Lost track of those small super funds?

There are millions of dollars to be found and some of it could be yours. SuperSeeker is a free and secure online tool that helps you keep track of your super. Register online and create a secure login to check your accounts that money has been paid into in the last two years. Find lost and ATO-held super and transfer your super into the super account you want.

Find SuperSeeker at this link: http://www.ato.gov.au/individuals/content.aspx?doc=/content/33301.htm

Changes to small business concessions in 2012–13

There are a number of important changes for small business entities in the 2012–13 income year that you need to know about, including:

Small businesses can now claim (write-off) an outright deduction for most depreciating assets purchased for less than $6,500 each – an increase from the previous amount of $1,000. For example, Sally buys a $5,900 camera and a $4,500 high resolution printer exclusively for use in her photography business. As each cost is less than $6,500, she can claim deductions of $5,900 for the camera and $4,500 for the printer in the 2012–13 income year.

Small businesses that buy a motor vehicle for use in their business can claim an immediate deduction of up to $5,000. The remainder of the cost is deducted through the general small business pool at 15% for the first year and 30% for later years. Both the long life and the general small business pools have been consolidated into a single pool which is deducted at 30%.

The entrepreneurs’ tax offset (ETO) has been abolished from 2012–13. For more information on these changes, refer to Small business entity concessions – home

http://www.ato.gov.au/businesses/pathway.aspxpc=001/003/084&alias=sbconcessions

Employees, contractors and Australian business numbers

There are many myths about what makes a worker an employee or a contractor. Businesses often rely on these myths and make the wrong decision.

One myth is that if a worker has an Australian business number (ABN), they are a contractor. In fact, having or quoting an ABN makes no difference to whether a worker is an employee or contractor for a job. Just because a worker has an ABN does not mean they will be a contractor in every instance. If the working arrangement is one of employment, whether the worker has or quotes an ABN makes no difference and will not change the arrangement into that of a contractor.

To determine whether a worker is an employee or contractor, your need to look at the whole working arrangement and examine the specific terms and conditions under which the work is performed. To get an answer about whether workers are employees or contractors, you should use the ATO online Employee/ contractor decision tool. It is free, anonymous and easy to use. The ATO Employee or contractor home page also has all the information in one place that you need to determine if workers are employees or contractors.

Find the Employer/ contractor tool at this link: http://www.ato.gov.au/content/00095062.htm?alias=employeecontractor and the Emploee and Contractor homepage at this link: http://www.ato.gov.au/businesses/pathway.aspx?sid=42&pc=001/003/135&alias=employeecontractoressentials

Tax deductions for gifts and donations

Some arrangements which promote generous tax deductions for gifts or donations do not meet the conditions for them to be tax deductible.

Tax deductible gifts must:

• Be made to a ‘deductible gift recipient’ (DGR), that is, an organisation endorsed by the ATO or listed by name in tax law as a DGR.
• Truly be a gift – for which your clients receive no material benefit or advantage. (Not all payments to DGRs are tax deductible – for example, the purchase of raffle tickets or chocolates).
• Be covered by one of the gift types (the most common gift is money and to be deductible it must be $2 or more).
• Comply with any relevant gift conditions – many categories of DGR have no gift condition.
• Tithing is generally not a tax deductible donation as many religious organisations are not DGRs.

For more information, you can refer to: http://www.ato.gov.au/content/00313847.htm and http://www.ato.gov.au/content/8568.htm. To find out if an organisation is an endorsed DGR, visit www.abn.business.gov.au and enter either the organisation’s ABN or name in the search box.

Make a difference– report suspected tax evasion

Members of the community, including individual taxpayers, businesses and tax practitioners, often have first hand knowledge of non-compliant or fraudulent behaviour. Without your assistance these behaviours may not be easily identified.

What the ATO are hearing-

The number of allegations from the community is growing. The community sees a ‘fair tax system’ as important. Last year 33,770 reports of suspected tax evasion were received, an increase of over 7% from the 2009–10 year. The most efficient way to provide information is by using the online reporting option available on the ATO website. You can access this from the ATO corporate home page by using the left hand menu and selecting Report tax evasion. The Tax Evasion Reporting Centre (TERC) collects all community information and provides useful intelligence to various business areas within the ATO.

Each allegation is considered and handled in a differentiated manner. This may result in the development of an education strategy, or involve taxpayer contact or audit activity.

The top five most commonly reported activities in 2011–12 were:

• cash income not declared – 6,552 (29%).
• pay as you go withholding matters – 4,008 (18%).
• non-lodgement – 3,031 (13%).
• overstated deductions – 1,923 (8%).
• rental income – 1,353 (6%).

In 2011–12, compliance activity undertaken on reports of suspected tax evasion raised around $40 million in taxes and penalties. These results were a direct result of the quality of information the ATO received.

Risk assessing small-to-medium enterprises – results and the way forward

From 1 July 2008, the ATO received additional funding to expand their income tax compliance program over four years. The ATO's  objective was to optimise voluntary compliance and enhance community confidence by ensuring that small to medium enterprises with a turnover between $100 million and $250 million paid their fair share of tax.

