Category: Newsletters

Happy NEW Financial Year – ATO Changes Update

TPAR – Taxable Payments Annual Report

The Australian Government’s effort to garner taxes from people working outside the tax regulation system has meant you’ll need to report payments you’ve made to any and all contractual workers where labour/service costs have been included in their invoices to you during the financial year. The ATO uses the information you provide to ensure those contractors are meeting their tax obligation.

If your business provides building and construction services, then you will already be filing a TPAR, however from 1 July 2018, if your business provides cleaning services and/or courier services, then you will also need to lodge a TPAR this year by 28 August 2019.

From 1 July 2019 if your business provides road freight services, information technology (IT) services or security, investigation or surveillance services, then you will need to lodge a TPAR next year by 28 August 2020.

YML Group can guide you in fulfilling your ATO tax payment reporting obligation and assist you with your TPAR lodgement.

PAYGW – Pay As You Go Withholding

From 1 July 2019 you will no longer be allowed to claim a tax deduction for PAYGW expenses if you do not meet your ATO reporting obligations. If you failed to withhold PAYG tax from a payment OR if you withheld PAYG tax from a payment without informing the ATO, then you may not claim a deduction for those payments.

Voluntarily disclosing these errors to the ATO prior to the ATO commencing an audit will enable you to make a claim.

Remember to consider all PAYGW obligations for salaries, wages, commissions/bonuses, allowances, director fees, labour hire and/or payments made to contractual workers including those without an ABN.

STP – Single Touch Payroll

STP was introduced by the ATO to streamline reporting of salaries, wages, PAYG withholding taxes and superannuation contributions. From 1 July 2019 all small businesses must comply by submitting a single – digital – report after every pay day via a cloud-based payroll system using STP-enabled software from a STP software provider.

You can access STP solutions via the ATO’s website and/or an internet search, but we suggest you might like to call YML Group on 02-8383 4400 – if you do not currently use cloud accounting software, ask for Sarp from our Innovation division – to provide you a quote for our services to assist you with becoming ‘STP-compliant’.

Be aware that STP is a compulsory ATO requirement and non-compliance may result in ATO penalties.

SBE – Small Business Entity Concessions (Instant Asset Write-off)

From 2 April 2019 small- and medium-sized businesses may claim – until 30 June 2020 – an ‘instant asset write-off’ deduction of up to $30,000 for each asset purchased, installed and/or in use as at 2 April 2019.

To be eligible for this SBE concession, your business must have an annual turnover of up to $50 million.

Note that the threshold of $30,000 is the entire asset cost including GST (if you’re not registered for GST), but is the asset cost excluding GST (if you are registered for GST).

Medical Expenses (Tax Offset)

Financial year 2018-2019 was the last year – under special circumstances, namely disability aids, attendant or aged care – to claim the net medical expenses tax offset. This tax offset has now been phased out and is not an option from financial year 2019-2020 onwards.

Proposed CGT Exemption for Foreign Residents with Main Residence

A recent proposed Bill by the Australian Government in relation to the removal of the CGT main residence exemption for foreign residents has lapsed, therefore will no longer take effect.

How can YML help?

Talk to our Accountants today to see how YML Chartered Accountants can assist you with your ATO obligations. Contact us on (02) 8383 4400 or by visiting the Contact Us page on our website.

Superannuation Year End Considerations Continue!

Pension Payments – Have you received your annual minimum?

It’s time to check on your annual minimum pension payment and make sure that you are on track to receive the correct amount by financial year end 30 June 2019. If your superannuation fund does not pay you the minimum pension amount, you risk a cessation of your pension from 1 July 2019. Moreover, your usually tax-free pension investments will be taxed at 15 per cent.

Your retirement income stream is calculated from 1 July each year and you can calculate your annual minimum pension payment by using your age. See the table below for the minimum amount you may withdraw in a financial year:

Age of Beneficiary Percentage factor*
Under 65 4%
65 to 74 5%
75 to 79 6%
80 to 84 7%
85 to 89 9%
90 to 94 11%
95 or more 14%
 

*Applies to every financial year from 2013/14 to 2018/19.

