Super for Same Sex Couples

The meaning of 'spouse' has been redefined and this affects other aspects of super as detailed below.

For super laws your 'spouse' now includes:

• someone you are married to
• a person you are in a relationship with and that relationship is registered under certain state or territory laws (including registered same-sex relationships)
• a person of either sex living with you in a relationship as a couple (generally known as a 'de facto' spouse).

The changes to the law mean same-sex partners can now have their relationship recognised by their superannuation fund. The changes amend tax and super laws affecting super death benefits, death benefit termination payments, making contributions for your spouse and other aspects of the super system.

The result is that:

• the definitions of 'spouse', 'child' and 'relative' in the super laws include same-sex partners and their children
• the definitions of 'dependant' and 'spouse' in the income tax laws include same-sex partners and their children
• same-sex partners and their children under 18 years are treated as dependants for the purposes of taxing super death benefits and death benefit termination payments.

(Source: ATO)

ATO Withdraws e-Record Bookkeeping System

Visit this post for details of our recommended bookkeeping system ==> Cashflow Manager.

From the 2010-11 income year the Tax Office's record-keeping product, e‑Record, will no longer be available.

The product has been reviewed and found to no longer be compatible with current commercial record-keeping systems. It would also need to be redeveloped to keep up with technology and new business directions.

Version 6.2 is the final version of e-Record and is available for download until 30 June 2010. The ATO encourages e-Record users to consider purchasing record-keeping software by 30 June 2010.

I have never liked e-Record as I found it to be not user friendly and the reporting is inadequate.

For those people wanting to replace e-Record we highly recommend Cashflow Manager - see our post

Easy Bookkeeping System - Cashflow Manager

My Tax Zone is a Cashflow Manager re-seller - enquire today for 24 hour delivery.

The introduction of GST forced many small business to upgrade to PC based bookkeeping systems. Since then we have been a strong advocate for Cashflow Manager over every other bookkeeping system available in Australia. It is just so simple to use.

Simply record your receipts and payments transactions in columns. You don't need to know anything about accounting, and everything is right there on the screen for you to review. Each column has a 'GST' type that automatically calculates the GST and makes your BAS Statement a breeze. The program is so simple that it comes with a full, no questions asked 90 day money back guarantee so there is no risk in giving it a try.

Features of Cashflow Manager include:

• Cashflow Manager uses columns to record receipts and payments.
• Customising the program for your needs is very simple with a wizard that walks you through each step.
• There are several ‘business templates’ that automatically establish columns for your type of business
• Reconciling to your bank takes just 5 simple steps.
• Comprehensive reports explain your business transactions and results.
• Comprehensive, easy to follow Help and Video Tutorials that walk you through each process.
• The Monthly Summary Report provides a picture of your monthly receipts and disbursements.

Changes to Notice of Assessment - Feb 2010

The ATO are currently upgrading their computer systems to improve the way tax agents and taxpayers interact with the ATO.

As part of the changes, a new notice of assessment (NOA) will be introduced in February 2010.

Changes to the notice of assessment for income tax transactions apply from the introduction of our new Income Tax processing system, scheduled for February 2010. Some of the main changes are outlined below and samples of the current and new look notice of assessment are available.

You will only receive a new look NOA when Income Tax transactions start being processed using our integrated core processing (ICP) system.

The new look NOA is designed to be easier to understand and to provide more detailed information about your income tax assessment.

The changes made to the NOA will also apply to the notice of amended assessment.

Report Predicts Rental Rises Accross the Board in 2010

Property investors will be pleased with Australian Property Monitors (APM) expectations of rental increases throughout Australia

The report stated that after rents remained stagnant in 2009, strong increases are expected in the coming year.

APM economist, Matthew Bell, said that this implies increased market confidence.

‘It is clear that in 2009 rents were generally kept in a holding pattern as landlords and the market waited to see the end of the global financial crisis.’

Mr Bell said that increases are expected in all capital cities.

‘Sydney rents are likely to increase by at least double the 2009 rate of 2.2% to approach the $500 per week level for houses. After a totally flat 2009, Melbourne rents should resume their long-term upward trend and are expected to rise by [between] 5% and 7%, in line with their long term growth rate.

‘Both Brisbane and Perth are poised to outperform the rest of the country as their property markets play catch up to Sydney and Melbourne. ‘In Perth, median house rents could hit $400, a rise of 11%, in line with the average growth rate of 12.4% experienced since 2003. Brisbane rents, coming off the same base of $360 as Perth, are also likely to approach $400 with an expected growth rate closer to 8%,’ Mr Bell said.

