The staff at Gotsis Rubic & Barbariol wish you and your families a very happy holiday season.

We look forward to helping you with your tax and providing the best service possible in 2012

If your enquiry is urgent please email us at tax@gotsisaccounting.com.au or call 0418 473 793

2011 Individual Tax Return Checklist

The amount nominated in the PAYG notice is based on the untaxed income (business income, rents, interest, investments etc.) shown on your last income tax return. The amount nominated is due by the 21^st of October, 2011.

If your untaxed income for the 2010/11 year financial year is less than the amount shown in your previous tax return you may vary the amount. However please note that if your estimate proves to be lower than 15% of your actual untaxed income for the year, the ATO may impose a charge.

The PAYG instalment amount will be credited towards your tax liability and it will determine whether you have more to pay or if you are entitled to a refund. Please note that it is recommended that you pay the PAYG instalment prior to lodging your tax return.

If you pay the PAYG instalment quarterly, you may be eligible to pay the instalment only once by the 21^st of October each year.

Please contact us for further information.

• 14 July 2011

Employers to provide payment summaries (Group Certificates) to the employees.

• 21 July 2011

Clients who lodge activity statements monthly: June 2011 activity statement is due for lodgement and payment.

• 28 July 2011

Quarterly PAYG instalment notice (Form R, S or T) for the quarter ended 30 June 2011 is due for payment. No lodgement is required unless the amount nominated by the ATO is varied.

If you lodge your quarterly activity statements by yourself:  June 2011 activity statement is due for lodgement and payment.

If your tax agent is lodging your quarterly activity statements:  June 2011 activity statement, tax agents have an extension to lodge and pay the activity statement to 25 August 2011.

If you did not pay the Superannuation Guarantee Contribution (SGC) by 30 June 2011, please pay by 28 July 2011. Any payment after that date will not be tax deductible. In addition, the ATO may impose fines for non-payment by the due date.

• 14 August 2011

If you are preparing the PAYG Payment Summary (Group Certificates) by yourself, the Annual Statement to the ATO must be lodged by 14 August 2011.

If the PAYG Payment Summary Annual Statement is being prepared by your tax agent, they will have an extension to 30 September 2011. If the only employees of the business are family members, the Annual Report may be lodged even later. You will need to let your tax agent know if your employees are family members only, so that your business can be granted an extension.

• 21 August 2011

The July 2011 monthly activity statement is due for lodgement and payment.

• 21 September 2011

The monthly activity statement for August 2011 is due for lodgement and payment.

• 30 September 2011

PAYG withholding Payment Summary Annual report for businesses with Tax Agent involvement is due for lodgement.  (Businesses with only family members as employees may be able to lodge the report by the income tax return due date).

• 21 October 2011

Monthly activity statement for September 2011 is due for lodgement and payment.

Annual PAYG instalment notice is due for payment.  Lodgement is only required if the instalment amount is varied or the rate method is used to calculate the instalment amount.

• 28 October 2011

Quarterly instalment notice (Form R, S or T) for the quarter ended 30 September 2011 is due for payment.  Lodgement is only required if varying the instalment amount.

If you lodge quarterly activity statements by yourself:  September 2011 activity statement is due for lodgement and payment.

If your tax agent is lodging your quarterly activity statements:  September 2011 activity statement, tax agents have an extension to lodge and pay the activity statement to 25 November 2011.

Superannuation guarantee contributions, for quarter ended 30 September 2011: contributions to be made to the fund by this date.

• 31 October 2011

Income tax returns for all entities with one or more prior year returns outstanding as at 30 June 2011 are due for lodgement. If there are no outstanding tax returns, then extension beyond 31 October 2011 applies.

• 21 November 2011

Monthly activity statement for October 2011 is due for lodgement and payment.

• 1 December 2011

Payment of income tax for companies and superannuation funds where lodgement of the income tax return that was due by 31 October 2011.

Should you have any queries in relation to the matters raised in this post, or indeed any matter relating to your taxation affairs, please do not hesitate to contact us.

All of us at Gotsis Rubic & Barbariol are looking forward to hearing from you.

• Work-related expense claims: Occupations the ATO will be focusing on will be employee school teachers, employee engineers and mechanics.
• Purchase-related costs for rental properties: The ATO will be focusing on costs associated with the purchase of rental properties.
• Personal Superannuation Contribution Claims:
• Contribution caps and excess contributions: The ATO will be monitoring compliance with the contribution caps.

High net worth individuals, investors (relating to investment expenses) and the cash economy will also be targeted.

To avoid being caught in the ATO’s radar, specialist advice on your personal circumstances should be sought.

Outlined below are some of the more important changes that will impact taxpayers lodging their 2011 tax return.