The Australian government has conceived the ‘sole purpose test’ to safeguard your retirement income with its applicable tax concessions from being transferred to the next generation. The ‘sole purpose test’ requires the setting of an annual minimum pension amount, determined by your age and increasing incrementally every five years. These increments are called the ‘percentage factor’, starting at 4 per cent (as seen in the table above).

The percentage factor provides a ‘safe’ pension withdrawal amount that allows for a retiree’s fund balance to continue to support them in retirement. As you age, the percentage factor increases to 14 per cent.

The provision of a minimum pension payment is regulated, however there is no maximum withdrawal (annual) in the pension phase of the fund. A Transition to Retirement Pension (TTR), not in the pension phase, has a maximum withdrawal of 10 per cent.

Return of the Coalition Government – What does it mean?

With the Coalition Government’s win at the recent federal election, the superannuation initiatives that it presented in Parliament prior to the election may now be addressed and eventually legislated for the benefit of retirees.

Some of the changes made by the Coalition Government are: A Bill proposed prior to the federal election may soon be enacted to increase the maximum number of members of a SMSF from four to six, enabling larger families access to the one SMSF. This will offer convenience and eliminate additional set up costs of a second SMSF.

Franking Credit Cash Refunds – What happens now?

If you were wondering whether your ability to claim franking credit cash refunds would end at the federal election, you will be pleased to know that retirees will continue to benefit from franking credit cash refunds – no changes to the current ATO arrangement.

How can YML help?

Talk to our YML Super Solutions Team today to see how YML Group can assist you with your SMSF pension payments. Contact us on (02) 8383 4400, or by visiting the Contact Us page on our website.

AI and RPA changing the Future of Work

Whether your business is on-board with Robotic Process Automation (RPA) or not, soon it will be the convention to upgrade your business’s software with RPA. Australia and the world are moving towards a vast uptake of RPA and its future morphosis with Artificial Intelligence (AI). It won’t be a matter of why? It will be de rigueur in order to stay ahead as information technology develops more efficient and faster automated business processes.

What is RPA?

RPA is the use of software robots to process high volume and repeatable tasks usually performed manually by people within your organisation. It automates business practices, but only performs certain tasks - the repetitive and predictable ones. Generally, it can process transactions, move data, activate outputs and communicate digitally between all your company’s IT systems.

What is AI and how is it used today?

AI behaves in a similar manner to human intelligence. Humans can plan, perceive, reason, manipulate and solve problems. Similarly, AI can perform these behaviours via computer. For greater efficiency and further simplification of the digital processes already executed by RPA, AI is set to enhance RPA by introducing ‘intelligent’ automation, creating a higher-level RPA experience in the workplace.

Currently, AI is used, for example, in service-related companies to predict customer preferences; in wholesale and retail environments to track spending patterns; and in digital processes such as improving the quality of a photograph.

What does a RPA and AI ‘marriage’ look like?

‘Intelligent’ automation (that is, AI) will move RPA up a gear by making judgements on or gathering insights from data collected from your business, its partners and its customers.

AI’s ability to make decisions normally made by people will effect change in RPA outcomes. To date, RPA outcomes have been expected because RPA manufactures repetitive, predictable ones. Therefore, AI combined with RPA has the capability to penetrate the data and provide you with results based on intelligence - intelligence usually gleaned from your human workers.

More day-to-day sophisticated and complex automated tasks will be achievable with AI joining hands with RPA. Pattern learning, optical character recognition, computer vision, emotional AI and language processing are just some of the aspects of AI able to be competently accomplished via RPA.

Today’s businesses can benefit from faster speeds, higher productivity, greater cost efficiencies and increased proficiency through RPA, but the introduction of AI will revolutionise today’s businesses in to the future.

How can YML help?

Talk to our YML Innovation Team today to see how YML Group can assist you with your RPA and AI requirements. Contact us on (02) 8383 4400 or by visiting the Contact Us page on our website.