Over the four-year program they:

Their approach to managing this taxpayer segment has supported a number of improvements in voluntary compliance, including increases in:

• Income tax voluntarily paid by taxpayers who had been reviewed or audited in previous years.
• Ruling requests.
• Self-initiated amendments.
• Voluntary disclosures.

The ATO are using intelligence gained from this program to refine the risk engine they use to monitor all small-to-medium enterprises on an ongoing basis. They will use their risk differentiation framework to help tailor the intensity, frequency and nature of their engagement with taxpayers in the $100 million to $250 million turnover segment.

For more information about the ATO’s compliance approach and the risk differentiation framework, refer to Tax compliance for small-to-medium enterprises and wealthy individuals at this link: http://www.ato.gov.au/businesses/content.aspx?doc=/content/00129961.htm&alias=smecompliance

ATO Dispute management plan

While the majority of interactions with the ATO are not disputed, they are aiming to be more open and transparent about how they handle disputes when they do arise. The recent release of the ATO Dispute management plan outlines the approach and key principles when resolving your tax and superannuation disputes. The supporting policy also covers disputes relating to debt, complaints, access to information, compensation claims and procurement, as well as disputes with ATO employees.

What it means

The plan has been developed in consultation with tax based industry and professional association through the National Tax Liaison Group and the ATO Tax Practitioner Forum, and will be updated on an annual basis. The ATO's aims are to reduce the time they take to resolve disputes and lower costs for both parties. They prefer to avoid or resolve disputes as early as possible, in a fair and effective manner. They also aim to build community confidence in the integrity of the tax system by reviewing their dispute performance regularly and reporting back on their focus areas. The release of the Dispute management plan is the first step towards making this happen.

You can find more information about  the ATO’s Dispute management plan 2012–13 at:http://www.ato.gov.au/corporate/content.aspx?doc=/content/00332859.htm&pc=001/001/045/004/005&mnu=50573&mfp=001&st=&cy=&alias=disputemanagementplan 

For more information regarding the ATO's Disputes policy refer to: http://www.ato.gov.au/corporate/content.aspx?doc=/content/00332860.htm&pc=001/001/045/004/005&mnu=50573&mfp=001&st=&cy=&alias=disputepolicy

Easy payment options for activity statement bills

You can make your activity statement payment quickly and hassle-free using BPAY® or credit card. To pay by BPAY, use biller code 75556 with the EFT code or PRN. To pay by credit card go to Government EasyPay, or phone 1300 898 089 to use the self-help telephone service. Electronic payments are secure and you receive a receipt immediately, so you know the payment has been made.For further information about ways to pay tax bills, refer to: www.ato.gov.au/howtopay

Changes to FBT living-away-from-home concessions

Changes have been made to the fringe benefits tax (FBT) concessions for living away-from-home allowances and benefits. The changes ensure that living away from home allowances and benefits continue to be taxed within the FBT system. From 1 October 2012, access to tax concessions for living away from home allowances and benefits are generally limited to a period of 12 months for an employee at a particular work location. Furthermore, the concessions only apply where the employee:

• Lives away from home for work purposes during that period.
• Maintains a home in Australia, at which they usually reside, for their own use and enjoyment.
• Can substantiate expenses incurred on accommodation, and food or drink (where it is more than the Commissioner’s reasonable amounts).
• Provides their employer with declaration(s) relating to living away from home Transitional rules may apply if an employee’s employment arrangement was in place before 7.30pm Eastern Standard Time on 8 May 2012. Special rules apply to fly-in fly-out and drive-in drive-out workers.

For more information, refer to http://www.ato.gov.au/businesses/content.aspx?doc=/content/00333689.htm&pc=001/003/027/002/007&mnu=45025&mfp=001/003&st=&cy=

New rules for trustees of SMSFs

New regulations apply to self-managed super funds (SMSFs) from the 2012–13 income year.

They require trustees of SMSFs to:

• Value the fund’s assets at their market value for the purpose of preparing financial accounts and statements of the fund.
• Consider insurance for their members as part of the fund’s investment strategy.
• Review the fund’s investment strategy on a regular basis. Trustees who fail to comply with these requirements may be subject to penalties.

For more information on valuing SMSF assets, see Valuation guidelines for self-managed superannuation funds at this link: http://www.ato.gov.au/superfunds/content.aspx?doc=/content/00328213.htm&pc=001/149/030/003/003&mnu=49150&mfp=001/149&st=&cy=

More powers to deal with non-compliance

Trustees have always been required to keep the money and other assets of the SMSF separate from those held by the trustee personally, or by a standard employer-sponsor or an associate of a standard employer-sponsor. A regulation has now made this requirement an operating standard, giving us the power to enforce compliance. Contraventions may result in a fine not exceeding 100 penalty units. There may be certain situations where an unavoidable restriction prevents holding assets in the fund’s name. In the coming months, the ATO will be publishing a separation of assets guide to provide advice on what trustees can do in these situations.