GST court decision with far-reaching consequences

Court decision on trade incentive payments could have far-reaching GST consequences
Recent Full Federal Court decision re goods and services tax (GST) treatment of four types of manufacturer incentive payments made to a car dealership. 

However the decision, and the Tax Office's response, is likely to have an impact in the wider market, not just in the motor vehicle dealership industry.

The GST law in relation to identifying "supply" and "consideration for supply" are not industry specific. Therefore the interpretations and concepts that have been highlighted by the court case may have implications for business taxpayers in many other industries that use supplier rebate programs, incentive agreements and similar schemes.

In fact, should any business's circumstances reflect the decisions in the case and/or the Tax Office's administrative advice as offered in its "decision impact statement", that business may well be entitled to claim a refund. In fact, all business taxpayers should also take these factors into consideration before finalising any proposed future supplier rebate or incentive agreements.  Read more…

Need a hand moving #yourBUSINESS to the cloud?

You know there's value in having your business processes in the cloud
Every week you mean to start, but sometimes that's as far as you get.

You're not alone. Finding time to develop a plan and get started is a significant hurdle for many business owners and bookkeepers we talk to.

That's where GJB can help.

Cloud accounting provides excellent value for businesses. And we can help you start realising those benefits sooner with our Crawl / Walk / Run program.

GJB's Crawl / Walk / Run program has three clear benefits for you and your business:  Read more…

New SuperStream standard - are you ready?

New SuperStream deadlines for SMSF trustees and employers
SuperStream is mandatory for all employers making super contributions and is being imposed in two stages. 

The new SuperStream standard requires super funds and employers to use new data and e-commerce standards for all superannuation transactions, and are designed to address inefficiencies in back office processing by encouraging the use of technology.

There has been widespread use of cheque payments and paper-based forms resulting in poor quality data, processing delays and duplicated or lost member accounts.

Superannuation funds, including SMSFs, must be ready to receive contributions and data in the new electronic standard from 1 July. If GJB processes your SMSF, we have matters in hand.

Large and medium sized employers are the first that must comply with the new system while small businesses have a further 12 months to comply.

From 1 July 2014:  Read more…

In a partnership? Know how liability of debt works?

Loan interest can be deductible to a partnership
A general law partnership is formed when two or more people* go into business together. 

Partnerships are generally set up so that all partners are equally responsible for the management of the business, but each also has liability for the debts that business may incur.

Partnership deduction for interest expenses
A typical scenario when launching a business based on a general law partnership structure sees each partner advance some capital to start up the enterprise. As the income years come and go, each partner takes a share of the profit and counts this as part of their personal assessable income for tax purposes.

However as the business becomes established, or better yet proves to be viable and becomes a successful operation, there is likely to come a time when its working capital - which had been financed from each partner's pocket - can be refinanced through the partnership business borrowing funds.

For such partnerships, there is a "refinancing principle" under tax law that spells out some general principles governing the deductibility of loan interest in such circumstances.  Read more…

Lodgement deadline approaches for R&D tax claim

Eligible businesses should prepare and register any research and development tax incentive claims for FY2012-13
30 April 2014 deadline fast approaching.

Registration of claims for the R&D tax incentive can take place up to 10 months after the financial year in which the R&D activities took place. R&D activities must meet certain criteria to be eligible for the tax incentive, and must be classified as either core R&D activities or supporting R&D activities (ask this office for more details about what these are and other eligibility criteria).

What does the tax incentive cover?
The R&D tax incentive is a government initiative that provides support via two available tax offsets to help businesses undertake R&D activities. The two components of the program are:

  • A 45% refundable tax offset (equivalent to a 15c in the dollar benefit for a company) for eligible entities with an aggregated turnover of less than $20 million per annum; or
  • A non-refundable 40% tax offset (equivalent to a 10c in the dollar benefit for a company) for all other eligible entities.

The R&D tax incentive has several objectives. It aims to:  Read more…

New ATO app to help small business

There are two kinds of treasures on the Web
Those you want to keep forever, and those you only need to keep until you have a few minutes -- which is where this app comes in.