STP – COMPULSORY Cloud-based Payroll Reporting

If you’re a small company, you need to know that compulsory Single Touch Payroll (STP) is an initiative introduced by the ATO to streamline company reporting of salaries, wages, PAYG withholding taxes and superannuation contributions.

Where you used to report your workers’ payroll information to the ATO once a year in the form of PAYG payment summaries, you will now need to submit a single – digital – report after every pay day. No longer will you lodge PAYG payment summaries. However, your workers will still see their same individual information through myGov.

STP uses a cloud-based payroll system and, if you haven’t already, you will need to upgrade your digital connectivity with STP-enabled software from a STP software provider.

Need STP software?

Access this link for some available STP solutions to enable your business to report digitally to the ATO, then action one of the solutions:

https://www.ato.gov.au/business/single-touch-payroll/in-detail/low-cost-single-touch-payroll-solutions/

The ATO provides the information in this link, but doesn’t endorse it.

Alternatively, please call us on 02-8383 4400 – ask for Sarp from our Innovation division – to provide you a quote for our services to assist you with becoming ‘STP-compliant’.

Already use a cloud-based payroll system, but not yet STP-compliant?

If you already use a cloud-based payroll system, you will simply need to ensure you are ‘STP-compliant’ by: Alternatively, please call us on 02-8383 4400 – ask to speak to your accountant - to provide you a quote for our services to assist you with becoming ‘STP-compliant’.

Either way, be sure to let YML Group know your decision, so your business record can be updated as ‘STP-compliant’.

STP is a compulsory ATO requirement and non-compliance may result in ATO penalties.

How can YML help?

Talk to our Accountants today to see how YML Chartered Accountants can assist you with your STP compliance. Contact us on (02) 8383 4400 or by visiting the Contact Us page on our website.

Federal Election 2019 Outcome – What it means for you

Promised personal TAX CUTS across a broad band of income mean you could benefit over a 10-year period. In the first instance, the Coalition’s plan is to simplify the taxation system.


The Coalition announced as part of its 2019 Budget the expanded and improved INSTANT ASSET WRITE-OFF. Businesses with up to $50 million in turnover may write off business assets this financial year (previously applicable up to $10 million in turnover). Furthermore, the write-off threshold has increased to $30,000 (from $25,000).

Legislated in October 2018, the fast-tracked CORPORATE TAX payable by small and medium businesses with up to $50 million in turnover was reduced from 30 per cent to 27.5 per cent for income year 2019-20. The Coalition plans to reduce the tax rate to 26 per cent for income year 2020-21 and finally to 25 per cent by income year 2021-22 onwards, fast-tracked by five years.

If you’re in retirement, wondering about recent reports of losing your FRANKING CREDIT CASH REFUND ability, be assured the Coalition plans for you to continue to make your claims. In addition, if you make VOLUNTARY SUPERANNUATION CONTRIBUTIONS at aged 65 or 66, you will no longer need to meet the work test requiring you to work 40 hours in a 30-day period per annum.

From 1 January 2020, eligible first home buyers with a minimum five per cent deposit may be able to apply for a deposit loan through the Coalition’s proposed FIRST HOME LOAN DEPOSIT SCHEME, enabling 10,000 first home buyers to benefit by purchasing a home sooner than they might have.

Vocational education and training (VET) are cornerstones of a skilled workforce and the Coalition’s plan to spend $525 million – ‘Delivering Skills for Today and Tomorrow’ – on VET will benefit businesses by creating up to 80,000 NEW APPRENTICESHIPS with Skill Shortages payments of $4000 for eligible employers and $2000 for apprentices.

The Coalition will continue to deliver on its financial support commitment over 10 years for all primary and secondary, public and private schools under Gonski 2.0.

Are you in the business of exporting? If you are, the Coalition plans to increase Australia’s number of exporting businesses from 52,000 to 62,000 over the next three years through its proposed ‘Exporters’ Package’ providing additional funds, $60 million, to its EXPORT MARKET DEVELOPMENT GRANTS SCHEME.

In an effort to more robustly support employers, including in regional areas, the Coalition will bring in changes to visas for skilled migrant workers, commencing with a greater number of EMPLOYER SPONSORED SKILLED VISAS being granted to 39,000 (from 35,528) in 2019-20.

