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News

20 Nov 2009 - Buying Property in a Self managed Super Fund

In the current financial climate many self managed superannuation funds (SMSF) have lost considerable value due to the volatile movements within the share market. It is because of these conditions that it is imperative to have a diversified portfolio within a superannuation fund.

As of September 2007 the opportunity for funds to increase and diversify their portfolio arose with borrowing restrictions on SMSF’s abolished on the acquisition of residential and commercial property. Funds are no longer required to purchase property outright, with trustees of SMSF’s now able to borrow and invest directly in property, taking advantage of an array of benefits associated with holding property within a SMSF.

Advantages of borrowing in a SMSF

Not only does the ability to borrow assist SMSF’s to acquire a larger more diversified portfolio but it also may act as a catalyst for investment growth speeding up wealth creation as there is more money working for the fund.

The more significant and on going benefits however are the result of the tax advantages associated with owning property in the SMSF.

Conditions of borrowing

If money is borrowed to buy property in a SMSF, the asset must satisfy the Australian Taxation Office’s ‘sole purpose test ’. This means the investment must provide a benefit for retirement only and not be for the immediate benefit to the member (i.e the SMSF cannot hold or fund their own residence or holiday home).

Should the SMSF fail to meet repayments of the loan the lender has no right of recourse on other assets held by the fund. This means that the lender cannot sell other assets in the fund to recover the money owed – this can vary depending on the financier, so always check the loan documents carefully.

Once the mortgage is repaid in full, the SMSF obtains title of the property upon which the assets are either transferred to the fund or they can be sold with the proceeds flowing through to the fund.

Considerations upon investment

Like any acquisition of property, its investment potential should be the primary focus rather than purely the associated taxation advantages.

Laws surrounding SMSF are complex and upon consideration of borrowing to purchase a property you should seek professional advice as penalties for non compliance within a SMSF are severe. It should also be remembered that poor judgment or ill advice when dealing with these borrowing products could have a negative effect on future retirement savings upon which you may rely on. So if you have any questions surrounding the issue please contact us.

22 Jun 2009 - Tax Office helping small businesses

Tax Office helping small businesses to stay on top of tax debt

The Tax Office has recently announced new measures to assist businesses with an annual turnover of less than $2 million that are struggling to manage their tax debts in the current economic climate.

The two measures that the Australian Taxation Office have announced are as follows:

Twelve month General Interest Charge (GIC) free payment arrangements

Businesses with an annual turnover of less than $2 million with an activity statement debt can apply for a GIC free payment arrangement from now until 30 June 2010.

They will have the GIC remitted for a maximum period of 12 months, provided the payment arrangement is maintained.

Businesses need to contact the Australian Taxation Office as early as possible on 13 11 42 to discuss their circumstances so they can negotiate a sustainable interest free payment arrangement.

Deferred activity statement payment due dates

Small businesses can also request a deferral of payment on their next activity statement.

Businesses with short term cash flow problems that pay quarterly and annually may be granted a deferral of up to two months, with those that pay monthly eligible for up to one month.

The Activity statements still have to be lodged on time, however, no interest applies for the period of the deferral.

Businesses need to contact the Australian Taxation Office as soon as possible to request an extension of up to two months on the payment of their next activity statement.

If you have any questions regarding either of these Australian Taxation Office measures, please don't hesitate to contact us.

22 Jun 2009 - Investment Allowance

Small & General Business Tax Break

As the end of the financial year is fast approaching we would like to take this opportunity to remind you of the Australian Government’s recently legislated tax break for small and general businesses.

The tax break is in the form of an additional tax deduction for businesses who commit to investing in a new tangible depreciating assets (i.e plant and equipment or motor vehicles) and includes improvements or modifications to existing eligible assets held where it is installed and ready to use in the time frames outlined below.

The amount of tax deduction is dependent on your businesses size. Details are as follows:

Small Business entities (Turnover less than $2 million a year)

50% additional tax deduction on the cost of the new eligible asset where the business commits to investing in the asset between 13 December 2009 – 31 December 2009 and first uses the asset or has it installed ready for use on or before 31 December 2010.
Cost of eligible asset needs to be $1,000 or greater.

