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October 2014 News Letter

Mining tax repeal & other notable tax changes

With the abolition of the mining tax from 1 October 2014, a number of other tax measures have come into force:

  • Abolition of the company loss carry-back concessions from 1 July 2013. 
  • Reduction of the instant asset write-off for small business entities from $6,500 to $1,000 – that applies from 1 January 2014*.
  • Abolition of accelerated depreciation (of up to $5,000) for motor vehicles from 1 January 2014*.

Note(*):  It is important to note that the changes to the depreciation rules for small business entities (e.g., the immediate write-off threshold reducing to $1,000) applies to assets first 'used' or 'installed ready for use' from 1 January 2014.

ATO Launches Voice Authentication

The ATO says that they need to ask the caller to verify their identity in about 75% of the 8 million calls it receives each year.

Australians contacting the ATO by phone will now be given the choice to record a short 'voiceprint' that can be used to verify their identity for future calls.

A voiceprint is a digital representation of the sound, rythm, physical characteristics and patters in a voice.

The ATO believes that this will provide a more secure, convenient call experience and will speed up the authentication process, therefore reducing the time taxpayers need to spend on the phone to the ATO.

SMSF's and Succession Planning

In a recent speech, an ATO Deputy Commissioner emphasied how important it was for trustees of SMSF's to have a plan in place for the succession and control of the SMSF on the death or incapacity of members who are trustees (or directors of the corporate trustee).

He said that other documentation such as wills, enduring powers of attorney (EPoA), binding death benefit nominations and reversionary pension documents should be checked to ensure they are consistent and in agreement with the members' goals.

In some cases, surviving member/s of the fund may not wish to continue as trustee/s (or directors of the corporate trustee).

An exit strategy, that can enable the surviving members to enjoy the benefits of the fund without having to remain trustees, is to appoint an approved trustee licensed by APRS (that is become a small, APRA fund).

Editor: If you would like to discuss any of this please contact our office.

SMSF's and Trauma Insurance

From 1 July 2014, an SMSF can generally only provide an insured benefit for a member that is consistent with one of the following conditions of release of a member's superannuation benefits:

  • death;
  • terminal medical condition;
  • permanenr incapacity (causing the member to permanently cease work); or
  • temporary incapacity (causing the member to temporarily cease working).

Trauma insurance is not consistent with any of these conditions of release. Trauma insurance typically pays out a lump sum where an injured person is diagonised with one of the critical illnesses, or injuries, defined in the policy, such as cancer, stroke, coronary bypass and heart attack.

Therefore from 1 July 2014, an SMSF that takes out a new trauma insurance benefit in relation to a member will generally be in breach of the new regulation. The new regulation does not apply to insured benefits for members who joined a fund before 1 July 2014, and were covered by the benefit before 1 July 2014.

TAX SCAMMER WARNING

The ATO has issued another warning to the community to be aware of fraudelent scammers as they target people lodging their income tax returns by the 31 October deadline.

Chief Technology Officer Todd Heather said that "People should also be aware of a nasty phone scam where taxpayers are threatened with arrest if they do not pay a fake tax debt over the phone".

Why It's Sometimes Wothwhile Taking On The Taxman

Editor: Where special circumstances exist, taxpayers can get relief from the non-commercial loss provisions in the income tax laws.

Effectively, what this 'relief' means, is that a taxpayer can claim losses, (often) incurred in farming, in the year that they are made, rather than having to wait until further revenue turns a profit.

Case

 For the 2010 to 2014 income years, the taxpayer applied to the commissioner for relief from the 'non-commercial loss' provisions.

The ATO refused to accept that 'special circumstances existed, even though:

  • the taxpayer's olive grove: was in a region that was drought declared for much of the time and it was palgued by the olive lace bug from 2000 onwards; and
  • in late 2009, his wife, who had project management skills, an agribusiness education and extensive experience as an oil maker and blender, underwent major surgery and was only expected to be back working at 100% by 2014.

 Editor: Strangely, the AAT Member was not too complimentary to the tax officers who decided that none of these were 'special'. In fact, he found that they had taken a 'regrettably inattentive approach'.

Importantly, he found that drought and the pest infestation were special circumstances.

As to the taxpayers wife, he found that as she was a highly qualified member of the team and an experienced oil maker and blender, her illness constituted a special circumstance.

On balance, the AAT Member decided the taxpayer should be granted the relief from the non-commercial provisions for the 2010 to 2013 income years, but not the 2014 income year, when the taxpayer's wife was finally expected to be back full-time.

Lost Super Climbs tp 14 Billion

New statistics released by the ATO reveal that more than $14 billion in lost super is waiting to be claimed. "There's over $6 billion of super, sitting in accounts where funds have not been kept up-to-date with changes to personal details," said Mr Shephard.

"It's easy for this to happen because when people get married or move house, the last thing on their mind is updating their name and address details with a super fund."

A addittional $8 billion in super is sitting in accounts that hyave not received a contribution in five years or more.

Visit: www.ato.gov.au/superseeker for more advice on how to track down lost and unclaimed super.

Personal Property Securities Register

The Personal Property Securities Register (PPSR) is now fully operational as of 31 January 2014. The PPSR is a national online register for consumers, businesses and the finance industry.

Consumers and business operators can search the PPSR when they need to know whether certain personal property has a security interest registered against it. For more information go to: www.ppsr.gov.au

or contact this office and we can discuss with you the implications of this new legislation for rural business.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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