• Personal Income Tax rates have been marginally reduced from 1 July 2010.
• The Low Income Tax Offset has been increased to $1,500, up from $1,350.
• The Tax Free Threshold  has increased to $16,000, up from $15,000.
• The Medical Expenses Tax Offset threshold has been increased to $2,000, up from $1,500.
• The Senior Australian Tax Offset has been increased from $29,867 to $30,685 for singles and $25,680 to $26,680 for each for couples.
• Taxpayers receiving Youth Allowance can now claim self education expenses. A standard $550 deduction can be claimed from 1 July 2006 until 30 June 2011.
• The Paid Parental Leave (PPL) Scheme offers the primary caregiver of a child born on or after 1 January 2011  a maximum of 18 weekly payments equal to the minimum wage (currently $569.90). PPL payments are considered assessable income and need to be  included in your tax return.

If you are ready to lodge your 2011 tax return please call for an appointment or use the contact us Page. We are conveniently located in the Sydney inner west suburb of Five Dock.

It is February 2011, two months into the New Year and a number of people have yet to lodge their 2010 Income Tax Return.

If this applies to you, please take this opportunity to read up on some changes that may impact you when you do lodge your return.

Remember, if you are expecting a tax refund, the earlier you lodge your tax return, the sooner you will receive your refund

Lodgment Dates

Generally, a tax return is due for lodgment with the Australian Taxation Office by the 31st October of each year. However, tax agents are granted an extension to be able to lodge their clients’ returns beyond the 31st of October. Please note that this extension is not granted for the clients who have one or more tax returns outstanding as at 30th June 2010.

ATO’s current Target Areas

Cash Economy

As part of Treasurer Wayne Swan’s recently released 2010/11 budget, an additional $107.9 million over 4 years will be provided to the ATO to address the issue of small businesses using cash transactions to avoid tax.

The ATO is focusing their attention on ‘cash economy’ hotspots, business to consumer transactions, individuals whose lifestyles do not match their reported income  and businesses that continue to operate with income levels below what would be expected.

Business sectors attracting the ATO’s attention include the home renovation sector, some sections of the retail industry (small value, high turnover retailers) and certain sections of the hospitality industry (particularly those establishments offering lower cost services).

The ATO has developed industry benchmarks for more than 100 industries in order to identify those businesses that may be avoiding their tax obligations by not reporting some or all of their income. In addition, the ATO are identifying additional sources of data to match with information supplied in tax returns and business activity statements, such as records of luxury car purchases.

Work Expense Claims

Work expense claims issues the ATO will be focusing on include:

• insufficient documentation relating to motor vehicle and travel expenses
• claiming for the living-away-from-home allowance when the claimant does not qualify
• home offices, mobile phone and internet expenses

The ATO this year will be paying particular attention to truck drivers, sales and marketing managers, sale representatives and electricians due to their high motor vehicle and travel expenses claims.

We remind all clients to ensure they have appropriate documentation to support their claims.  In some instances this would include documentation in addition to receipts and invoices.  For example, if a private motor vehicle is used for both private and work purposes, logbooks and odometer readings should be kept in order to determine the percentage the car is used for work related purposes. Another example is if work related travel involves the taxpayer being away from home for more than 6 nights in a row. A travel diary needs to be kept in order to claim travel expenses that exceed the reasonable amounts allowed by the ATO.

Payment of the Superannuation Guarantee

One of the ATO’s key priorities is to ensure that employers meet their superannuation guarantee obligations. Industries identified by the ATO as being at a high risk of not meeting their superannuation guarantee obligations include the road freight transport industry, the automotive repair industry and electrical services industry.  Employees identified by the ATO as being non compliant will need to pay the required superannuation guarantee along with interest and possible penalties.

Employers need also take note that late payment of the superannuation guarantee (i.e. payments made after the 28^th day of the month following end of the quarter to which those payments relate to) can affect tax deductibility. Tax deductibility of superannuation guarantee payments relating to the 30^th June 2010 quarter that is not paid by 28^th July 2010 will be deferred to the year ending 30^th June 2011.  In order to maximize tax deductions for the 2010 year it is recommended to pay the superannuation guarantee contribution by 30^th June 2010 in order to obtain the deduction in the 2010 year.

Executives and Directors

The ATO are focusing their attention on executive and director remuneration payments. The ATO will be checking that shares and options received as remuneration are correctly reported.  For the 2010 year, there are new rules relating to the timing of the assessability of the discount received under the employee share or option schemes.  In brief, all discounts on share and options provided under an employee share scheme will now be assessed in the income year in which they are acquired, whether they are qualifying or non qualifying.  The ability to defer taxation of the share or option may arise where there is a real risk of forfeiture of the share or option. New disclosures have been included in the 2010 tax return following the tax legislation changes in this area.

Offshore Transactions

ATO are using data matching facilities and information from overseas tax offices and financial institutions to identify unreported foreign income.  Audits will be directed at those taxpayers where there are discrepancies identified in the matched data.

Self Managed Superannuation Funds

Given the concessionary tax treatment applied to self managed superannuation funds, the ATO are working on ensuring high levels of lodgment compliance, with a particular focus on regulatory matters such as loans, in-house assets, borrowings and arms-length transactions.

***

Dimitri Gotsis

GOTSIS RUBIC & BARBARIOL

Just a short note to let you know that Business Activity Statements (BAS) and/or Installment Activity Statements (IAS) are due for lodgement and payment by 28th February, 2011.  No further extension will be granted by the Taxation Office.

