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Great Article on Why Australians trust their accountant
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Federal Budget-2015
Tax Tip                                                                                    May 2015

Now that the dust has settled on the 2015 Federal Budget announcement, we have reviewed the release notes in detail to assist you in understanding how the more significant proposed measures practically impact on you and your small business.
Please note that references below to small businesses are those businesses with annual sales turnover of less than $2 million.
Cut in small business company tax rate from 30% to 28.5%
With effect from 1 July 2015, there will be a 1.5% cut in the company income tax rate applying to small businesses from 30% to 28.5%. Companies with annual turnover of $2 million or above will continue to be subject to the current 30% rate on all of their taxable income.
An incorporated business has annual turnover of $1.3 million and taxable income of $200,000. Under the current law, the business would pay income tax of $60,000 (i.e. 30%) whereas under the proposed law the business would pay income tax of $57,000 (i.e. 28.5%), a $3,000 saving.
Small business tax discount
The above 1.5% tax cut relates to small businesses that utilise a company structure. However, small businesses that use a structure other than a company (e.g. sole trader, partnership, or trust) will instead be eligible for the small business tax discount, with effect from 1 July 2015. The small business tax discount will be 5% of the income tax payable on the business income received and be delivered in the form of a tax offset, but will be capped at $1,000 per individual.
A person running a business as a sole trader has annual turnover of $300,000 and taxable income of $75,000. Under the current law, the person would pay income tax of approximately $16,000. Under the proposed law, the person will be entitled to a tax offset of $800 (i.e. $16,000 x 5%) and therefore only pay $15,200 in income tax.
Small business asset write-off
Assets that are acquired and installed ready for use by small businesses between 7:30pm AEST on 12 May 2015 and 30 June 2017 are able to be immediately written off provided the cost of the asset is less than $20,000. This threshold applies on a per asset basis.
Assets that cost $20,000 or more (which cannot be immediately deducted) can continue to be placed in the small business simplified depreciation pool and depreciated at 15% in the first year and 30% each year thereafter. It should also be noted that where the balance of the small business simplified depreciation pool is less than $20,000 over this period the entire balance can be immediately written off (including existing pools).
From 1 July 2017, the threshold is expected to revert back to the existing amount of $1,000.
A bakery that is structured as a company purchases a new oven for $13,750 and a new cabinet for $3,500. Under the previous law, because these assets each exceed the previous $1,000 threshold, they would need to be included in the small business pool. Of their combined $17,250 cost, only 15% (or $2,588) would be depreciated in the first year. At a company tax rate of 30%, the company would receive a tax benefit of $776 in the first year.
Under the new law, the company will be able to claim an immediate deduction for both assets, providing an immediate deduction of $17,250. With the new small business company tax rate of 28.5% from 1 July 2015, the company will receive a tax benefit of $4,916, which is an improvement of $4,140.
Immediate deductibility for professional expenses regarding start-up businesses
With effect from 1 July 2015, businesses will be able to immediately deduct a range of professional fees associated with starting a new business, such as accounting and legal advice. For example, fees paid to your accountant to establish a new company or trust.      
Currently, these professional costs are deducted over a 5 year period.
A person paid $1,500 to their accountant to setup a company for a new business venture. Under the current law, the new company would only be able to claim a deduction of $300 over the next 5 years. However, under the new law, the company would be able to deduct the entire $1,500 in the first year.
CGT rollover relief for change of entity structure
With effect from 1 July 2016, small businesses will be able to change the legal structure of their business without attracting a Capital Gains Tax ("CGT) liability at that point.
CGT rollover relief is currently available for individuals who transfer their business into a company (provided certain criteria are met), but all other entity type changes have the potential to trigger a CGT liability. This measure recognises that new small businesses might choose an initial structure that they later find does not suit them when their business is more established. The Government provided an example of a sole trader changing their business structure to a trust without triggering any CGT liability.
No FBT on work related electronic devices
From 1 April 2016 small businesses will be able to provide their employees with more than one qualifying work related portable electronic device (e.g. mobile phone, laptop, tablet, etc.), even where the devices have substantially similar functions.
Currently, an FBT exemption can apply to more than one portable electronic device used primarily for work purposes provided the devices perform substantially different functions. This new measure is designed to remove confusion where there is a potential overlap in the functionality of various devices. For example, a small business employer can now provide both a laptop and a tablet to its employees under this exemption despite their similar functionality. Note, each device still needs to be primarily used for work purposes in order to be exempt from FBT.
Work related car expenses
Currently, there are 4 different methods by which taxpayers can claim a tax deduction for work related car expenses - cents per kilometre, logbook, 12% of original value, and one-third of actual expenses incurred. From 1 July 2015, only the cents per kilometre and logbook methods will continue to be available.
As a further simplification, the cents per kilometre method will only have a single rate of 66 cents per kilometre, as opposed to the three different rates that currently apply based on the engine capacity of the car.
Additional information
If you would like any additional information regarding the above or any other tax related matter, please don't hesitate to contact our office on (02) 9894 8884 or
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Vantage Partners
Taxation Planning Tip
SuperStream is coming....Are you ready?
Tax Tip                                                                                May 2015     

