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At the end of a busy day Adel was preparing to go home. She is an office manager at a very successful small family business that sourced and supplied quality aftermarket parts for air conditioning repairs.
 
Just before Adel closed down her computer she received an email from her boss, the owner, David. In the email David asked Adel to arrange an urgent $50,000 transfer to a supplier that night...

Greater certainty on company tax rates for small business entities

Update of the previous article, 'Investment companies miss out on tax relief' written by Tim Elliot after the bill was introduced to the Parliament of Australia on the 19 October 2017. 
 

As part of the Government’s Enterprise Tax Plan, the corporate tax rate for small business entities (aggregated turnover of less than $10m) has been;

  • cut to 27.5% for the 2017 income year, 

with the turnover threshold for small business entities;

  • increasing to $25m for the 2018 income year, and
  • again increasing to $50m for the 2019 to 2024 income year.  

The 'Netflix' Tax

Originally dubbed the “Netflix Tax”, from 1 July 2017, foreign businesses are liable to charge Goods and Services Tax (GST) at a flat rate of 10% on imported services and digital products supplied to Australian consumers ie. “B2C” sales. 

GST is an indirect consumption tax that is similar to Sales tax/VAT.

This development has caught many US on-line and e-commerce businesses on the hop with the main impacts being that it will bring many new taxpayers into Australia’s GST “net” and in most cases Australian customers will have to cough up more to cover the GST.

Company tax changes, a missed tax reform opportunity?

Have we missed the opportunity for meaningful tax reform?

The recent company tax rate reduction drives a wedge between small companies, with draft legislation and the Explanatory Memorandum not addressing key ambiguities.

In a world that is growing increasingly competitive, Australia requires leadership in tax reform and proper implementation more than ever.

Investment companies miss out on tax relief

** Updated 20 October 2017: Please note this bill was introduced to the Parliament of Australia on the 19 October 2017 and as a consequence elements of this article are no longer correct.  Please refer to our update 'Greater certainty on company tax rates for small business entities' by clicking here.

As part of the Government’s Enterprise Tax Plan, the corporate tax rate for small business entities (aggregated turnover of less than $10m) has been cut cut to 27.5% from FY17, with the turnover threshold for small business entities increasing to $25m in FY18 and increasing to $50m in FY19.

However, there has been significant uncertainty in relation to whether companies receiving primarily passive income (including corporate beneficiaries) constitute small business entities and therefore qualify for the lower corporate tax rate. Recent commentary amongst practitioners has certainly supported the possibility.

Are parties really committed to tax reform?

Of late we’ve seen both the major parties make their case for changes to the tax system. Whilst tax reform has been part of the political, business and social landscape for many years, the commitment of government to tackle this issue head on has been somewhat “lukewarm”. One can understand that from a political perspective  addressing wholesale tax reform can be difficult when you do not have a majority government, or the public have become disenchanted and their votes continuously “swing”.

2017-18 South Australian Budget Wrap

Treasurer Tom Koutsantonis has revealed his fourth budget, the last before the 2018 state election. Voters have been wooed with community grants, infrastructure spending, apartment affordability measures and some extra payroll tax relief for business.

Whilst the big banks –  today's headline story  - and foreign investors (neither of whom vote) have come out the biggest and very sore losers.

2017 Tax Planning Checklist: Introduction

This paper sets out various items to consider prior to 30 June 2017, for effective tax planning.

  • Taxing of Trade Income

  • Record Keeping

  • Individual Income Tax Rates

  • Temporary Budget Repair Levy

  • Medicare Levy Surcharge and Private Health Care Rebate

2017 Tax Planning Checklist: Deductions

Key Items

  • ​Prepayments - Small Business Entity Taxpayer

  • Prepayments - Not Defined as Small Business

  • Prepayments "Excluded Expenditure"

  • Deductions Under the General Prepayment Rules

  • Bringing Forward Deductions

  • Interest on Investment Loans

  • Bad Debts (if taxation return prepared on an accruals basis)

  • Staff - Bonuses

  • Staff - Holidays

  • Superannuation

  • Superannuation Minimum Contribution

  • Superannuation Co-Contribution – for 2016/17

  • Interest on Loan Funds

  • Repairs and Maintenance

  • Directors’ Fees

  • Travel Deductions

  • Expense Substantiation

  • Depreciation

  • Negative Gearing

  • Building Allowance

  • Borrowing Costs

  • Entertainment

  • Research and Development

  • Property Owner's Deductions

  • Donations and Gifts

  • Audit Fees

  • Salary Packages

  • Working from Home Expenses

  • Expenses for Shareholding Investments

  • Taxation Advice

  • Motor Vehicle Expenses

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