| 2004 Tax Time Newsletter |
| 2004 Tax Time Newsletter |
TAX TIME NEWSLETTER 2004
Changes in the Practice
Updating our Database
This Year?s Tax Returns
Superannuation Co-Contributions
TAX TIME CHECKLISTS 2004
For Individuals
For Rental Property Owners
For Businesses
including Self-Managed Superannuation Funds
Use of Checklists
Record Keeping
Answers to FAQs - Taxable / Deductible Items
Employers ? End of Financial Year Requirements
Computerised Accounting Programs ? Some Considerations
OUR COMPANY - WHAT?S DIFFERENT THIS YEAR?
Two new staff members have joined us this year, Nicole Thyer and David Siddles.
COMMUNICATION WITH CLIENTS
Updating our Database:
Our database needs to be complete and up to date at all times so that we can provide information to you.
o Directors: If you are a director of a company, you have to notify any change of detail within 28 days or fines apply. Please contact Kirsty Laing so that we can notify the ASIC of changes to any director information.
o All clients: We may need to contact you in relation to your income tax or other matters. Please advise Kirsty promptly of any changes to your daytime contact details.
If you wish to correspond by e-mail, send us an e-mail at info@simmo.com.au and we will add you to our electronic mail list.
Postage Paid:
We provide postage paid envelopes for return of documents. If you send original documents in the mail, please keep copies or details, as we cannot accept responsibility for items lost in transit to us.
TAXATION
Business Activity Statements
Private Use ? when preparing Activity Statements, take care to apportion the business / private use correctly, otherwise you may be overstating your claim. Account for the private use in the quarter in which it occurs. If we calculate a ?Recipient?s Benefit Payment? payment for you for FBT purposes, you can ignore private use in all Activity Statements.
Claiming Input Tax Credits for Goods obtained under Hire Purchases / Leases ? when preparing the Activity Statement on the cash basis, be careful when you claim the input tax credits for goods obtained under hire purchase or for lease payments. You cannot claim the whole input tax credit in the quarter when the goods are delivered, but progressively, as the payments are made. However, if you prepare the Activity Statement on the accruals basis, you can claim the whole input tax credit for hire purchase goods ?up front?. An alternative is to arrange a ?chattel mortgage?. Contact us if buying a car or equipment in relation to this.
Tax Returns
Undeclared Interest and Dividends ? take care in ensuring you have given us all interest and dividend details as the Tax Office is advised of these amounts separately by the financial institution.
Rental Properties ? we will alert you to any potential problem areas. One area may be the definition of ?plant? for depreciation purposes. A recent AAT decision to disallow deductions for depreciation on various items of ?plant? at a rental property may cause confusion for taxpayers. However, each case is different, and whether or not an item is ?plant? or part of the structure of the property, is a question of fact. It may be advisable to obtain a quantity surveyor?s report as to the value of ?plant? items in rental properties.
Work Related Expenses ? take care to keep receipts or other documentary evidence of your expense and the connection with your employment.
Travel Expenses ? again make sure you can substantiate the expense and the connection with an income producing purpose
? travel required by your employer, or in the course of your work, or
? travel to attend a company AGM, an investment portfolio management cost, or
? travel to inspect rental properties etc.
Again, be careful about the extent of the claim, as private portions of travel expenses are not deductible.
Superannuation co-contributions
Government co-contributions are calculated by your superannuation fund. Your superannuation fund will advise you of co-contributions received from the Commonwealth Government.
IMPORTANT:
This Newsletter and set of Checklists is not advice. Readers should not act solely on the basis of this material. Items herein are general comments only and do not constitute advice. Changes in legislation may also occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas covered in this newsletter.
For further information on subjects in this Newsletter, contact:
Michael Simmons B. Ec FCPA (FPS) at Simmons & Associates Pty. Ltd.
For all taxpayers ? preparing your relevant tax information:
? We ask that you use the checklists to ensure that we have all the information required to complete your return. Incomplete information means we have to put the file(s) aside and take up again where we left off once you have provided the requested information. This "stop-start" procedure is more time consuming and therefore more costly for you.
? We prefer to see copies of relevant documents, where possible, for retention on our files.
? If you are providing us with a summary of the information, and no documents are attached, please ensure that you provide all of the requested information.
? You can also save time by filling in the blanks for the checklist items before you forward your information to us.
