ATO's Audit Targets

The ATO has set up a new page on its website called "Building confidence", which talks about its current compliance activities, and the amounts of tax and penalties it has collected in 2014 from its various initiatives.

Some of the areas that the ATO has stated it will be focusing on are:

Work related expenses:

  • Motor vehicle expenses for travelling between home and work;
  • overnight travel; and
  • the work-related proportion of use for computers, phone and other electronic devices.

Rental property expenses:

  • excessive deductions being claimed for holiday homes (deductions should be limited to the amount of income earned, or to the number of days actually rented out at a commercial rate);
  • husbands and wives inappropriately splitting rental income and deductions for jointly owned properties; and
  • interest deductions being claimed for the private proportion of loans.

Cash Economy:

  • the building and construction industry; and
  • the restaurant, café and takeaway industry.

Contractors:

  • employers misusing contracting arrangements with the intention of avoiding employment overheads.

ATO Focus on Super Obligations

Each year, the ATO identifies industries where employers are at a greater risk of not making super contributions for their eligible employees.

This year it's focus is on:

child care services

pubs, bars and taverns; and

industrial cleaning industries.

Furthermore, the ATO stated that, in early 2015, it will write directly to employers in these industries to remind them of their super obligations.

It has also advised that it will be undertaking super obligation audits of these industries from July 2015.

The ATO reminds all taxpayers that they must:

  • contribute at a rate of 9.5%;
  • make contributions by the quarterly cut-off dates (i.e., 28 April, 28 July, 28 October, 28 January);
  • pay super for eligible contractors, even if the contractor quotes an ABN; and
  • give an employee's tax file number to their super fund within 14 days of receiving it.

Note: If you receive a phone call from the ATO and you're at all uncomfortable answering their questions over the phone, feel free to tell them to call us instead, or (if they still insist on speaking to you) that you would like to speak to them later after speaking to us.

Pension deeming rates to be lowered

The social security deeming rates* will be lowered from 20 March 2015 as follows:

  • the 'lower deeming rate' will decrease from 2% to 1.75% for financial investments up to $48,000 for single pensioners and $79,600 for pensioner couples and $39,800 for each member of a couple; and
  • the 'upper deeming rate' will decrease from 3.5% to 3.25% for balances over these amounts.

(*) The deeming rules are part of the social security income test, and are used to assess income from financial investments for social security and Veterans' Affairs pension and allowances, such as the Age Pension, Disability Support Pension and Carer Payment, income support allowances and supplements such as the Parenting Payment and Newstart.

Deeming rates reflect the rates of return that people receiving income support payments are deemed to earn from their financial investments.

The deeming rates have been reduced as actual returns available to pensioners and other allowees have decreased.

However, if income support recipients actually earn more than these rates, the extra income is not assessed for the purposes of the social security income test.

When can Super monies be released on 'compassionate grounds'

Where an SMSF member is suffering a severe medical condition and cannot afford to pay for such medical expenses, they can apply to the Department of Human Services (DHS) not the ATO, to have some of their super funds released on 'compassionate grounds'. 

Basically a member will be entitled to claim 'compassionate grounds' where:

  • the medical treatment (which is not readily accessible through the public health system) is necessary to treat a life threatening condition, to alleviate acute or chronic pain, or to alleviate an acute or chronic mental disturbance/illness; and
  • two registered medical practitioners (one of whom is a specialist) have certified that the above requirements have been satisfied.

Important: There are many other issues involved, including significant penalties where funds are withdrawn incorrectly, so clients should contact our office before trying to withdraw any funds from their superannuation fund.

End of Financial Year Update - What's new

Employers

Employers must provide 2014 PAYG Payment Summaries to employees by Monday 14 July 2014.  You must then provide the ATO with the information they need by 14 August.

Taxable Payments

If you are in the building and construction industry your Taxable Payments Annual Report is due on 21 July.

Other Changes

From 1 July 2014, the Superannuation Guarantee rate is increasing from 9.25% to 9.5%. 

The Medicare Levy rate is also increasing from 1.5 to 2% of taxable income.

Superannuation Contributions

The concessional contributions limits from 1 July 2014 are as follows:

Age < 50 years                  $30,000

Age 50 < 60 years            $35,000

60 years and over             $35,000

The Non-Concessional Contribution Cap from 1 July is $180,000 or $540,000 under the 3 year bring forward rule.

Reduction of Company Tax Rate

A reduction in the company tax rate of 1.5% will take effect from July 2015.

Temporary Tax Repair Levy

A Temporary Tax Repair (Debt) Levy of 2% on the highest marginal income rate will apply for the next 3 income tax years to taxpayers on incomes above $180,000.

Fringe Benefits Tax

The rate for calculating fringe benefits tax will increase to 49% from the current 47% from 1 April 2015 until 31 March 2017.

 

 

Ways to Boost your Tax Refund

Accounting fees   |   Advertising   |   Afforestation   |   Agents fees   |   Airfares   |   Bank Charges   |   Body Corporate fees   |   Books and reference materials   |   Borrowing expenses   |   Calculators/Organisers   |   Capital items less than $300   |   Car expenses   |   Cleaning   |   Clothing (protective)   |   Computers and software   |   Commissions   |   Conferences/Seminars   |   Cooling   |   Council Rates   |   Delivery expenses   |   Discharge of mortgage expenses   |    Donations/Gifts   |   Driver's licence - endorsement premium  |   Dry cleaning expenses   |   Electricity and connection   |   Films   |   Financial charges   |   First aid courses   |   Gardening   |   Garbage removal   |   Glasses and googles (protective)   |     Heating   |   Hire of plant and equipment   |   Home Office   |   Income Protection Insurance   |   Land Tax   |   Lease payments   |   Lease preparations etc.   |   Legal expenses   |    Levies   |   Licences Lighting   |   Loan interest   |   Mobile phone   |   Pest control   |   Phone calls /rental   |   Political party contributions   |   Postage   |   Power and connection   |   Practising certificate   |       Printing   |   Professional association fees   |   Protective equipment   |   Rent    |   Repairs   |   Self-education   |   Storage   |   Subcontractor   |   Subscriptions/Journals   |   Superannuation   |   Tax Preparation/advice   |     Taxi fares   |   Tools   |   Travel Costs   |   Uniforms   |   Union fees

 Please Note - The above expenses are only deductible if they are incurred in deriving income.