The report said that Canberra prices are expected to grow by up to 10%, with Darwin rents increasing by 8% throughout the year.

Mr Bell expects renters will be able to cope with the increases.

‘Although rents should rise across the board, an improving employment outlook will mean more income for renters to be able to cope with these increases in 2010.’

Stamp Duty Calculator

If you are purchasing an investment property than stamp duty (a state imposed property tax) can be a substantial component of the purchase costs.

This online stamp duty calculator will help you estimate stamp duty on an investment property accurately of each state:

==> http://www.prospergroup.com.au/calculators.php#stamp-duty-calculator

The calculator also includes the mortgage registration fee, transfer fee and any stamp duty on a loan. This all encompassing calculator is excellent to use for accurate calculations.

ABN Registration

The Australian business number (ABN) is the identifying number that businesses use when dealing with other businesses – for example, you generally need to quote an ABN on your invoices or other documents relating to sales that you make to other businesses to avoid having an amount withheld from payments made to you. You use your ABN in certain dealings with the Tax Office and other areas of government.

You are not required to have a tax file number (TFN) to register for an ABN. However, having a TFN reduces the risk of administrative errors when dealing with the Tax Office.
Income tax exempt organisations do not require a TFN.

Entitlement to an ABN - the ATO has recently upgraded their ABN entitlement guidelines.

To be entitled to an ABN you must be:

• a company registered under corporations law in Australia
  a government entity, or
• an entity that is carrying on an enterprise in Australia.

A non-resident entity may be entitled to an ABN where:

• it is carrying on an enterprise in Australia, or
• in the course of carrying on an enterprise, it makes supplies that are connected with Australia.

Your enterprise does not have to be located in Australia.

(Source ATO)

What is a Notice of Assessment?

The notice of assessment the ATO sends you is an itemised account of the amount of tax you owe on your taxable income. It also contains other details that are not part of the assessment, such as the amount of credit for tax you have already paid throughout the income year, adjustments for outstanding debts (either ATO or child support) and or FTB reconciliations and credits for PAYG instalments paid during the year.

When you receive your notice of assessment, you should make sure that everything is correct.

After the ATO has processed your tax return, you are issued with a "Notice of Assessment". This will tell you if you are entitled to a refund, or if you have a tax debt to pay.

To understand the items on your notice of assessment refer to the information in Reading your notice of assessment on the reverse side of your notice. To understand how your refund or tax liability is calculated, follow these steps:

• work out if your taxable income is correct (the assessable income you earned minus deductions)
• add up the amount of tax payable on that amount of income (tax on taxable income, plus Medicare levy and Higher Education Loan Programme/Student Financial Supplement Scheme repayments)
• minus any offsets from your tax payable, then tax already paid (amounts withheld by your employer and paid on income activity statements)
• if there is an amount left over, this is refunded to you, and
• if there is an amount outstanding, this is your tax debt amount payable.

If you think the assessment is incorrect than check all the details on your notice of assessment with those on your tax return. If you think there is a problem, phone the ATO on 13 28 61 for help. You will need your notice of assessment and, if possible, a copy of your tax return.

If you use a Tax Agent they will handle that for your.

What is Medicare Levy

Medicare is the scheme that gives Australian residents access to health care.

To help fund the scheme, resident taxpayers are subject to a Medicare levy. Normally, we calculate your Medicare levy at the rate of 1.5% of your taxable income. A variation to this calculation may occur in certain circumstances.

Generally, tax offsets do not reduce your Medicare levy. However, if you have excess refundable tax offsets, we use them to reduce your tax, including your Medicare levy.

Medicare Levy Reduction - A reduction in medicare levy can apply depending on taxable income (individual and combined family income) and number of dependant children. For the 2009 year, for example, medicare levy is nil if you meet one of the following tests:

• Individual and income < $17794
• Individual eligible for Senior Australians Tax Offset < $28867 (higher threshold applies for couples)
• Individual eligible for the Pensioner Tax Offset < $25299 (higher threshold applies for couples)
• Family (including single parent families)
• ==> 1 child < $42000
• ==> 2 children < $44757
• ==> 3 children < $47514
• ==> 4 children < $50271
• ==> 5 children < $53028 etc

The above thresholds have various shade-in limits.

Medicare Levy Exemption - There are several exemption categories that include:

• If you are not an Australian resident you are EXEMPT from Medicare Levy.
• Defence force members who receive free medical under Defence Force arrangements are exempt (but not non-defence force spouses)
• Norfolk Island residents.