? You are required to keep tax records for a period of five years from the date your tax assessment was issued. Failure to do so may mean the relevant item is disallowed for tax purposes.
? In some cases, it may be necessary to keep records longer. For example, if you have an item of equipment that you are claiming depreciation on, you need to keep records for as long as you use it for work or in a business, and for a further period of five years after you stop using it or dispose of it.
? For businesses, record keeping includes completing a Bank Reconciliation. Failure to perform a bank reconciliation is seen by the Tax Office and ASIC as a failure to keep basic records. We routinely do bank reconciliations for clients when specifically requested, and some clients prefer to complete their own using spreadsheets or computerised accounting programs.
? Profits on sales of shares and other assets bought after 20/09/1985 are taxable.
? Dividends on shares are taxable even when there are imputation credits.
? Dividends which are reinvested are still taxable.
? If you received interest from the Tax Office during the year, it is taxable this year.
? If you paid interest to the Tax Office during the year, it is deductible this year.
? Parking fines and traffic fines, and fines for late payment of taxes are not deductible.
? Purchases of raffle tickets are not donations and are not deductible.
? Any fringe benefits or salary sacrifice amounts are shown on your PAYG Payment Summary. These amounts are not taxable but are taken into account when assessing other items such as Medicare Levy Surcharge, Centrelink benefits etc.
? PAYG Payment Summaries (formerly known as Group Certificates) should be issued to employees by 14th July 2004. The 2003/2004 PAYG Payment Summary Statement (formerly the Annual Reconciliation Statement) is due by 14th August 2004. If you require assistance with this, please contact Michael.
? WorkCover Annual Declaration of Rateable Remuneration
o Must be completed and returned by 31st July 2004.
o 2003/04 Certified Statement of Remuneration (Salaries, Wages, Allowances etc paid). Remember to include Superannuation and Fringe Benefits paid for the year in your calculation of Remuneration.
o 2004/05 Estimate of Remuneration WorkCover provides estimates ? you may need to revise these.
o (Over on page 2) Certification to be signed by you
o Note: Payment of your WorkCover Premium will be due in October 2004.
? Superannuation Guarantee Contributions
o The compulsory 9% super contributions need to be made by 30th June 2004 to be deductible for 2003/2004.
o If not made by 30th June, contributions for 2003/2004 must be made before 28th July 2004 to avoid the SGC Levy and losing the 2003/2004 deduction for employer contributions.
By and large, the single biggest advantage for business people of the Activity Statement system has been the need to prepare financial information quarterly or at least to keep it up to date. Knowing where your business is at the moment (rather than six or eighteen months ago) is a business advantage over competitors and ?best practice? management. As a result of the introduction of GST and the new tax system, many clients have installed computerised accounting programs, designed to keep track of financial information and to comply with the reporting requirements of the new tax system.
The aim, for both parties, client and accountant, is for timely, useful financial information at a reasonable cost, while you continue the all important work of running your business.
If you are using a computerised accounting program, please consider the following:
1. Upgrades / Versions of Accounting Programs:
In our office we must install the latest versions of computerised accounting programs, to keep abreast of the programs that our clients are purchasing. However, we will no longer be able to maintain multiple versions of the various accounting programs. The cost of maintaining such an infrastructure is too great and too prone to error for us - we will maintain the latest two versions of each program. Also, there are questions of reliability of some older versions of some programs.
If you use and send us an earlier version, our programs will automatically update the file to the latest version. This means we can no longer make required adjustments to your file and return it to you, unless you have one of the later versions.
2. Bank Reconciliations:
Since the bank reconciliation is the basis of all financial reports, please complete the bank reconciliation before sending the data file to us. We cannot accept responsibility for financial accounts supplied to us where the bank account has not been reconciled.
3. Corrupt or Incomplete or Locked Data Files:
Similarly, we are unable to work with corrupt or incomplete data files. We will check the files as soon as we receive them by running various reports. If there are any problems with the file, we will contact you to correct your files and resend them to us.
With QuickBooks, please do not give us an ?Accountant?s Copy? to work with as this copy locks certain data files - access to some data is then blocked and we cannot memorise reports and the ?drill down? function is effected in certain circumstances.
Various Tax Time 2004 checklists follow. If you require further copies, or wish to refer family or friends to us, they are also available from our website at www.simmo.com.au
29th-June-2004 |
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