If you lodge your IAS monthly, the January 2011 Statement is due for lodgement and payment by 21st February, 2011.

The February Activity Statement is due by 21st March, 2011.

The March Activity Statement is due by the 21st April, 2011.

Please note that the Fringe Benefits Tax (FBT) year ends 31st March, 2011.  If you have been lodging FBT returns please take the odometer reading at 31st March, 2011.

If you conduct your business through a Company and the Company owns motor vehicles that are sedans or four wheel drives and these vehicles are made available to the employees (including directors) for private use , then the Company may have an obligation to lodge a FBT return.

Dimitri Gotsis

The “Cash Economy” refers to business transactions settled in cash and then not recorded as either income or expenditure

To many small business owners it will sound ironic that at a time of adverse economic conditions, when business owners have to literally pour money into their business from borrowings and other sources, the ATO is announcing that it will intensify its compliance and audit activities.

The ATO is sending  around 100,000 letters to small operators around the country, informing them that their income is outside their industry’s “Benchmark“. Many more taxpayers will receive a phone call from the ATO regarding the “Benchmark” and their perceived low taxable income.

These “Benchmarks” are a set of business percentages that have been arrived at after consultations between the ATO, representatives from various industries and professional bodies and also from information gathered from tax returns of taxpayers operating within the relevant industry.

If you receive either a letter or a call from the ATO please let us know.

Our advice to all our clients is to make sure that accurate records of income and expenditure are kept so that documentary evidence exists should the ATO have any questions.

DIMITRI GOTSIS

Gotsis Rubic & Barbariol, tax accountants Sydney, see a number of target areas of focus for the Australian Tax Office (ATO) in 2010/11 as follows:

Cash Economy

The ATO is focusing their attention on cash economy hotspots, business to consumer transactions and those whose lifestyles do not match the income they report or whose businesses continue to operate with income levels below what would be expected. Business sectors attracting the ATO’s attention include the home renovations sector, some sections of the retail industry such as small value, high turnover retailers and certain sections of the hospitality industry, particularly those establishments offering lower cost products.

The ATO have developed industry benchmarks for more than 100 industries to identify those businesses that may be avoiding their tax obligations by not reporting some or all of their income. In addition the ATO are identifying additional sources of data to match with information supplied in the tax return and business activity statements, such as records of luxury car purchases and tying those purchases back to the taxable income declared.

An additional $107.9 million over 4 years will be provided to the ATO to address small businesses that use cash transactions to avoid tax.

Work Expense Claims

The key work expense claims subject to the ATO’s focus include:

• insufficient documentation available to support motor vehicle and travel expenses;
• claiming for the living-away-from-home allowance when the claimant does not qualify for the allowance;
• home offices, mobile phone and internet expenses.

We remind all clients to ensure they have appropriate documentation supporting their work expense claims. In some instances, this would include documentation in addition to the relevant receipts and invoices. For example, if a motor vehicle is used for both private and work purposes, car logbooks and odometer records should be kept in order to deduct the work related portion of motor vehicle expenses under the logbook method.

Payment of Superannuation Guarantee

One of the ATO’s key priorities is to ensure that employers meet their superannuation guarantee obligations. Industries identified by the ATO as being at high risk of not meeting their superannuation guarantee obligations include the road freight transport, automotive repair and electrical services industries. Employees identified by the ATO as being non compliant will need to pay the additional superannuation guarantee together with additional interest and penalties. In this regard we note that the late payment of the superannuation guarantee (i.e. payments made after the 28th day of the month following end of the quarter to which those payments relate to) are not tax deductible.

Rental Expenses

There are three expense items in the rental statement that the ATO will continue to pay attention to.

• Interest: Only interest on that part of the investment loan that relates to the investment property is deductible and only for that part of the year that the property was rented or available to be rented.
• Repairs and Maintenance: Expenditure that relates to renovations or improvements is not an income deduction but it may be a depreciable expenditure.
• Capital Depreciation Allowance: To be able to claim 2.5% of the cost of a building you must have an appropriate depreciation report from the Developer or from a Quantity Surveyor

Executives and Directors

The ATO are focusing their attention on executive and director remuneration payments, including checking that shares and options received as remuneration are correctly reported. For the 2010 year, there are new rules relating to the timing of the assessability of the discount received under the employee share or option schemes.  In brief, all discounts on share and options provided under an employee share scheme will now be assessed in the income year in which they are acquired, whether they are qualifying or non qualifying. The ability to defer taxation of the share or option may arise where there is a real risk of forfeiture of the share or option. New disclosures have been included in the 2010 tax return following the tax changes in this area.

Offshore Transactions

ATO are using data matching facilities and information from overseas tax offices and financial institutions to identify unreported foreign income. Audits will be directed to those taxpayers where there are discrepancies identified in the matched data.

Self Managed Superannuation Funds

Given the concessional tax treatment applied to self managed superannuation funds, the ATO are working on ensuring high levels of lodgement compliance, with a particular focus on regulatory matters such as loans, in-house assets, borrowings and arms-length transactions.