WINTER NEWSLETTER 2013
Welcome to our Winter 2013 Tax Time Newsletter where we will bring you some important updates to the tax system and we look forward to continuing to provide you with our professional service over the next tax year.
Tax time is fast approaching.
Þ To help with this year's return, we have enclosed a Tax Return checklist of common items to gather together so we can complete your return.
Þ Appointments with one of our accountants can be made during business hours by calling (02) 4647 4088.
Þ If you are unable to attend the office at 3 Somerset Avenue Narellan during business hours, information to complete your tax return can be faxed to (02) 46474084, posted to PO Box 351 Narellan NSW 2567, emailed to email@example.com or dropped through our door after hours.
Þ The ATO require all refunds to be deposited into an Australian bank account when lodging a tax return. A current BSB and Account Number will need to be supplied on your tax return. Refund cheques will no longer be issued by the ATO.
CHANGES and UPDATES
Budget 2013 – This year's Federal Government Budget brought about a number of important changes for the following tax year that will affect most clients.
Tax Rate Changes
Tax rates remain the same as last year.
$0 - $18,200
$18,201 - $37,000
$37,001 - $80,000
$80,001 - $180,000
Medicare Levy of at least 1.5% may be applicable for most taxpayers above these rates.
Important Points out of the Budget
· The baby bonus gets scrapped from 1 March, 2014 and the "work test" for the Paid Parental Leave Scheme will be extended.
· An increase in the medicare levy by 0.5% to fund the National Disability Insurance Scheme to commence 1 July 2014.
· The LAW (law) income tax cuts scheduled for 2015/16 will be deferred with no date announced as when that will be likely to be implemented. As these cuts were timed with advent of the Carbon Price which is projected to fall, this is the reason being offered for this measure.
· The net medical expense offset (that is net out of pocket medical expenses exceeding $2,120 for income less than $84,000 for singles and $168,000 for families or expenses exceeding $5,000 for income over $168,000) that attract a 20% tax offset is to be phased out. The key to the phase out is whether you claim the offset at all. If you claim the offset in the 2013 year you will continue to be eligible in the 2014 year. Similarly, if you claim the offset in the 2014 year you will continue to be eligible in the 2015 year when it ends. There is some relief for expenses relating to disability aids, aged care expenses and attendant care until July 2019.
· If you are a student, the discounts that apply to up-front and voluntary payments made under the Higher Education Loan Program will be removed from 1 January 2014.
· Self-education expenses to be capped at $2,000.
· The higher concessional contributions cap will be raised to $35,000 to anyone who meets certain age requirements. For people aged 60 and over, the start date for the new higher cap will be brought forward to 1 July 2013. Individuals aged 50 and over will be able to access the higher cap from 1 July 2014.
· Transfer of lost member accounts to the ATO.
· Individuals can claim their lost superannuation accounts transferred to the ATO at any time. Interest will be paid on these accounts at a rate equivalent to growth in the Consumer Price Index to maintain their real value.
· The Government will provide $77 million over four years to the Australian Taxation Office (ATO) to increase compliance by expanding data matching with third party information.
CURRENT POPULAR TALKING POINTS
We have a number of new popular initiatives available now that can save money and make you money over time. These include:
Self Managed Superannuation Funds
These are becoming a popular way to run your super fund where you maintain the control and the investments instead of your current super fund. It has become a popular way to buy shares, property or cash deposits of your own choice as your own super fund. You can also now borrow through super funds to purchase super fund assets under certain conditions. Talk to us if you would like further information on whether a Self Managed Super Fund is suitable for you.
Income Protection & Trauma Cover
Most people tend to insure their cars, houses and contents but less insure the income that pays off these asset purchases. What would happen if you could not receive your income and have to sell these items? Income protection premiums are tax deductible and can provide up to 75% of your income if claimed upon. They can in many cases be funded through super. Life and Trauma insurance are other worthwhile insurance policies that will provide a lump sum cover in the event of suffering common illnesses such as cancer, heart attack, stroke or death to name a few. Talk to us to discuss suitable policies and quotes for your situation.
Salary sacrificing or pre-tax payments to a private expense are still a popular way of paying less tax and receiving more income despite changes to Fringe Benefits Tax laws for employers. Talk to us to discuss what will be best in your situation or if you are planning to discuss these options with employers.
ATO Audits & Record Keeping
ATO have reinforced with us and taxpayers that they are increasing their auditing activities on both work related deductions for employees and expenses, income and GST for businesses. Ensure if you are looking to claim a tax deduction this year for your expenses, you can back it up with documentation (receipts or bank statements). Don't forget to pick up our documentation envelope for your receipts to be kept in for 2014 tax year, at your appointment.
Make sure you speak to us first before making the big transaction of purchasing a rental property. We can advise you of what to look out for, the best tax structure for you and how to get the most out of your new investment and how to avoid the traps and pitfalls.
Struggling with cashflow and budgeting? We have developed some strategies to set you back on the right track and keep you there. Make an appointment with us as soon as possible and let us show you how to get there.
For those in small business, we remind you of a change in last year's budget to reduce your tax payable that allows you to claim up to $6,500 immediately on asset purchases.
Whether you are in business or deciding to go into business, one of the most important decisions you will make is your choice of business structure – will you operate as a sole trader, as a company, a partnership or trust?
For each business owner the answer will be different depending on which of the following factors are most important for you:
· Asset protection
· Minimization of tax
· Startup/ongoing costs and compliance
· Other factors.
Your initial choice of business structure is important and should be made in consultation with us. Get the right advice first by speaking to Geoff Rogers our business specialist.
Feel free to share the above information with family, friends and work colleagues, and pass on our contact details as we are always happy to assist new clients.
Should you wish to discuss any of the above matters or to make an appointment to see us, please find below our contact details:
Phone: (02) 4647 4088
Address: 3 Somerset Avenue, Narellan NSW 2567
Geoff Rogers, Director and the Team at Camden Valley Financial Solutions