WHY SHOULD I LODGE MY TAX RETURN ON TIME?

 

There are a number of reasons to lodge your Income Tax Return on time! Firstly there are the obvious reasons which include avoiding Tax Office late lodgement penalties, we have recently viewed penalties of up to $900 and Activity Statement penalties up to $1,700 per outstanding lodgement. 

Another reason for lodging on time and paying your tax liability is to avoid the Tax Office imposed General Interest Charge on liabilities (tax payables). The ATO issues General Interest Charge at a rate of 9.28%. This interest rate is generally far greater than a home loan interest rate and can quickly increase the balance of the amount you owe. 

Other than the penalties, as of recent times we have noticed a lot more financial institutions are asking for current copies Income Tax Returns for loan applications or loan renewals to support the amount of income which they are basing a loan or credit application on.

If you currently do not have the available funds to pay out the full tax debt another service we offer as qualified Tax Agents is negotiating payment arrangements with the Tax Office on your behalf. This can mean that you could pay off the debt in more manageable smaller payments. 

If you having issues dealing with your lodgements and Tax Office debt, call us to arrange a confidential meeting to discuss getting your lodgements up to date and putting a plan in place to deal with the debt. 

Please contact Andrew Marshall or Janine Orpwood at Langley McKimmie Chartered Accountants on (03) 5427 8100 to discuss further.

We provide accounting and wealth management services to clients in Woodend, Gisborne and Macedon Ranges areas within Victoria Australia.   

 

VICTORIAN STATE BUDGET 2016-2017

The recent State Government Budget announced an increase in the payroll tax threshold from 1 July 2016 by $25,000 per annum over the next four years. With the current rate of payroll tax at 4.85% the overall saving per business group over the next four years is $12,125.00.

Other key highlights are:

- $1.2 billion to help business grow
- $10.4 billion in infrastructure
- $1.1 billion in funding education
- $2.9 billion in health funding
- Expected unemployment rate to drop from 6.0% to 5.75%
- Budget expected to be in surplus of $2.9 billion
- Extension of land tax primary production exemption to urban land owned by certain family
  superannuation funds.

Please contact Andrew Marshall or Janine Orpwood at Langley McKimmie Chartered Accountants on (03) 5427 8100 to discuss further.

We provide accounting and wealth management services to clients in Woodend, Gisborne and Macedon Ranges areas within Victoria Australia.   

MAIN RESIDENCE EXEMPTION PART 2 - ADJACENT LAND

 

In the event that adjacent land is split from a taxpayers main residence and separately sold, a capital gains tax event will occur, even when the original block is less than 5 acres. Case Study  Bob acquired a residential property on 2 acres for $1 million, it has been his main residence for the entire ownership period, 4 years. The property encompasses two adjoining titles, Title 1 includes the dwelling, Title 2 includes a swimming pool, a shed and other facilities but no part of the dwelling.   Bob has now been offered approximately $1.5 million for the sale of the second title on its own. He seeks guidance on the capital gains tax consequences of selling the second title and in particular, whether a main residence exemption is available to him. He does not intend to sell the first title which will be retained and will remain his main residence.   Capital gains tax will apply to this sale and a main residence exemption will not be available. The actual cost base of the portion of land will need to be established. It will be a reasonable portion of the purchase price paid for both lots plus a proportion of associated cost base items incurred on the property since. As the property has been owned in excess of 12 months, a general 50% CGT Discount will be available.   Notably, should Bob sell both titles to the same purchaser under the one contract, a main residence exemption would be available. Please contact Andrew Marshall or Janine Orpwood at Langley McKimmie Chartered Accountants on (03) 5427 8100 to discuss further. We provide accounting and wealth management services to clients in Woodend, Gisborne and Macedon Ranges areas within Victoria Australia.

HOW DOES THE 2016-2017 FEDERAL BUDGET AFFECT YOU?

The 2016-2017 Budget introduced a lifetime limit of $500,000 for non-concessional superannuation contributions effective 7:30pm on 3 May 2016.  Significant changes from 1 July 2016 are: - The company tax rate will reduce to 27.5% for companies with turnover < $10m.   The turnover threshold to access the reduced tax rate will increase annually and the   company tax rate will reduce to 25% by 1 July 2026 - The 32.5% tax threshold for individuals will increase from $80,000 to $87,000  Significant changes from 1 July 2017 are: -  The concessional superannuation contributions cap will be reduced to $25,000 from    $30,000 or $35,000 (depending on your age) -  Removal of the “work test” which will allow people aged 65-74 to more easily    contribute to superannuation - The ability for all individuals to claim a tax deduction for personal concessional   superannuation contributions - Creation of a $1.6 million dollar superannuation pension cap  Please note the 2016-2017 budget initiatives have not been passed through Parliament at time of printing and are subject to change. Please contact Andrew Marshall or Janine Orpwood at Langley McKimmie Chartered Accountants on (03) 5427 8100 to discuss further. We provide accounting and wealth management services to clients in Woodend, Gisborne and Macedon Ranges areas within Victoria Australia.

FOREIGN RESIDENT CAPITAL GAINS WITHHOLDING

New legislation has now been passed which could impact transactions involving the purchase of taxable Australian property from foreign residents. The most common transactions affected will be those involving real estate but it has a wider application to but not exclusively mining rights, property trusts and options over these items. 

Essentially the purchaser is obligated to withhold 10% of the purchase price on payments made to foreign residents on contracts for taxable Australian property entered as of 1 July 2016. The withholding must be paid to the ATO unless certain conditions are met. This only has application for real property with a market value over two million dollars. The vendor can apply to the ATO for a ‘clearance certificate’ and once this is given to the purchaser they would not be required to withhold the 10%.

For more information please see:

https://www.ato.gov.au/General/New-legislation/In-detail/Direct-taxes/Income-tax-for-businesses/Foreign-resident-capital-gains-withholding-payments/

 

 Please contact Andrew Marshall or Janine Orpwood at Langley McKimmie Chartered Accountants on (03) 5427 8100 to discuss further.

We provide accounting and wealth management services to clients in Woodend, Gisborne and Macedon Ranges areas within Victoria Australia.