Small business owners can now download the ATO app for access to Small business assist's useful calculators and tax information, when they're on the move.

You can use the app to:

  • search Small business assist to find information on a range of topics and videos, and to book an after-hours call back with a small business specialist
  • work out if a worker is an employee or a contractor for tax and super purposes
  • work out how much tax to withhold from your employees and other workers' pays
  • see how a payment plan can help you to quickly pay off a tax debt.

Small business owners can now use the ATO app to access services to help with their business tax affairs at a time and a place convenient to them, which can be downloaded through Google play™, Apple App Store and Windows Phone Store.

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FBT fears, cheers and changes

The current FBT year is just wrapping up
It has been a period of potential turmoil with the proposal to scrap the statutory formula method for calculating car benefits.

However not long after this landed on the legislative table it was swept off it again by the current government. So the status quo remains in this area of FBT law. But it may have served as a distraction from some other important adjustments, one of which is that the FBT rate is increasing come April 1.

The increase to the FBT rate comes about due to the Medicare levy increasing from 1.5% to 2% of taxable income from July 1, 2014. The boost to the levy is to be directed to the DisabilityCare Australia Fund. Consequently, the FBT rate will increase from its present 46.5% to 47%, but comes into force earlier.

Type 1 and type 2 gross-up rates are also affected, and ultimately the grossed-up taxable value of fringe benefits provided. The rate for type 1 benefits increases from 2.0647 to 2.0802, and type 2 from 1.8692 to 1.8868, both from April 1. For employers, the additional FBT payable due to the increase is 1.83% for type 1 benefits and 2.03% for type 2 benefits.

Note that the higher gross-up formula was introduced to avoid allowing employers the benefit of claiming GST input tax credits for items bought for the private use of employees. The higher gross-up effectively recovers the input tax credit that an employer can obtain in providing a fringe benefit.  Read more…

A very popular deduction, but have you got it right?

Car expenses
A very popular deduction, but you've got to get it right!

Vehicle expenses are a very regulated area for claiming deductions, so good guidance on making car expense claims is essential to stay on the right side of the taxman. It is not generally allowed, for example, to claim the cost of trips between home and work, even if you do minor work-related tasks on the way.

This is also the case where you may be called into work while otherwise at home, or if you worked shifts that are outside usual work hours. The fact that there happens to be no public transport near where you work also generally doesn't make a difference.  Read more…

Selling a property? Factored in GST?

Vendor guide on GST treatment of residential premises
It is typical for people to consider stamp duty, land tax and income tax implications when they sell a property, but remember that it is equally important to consider whether the transaction will be subject to goods and services tax (GST). 

One important thing to remember is that there is now a single test that looks at the physical characteristics of a property to determine its suitability for residential accommodation, and as a result, its GST treatment.

Let us run through how the sale of your property may fall under one of these three categories:

  • taxable supply – the seller is liable for GST on the sale and can claim GST credits for anything purchased or imported to make the sale
  • GST-free supply – the seller is not liable for GST, but can still claim GST credits for anything purchased to make the sale, or
  • input taxed supply – the seller is not liable for GST on the sale and also cannot claim any GST credits.

The sales of properties are input taxed, and not subject to GST, if they are used predominantly for residential accommodation.  Various issues exist that determine whether residential premises can be considered residential accommodation or not. After that, we outline what happens when you sell commercial residential and new residential premises.  Read more…

Small business certainly has one thing in common with government, corporates and industrial conglomerates
All need to keep accurate books!

Whilst bookkeeping is at the heart of a business's success, getting it wrong can prove costly.

We've compiled six of the most common bookkeeping blunders made by small business. Check them to know exactly what to avoid:

1. DIY. In an often misguided attempt to save costs, many small business owners elect to keep their own books. If you have the time and experience, it is a valid approach. If not, a competent bookkeeper is a blessing. Not only do they have the capability to do the job quickly and save you time, they also give you an extra pair of eyes to spot errors and make suggestions.  Read more…