Eclipse Accounting News August 2010

Having Issues with your Tax Obligations?

Taking Advantage of Tax Offsets    

Sutherland Shire Local Business Awards

1.      Incorrect Amounts at Reportable Employer Super Contributions on Employee Payment Summaries

Reportable employer superannuation contributions (RESC) are used in determining eligibility for a range of government financial assistance programs, and generally include superannuation contributions made on behalf of an employee under a salary sacrifice arrangement.

Reportable Employer Superannuation Contributions

This is the amount of employer super contributions influenced, or able to be influenced, by employees (including directors of companies) that are:

·         above your compulsory contributions (such as super guarantee contributions or industrial agreement [award] super contributions), and
·         not included in your employee’s assessable income

What to do next

If you have issued payment summaries that incorrectly include compulsory super amounts, you need to notify affected employees about the error and issue them with an amended payment summary.

If you have already lodged your Payment Summary Annual Report with incorrect amounts, you will need to lodge an amended annual report. Contact Kathie on 9531-0922 if you require additional copies of Payment Summaries or the Annual Report or need assistance with your MYOB Payroll settings.

2.      First Home Saver Accounts - how do they work?

First home saver accounts are available through financial institutions including banks and credit unions. After the end of each financial year, you will receive a government contribution calculated on the personal contributions deposited into the account during the financial year. When you’re ready to buy or build your first home, you can withdraw the funds and close your account.

Getting started

·         Choose the account provider you want to have your account with and read their product disclosure statement.
·         Your first home saver account is an individual account, not a joint account.  However, if you want to buy a home jointly, you can do so whether or not the other joint buyers have a first home saver account.
·         Other people (such as parents or grandparents) can help you save by contributing to your account.
·         Contributions need to be made from your after-tax income – you can’t salary sacrifice into a first home saver account.

With first home saver accounts, the more money you save, the more the government will contribute, up to a certain limit each year.  The advantages of a first home saver account over a normal account are that government contributions add to your savings, and withdrawals are tax free. Earnings on first home saver accounts are taxed at 15% but this is paid by the account provider and you don’t report the earnings as income on your tax return.

You can’t just take money out whenever you want. You have to contribute at least $1,000 per year into your account in at least four financial years (not necessarily in consecutive years) before you can withdraw the funds to buy or build a home. This is known as the ‘four-year rule’.

The government makes a contribution equal to 17% of your personal contributions for the financial year up to a maximum amount each year. If you contribute $5,500 or more to your account during the 2010–2011 year, the government will contribute $935 to your account.  The maximum annual government contribution will also be indexed over time.   The contribution is calculated and paid in a lump sum once a year after your tax return is lodged and the account provider has reported contributions to the ATO.

You can contribute as little or as much as you like every year, up to a maximum account balance cap over the life of the account. This amount includes any earnings over the years and any contributions the government has made. The cap is $80,000 for the 2010–2011 financial year and will be indexed over time.

3.      Having Issues with your Tax Obligations?

If you are experiencing difficulties paying tax obligations, you should contact the ATO as early as possible to find out how they may be able to help and to receive general advice about your tax lodgement and payment obligations.

If you are a small business and you think you won’t be able to lodge your activity statement on time, you can contact the ATO on 13 28 66 before the due date to see what arrangements are available based on your specific circumstances.

If you are unable to pay your tax on time contact the ATO on 13 11 42 to discuss your individual circumstances. If you contact them early you should be able to work out an arrangement to suit your circumstances and to help ensure your debt doesn’t become too difficult to manage.

The ATO may be able to:

·         give you more time to pay debts – without interest charges;
·         give you more time to meet activity statement and other lodgement obligations – without penalties;
·         remit general interest charges; or
·         release people from paying certain taxes or penalties.

4.      Taking Advantage of Tax Offsets   

Taking advantage of tax offsets could reduce the amount of tax you have to pay this financial year.  As a general rule tax offsets can only reduce the amount of tax you pay (excluding Medicare levy) to zero.  You are not refunded any excess.  From 1 July 2009 (2010 tax return), the ATO will apply new income tests and amend other existing tests to work out if you are entitled to claim certain offsets.