ATO Interest Rate Now 10.95%

On 1 July 1999, the penalty arrangements for late payment and other obligations were rationalised and simplified pursuant to Taxation Laws Amendment Act (No 3) 1999.

This was done by the introduction of a uniform tax deductible general interest charge (GIC). The GIC replaced a complex system of interest and punitive culpability penalties imposed following late payment of outstanding amounts due to the Tax Office.

The GIC is updated quarterly with rates for the next quarter generally announced two weeks before the start of that quarter.

The GIC rate announced for March 2010 quarter is 10.95%.

Previous rates can be obtained here ==> previous qtr GIC rates

(Source ATO)

Claim Lost Super (small accounts) From ATO

From 1 July 2010, the Government will require superannuation providers to transfer the following accounts to unclaimed monies:

• lost accounts with balances of less than $200 (small lost member accounts)
• lost accounts that have been inactive for a period of five years and have insufficient records to ever identify the owner of the account (insoluble lost member accounts).

Former account holders will be able to reclaim their money from the Tax Office at any time.

The first reporting period for superannuation providers will be 1 January 2010 to 30 June 2010 and the due date for lodgment and payment will be 31 October 2010.

(Source: ATO)

Small Business & General Business Tax Break

The ATO has released this update on the small business tax break to help answer common questions.

This information is to assist businesses answer their questions on the
business tax break including 'Am I eligible?', 'What can I buy?' and 'How
do I claim it?'.

The link ==> http://www.ato.gov.au/distributor.asp?doc=/content/Content/00193781.htm

Published: 09 Dec 2009

NRAS Tax Office Guidelines

The ATO has released details and guidelines on what NRAS is and how different types of taxpayers claim the NRAS tax benefits.

The link is ==> http://www.ato.gov.au/distributor.asp?doc=/content/Content/00179876.htm

The guidline covers topics such as:

• Background
• What NRAS incentives are provided through the tax system
• Who is entitled to NRAS tax offset
• Claiming the annual NRAS tax offset
• Calculating the NRAS tax offset
• and more

Average Mortgages Reach All Time High

The average new mortgage arranged in Australia in November reached
$367,000, the highest on record, according to AFG, Australia’s largest mortgage broker. The AFG Mortgage Index shows that mortgage sizes have been on the rise since the middle of the year, having increased by 6.4% since May. Supporting recent reports of increasing property prices, average mortgage sizes have grown particularly strongly in Victoria – up 12.1% since May and New South Wales – up 10.7%, but less so in WA, where they rose by 3% and Queensland, where they have held steady since May.

November also saw the continuing re-emergence of property investors, who accounted for one in three of all new mortgages arranged (33.8%), the highest such figure all year, and well up on the one in four (24.7%) figure for March when investment reached its lowest point.

However, overall monthly sales of mortgages in November declined for the second month in a row, off the back of increasing interest rates and sharply declining First Home Buyer numbers. First Home Buyers accounted for just 13.7% of all mortgages arranged in November, compared to 28.1% at their peak in March this year.

Mark Hewitt, General Manager of Sales and Operations says: ‘Larger average mortgages and greater activity by investors are usually the signs of a confident market. But confidence is still fragile. October and November are seasonally strong months in the calendar, but we’ve seen two straight months of decline. In our view the RBA has gone too far too fast in ratcheting rates back up again. Yesterday’s unprecedented third monthly rise will do nothing to encourage ordinary families back into the property market.’

AFG Mortgage Index also shows a slight change in the balance of lenders from banks to non-banks during the past two quarters (Table 6) suggesting that second tier lenders are becoming somewhat more competitive as global credit conditions ease.

Source: AFG

Single Member SMSF

Single member funds:

Did you know a fund can be set up with only one member?

The ATO allows for the creation of single member funds but it is important to remember the rules governing management of these funds.

In case you were not aware of the rules, they have been summarised for you below.

The first option for managing a single member fund is to choose a corporate trustee. In this case be sure that the member is one of the following

• the sole director of the trustee company
• one of only two directors, that is either of the following

* related to the other director
* not an employee of the other director.

The second option for managing a single member fund is to have two individuals acting as trustees. In this case one trustee will be the member and the other trustee will be either

• a person related to the member, or
• any other person who does not employ them.

It is important to remember that a trustee or director can’t be paid for their services as a trustee or director in relation to the fund.

Source: ATO