Month: April 2022
Be ready before refinancing or applying for a new loan
Documentation for a new loan is lengthy and requires personal and financial information. You will need to have proof of identification, along with proof of income, and you will need to show your living expenses and assets and liabilities.
YML’s Finance Team can help you with valuations of properties. If it has been over 12 months since your last valuation, then it is time for a new valuation to keep a record of your equity availability up to date.
Purchasing property is a process that is simplified by having your finance lined up and ready to be accessed when a purchase occurs.
Be ready with your application and lenders will be even readier to assess it for you.
How can YML help?
Talk to our YML Finance Team today to see how YML Group can assist you with your refinancing and loan applications. For more information, view our website and contact us on (02) 8383 4466 or by using our Contact Us page on our website.
Do yourself a Service – Partner with YML’s Bookkeeping Service and be ready for FYE 2022
What if you could focus on your organisation’s day-to-day business operations and put your customers first whilst knowing that your business financials are being maintained to the highest order?
Having access to a virtual bookkeeper who understands Australian business, its dynamics and regulations has many benefits including saving you time to focus on customer service and new business development.
Your virtual bookkeeper via YML’s Business Process Outsourcing (BPO) provides financial information in management-level reports at any given time of the day or night, giving you the opportunity to review your business’s financial health and convey this information to internal and external stakeholders in a timely manner.
You will save time spent stressing and gain peace of mind that your business will stay in control of its financial processes. You can sigh a sense of relief that a paperless, virtual strategy can empower you to take the reins and continue to build your organisation without having to do the bookkeeping yourself.
Up-to-Date Financial Accuracy
When you, as business owner, need to deliver fast, informed decisions requiring up-to-date financial information, the benefit of YML’s bookkeeping service is that it manages your financial information, improving your business by providing ready knowledge of whether it can, for example, hire a new employee, increase office space or issue a purchase order for a new asset. Make sure your business is financially accurate as it heads towards the end of the financial year 2022.
2022 Tax-Time Compliance
With a swathe of regulations around company taxes, including GST, BAS and PAYG withholding tax, it is important that your business keep financial records that enable accurate and timely reporting to the Australian Taxation Office (ATO).
If you, or someone else in your organisation, are trying to manage the books without the necessary qualifications or experience, there is a risk that financial data might be incorrectly entered and ATO penalties could be incurred. Missed tax payments due to human error or lack of knowledge can be avoided by using YML’s bookkeeping service to stay on top of your business’s regulatory financial obligations and thereby reduce unwelcome costs to your business.
Do yourself a service…
Be a credible, professional, and efficient enterprise by partnering with one of YML’s highly qualified, specially trained, Australian-focused bookkeepers who will be ‘at your service’ via video chat or via phone as often as you choose.
How can YML help?
Talk to our YML Business Services Team today to see how YML Group can assist you with Bookkeeping. For more information, view our website and contact us on (02) 8383 4455 or by using our Contact Us page on our website.
It’s time to apply for a Director Identification Number (DIN)
As part of the 2020 Budget – Digital Business Plan, the Australian Government requires all Australian company directors to mandatorily register for a Director Identification Number (DIN).
A DIN is a unique number assigned by the Australian Taxation Office (ATO) to a director for eternity, even if you change companies. A DIN your unique identifier. Any director of a company or of a registered entity under the Corporations Act 2001 must acquire a DIN. It is free to apply.
A Director Identification Number is:
- Verification of a company director’s identification
- A 15-digit number, beginning with 036 (a 3-digit country code for Australia under ISO 3166) and ending with an 11-digit number plus one ‘check’ digit for the purpose of detecting errors
- Unique to a person and does not change even if a director changes job title, leaves a company, changes their name or moves interstate or overseas
The purpose of this DIN register is to help:
- Prevent director involvement in unlawful activities
- Prevent fraudulent use of director identities
- Prevent false director identities from being created
- Authorities to trace – in real time – directors’ business relationships and their business activities within companies
- Create fairness in a more equitable business environment because wrongdoings by directors can be traced
What do you need to do?
Click the below link and follow the instructions on how to get your Director ID.
How to apply for your Director ID?
Note: If the Director cannot apply by the due date they can complete an Application for an extension of time to apply for a director ID (NAT75390, PDF, 271KB).
For more information, kindly visit:
https://www.abrs.gov.au/director-identification-number/about-director-id https://www.abrs.gov.au/director-identification-number/who-needs-apply-and-when
How can YML help?
Talk to our YML Chartered Accountants Team today to see how YML Group can assist you with your Director ID. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.
Trust Distributions – Draft Section 100A – What you need to know?
In the late 1970s, then-Treasurer John Howard introduced Section 100A (S 100A), a provision designed to overcome ‘trust-stripping’ and to address the integrity of trusts and their income distributions.