Education tax refund

Eligible parents, carers, legal guardians and independent students can get 50 per cent back (up to the maximum refund amounts) on some education expenses.  Eligible expenses include the cost of buying, establishing, repairing and maintaining any of the following items:

·         laptop computers and home computers
·         computer-related equipment such as printers, USB flash drives, as well as disability aids to assist in the use of computer equipment for students with special needs
·         computer repairs
·         home internet connections
·         computer software for educational use
·         school textbooks and other printed learning material, including prescribed textbooks, associated learning materials, study guides and stationery, and
·         prescribed trade tools for secondary school trade courses.

To find out more go to www.educationtaxrefund.gov.au

Entrepreneurs’ tax offset

The entrepreneurs’ tax offset (ETO) provides a 25 per cent tax offset for small businesses with annual turnover of less than $75,000. The tax offset begins to phase out if turnover is greater than $50,000 until it reaches zero at a turnover of $75,000.  A family income test will now apply by restricting eligibility for singles where their income for ETO purposes is more than $70,000 or $120,000 for families.

Net medical expenses

You can claim a tax offset of 20 cents in the dollar for your out-of-pocket medical expenses over $1,500.  There is no upper limit on the amount you can claim.  Expenses you can claim include dental bills, optometrist bills, prescribed medical aids, hearing aids, certain residential aged care accommodation and maintaining a properly trained guide dog.

Mature age worker tax offset

If you are 55 years or over on 30 June 2010 and still working you may be entitled to a tax offset of up to $500.  The offset is calculated for you by the ATO based on the information you provide in your tax return.  To be eligible for the offset, you must:

·         be an Australian resident for tax purposes
·         be aged 55 years or over on 30 June 2010; and
·         have received ‘net income from working’ of less than $63,000.

You will receive the full offset amount of $500 if you received net income from working between $10,000 and $53,000.  A reduced offset amount applies for net income amounts over $53,000 or less than $10,000.

Dependent spouse tax offset

You may be eligible to claim a dependent spouse tax offset of up to $2,243 if you provided financial support for your spouse (de facto or married) throughout the year.  You will be eligible for the offset if all of the following apply:

·         your adjusted taxable income was $150,000 or less
·         your spouse’s adjusted taxable income for the year was less than $9,254
·         you met all of the following conditions:

    Ø  you maintained your spouse 
    Ø  you and your spouse are Australian residents 
                  Ø  neither you nor your spouse were eligible for family tax benefit Part B or were only eligible for it at a shared-care rate.

Senior Australians tax offset

The senior Australians tax offset allows eligible people to earn more income before they have to pay tax and the Medicare levy.  If you are eligible you will pay less tax and in some cases may not have to lodge a tax return.   Some people can claim this tax offset and the mature age worker tax offset.

5.      Sutherland Shire Local Business Awards

For the third year running, Eclipse Accounting Group Chartered Accountants have registered for the Sutherland Shire Local Business Awards under the Professional Services category. 

We have been fortunate enough to win the Award in our category for the last two years.  This would not have been possible if it wasn’t for the votes and support received from many of our loyal clients.  We are hoping that we receive a similar response for the 2010 Awards and are once again asking all of our clients and business associates to support us with their vote.  This year, we are competing against over 40 other businesses in our category so to win 3 awards in a row will be a big ask but as they say, “You have to be in it, to win it.”

To make it easy for you to vote for us, we have provided a link below to the website where you can cast your vote. 

1.       Go to Business Awards
2.       Select "VOTE" then "Vote Now"
3.       Enter your details including the email address of the computer you are voting from (as you will need to validate your vote)
4.       Select "Vote 1" and choose the category of "Professional Services"
5.       Select "Eclipse Accounting Group" (we should be 33 in order but please double-check as this could change)
6.       If you like, you can add a short comment in the space provided at the bottom of that page before “adding vote to list”.
7.       Select “Submit”
8.       You should then receive an email requesting you to validate your vote.
9.       Click on the link provided.

Thank you for your support.

From All the Team at Eclipse Accounting Group