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Welcome to Twomey Talk where you can take advantage of the specialist knowledge of our team & learn their thoughts on various issues that may
impact YOU!

FUEL TAX CREDIT RATES

Fuel Tax Credit rates increased on 1 August 2017 in line with indexation.

Most commonly claimed rates are now:

Heavy vehicles travelling on public roads............ 14.5 c/litre

All other business uses......................................... 40.3 c/litre

(including off-road and power auxiliary equipment of a heavy vehicle)

TWOMEYS LENDING SOLUTION

We have recently partnered with Richard Hewitt from Hewitt Advisory to provide a complete solution for all our clients' lending needs, including agri, commercial, equipment finance and home lending.

Hewitt Advisory is an accredited Finance Broker and will assist to ensure that your interest rate and lending structure is both competitive and suitable for your needs.

Richard is available to help you 'present' your business to potential investors, rather than just 'applying for a loan'. He will conduct a comprehensive review and analysis of your business, prepare a detailed cash flow with production schedules and explanation, provide an assets and liability statement, compile all the detailed information required, submit your credit presentation to the most suitable lenders, and work with the selected lender through the formal credit approval process.

Regular communication and on-going support is provided as part of the service.

If you would like further information about how Hewitt Advisory could assist your business, please speak to your local Twomeys Accountant.

The ATO estimates that there is a $2.85 billion a year shortfall in employer Superannuation Guarantee contributions, and a total of $17 billion unpaid since 2009.

The Federal Government is introducing a package of reforms that will provide the ATO with additional funding to crackdown on employer non-compliance, enhance their power to deal with repeat offenders and strengthen employer penalties for non-compliance.

Employers are legally required to pay 9.5% superannuation guarantee to every employee over the age of 18 who earns more than $450 gross per month. On time payment of superannuation guarantee is due by the 28th day of the month following the end of each quarter.

TAXABLE PAYMENTS ANNUAL REPORTS

Businesses in the building and construction industry that pay contractors for building and construction services are required to lodge an annual Taxable Payments Annual Report (TPAR). Payments for invoices that include both labour and materials must be reported, unless the labour component is incidental.

The building and construction industry covers a wide range of occupations including architects, engineers, project managers, painters and landscapers. It also includes a wide range of activities such as alteration, construction, demolition, design, excavation, installation and management of building and construction services.

The TPAR for the 2016-17 year was due on 28 August 2017. Businesses in the building and construction industry that did not pay any contractors during the financial year still need to complete a TPAR – Not required to lodge form.

HECS-HELP BENEFIT

The HECS-HELP Benefit is paid to eligible graduates who take up employment in particular fields and/or work in specified locations and have a HELP debt. Eligible graduates can apply to the ATO for a HECS-HELP Benefit and if approved, receive a benefit amount of up to approximately $1950 per year.

There are two different application forms for HECS-HELP benefit depending on the area of study:

• early childhood education

• maths, science, education or nursing (including midwifery).

The HECS HELP Benefit for early childhood education teachers reduces the Higher Education Loan Program (HELP) debt of early childhood education teachers who work in areas of high need, including regional and remote areas, Indigenous communities and areas of high disadvantage, based on postcode location. Cootamundra, Young, Harden and Cowra are all eligible postcode locations.

The HECS-HELP Benefit for maths, science, education or nursing graduates reduces the Higher Education Loan Program (HELP) debt of graduates who work in eligible occupations. In addition, maths or science graduates must have completed their study after 30 June 2008, while education or nursing (including midwifery) graduates must have completed their study after 30 June 2009.

From 1 July 2017, the HECS-HELP benefit will be removed. This means the 2016–17 income year is the last year for which you can claim the HECS-HELP benefit. However, you still have two years to lodge your application. Late applications will not be accepted.

Income year for which you are claiming the HECS-HELP benefit  Applications must be lodged with the ATO by 
 2015–16 income year 30 June 2018
 2016–17 income year 30 June 2019 

Some graduates may be eligible to apply for more than one type of benefit (for example an education graduate who is also eligible as an early childhood education teacher or a maths or science teacher).

For more information, instructions and application forms, go to www.ato.gov.au/Forms/HECS-HELP-benefit---Overview.

The reasonable daily travel allowance for employee truck drivers who have to sleep away from home has been slashed from $97.40 per day in the 2016-17 year to just $55.30 per day for the 2017-18 year.

Employee truck drivers who receive an overnight travel allowance from their employer and spend less than $55.30 per day on food and drink do not need to keep detailed receipts of their expenditure. If an employee truck driver wants to claim more than $55.30 per day for food and drink, they will need to keep receipts for all their expenditure.

The ATO has a free app called myDeductions that can be used to keep track of work related deductions. It can capture photos of invoices and receipts, record vehicle trips and keep a record of all expenditure. At tax time the data can be uploaded to the income tax return or emailed to the tax agent.

myDeductions can be downloaded to a smart device from the App Store, Google Play or Microsoft.