A new GLOBAL TALENT – INDEPENDENT PROGRAM commencing on 1 July 2019 will provide 5000 places within the 2019-20 migration program. The best-of-the-best skilled migrant workers will be eligible to apply.

If you’re an employer of WORKING HOLIDAY MAKERS, then from 1 July 2019, overseas visitors on a working holiday visa may have the option of a third year visa, providing they perform six months of specified work in regional areas. To attract people with more work experience, the Coalition has already lifted the eligible applicant age cap from 30 years to 35 years (Canada and Ireland only at this time).

Overall, a reduction in PERMANENT MIGRATION will see a new cap of approximately 160,000 migrants (down from 190,000) composed of 110,000 skilled migrant workers and 47,000 family members.

How can YML help?

Talk to our Accountants today to see how YML Chartered Accountants can assist you with your next financial steps. Contact us on (02) 8383 4400 or by visiting the Contact Us page on our website.

NOW is the time to consider your Year-End Super Contributions

A superannuation fund with a healthy and prospering balance is an important lifetime investment. Super contributions are governed carefully in Australia and caps exist, indexed annually, which must not be exceeded if you want to avoid paying additional tax penalties on the excess you contribute beyond the cap limit.

Concessional Contributions

The annual cap for total concessional contributions has fallen to $25,000, regardless of your age, however a work test is applicable once you reach 65 years of age. A concessional contribution is a contribution such as your employer contributions, including salary, salary sacrifices, bonuses, or an extra personal contribution you make yourself to ‘top up’ your super investment and on which you may claim an income tax deduction.

These concessional contributions are ‘before tax’ contributions and are subject to a tax liability of 15%, known as ‘concessional tax’.

Non-Concessional Contributions

If you make a personal contribution in to your SMSF on which you do not claim an income tax deduction, this is called a non-concessional contribution and is an ‘after tax’ contribution.

Consider using cash proceeds from share sales, property sales or an inheritance you have to move these investments in to your SMSF. The increasing value of cash proceeds may mean a transfer in to your super fund helps you to control the amount of tax you will pay. The annual cap for non-concessional contributions in the 2018/2019 financial year is $100,000. However, be aware that if you are nearing 65 years of age, you have an option to contribute up to $300,000 with the ‘bring-forward’ rule.

Co-Contributions

If you make a non-concessional contribution in to your SMSF and you are a lower to middle income earner, the government automatically makes a contribution – up to $500 – in to your SMSF upon receipt of your annual tax return.

Spouse Contributions
You may be eligible to claim a tax off-set of $540 if you contribute to your de-facto/spouse’s super fund and your de-facto/spouse earns up to $37,000 per annum. There is a phasing out of this tax off-set amount after $37,000 per annum income, stopping at $40,000 per annum income.

Splitting Contributions (De-facto/Spouse)

The government is looking at limiting the tax-free balance of super funds, so it would behove you to consider splitting superannuation contributions with your de-facto/spouse.

Splitting contributions makes sense in the following scenarios:
Take the time today to check your year-end retirement investments. Ensure that you are taking full advantage of your super contribution opportunities.

How can YML help?

Talk to our YML Super Solutions Team today to see how YML Group can assist you with your retirement wealth strategy. Contact us on (02) 8383 4400, or by visiting the Contact Us page on our website.

Federal Budget 2019 – Immigration to Australia NEWS

Australia’s immigration programme is set to mostly benefit from the Australian government’s recent Federal Budget 2019. Treasurer Josh Frydenberg outlined several important new pronouncements for the betterment of Australia and Australian employers.

Annual Migration Cap – Reduction

First, with the aim “to better manage population growth”, the government will reduce the annual immigration cap by 30,000 to a total of 160,000 per annum for four years from 2019-2020. With a view to ensuring infrastructure keeps up with Australia’s growing population, the government has determined to lower the cap for now.