Other Business entities (Turnover greater than $2 million a year)

30% additional tax deduction on the cost of the new eligible asset where the business commits to investing in the asset between 13 December 2009 – 30 June 2009 and first uses the asset or has it installed ready for use on or before 30 June 2010;
10% additional tax deduction on the cost of the new eligible asset where the business commits to investing in the asset between 13 December 2009 – 30 June 2009 and first uses the asset or has it installed ready for use between 1 July 2010 to 31 December 2010;
10% additional tax deduction on the cost of the new eligible asset where the business commits to investing in the asset between 1 July 2009 – 31 December 2009 and first uses the asset or has it installed ready for use on or before 31 December 2010.
Cost of eligible asset needs to be $10,000 or greater

For business entities wanting to claim the tax break for the year ending 30 June 2009 a commitment to an investment in an asset must be made between 13 December 2008 to 30 June 2009.

Should you have any queries or concerns or require further information regarding the above please do not hesitate to contact our office.

25 Mar 2009 - RDG Axis IT Consulting wins at 2009 Reckon Awards

RDG Axis IT Consulting are proud to announce that at the recent 2009 Reckon Partner Conference, consultant Nathan Elcoate was awarded the prestigious award of Accredited Partner Of The Year for 2009!

This follows suit from Nathan’s two achievements last year being Runner Up Partner Of The Year and Beta Test Partner Of The Year.

Constantly striving for improvement in both the Quickbooks range of products and in the services we are able to offer our clients, the team at RDG Axis IT Consulting are very proud of the award and what it represents.

So next time you require assistance with your Reckon product, rest assured you are receiving the very best support possible for your business or training requirements. Remember, we also operate the only official Reckon Accredited Training Centre on the Gold Coast.

And with the 2009/10 range of products about to hit the market, this will certainly be one very positive year ahead.

All the very best from the entire team!

25 Feb 2009 - 50% Reduction in Minimum Drawdown for Retirees

UP TO 400,000 self-funded retirees who have seen their nest eggs slashed by turmoil on financial markets will finally gain some relief after the Federal Government yesterday (18 Feb 2009) relaxed its rules on superannuation investments.

The Treasurer, Wayne Swan, and the Minister for Superannuation, Nick Sherry, announced the Government would temporarily suspend requirements for people on superannuation pensions to make a minimum annual withdrawal from their accounts.

Under this requirement, retirees have been forced to take payments of between 4 per cent and 14 per cent of their account balance each year.

The rule is designed to ensure retirees draw down their capital but in the current environment pensioners have been anxious it would force them to incur significant losses by selling investments to make the minimum payments.

"In response to these legitimate concerns, the Government will suspend the minimum drawdown requirement for account-based pensions for the second half of 2008-09," he said. "This will occur through a 50 per cent reduction in the minimum payment amount for 2008-09."

Senator Sherry said people who had already taken half their current minimum payment for 2008-09 would not be required to take a further payment until the end of 2009-10.

National Seniors Australia welcomed the move but called for minimum withdrawal requirements on allocated pensions to be abolished permanently.

"Retirees are reporting the value of their super savings being reduced up to 50 per cent, but they still have to take out as a pension a fixed percentage of what their savings were before the economy came crashing down," said the National Seniors policy adviser, Paul Versteege.

For further information please contact this office on 07-5531-1288.

18 Feb 2009 - Small Business and General Business Tax Break

The Prime Minister & Minister for Small Business has released the following media release in relation to the small business and general business tax break.

Please note that this is only a media release and therefore not legistation.

What the Small Business and General Business Tax Break will mean

Small businesses can claim an additional 30 per cent tax deduction for eligible assets costing $1,000 or more that they acquire from 13 December 2008 to 30 June 2009, and install by 30 June 2010.

For eligible assets costing $1,000 or more that they acquire from 1 July 2009 to 31 December 2009, they can claim an additional 10 per cent deduction where they are installed by 31 December 2010.

To benefit from this tax break a small business must have a turnover of $2 million a year or less.

Other businesses can receive the same deductions for eligible assets greater than $10,000.

Assets eligible for the allowance are new tangible depreciating assets and new expenditure on existing assets used in carrying on a business for which a deduction is available under the core provisions of Division 40 (Capital Allowances) in the Income Tax Assessment Act 1997.

