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NEWSLETTER OCTOBER 2011

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

It's a girl
Congratulations to Nicky Burns on the birth of her third child. The newest member of the team is called Lana and she is a real cutie when she smiles! For those of you who have not met her yet, Nicky is a University of Qld Dean's Honour Roll graduate accountant who is currently on maternity leave. Nicky plans to return to work in the new year.

Where are we headed?
The economy is always subject to cycles. Particularly on the Sunshine Coast, long term residents all know of the famine or feast ups and downs of living and working on the Sunshine Coast. But not for three generations have we seen anything like the magnitude of the present cycle and the ramifications it is currently having world wide.
Will it get better? Certainly. When? That is the hard part.

Right now the Australian economy has been slowing, and at least locally, many of us have seen the value of our properties drop. Most recently the RBA held the interest rate steady, reflecting a reduction in the level of underlying inflation, where they had previously predicted it would stop falling and gradually begin to rise.

Many parts of our economy are booming but not all of the activity is generating work in all regions so workers are forced to follow the work. Our regional economy is said to thrive on Tourism and Construction. While these are both in the doldrums here, many of the skills acquired by locals are highly sought after. Some of the wages paid is spent back at home but there is little immediate local work for the army of tradespeople who are forced to travel to where the work is either by commuting or moving permanently.

Peregian Beach near our office
Peregian Beach near our office
LINKS
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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
China, Korea, Vietnam, India and many other parts of Asia are all predicted to enjoy strong growth over the next decade and they all require many of the things we produce. This supply demand is not likely to ease in the short term and so there are strong indicators for positive sentiment locally in the near to mid term. We seem to be in the enviable position of having a reliable income stream we can predict with some certainty despite the best efforts of our politicians to muck it up so that, even when heavy handed attempts are made to tax the cash flow, new major investments are still being regularly announced. If big money is still investing here, the rest of us lower in the food chain should be able to look forward to a solid future.
Most commentators seem to be factoring in a drop in interest rates this year. Will they be proven right? Let us hope so.

In Tax News
Did you know that the cost of uniforms may now be counted towards the Education Tax Refund (ETR) in 2011-12 individual tax returns? Previously, the only expenses that were eligible for the ETR were for computer, stationery and textbook costs (see Items that are eligible education expenses). At the end of this financial year you will also be able to claim your uniform expenses, so start keeping receipts for all your school uniform purchases from 1 July 2011 onwards if you are eligible to claim the ETR. Uniforms are the only previously-ineligible expenses that have now been made eligible, though. See Expenses that are not eligible for an indicative list of expenses that you are still unable to claim, such as subject levies, excursion costs, sports equipment, membership fees, tutoring costs.

There is more news with the ETR, too. Recently, the ATO clarified that according to the legislation there is no requirement to only claim that part of your eligible expenses that was used for educational purposes. This means that if the expense is used even partly for educational purposes, then so long as the expense is ETR-eligible you may claim the entire cost.

Don't forget that in order to qualify to use the ETR you must be eligible to receive Family Tax Benefit A, although some exemptions apply where FTB A was stopped under certain conditions.
More information

ARE YOU A COMPANY DIRECTOR? READ THIS!
As you may already know, company directors are currently personally liable for outstanding PAYG Withholding amounts if they don't act within 21 days of receiving a Director Penalty Notice from the ATO. In case you don't already know, this means that if you have unpaid PAYG Withholding amounts (that is, the tax that you withhold from employees' pay), then if you don't pay them to the ATO within 21 days of receiving a Notice, they have the authority to instruct you to pay the debts from your personal funds, not those of the company.

There are changes being considered by parliament that could significantly expand the personal liability of company directors, however. The changes being considered are:
  • Directors may be liable for their company's Superannuation Guarantee amounts, as well as their PAYG amounts under current legislation;
  • If these PAYG and super debts are unreported and unpaid for 3 months after the lodgement due date, directors become automatically personally liable for that debt and the ATO can then proceed to recover that debt from the director(s);
Previously, the penalty could be avoided if the company went into liquidation within the 21 day notice period, but with the automatic assignment of debt to the directors the penalty may no longer be avoided by putting the company into liquidation or voluntary administration within 3 months after the debt was due. These changes are in addition to existing Director Penalty Notice provisions.

The intent with this legislation change is to prevent "phoenix" activity, where directors wind up companies within the Notice period to avoid their PAYGW obligations to employees, but it will also penalise directors who are lax with lodging BAS and tax returns. It is likely this legislation will pass, so the implication for company directors should therefore be clear: you can no longer afford not to lodge BAS and tax returns. Even if the company can't afford to pay the BAS or tax they must be reported within 3 months of their due dates, otherwise you risk having to pay those company debts from your personal funds.

Additionally, if you have an insolvent company don't leave it idle while you wait for the creditors to wind it up, put it into liquidation or voluntary administration - otherwise you may risk personal liability for missing your lodgement due dates.

If the company is unable to pay its debt after reporting, then you can work out a payment arrangment with the ATO. If it is likely the debts will never be paid, then the company may have to be placed into liquidation. If you have at least reported these obligations, though, the ATO will not come after the company director(s) seeking payment.

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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