Newsletter

The Australian Taxation Office (ATO) will be requesting and collecting the user identification name and number, name, address, telephone numbers, date of birth, email address, registration date, number of monthly sales, value of monthly sales, the Australian Internet Protocol address, and bank account details of sellers who have sales of $20,000 and greater, in the 2010-2011 income year through various online selling websites.

The selected online selling sites represent some of the largest market participants in Australia and have been selected as they track the sale/purchase price of goods and services as part of the transaction through their website. Other websites do not track the sale/purchase price of goods and services and only put the vendor and purchaser in touch with each other.

This acquired data will be electronically matched with certain sections of ATO data holdings to identify non-compliance with lodgement, payment and correct reporting obligations under taxation law. It is expected that records relating to approximately 11,000 individuals will be matched.

The ATO will use this data to improve compliance with tax obligations of particular groups of taxpayers and will allow them to:

• identify individuals and businesses that don't report, or under-report, their sales
• identify individuals and businesses that operate 'off the books' and avoid their obligations by not registering, lodging returns or making payments
• better understand and address the compliance behaviour of taxpayers involved in online selling
• increase community awareness of the ways we use data matching to address tax compliance
• protect honest taxpayers, by deterring, detecting and dealing with those who have not complied.

The ATO will contact individuals and businesses that they identify as being at risk of running part of their business off the books or in other ways not reporting all their income and will encourage them to make a voluntary disclosure of any under- reported amounts.

INCREASE SUPER GUARANTEE RATE FROM 9.00% TO 9.25%

0.25% increase to the super guarantee rate. Super guarantee is the minimum amount of compulsory super you pay for your employees. The minimum rate of 9% will change from 30 June 2013. This is the first of several increases over the next seven years.

REMOVAL OF THE UPPER AGE LIMIT FOR SUPER GUARANTEE PAYMENTS

From 1 July 2013, the existing age limit for employee super guarantee eligibility will be removed. This means you will need to begin paying super for eligible employees who are 70 years old or over.

MYSUPER

Employers must have a nominated fund, or “default fund”, where they make super guarantee payments for employees who have not selected a preferred fund (by completing a choice of fund form).

From 1 January 2014, employers must make these contributions to a fund that offers a MySuper product: a new, simple and cost-effective super product that will replace existing default products. Super funds will be allowed to provide MySuper products from 1 July 2013, and they will provide you with information to help with the changeover from existing arrangements.

INVESTIGATE YOUR OPTIONS FOR MEETING THE NEW DATA AND E-COMMERCE STANDARD

The data and e-commerce standard will allow you to send super contributions and data on behalf of your employees to all funds in one standard electronic format, instead of sending information to separate funds in multiple formats. The benefits of a standard format include reduced processing times and costs.

Consider what your business needs to prepare for this change, as you may need to update software or systems.

The new data and e-commerce standard for sending contributions will be mandatory for employers with 20 or more employees from 1 July 2014.

The new data and e-commerce standard for sending contributions will be mandatory for employers with 19 or fewer employees from 1 July 2015.

14 JULY 2013

• Payers must issue 2012-13 PAYG Withholding payment summaries to payees (that is, employees and other workers).

21 JULY 2013

• June 2013 monthly activity statements - final date for lodgement and payment. To ensure you receive the correct amount of credit in your income tax assessment, finalise all your PAYG instalments before you lodge your tax return.

28 JULY 2013

• Superannuation guarantee contributions for Quarter 4 (April - June 2013) are to be made to the fund by this date. If an employer does not pay the minimum superannuation guarantee contributions for Quarter 4 by this date, they must pay the SGC and lodge a Superannuation guarantee charge statement-quarterly by 28 August 2013. The SGC is not tax deductible.

14 AUGUST 2013

• PAYG withholding payment summary annual report – final date for lodgement. Use this to report amounts withheld from salary and wages and other payments. These amounts are reported at Label W2 of the activity statement.

