In this Sky Update, we bring you all the latest tax news along with some other items that may pique your interest.
Instant asset write-off extended for small business entities
The legislation to extend the $20,000 Instant Asset Write-off for 12 months to 30 June 2018 has received Royal Assent.
Small Business Entities (turnover < $10m) can continue to claim an immediate deduction for depreciating assets that cost less than $20,000, provided the asset is installed ready for use on or before 30 June 2018.
After 30 June 2018, the Instant Asset Write-off will drop back to items costing less than $1,000.
Work-related deductions denied: lack of documentary evidence
A pipe fitter has been denied deductions by the Administrative Appeals Tribunal (AAT) for work-related expenses. The AAT disallowed the claims because the taxpayer was unable to produce adequate documentary evidence.
With the ATO focusing on education and work related expenses this tax time, it is incumbent on taxpayers to ensure that they can demonstrate a connection between the expense and their income and back it up with evidence.
Super reforms – Transition to Retirement Income Streams (TRIS)
With the reforms coming into effect on 1 July 2017, TRIS no longer enjoy the earnings tax exemption. This means that the super fund is required to deduct 15% tax on the earnings from the member’s TRIS account.
Where a member has a satisfied a full condition of release (eg reached preservation age & retired), the TRIS can be converted to a “retirement phase” pension that will continue to enjoy the earnings tax exemption.
If this is you, it will be necessary to contact your super fund to ensure that the correct steps are taken to ensure that no tax is deducted.
Whilst the removal of the earnings tax exemption reduces the tax efficiency of TRIS, they may still be a good option for those people approaching their retirement.
If you have (or are considering) a TRIS, get in touch to clarify whether a TRIS is right for you.
Single Touch Payroll operative for early adopters
Single Touch Payroll (STP) has started on 1 July for those employers who have voluntarily opted in.
STP will become compulsory for employers with 20 or more employees from 1 July 2018.
Industries like retail, tourism and hospitality that typically have many part time and casual employees are likely to be most affected by the introduction of STP.
The first requirement is for all employers to do a headcount on 1 April 2018 to determine if they are required to start using STP on 1 July 2018.
In the meantime, we recommend that business that are likely to have a 1 July 2018 start date begin making preparations for STP. The most important step being to ensure that the business has STP compliant payroll software.
On this front, we have had advice from many of the common software providers including MYOB, Xero, KeyPay and Sage Wage Easy that they have (or are in the process of implementing) STP functionality.
If you need assistance or information on STP, don’t hesitate to get in touch.
Announcement regarding gaming machine entitlements
Business operating in the the pubs and clubs industry have been eagerly awaiting the Victorian Government announcement made on 7 July concerning the allocation of new gaming machine entitlements for 2022 and beyond.
The changes include:
- Replacing the current 10 year term with a 20 year term, and requiring venue operators to make two sets of premium payments – the first in 2022 and the second in 2032.
- Giving venue operators the opportunity to acquire post-August 2022 entitlements up to the number of entitlements they held on 7 July 2017 through an administrative allocation process, rather than a competitive process.
- Increasing the maximum number of entitlements held by a club venue operator from 420 to 840.
- Adjusting the 50:50 rule to facilitate the allocation of unused club entitlements to the hotel sector.
- Determining premium payments for entitlements based on a venue’s gaming revenue.
- Making changes to the current gaming machine taxation arrangements to make them more progressive.
The allocation process is expected to be complete the end of next year. New venue operators and existing venue operators wanting to acquire extra entitlements will have the opportunity to apply for entitlements not taken up during the initial offer.
Victorian regional employers – Payroll Tax reduction
From 1 July 2017 a lower Payroll Tax rate (3.65% versus 4.85%) applies for regional employers being those employers that:
- Are based in regional Victoria; and
- Pay at least 85% of Victorian taxable wages to regional employees.
This change represents a significant Payroll Tax saving for many regional businesses.
If you operate a regional business and need information on how to take advantage of the reduced rate, get in touch.
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