What is SuperStream?
SuperStream refers to a range of measures introduced by the Federal Government to help make the back office function of super funds more efficient. In particular, SuperStream aims to:
         Ensure timely electronic processing of transactions;
         Remove the incidence of lost and duplicate super accounts;
         Create timely allocation of contributions to member accounts;
         Improve efficiency for both employers and super funds.
What does SuperStream mean for employers?
A key element of SuperStream that will affect employers' is the requirement to comply with the new data and payment standard. The standard requires employers to:
Send all contribution data in a standard message format;
Make all contribution payments electronically. That means no more payments by cheque;
Ensure that data and payments are sent on the same day.
When does SuperStream come into effect?
Employers with 20 or more employees must use the new standard for sending contributions to super funds from 1 July 2014.
Employers with less than 20 employees must use the new standard for sending contributions to super funds from 1 July 2015.
What should employers do to prepare for SuperStream?
SuperStream is another prime example of the importance of ensuring that your accounting software is kept up to date.
At Vantage Partners we work closely with all leading accounting software providers, including MYOB, Xero, and QuickBooks and can assist you in ensuring that your accounting software is compliant with SuperStream.
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Vantage Partners
Taxation Planning Tip
Steps involved in a typical SMSF borrowing arrangement
Borrowing within your self-managed superannuation fund (SMSF) to acquire a property has become a very popular strategy for many of our clients. There are a number of benefits to this strategy, however it is important that a series of key steps are followed to ensure that no unforeseen consequences occur.
Below is a list of steps involved in a typical SMSF borrowing arrangement.
Determine that borrowing would be an appropriate strategy within your SMSF. This would often involve the assistance and advice of your accountant or financial planner.
Review the trust deed of the SMSF to ensure that the trustee has the power to borrow, grant security and allow assets to be held by custodians for the trustee. If the current deed does not allow this, then you should amend the deed.
Review the investment strategy of the SMSF to ensure that it allows for the acquisition of the property and permits borrowing for that purpose. If not, you will need to amend the investment strategy.
Source the property for purchase, negotiate the price and reach agreement with the vendor.
Finalise the borrowing arrangements with the lender including in-principle loan approval.
Determine who is to be the custodian. If you would like to use a new company, arrange for the new company to be setup. It is important to note that this company must be different to the SMSF trustee.
The custodian resolves in writing to act as custodian for the SMSF trustee in the purchase of the property.
The SMSF trustee resolves in writing to purchase the property and to appoint the custodian to act for the SMSF trustee as bare trustee of the bare trust.
The custodian is named on the purchase contract as the purchaser and signs the contract accordingly. Note, not the SMSF or its trustee.
The SMSF trustee provides all the deposit money for the purchase of the property. That is, money for the deposit should come directly from the SMSF's bank account.
The custodian and SMSF trustee sign the bare trust deed. It is important to seek legal advice to confirm the correct dating of this document.
The SMSF trustee signs all of the loan documents with the lender. Note, the SMSF trustee is the borrower.
Purchase of the property is completed using only money coming from the SMSF's bank account or from the loan by the lender.
The bare trust deed is submitted to the Office of State Revenue for payment of stamp duty (nominal duties apply).
When the loan is eventually repaid the property can be transferred from the custodian to the SMSF for nominal stamp duty provided the bare trust deed has been stamped already.
Please note that the above steps only relate to properties located in NSW.
If you have any queries about the above or are considering this strategy, please contact our office for more information.

Disclaimer: The contents of this publication are general in nature and we accept no responsibility for persons acting on information contained herein.
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MYOB just realised a video - Paying Super made super easy
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