21 AUGUST 2013

• July 2013 monthly activity statements - final date for lodgement and payment.

25 AUGUST 2012

• Quarter 4 activity statements (April - June 2013) – final date for lodgement and payment for electronic lodgement (ELS, ECI, Tax Agent Portal or BAS Agent Portal). To ensure you receive the correct amount of credit in your income tax assessment, finalise all your PAYG instalments before you lodge your tax return.

21 SEPTEMBER 2013

• August 2013 monthly activity statements - final date for lodgement and payment.

There are real advantages in choosing a structure best suited to the way you want to operate your business. It’s important you understand these advantages and responsibilities as they may affect the way tax applies to your business, the protection of your assets, your operating costs and how other businesses deal with you.

SOLE TRADERS

If you operate your business as a sole trader, although you may decide to have employees, you trade, control and manage all aspects of your business. This is the simplest form of business structure.

Things to consider

• The structure is relatively inexpensive and easy to set up and maintain. Relatively easy to change your legal structure if the business grows, or if you wish to wind things up.
• You have full control of the business and are legally responsible for all aspects of the business. There is no division between business assets or personal assets, which includes your share of any assets jointly owned with another person.
• You receive the full benefit of profits made by the business and keep all the after-tax gains if the business is sold.
• If you have no employees, you usually have to do all the work.
• Your access to finances is usually limited to your own resources.
• Limited opportunity for tax planning. Debts and losses cannot be shared and you cannot split business profits.
• You can lose personal assets such as your home, contents and vehicles if the business goes into debt. Your liability is unlimited which means that personal assets can be used to pay business debts.

Taxation obligations

You are not considered an employee of your own business and are free of any obligation to pay payroll tax, superannuation contributions or workers' compensation on income you draw from the business. However you must make super contributions, PAYG withholding payments and workers compensation payments for any eligible workers you employ including apprentices.

Sole traders are taxed as individuals. As a sole trader, you must report the business income you earn (after expenses) on your personal tax return, along with any other income you earn (such as salary or wages, interest, dividends). You pay the same tax as any other individual and you are also entitled to the tax-free threshold (the first $18,200 you earn in an income year) if you're an Australian resident.

COMPANIES

A company is a separate legal entity capable of holding assets in its own name and conducting business in its own right. Shareholders own the company while directors run the company. In many cases company directors are also shareholders, along with company employees. If you operate your business as an incorporated company, the business is a distinct legal entity that is regulated by the Australian Securities & Investments Commission (ASIC). A company is a more complex business structure.

Things to consider

• Usually, the set-up and administrative costs for a company are higher than for other business structures. However a company structure is commercially well understood and accepted, easy to sell and pass on ownership.
• Ability to raise significant capital. A company has far greater access to capital for the running of the business.
• Profits can be reinvested in the company or paid out to the shareholders as dividends and a company can carry forward losses indefinitely to offset against future profits. However a company cannot distribute losses to its shareholders.
• Limited liability for shareholders/owners. Shareholders are not liable for the debts of the business.
• Increased asset protection. A company’s assets belong to the company and the company is liable for debts incurred which makes this type of business structure appealing to high-risk business ventures. Generally, the owner’s assets cannot be accessed to pay for any company debts or liabilities. However, there are some exceptions. Financial institutions may require a personal guarantee against loans or overdrafts. A personal liability may arise if debts are caused recklessly, negligently or fraudulently.
• A company can also sue and be sued.

Taxation obligations

The tax requirements for a company are quite different to that of a sole trader business structure. It has its own tax income liability which is totally separate to individual income tax. A company pays income tax at a flat rate of 30% on taxable income which may be an advantage for businesses with high profit levels.

Your company must lodge an annual company tax return to report its income and deductions, and the income tax it is liable to pay. All companies must pay their own income tax. If you receive wages or director's fees from your company, you need to include them in your individual tax return and pay tax on them at the individual’s tax rates.

Your company must make super contributions and workers compensation payments for any eligible workers it employs, including you as a company director.