Newsletter - March 2005
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 Tax Audits
Australian Taxation Office has now moved from educating taxpayers on GST issues
to relentless revenue rising exercise. The ATO plan includes:
-Contacting more than 85 000 businesses whose financial performance is markedly
different from their industry peers.
-600 ATO officers will be making visits to around 20 000 businesses. These
officers specialise in detecting omitted income and businesses operating
outside the tax system.
-Identification of cash economy issues by 2400 field officers through general
compliance reviews.
-Checks undertaken since the start of the new tax system have also identified
tens of thousands of businesses that appear to have been operating without
lodging income tax returns. Most of these are micro-businesses, and the ATO is
pursuing these also.
A number of high risk industries have been selected by the ATO for close
scrutiny. These include:
-Building and construction
-Road freight service
-Taxis
-Cafes
-Restaurants and takeaway food outlets
-Hairdressing and beauty salons
-Cleaning services
-Clothing and textiles
-Pubs, clubs and taverns
-The security industry
-Second hand car dealers
Employers Beware
Recent changes in Industrial Law are going to be troublesome to unaware
employers. As from 1 January 2005 employers in State Awards will be
gradually subjected to Federal Awards. Most adversely affected will be
those industries involved in after hourse and week end work. Unless
properly drawn and approved employment agreements are drawn up, the
employers may become liable to back pay substantial shift and overtime
penalties.
End of Financial Year
We are now fast approaching the end of the financial year 2003. It is time to
reveiew the year and complete all necessary steps to ensure smooth closure of
financial accounts. The items that must be paid special attention are:
Any extra super contributions must be made and paid before 30/6/05. Be aware
that this years Superannuation Gurantee Levy is 9% of gross wages. If you have
short paid, it is time to make up the difference. Stock take will have to be
done on 30/6/05. If the taxpayer is applying Simplified Tax System (ask us to
find out if you are) then it is best to pay out all liabilities before 30/6/05.
Review your wages records to ensure they are properly kept. The employee
payment summaries will be issued in July 03 and it will be difficult to correct
mistakes later on.
PSI Legislation
PSI (or Personal Services Income) provisions of the Act is now in force. 80/20
provisions are very important for professional taxpayers. Stated very simply,
if you are a professional, earning income from your personal exertion, and if
80% or more of your income is earned from one source, then you may be caught by
this legislation. If you operate as an individual taxpayer or trust, it
basically requires that all income is directed to you personally. Same applies
if you are operating through a Company. However, in a Company situation, you
need to pay your PAYG witholding tax and super contributions properly. You MUST
consult with us if you think this legislation affects you to ensure that you
have complied with all requirements before 30 June 2005.
Self Managed Superannuation Funds
The legislative requirements on Self Managed funds are becoming very
difficult to operate them. We strongly recommend that all small funds
should be closed and transferred to an externally managed fund. Management of
the larger funds should be handed over to specialised bodies. It is important
to understand that we are no longer allowed to do the accounts and audit these
funds at the same time. We can do one or the other. We recommend that every
business with a self managed fund visit us to discuss this matter.
Simplified Tax System
This is the second year that the new STS can be applied. It basically means
that small businesses with less than $1'000'000 turnover can use cash basis of
accounting, ignore trading stocks up to $5'000 and use asset pooling method
instead of depreciation. This is a great system for businesses with substantial
trade debtors.
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