WHAT'S NEW?

From 1 July 2017, the 10% test that previously applied to personal deductible contributions has been removed. As a result, all individuals under the age of 75 (including those aged 65 to 74 who satisfy the work test) will be eligible to claim a tax deduction for personal superannuation contributions.

Prior to 1 July 2017, individuals who were employees at any time in the financial year must have earned less than 10% of their income from employment (the 10% test) to be eligible to claim a tax deduction for personal super contributions. This generally meant that only individuals who were self-employed or not employed (eg. retirees) were eligible.

Benefits

The predominate benefit of making a personal deductible contribution is that individuals are able to claim the contribution amount as a tax deduction to offset their assessable income.

The tax saving for individuals is the difference between their marginal tax rate (including Medicare levy) and contributions tax of 15% on every dollar they make as a personal deductible contribution.

CONTRIBUTION LIMITS

From 1 July 2017, the concessional contributions cap is $25,000 for all individuals regardless of age. Concessional contributions include employer superannuation guarantee contributions, salary sacrifice contributions and personal contributions for which the individual is claiming an income tax deduction.

Salary Sacrifice v Personal Deductible Contributions

In terms of tax savings, there's little difference between making ongoing salary sacrifice contributions and making regular personal contributions into super followed by a Notice of Intent to Claim within required timeframes.

However, there are some differences worth noting:

• Cashflow – Compared to salary sacrificing, making regular personal contributions from after tax income will leave the individual with less net take home income. If individuals are going to make one-off or irregular personal deductible contributions they need to save up after tax income to do so.

• Administration – both salary sacrifice agreements and personal deductible contributions have challenges. A salary sacrifice agreement must be agreed upon in advance with the employer. A personal deductible contribution requires the individual to lodge a valid Notice of Intent to Claim within required timeframes and claim the deduction in their tax return.

If you would like specific advice regarding the relevance of the changes to personal tax deductible contributions on your personal situation, please speak to Twomeys' Financial Advisor Michael Gay on 02 69 420 300.

The Australian Government has introduced changes relating to the Higher Education Loan Program (HELP, formerly known as HECS) and Trade Support Loan (TSL) obligations. Under these changes, Australians living overseas have the same repayment obligations as people who live in Australia.

If worldwide income exceeds the minimum HELP and TSL repayment thresholds, compulsory repayments against the loan are required to be made.

The changes apply to people already living overseas as well as those who intend to move overseas for a total of more than six months in any 12 month period.

The changes also apply to both new and existing HELP and TSL debts, but not to Student Start-up Loans (SSL), ABSTUDY Student Start-up Loans (ABSTUDY SSL) and Student Financial Supplement Scheme Loans (SFSS).

What must be reported

• Australians residing overseas for 183 days or more in any 12 month period, must update their contact details and submit an overseas travel notification. The overseas travel notification can be completed through myGov.

• Australians who have a HELP or TSL debt and are a non-resident for tax purposes must either report their worldwide income or lodge a non-lodgement advice. This can be done online or through a registered tax agent.

> If worldwide income for the 2016-17 year is below $13,717, then only a non-lodgement advice form is required. A nonlodgement advice form can be lodged via myGov.

> If worldwide income for the 2016-17 year is above $13,717, then worldwide income needs to be reported. Worldwide income can be reported via myGov or through a tax agent by lodging an income tax return as a non-resident for tax purposes.

What is the reporting deadline?

• Australians reporting their own worldwide income have until 31 October 2017 to report.

• Australians who use a tax agent to report their worldwide income may be able to lodge later than 31 October 2017, but only if they are registered as a client of the tax agent prior to 31 October 2017.

After lodgement, a notice will be issued by the ATO confirming the amount of HELP and TSL debt that is required to be repaid and the date that repayment is due.

What are the repayment thresholds?

For the 2016-17 financial year, the income threshold at which HELP and TSL repayments are required is $54,869. Repayment rates start at 4% and increase to 8% once income exceeds $101,900.

It was announced in the May 2017 Federal Budget that the income threshold will drop to $42,000 from 1 July 2018. Repayment rates will start at 1% and increase to 10% once income exceeds $119,882.

SINGLE TOUCH PAYROLL

Single Touch Payroll will be mandatory for employers with 20 or more employees from 1 July 2018.

Employers will be required to report salary or wages, PAYG withholding and superannuation information directly to the ATO at the same time that payment is made to their employees. Employers who report through Single Touch Payroll will not be required to provide employees with Payment Summaries at the end of the year.

Single Touch Payroll will begin to be incorporated into payroll software from 1 July 2017.

SIMPLER BAS

Small businesses will have less information to report on their BAS from 1 July 2017. The only GST information required will be:

  • G1 Total Sales
  • 1A GST on Sales
  • 1B GST on purchases

Businesses will not longer have to report Export sales, GST free sales, Capital purchases and Non-Capital purchases.