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NEWSLETTER JANUARY 2013

Peregian Accounting Services
Unit 3 12 Grebe Street
Peregian Beach Q 4573

Welcome to a new year and a fresh start. We hope this will be the beginning of a period of growth and prosperity.

Reminder - Schoolkids Bonus payments arriving soon

If you are registered for Family Tax Benefit (FTB) Part A you may be expecting a payment in January 2013 of $205 per primary school child and $410 per secondary school child. This payment is the Schoolkids Bonus, which replaces the Education Tax Refund you may have received in previous years, and is the first of two half-yearly payments to help with school expenses. The second such payment is expected in July 2013.

Unlike the Education Tax Refund, you do not need to keep receipts for education expenses and you do not need to make a separate claim to receive the payment. Eligibility for payment is based upon eligibility for FTB Part A and whether your children are in primary or secondary school.

If you usually receive your FTB as a fortnightly payment the Schoolkids Bonus should come to you automatically. If you usually receive your FTB as a lump sum at the end of the year then you will need to check that you are currently registered with Centrelink if you wish to receive the Schoolkids Bonus January payment. It is possible to receive FTB as a lump sum with or without being registered, but if you are not registered you will also receive your Schoolkids Bonus as a lump sum at the end of the financial year instead of two payments in January and July.

Contact the Department of Human Services for more information.

Peregian Beach near our office
Peregian Beach near our office
LINKS
ATO Home page
ASIC Home page
Institute of Public Accountants Home page
Xero home page
MYOB Home page
Quickbooks Home page

Contact
Peregian Accounting -
Adaptive Accounting

Web:www.adaptive.net.au
Email: info@adaptive.net.au
Phone: 61 7 5448 1218
Fax: 61 7 5448 1221



Upcoming Due Dates

  • January 28 : December 2012 quarter superannuation guarantee payments due.
  • February 21 : January 2013 monthly BAS due date for lodging and paying (only for those on montly reporting cycles).
  • February 28 : December 2012 quarterly BAS due date for lodging and paying (if lodging electronically).
  • February 28 : Annual 2012 GST return lodgement due date for lodging and paying.
  • February 28 : PAYG Instalment due date for paying (lodgement only required if varying the instalment amount).
  • March 21 : February 2013 monthly BAS due date for lodging and paying (only for those on montly reporting cycles).

In Tax News

The ATO has expanded their registration systems to allow voluntary entry into the PAYG Instalments system for those who are new to business.

PAYG Instalments are made if you are an individual receiving income from small businesses, where you make pre-payments towards your current year's tax bill using a calculation based on business income you received in previous years. Until now, small business owners in their first year of business had to either make their own arrangements for pre-paying their expected tax bill, or pay their tax bill in one go after they had lodged their first tax return. After lodging this tax return, the ATO would calculate what their next year's tax bill would likely be, and send quarterly instalment notices with amounts that were required to be paid. Often clients would receive their tax bill and their first PAYG Instalment bill around the same time, causing a sizeable dent in their cash flow.

The ATO has now changed their PAYG Instalment system to allow you to register for PAYG Instalments from the day you start your business. The way it works is that your first Instalment Activity Statement will display a nil amount, but you can then vary the amount upwards according to how much you wish to pay each quarter in that first year. As per usual, if you have overpaid at the end of the year you will be refunded the difference and if you have underpaid you will have a bill for the difference. In the year after your first tax return is lodged the ATO will adjust the instalment amount based on the business' income, but you can again vary your instalment amounts if you meet the criteria for variation (eg a significant change in business conditions).

Whilst you have always had the ability to make payments of your own accord in the first year of business, registering and receiving reminders about your PAYG liability from the day you hang out your shingle may make it easier to manage your tax liabilities and cash flow.

Voluntary registration is a manual process at the moment, meaning you have to contact the ATO on 13 28 61 to set it up.

ATO Getting Tougher & Penalising Late Lodgers

We have noticed an increase in penalties and fees the ATO is charging. We have also seen a significant increase in ATO errors that when questioned, are reversed. The ATO seems to have toughened its stance and is more and more often applying fees and taxes without proper enquiry and then leaving it to us to get them to change their mind on your behalf. This is highly inefficient as it wastes not only our time but the ATO time as well. Perhaps not as inefficient as you might think though. How many question the ATO as much as we do when they get it wrong as the effort and level of knowledge required to stand toe to toe with the ATO can be quite substantial. We take the view that we make the effort now and help stop it happening. If we just accepted the staus quo it will never improve. To date we have enjoyed 100% success rate in arguing our case but we should not have to go that far as often as we do.

In order to maintain our excellent success rate for your benefit, we need your help to keep our lodgements up to date. The ATO has introduced a new system that allows Registered Tax Agents automatic consideration on a range of issues if their lodgments are reasonably up to date. These considerations are worth cold hard cash to our clients as we can often get fees waived or reduced because of it. We have an excellent record but now more than ever we need to keep our record clean for the benefit of all of our clients. Therefore we will remove ourselves as Tax Agents for all clients with outstanding returns who are not in contact with us to prepare their lodgment. When these clients are ready to lodge we can easily add them back to our lodgement program at that time. We will write to you first if you are affected so please make contact as soon as you receive our letter to make arrangements to lodge the outstanding returns.

GST: Did You Know...?

Originally planned as a broad-based 10% tax on goods and services to replace the myriad sales and consumption taxes that existed in Australia at the time, the GST is not quite as simple as a 10% tax on everything. Here are some issues surrounding GST that we've discovered typically surprise clients:

There is a difference between "GST-Free"/"No GST" and "GST-Exempt":
Business expenses include more than just goods and services, there are other items such as depreciation and amortisation, and payroll and tax obligations. Expenses you incur that are not a good or a service, such as depreciation, don't form part of your GST reporting obligation and are therefore classed as GST-Exempt. If the item is a good or a service, but you didn't pay GST on it when you bought it, then it is GST-Free but still required to be reported even though you have no GST input credit on its purchase. Accounting programs generally have a separate tax code for GST-Exempt items to make sure they are not captured in GST reports (in MYOB this is "N-T Not Reportable", and in Xero it is "GST Exempt").

Not all things that are called "services" include GST:
Some education courses, as well as some medical, health and care products and services are GST-free sales. Additionally most financial services as well as rent on residential properties are input-taxed, meaning that although GST is included on the inputs the supplier uses to create the product or service, they cannot claim a credit for the GST on the inputs, and nor is GST charged to the customer. This is why landlords cannot charge GST on rent to residential tenants.

Whether or not you charge GST on your invoices depends only on what you are providing:
The temptation amongst clients who prepare their own BAS is to incorrectly only charge GST on invoices where they paid GST on the supplies to complete the job. If you provide a GST-inclusive service then you must charge GST on your invoices to your customers, even if a particular supplier didn't charge you GST on the supplies you used. The exception to this rule is if you were simply acting as an agent between two people, and didn't add any value to the product or service along the way. An example of acting as an agent might be if you are a tradie subcontracting your services to another builder, where the other builder is responsible for providing the materials for the job. If they ask you to pick up some more materials to complete the job and they will reimburse you later, then you invoice the other builder exactly the same GST as you paid on the materials.

There are many more examples, which we will cover in later newsletters.

If you have any feedback or suggestions for our newsletter please email us at newsletter@adaptive.net.au

Until our next contact
Good Health & Good Luck

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