Under superannuation guarantee for employees 2016 legislation, the amount payable for 2015/2016 for employees (and some contractors) remains at 9.5% of a worker’s ordinary time earnings.  The superannuation contributions are payable by employers on a quarterly basis, on or before the 28th of the month following each quarter end.

To be deductible in the financial year of payment, the June 2016 superannuation payment needs to be made on or before 30 June 2016.  Otherwise, superannuation payments are due as follows:

QUARTER                 DUE DATES

September                     28 October

December                      28 January

March                            28 April

June                               28 July

It is essential that employer superannuation payments are made to (and in) the nominated superannuation fund on or before the due date to avoid the administrative burden required in the event that payments are even one day late!  Employer superannuation contributions are under the ATO’s scrutiny and timing is an issue.

Employers with fewer than twenty (20) employees who are yet to engage with Superstream and are required to should refer to the relevant news blog in May 2015 archives.

For further advice, call the team at BSN & Co on 08 9204 3733

Want to know how your SMSF can invest in property?

If your fund has more than enough monies available to meet the cost of acquisition including stamp duty and any settlement costs, then direct investment would be the straightforward cost effective way to go and would avoid the need for other structures!  Without the need to borrow, ongoing administration and management would also be simplified.

Alternatively, should your fund not have sufficient monies to purchase property outright, amended superannuation law allows borrowing by funds to acquire assets including property.

Known as ‘limited resource borrowing arrangements’ (LRBA), these quarantine the risk of borrowing to the particular asset acquired, rather than expose all fund assets should there be any future difficulty with loan repayments.

Generally, the LRBA requires a separate “bare” holding trust into which the property being acquired is transferred, while the SMSF enters into the loan agreement with the lender.  At the end of the loan period the property title is transferred from the holding trust to the SMSF.

While the LRBA are not as simple or straightforward as borrowing normally encountered, they at least facilitate property investment by funds and, furthermore, a member or related party of the fund may be lender to the SMSF.

Property investment by a SMSF may occur through a tenants-in-common approach – i.e. the SMSF purchases only part of the property in conjunction with another party, both parties have specific percentages or proportions of the whole property, which itself may not be used for security.

An in-specie contribution of property by a member owning a business property is an option subject to member contribution caps and any capital gains tax and stamp duty implications.  The contribution caps may mean any in-specie contribution of property would have to be undertaken progressively over several years with the vendor utilising small business capital gains tax concessions.

A further option as regards SMSF investment in property is to utilise the related entity strategy, whereby a related company or unit trust in which the fund and other party/parties invest, pools the funds and acquires a property, hence the SMSF is a joint shareholder or joint unit holder for an indirect investment.  Of course, there are restrictive conditions on what the related entity may or may not do to satisfy superannuation requirements but, nevertheless, an alternative which facilitates investment in property.

For further advice, call the team at BSN & Co on 08 9204 3733

The supply of existing residential premises is an input taxed supply under sections 40–35 of the Goods and Services Act, hence any rental expenses on-charged to tenants by real estate agents or landlords are not subject to GST irrespective of whether the agent or landlord is registered for GST.  However, any associated fees for, say, an agent’s services would be subject to GST provided the agent is registered for GST.

Commercial residential premises will attract GST on the same basis as for other commercial properties.

For expert advice about residential property leases, contact us on 08 9204 3733

Advantages of Fringe Benefits Tax 2016 statutory formula method

It is worth contemplating the advantages of this method over the operating cost method, even though a standard 20% rate was introduced from 1 April 2014.

The statutory formula method is:

PRIVATE USE FRIENDLY

The statutory formula method does not distinguish between business and private use, hence this method does not penalise those with high private use of the company or salary packaged vehicle.

Under the operating cost method the calculation of fringe benefits tax is based solely on the level of private use – the more private use, the greater the FBT liability!

RECORD KEEPING

The statutory formula method includes all kilometres, whether business or private, hence there is no requirement to keep records to distinguish between business and private.  All that is required is the opening and closing kilometre readings for the FBT year and the base cost of the motor vehicle.

The operating cost method would not only require log book kilometres, but records of the usual motor vehicle expenses:

• Fuel
• Insurance
• Registration
• Services
• Repairs
• Lease payments

Further, for owned motor vehicles the calculation of depreciation and imputed interest would need to be calculated as part of ‘operating costs’.

TAX CONCESSIONS

The statutory formula method allows the base value of the motor vehicle to be discounted by one third after four full FBT years.

GENERAL

The use of the statutory formula method is certainly less onerous in terms of record keeping, therefore convenient for taxpayers and accountants.  Notwithstanding the advantages outlined above, we recommend you compare the statutory formula and operating cost methods, particularly with higher cost, low private use motor vehicles.  Although the operating cost method is likely to yield a better fringe benefits tax outcome, only 30% of taxpayers use it.  Even with relatively high business use (which would be exempt from FBT), taxpayers tend to prefer the convenience of the statutory formula method.

For expert advice call us on 08 9204 3733

Keeping track of sales, earnings, expenses and purchases is fundamental to the overall health and sustainability of your business.  Effective bookkeeping produces the data you need to evaluate your current practices and plan for the future.

But despite its proven effectiveness, many business owners dread and avoid doing their bookkeeping tasks.  Here are four reasons why bookkeeping is crucial to your success.

Keeping track of expenses

A reliable system for tracking expenses ensures you reap all the benefits you’re entitled to when doing your tax returns.  Expenses such as “food”, “travel” and “office supplies” can be easily categorised when recorded in a bookkeeping software program.

Using a dedicated credit card for business expenses and reconciling your bank statements on a monthly basis ensures that nothing is missed come tax time.

Measuring profitability and planning for the future

In order to grow your business, you must be able to track and compare its finances from one year to the next.

In addition to reconciling your bank statements every month, effective bookkeeping generates data you can use to gain a comprehensive overview of your business.  This data can help you:

• measure year to year profits;
• identify opportunities to cut costs;
• plan for major expenses such as new office space, equipment or staff; and
• develop data-based strategies for expansion.

Preparing for tax time

Few things are more stressful for business owners than scrambling to get poorly maintained financial records ready for tax time.  In addition to the panic of last minute preparation, inaccurate or incomplete documentation can lead to the ATO imposing penalties and interest charges or conducting an audit.

Sound bookkeeping will not only save you money, it will enable you to meet lodgement deadlines in a timely manner and give you peace of mind.

Final tip:  ask for help

Most business owners are passionate about the overall business, not just crunching the numbers.  Employing a bookkeeper, even on a part-time or as-needed basis, to help manage tasks like processing payroll, reconciling the books each month and managing accounts receivable will keep everything running smoothly and optimize your overall efficiency and profitability.

Invest in effective bookkeeping and you’ll build a solid foundation for business success.

Here at BSN & Co we have experienced bookkeepers who can help you manage your business.  Visit our bookkeeping page to find out more.