Treasurer John Howard’s press release in 1980 read in part, “Last year’s measures are contained in Section 100A of the Income Tax Assessment Act. This section applies so that, where amounts of trust income are directed to persons not intended to have the benefit of them, the amounts are treated as income to which no beneficiary is presently entitled, and thus taxable at the maximum personal rate.”
Pointedly, S 100A relates to the ATO’s consideration of trust entitlements and arrangements created to distribute income to beneficiaries where there is no intention for the beneficiaries to receive the benefit of those trust entitlements and arrangements.
In 2014, the Australian Taxation Office (ATO) sent out a Fact Sheet giving a heads-up on S 100A and where the ATO saw the future of trust distribution compliance heading. Those who heeded the 2014 Fact Sheet are now likely quite versed in the direction the ATO is wanting to take its S 100A draft ruling.
The newly-released draft guidance has some differences from the 2014 Fact Sheet such as working capital properly done left in a trust would not cause a S 100A to be brought nor would loans on commercial terms, however any differences are outlined in the draft guidance available now.
It is worth noting that The Tax Institute’s senior advocate, Robyn Jacobson, has stated that this draft guidance is the most significant guidance on trusts in over 10 years. Let’s look at it more closely…
The draft guidance includes:
- A draft Taxation Ruling – TR 2022/D1 – referencing Income Tax: Section 100A Reimbursement Agreements
- A draft Practical Compliance Guideline – PCG 2022/D1 – referencing S 100A Reimbursement Agreements (ATO’s approach to compliance and the allocation of resources to review and assess)
- A Taxpayer Alert – TA 2022/1 – referencing parents benefitting from any trust entitlement of their adult children
There is no limit to what might be a ‘reimbursement agreement’, an agreement that provides for the transfer of money or property to a person other than the beneficiary or to the beneficiary and some other person/s (including persons, companies, trustees).
It should be noted that the onus is on a taxpaying beneficiary to show that they would be entitled anyway to distributed trust income but for a reimbursement agreement.
Trust distributions for the purpose of tax reduction might see a trustee’s past transactions reviewed under S 100A. For example, trustees who use trust distributions to take advantage of lower marginal tax rates of beneficiaries (see Taxpayer Alert – TA 2022/1) could be non-compliant with S 100A where there is any purpose of tax avoidance.
To avoid invoking a S 100A, a trust will be tax-driven within the scope of an ‘ordinary’ family or commercial dealing as S 100A does not apply to arrangements entered in to in the course of ‘ordinary’ family or commercial dealings.
This exception of ‘ordinary’ family or commercial dealing applies when the transactions between family members and their entities within a trust can be explained as regular familial or normal commercial acts without the need for further explanation. Although the definition of ‘ordinary’ is not yet clearly defined, the draft ruling contains examples that would or would not be classified as ‘ordinary’ family or commercial dealings.
The ATO has to date taken a rather broad view of TR 2022/D1 when S 100A has been applied and considered in the Federal Court, as set out in the full decisions of the Federal Court in the cases of FCT v Prestige Motors Pty Ltd [1998] FCA 221 and Idlecroft Pty Ltd v FCT [2005] FCAFC 141.
Taxpayer Alert – TA 2022/1
The ATO’s taxpayer alert concerns family trusts wherein arrangements are made to distribute trust income to adult children, or other lower-taxed family members, and parents benefit via repayments and reimbursements then made by the adult children back to the parents. Where it is not intended that the adult children retain any benefit of the distributed trust income, rather their acquisition of the income is purely based on tax avoidance, then the ATO will assert its concern and authority. (Note: Minors are not affected by S 100A)
Trust income distributions to adult children still living at home and studying will face tougher inspection, especially if the parents have used this method to access lower tax rates for the parents’ own benefit. Although a commonplace activity, the ATO will assess whether such a trust income distribution event falls within an ‘ordinary’ family dealing.
Robyn Jacobson of The Tax Institute has said that although not uncommon for adult beneficiaries to receive trust income distributions, “the ATO is being very clear that it will be watching these arrangements very clearly” and that these “common set-ups… [may be] subject to tax under Section 100A”.
What else do you need to know?
It is anticipated that the ruling would possibly commence on 1 July 2022, however there will be a period for consultation and feedback and how much longer the guidance will be in draft form is unknown at this time.
It would be wise to start note-taking on what your trust has done so far in relation to S 100A, relative to both FYE22 tax planning and whether past distribution arrangements of your trust need to be reviewed.
The draft ruling allows for ATO not reviewing arrangements entered in to prior to 1 July 2014.
Taking the new ATO draft guidance on trusts in to consideration, trustees might be highly likely to incur higher tax payments on future trust distributions or the ATO might want to examine past income distributing executions.
Next Steps
We encourage you to contact YML Chartered Accountants now about your FYE22 planning and look at prior trust distributions in light of the new draft guidance.
How can YML help?
Talk to our YML Chartered Accountants Team today to see how YML Group can assist you with your trust compliance under S 100A. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.