New Skilled Visas – Regional

To encourage settlement across Australia, two new regional visas will replace the existing subclass 187 and subclass 489 visas. To be called Skilled Work Regional (Provisional) visa and Skilled Employer Sponsored Regional (Provisional) visa, these new visas will require visa holders to live and work in Australia’s regional areas for five years. Commencing in November 2019, after three years visa holders will be eligible to apply for permanent residency in regional areas from November 2022.

Skilled Migration Points Test – Adjustment

Both single applicants and partnered applicants will be awarded additional points when they or their partner, respectively, demonstrate/s competent English skills. This adjustment is to be used when a primary applicant’s partner does not meet the current number of points for skilled partner status.

‘Social Cohesian’ – Community Integration

Over $64 million has been allotted to helping migrants “become established and integrated in their [Australian] communities” – funding for local community and youth hubs, sport and language programmes and support and learning to both “foster belonging” and “celebrate diversity”.

Visa Fees – Increase
From 1 July 2019 visa application fees will incur a 5.4% increase for nearly all subclass visas.

To find out more about how Federal Budget 2019 changes may affect your visa application, consult YML Migration’s experienced migration agents soon to take advantageous of lower visa application fees prior to 1 July 2019.

How can YML help?

Talk to our YML Migration Team today to see how YML Group can assist you with sponsorship and visa applications. Contact us on (02) 8383 4400 or by visiting the Contact Us page on our website.

Tax Planning and Restructuring to suit your Business

Tax planning is a legitimate discipline used in business to minimise, within legal limits, taxes paid by businesses. This is not a tax avoidance undertaking to deliberately exploit the tax system, so it is important to consider carefully which areas to explore. In 2019, consider the following areas:

As your business builds, it may be that it makes sense to restructure the business to suit your business’s needs. Four main business structures are: company (a legal entity separate from its shareholders), partnership (a group of people or entities but not a company), trust (a holding entity for income or property), sole trader (a single person legally responsible, with or without employees).

Restructuring means changes to your existing liabilities and taxes, so seeking professional financial advice is essential to understanding which structure can help your business optimise its future tax planning whilst ensuring the new structure makes sense operationally.

Earlier this year, the Australian Government determined to not only increase but also to extend the instant asset write-off until 30 June 2020. This is a consequential opportunity for small businesses wanting to decrease tax payments. To be eligible:

Have an annual turnover of up to $10 million and the business asset must have cost up to $25,000, be in use and have been purchased during this financial year up to 30 June 2019.

The $25,000 threshold is a 25% increase on last financial year’s threshold.

The ATO permits your business to deduct in this financial year certain prepaid expenses incurred for work or services to be performed in the next financial year. There are prepayment rules that apply and it is important to follow these rules including ‘eligible service period’, ‘excluded expenditure’ such as amounts less than $1000 and salary and wages, ’12-month rule’ and ‘pre-RBT obligation’.

Recording debtors and creditors in an accrual accounting system – that is recording income and expenses when work or services are completed, whether or not payment has yet been received or paid – will enable your business to determine actual income and expenses for the financial year to 30 June 2019.

Superannuation payments made to your employees by financial year end constitute a tax deduction for your business. It is essential that payments made to super funds are made timely and no later than 30 June 2019 to be eligible.

Have your trust distributions been calculated to meet ATO legislation? Do you need your trust minutes prepared and signed prior to 30 June 2019?

Arrange a tax planning meeting with us and we will discuss ways you might hone tax planning and evaluate restructuring your business to your advantage this year and every year hereafter.

How can YML help?

Talk to our Accountants today to see how YML Chartered Accountants can assist you with tax planning and restructuring your business. Contact us on (02) 8383 4400 or by visiting the Contact Us page on our website.

Single Touch Payroll – NOW Mandatory for ALL Businesses

STP, Single Touch Payroll, is an initiative introduced by the ATO to streamline company reporting of salaries, wages, PAYG withholding taxes and superannuation contributions. STP was initially applicable only to businesses with 20 or more employees. As of this year, from 1 July 2019, all employers will be required by the ATO to have adopted STP regardless of the number of employees, so small businesses with 19 or fewer employees now also need to report via STP-enabled software.