Non-Eligible Assets

Second hand items;
Intangible assets such as goodwill, intellectual property and rights;
Land;
Trading stock;
Taxpayers not carrying on a business (for example, owners of rental properties);
Capital works expenditure deductible under Division 43;
Assets acquired before 12.01am AEDT on 13 December 2008;
For the 30 per cent deduction assets must be ordered or acquired prior to 30 June 2009 and installed ready for use by no later than 30 June 2010;
For the 10 per cent deduction assets must be acquire between the 1 July 2009 and 31 December 2009 and installed ready for use by no later than 30 June 2010;
Private use proportion is excluded from cost for minimum expenditure threshold purposes

Claiming the tax bonus

The deduction will be available to the taxpayer who is entitled to the depreciation deduction in respect of the asset.

The deduction is on top of the usual depreciation deduction claimable for the asset as part of the taxpayer's income tax return.

The deduction is claimable in the income year in which the asset is installed ready for use.

Worked Example

A landscaping business entered into a binding contract to acquire a new backhoe on 20 May 2009 at an all inclusive cost of $60,000.

The backhoe is delivered and ready for use on 20 June 2009 and has an effective life of 9 years.

The business will be entitled to claim the 30 per cent deduction because:

a backhoe is a depreciating asset for which the business would be entitled to claim a deduction under the core provisions of Subdivision 40-B of ITAA97;
the asset exceeds the expenditure threshold of $10,000;
the business started to hold the asset between 13 December 2008 and the end of June 2009; and
the asset was installed ready for use before the end of June 2010.

The deduction will be 30 per cent of the asset's first element of cost under Subdivision 40-C – that is, $18,000.

When lodging its 2008-09 income tax return the business will be able to claim this deduction in addition to the usual depreciation deduction in respect of the asset.

If the business had delayed this investment until after 30 June 2009 – for example, until 1 September 2009 – and had it installed ready for use before the end of December 2010, the 10 per cent rate would apply. It would be able to claim a deduction of $6,000.

If you have any questions regarding either of these Government initiatives, please don't hesitate to contact us.

13 Feb 2009 - Queensland Govt Commercial Leasing Update

Commercial Leasing Update

The provisions of the Land Tax Act 1915 (QLD) currently prohibit a landlord of commercial premises from recovering Land Tax from the tenant.

Proposed Changes

A draft release from the Queensland government indicates that the prohibition on recovering land tax from tenants of leased commercial premises will be removed from the Land Tax Act 1915.

What it means for you

This proposed change to Land Tax will affect current and future lease negotiations in respect of commercial, industrial and some retail leases. It does not include residential leases or retail leases governed by the Residential Tenancies Act 1994 (QLD) and the Retail Shop Leases Act 1994 (QLD). The landlord should consider the opportunity to include land tax in the definition of outgoings for leases that will come into existence after 30 June 2009 and alternatively tenants should be aware that their landlord may soon look to include the cost of Land Tax in future leases.

Date of Changes

If the Draft bill is passed it is anticipated that the changes will take effect from the 30 June 2009 and accordingly should apply to land assessments issued for the 2009-2010 financial year.

Therefore this means that any leases entered into after 30 June 2009 will be able to contain Land Tax in the definition of outgoings recoverable by the landlord. Please note that any lease which arises out of the exercise of an option contained in a lease entered into prior to 30 June 2009 cannot include an obligation for the tenant to pay land tax.

If you require further information in relation to the above please contact this office on 07-5531-1288.

21 Jan 2009 - PAYG installments 20% reduction

To help small businesses weather the global financial crisis, the Government recently announced a 20% reduction to the quarterly pay as you go (PAYG) instalment due for the December 2008 quarter. Taxpayers who report their obligations quarterly via Pay As You Go Instalments or BAS and are eligible for the reduction will soon receive their letters from the ATO. It is important to remember that in most cases you can choose to estimate your total tax obligations for the financial year and vary your instalments based on the revised estimate. This approach can however attract penalties if you subsequently under pay your instalment tax by more than 10 percent. This new initiative by the Government and ATO removes that risk. If you have any questions please contact us.