It is Tax Time again! For some this can be quite a stressful time, especially for those who own a business, are accounting professionals, are in the financial services industry and in software development too!
It’s not unusual for some of us to be running like mad, finishing last minute tasks, booking client meetings and running important EOFY processes, or if you are like us, putting the finishing touches on a software update for thousands of users! We’ve been poring over the budget documents to see what changes affect your software.
There are several ways to keep the stress at bay at the end of the financial year. One of the best ways is by being organised. It will also help to understand what changes are coming. Knowing exactly how this Tax Time season is going to affect your business can help avoid nasty surprises.
So, to help you stay up to date this tax time we’d like to share some information about key changes which may affect you from come 1 July this year.
Taxable Payment Reporting for the Building and Construction Industry
It was in last year’s Federal Budget that the Government introduced Taxable Payments Reporting. The new reporting requirement affects businesses in the building and construction industry.
Whilst this has been in place since the start of this financial year, the first Taxable Payment Annual Report (TPAR) needs to be submitted by those in the industry in July 2013. The due date for this report is 21 July 2013 and will require reporting on information your business has gathered throughout the year.
We’ve updated both our desktop and hosted products in the Reckon Accounts business range with the Taxable Payments reporting capability to assist users with compliance. You can now compile the TPAR report and submit electronically using the latest software and via the ATO portal; if you are familiar with the EMPDUPE file for Payment Summaries, the process is somewhat the same.
If you are unsure as to whether you need to report or not, consult the ATO or your accountant.
Tax Scale Update
Although the Federal Budget had no overall major PAYG changes, HELP and SFSS are indexed to CPI and so their thresholds have been adjusted. Due to this a new PAYG tax table is required for Reckon Accounts and Payroll Premier 2013/14. Our Reckon Accounts software will be updated before the end of June to help users comply with this change.
Super Guarantee Rate Increase
One of the most significant changes this year is the rising Super Guarantee rate (SG). The SG is going to be increased from 9% to 12% incrementally, from 1 July 2013 until 1July 2019, the first increment is from the current 9% to 9.25%.
Our Tax Time update for Reckon Accounts users will help users with this change, all default super payroll items of type Super Guarantee Act (SA) will automatically be updated in new and existing company files. Likewise, all employee records where this super payroll item has been applied at 9% will automatically be updated to the new rate of 9.25%.
Calculations for the Reportable Employer Super Contributions (RESC) are also affected by this change as the lower threshold has now been increased to the new rate. Hence, the Reckon Accounts 2013 Tax Update will address the updates of all RESC algorithms as well.
So what do you do at the end of June, at what point should you start paying 9.25%?
The ATO’s ruling on this has been that if it is ‘reasonably expected’ that the employee will receive the money in the account on 30 June or before, 9% still applies, if not 9.25% must be paid, even in June. The big point about this ruling is that it is determined by when the employee gets the money, not when the employer pays it. Remember it is quite common for Credit Unions to take two days to credit employee accounts with salaries. For any specific questions about this change please consult the ATO.
New upper age limit for Super Guarantee Eligibility
From 1 July 2013, the upper age limit for paying super for an employee will be removed so mature age workers can keep building their retirement savings if they are employed. This means there will no longer be a maximum age for super guarantee eligibility.
If you have eligible employees aged 70 years or older, you will now need to make super contributions to their super funds. The rate of which is the same as those under 70.
Other rules still apply such as the $450 threshold. If you have any doubts please talk to your financial advisor or accountant.
Private health insurance rebate
The private health entitlements to the rebate have changed in the new financial year. Under the new measure, the Government will no longer pay a rebate on the Lifetime Health Cover (LHC) loading component of the premium.
This change will also be affected by your clients’ income. They will receive a statement from their private health insurer which they are required to complete with their tax return. Accounting professionals should also note that your clients may now be eligible for a private health insurance rebate if they were covered by private health insurance, regardless of who paid for the policy.
Medicare levy surcharge thresholds
The Medicare levy surcharge is now determined by new income thresholds. There is no change to how the Medicare levy surcharge applies, or to any exemptions that may apply to your clients’ circumstances, the change only affects the thresholds.
Fuel Tax Rates
From 1 July 2013, carbon charge amounts for liquid and gaseous fuels will increase, hence reducing fuel tax credit rates (FTC) for fuels. Please contact the ATO for the new rate.
That covers the main changes coming into affect at the start of the 2013/14 financial year. You’ll find a whole host of documentation relating to each of these at the ATO website and the federal budget website.
What are the most pressing tax time concerns you or your clients have this tax time?
Please note: This blog does not constitute tax or accounting advice or individual financial advice. For any specifics related to your specific business or finances, please consult your registered tax agent.