With mandatory reporting via STP, small, medium and large employers need to ensure they are complying with the ATO’s new requirement. To do so, a business needs to consider its digital connectivity capacity and, where applicable, upgrade with STP-enabled software.

There are many options available – from purchasing in-house software packages to using a third party and subscribing to a STP software provider who works out and lodges the necessary reportable data to the ATO on your behalf.

Your business’s pay cycle does not need to change. As you pay your employees, whether it be weekly, fortnightly or monthly, you will simultaneously file with the ATO that payroll cycle’s data including employee payments, taxes withheld and super amounts. This will result in a smoother transition, allowing you to timely report to the ATO.

You will still need to prepare and submit a quarterly BAS, but payment summaries and end of financial year payment summaries will be automatically produced by the STP system.

YML Group helps many clients with STP and we can help your business set up its STP system. There are many low cost solutions such as Xero, MYOB, Reckon and others that YML Group can assist you with for ongoing compliance of the ATO’s STP regulations.

Lodging payroll with the ATO has never been easier. Let us help you set up STP today.

 How can YML help?

Talk to our YML Innovation Team today to see how YML Group can assist you with ensuring your company is STP-compliant. Contact us on (02) 8383 4400, or by visiting the Contact Us page on our website.

FBT 2019 – What’s new?

The FBT year in Australia is from 1 April and ending 31 March the following year, so now is the time to ensure that you are up-to-date with the latest FBT developments in the areas of focus for the ATO.

For the FBT year ended 31 March 2019, the FBT rate remains at 49% in line with last year’s FBT rate.

FBT applies to benefits, given to employees in lieu of or in addition to salary or wages, received and this tax is paid directly to the ATO by employers. Benefits received may include such items as vehicles, car parking, housing, private loans and even, these days, Bitcoin.

The ATO has identified two concerns - employers’ failure to identify and report FBT on items and employers’ incorrect application of exemption provisions when reporting taxable value on items – in areas of concern for the ATO. Let’s delve further…

Where an employer is required to lodge a FBT return, what do you need to know about:

FBT Rebate?

Some employers claim a FBT rebate despite being ineligible to do so. You need to check that you are a rebatable employer and if you are not, then you should ensure you are eligible to receive a FBT rebate before making a claim.

Employee Contributions?

To ensure that an employer reports employee contributions as income on their income tax return and does not overstate the employee contribution amount in order to reduce an FBT liability, the ATO focuses on finding accurate declarations on both the FBT return and the employer’s income tax return.

Motor Vehicles?

It is necessary for an employer to verify that a FBT exemption applies to the provision of a motor vehicle to an employee for private use. In addition to supplying this verification to the ATO, the ATO is looking for an employer to keep sufficient records to support an exemption.

An employer will need to look carefully at the complex rules of FBT car parking (slight increase in car parking threshold 2019) and will need to be aware of the Practical Compliance Guideline 2018/3, applicable to car and residual benefits claimed in 2019 and later FBT years. If an employer provides an employee with an eligible vehicle to perform work duties, then this guideline may be applicable. 

Living Away From Home Allowance (LAFHA)?

An employer pays a LAFHA to an employee to compensate an employee for additional expenses incurred and for the fact of being away from home whilst employment duties require an employee to live away from their usual residence.

It is important to only claim FBT for eligible employees and to obtain declarations from those eligible employees. Claiming for invalid circumstances or keeping insufficient records of the accommodation and meal components is also closely looked at by the ATO.

The ATO’s LAFHA reasonable total food and drink expenditure for one adult in Australia increases in 2019 by just under 7.5% from 2018. It would behove an employer to check the ATO’s LAFHA guidelines for 2019.

It pays to understand how FBT applies in these areas. To minimise your FBT liability, at YML Group we can prepare and lodge your FBT return and/or calculate any employee contribution.

Our fee for the preparation and lodgment of an FBT return is from $530 + GST and for the calculation of an employee contribution is $260 + GST per item.

How can YML help?

Talk to our YML Chartered Accountants Team today to see how YML Group can assist you with FBT. Contact us on (02) 8383 4400, or by visiting the Contact Us page on our website.