposit inside their superannuation account, if passed.

Individuals will be able to contribute up to a total of $30,000 or up to $15,000 annually to superannuation, and later withdraw these contributions from 1 July 2018, said Treasurer Scott Morrison.

“These contributions, along with deemed earnings, can be withdrawn for a deposit with withdrawals taxed at a marginal tax rate less a 30 per cent offset,” he said.

Dixon Advisory managing director — head of advice Nerida Cole previously urged both sides of governments to pass the legislation so that first home buyers have certainty that the proposal will be available for use in 2017.

“The proposed First Home Super Saver Scheme offers tax concessions for first home buyers, to help them get to their savings target more quickly,” said Ms Cole.

The downsizing measures will enable older Australians to contribute proceeds from the sale of their family home into their superannuation accounts.

“From 1 July 2018, people aged over 65 will be able to make an additional non-concessional contribution of up to $300,000 into superannuation when they sell their home which they’ve held for at least 10 years,” said Mr Morrison.

“Both members of a couple can take advantage of this measure, meaning up to $600,000 of contributions may be made by a couple from the proceeds of selling their home.”

 

 
By: Staff Reporter
19 OCTOBER 2017
smsfadviser.com

 

Former director liable for company’s unpaid tax liabilities

A reminder that directors can very easily become responsible for unpaid taxation liabilities.

         

 

In the New South Wales District Court, a former non-executive director was held liable in full for unpaid PAYG withholding liabilities.

A director must take all reasonable steps to ensure that the company taxation obligations have been satisfied.  Whilst in this case the director had relied upon assurances from the company officers that the debts would be paid and that arrangements were being entered into, ultimately the company did not pay any instalments.  The director assisted in negotiations after he received a Director Penalty Notice from the Australian Taxation Office, but then resigned as a director.  Still, the company did not pay.

The ATO chose to recover (successfully) against one of the two directors.

Whilst there might be many justifications for non-payment, and advisers and lawyers will argue on your behalf, ultimately the ATO will win almost every time they issue a Director Penalty Notice.

 

AcctWeb

Paperwork bungles lead to $38k in payments

An example of the need to keep good records for everything you do.  Good bookkeeping = good records.

       

 

Back office and paperwork bungles have seen several workers given $38,000 in unpaid wages and entitlements, as the regulator sounds alarm bells on its monitoring of “the intricacies of our workplace laws.”
The workers were based in the Newcastle and Hunter region of NSW, and were victims of poor compliance practices and checks of their employers.

In one matter, a young labourer in Lake Macquarie was back-paid $25,220 after he was underpaid as a result of being incorrectly classified as an apprentice.

Essentially, it was agreed the labourer would commence an apprenticeship, but the employer failed to properly complete the paperwork and registration process required to enter into a formal training arrangement.

Consequently, the labourer was paid lower rates than he was entitled to, and the employer had not taken the appropriate steps to ensure compliance.

“Employers must be aware that we are prepared to take enforcement action in response to reckless, deliberate or repeated breaches of pay and record keeping laws,” said Fair Work Ombudsman Natalie James.

“We conduct follow-up audits of businesses previously found to be non-compliant to make sure they have changed their ways. Repeat offenders can expect to be subject to serious enforcement action including potential litigation.

“In our experience many businesses are overconfident when it comes to the intricacies of our workplace laws, however we will be taking an increasingly hard line with employers who have significant compliance issues and cannot demonstrate that they made a diligent effort to understand what award or industrial instrument applies to their workplace, what the correct classification for their employees is, and what minimum pay rates apply.”

By: Staff Reporter
04 OCTOBER 2017
accountantsdaily.com.au

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