Lodgement Obligations

In this post we have outlined the remaining lodgement obligations up to the end of the financial year 2012.

21 April 2012

Due date for lodgement and payment of the March 2012 monthly activity statement.

28 April 2012

• Due date for lodgement and payment of the Business Activity Statement for the quarter ended 31 March, 2012.
• Due date for superannuation guarantee contributions for the March 2012 quarter.

15 May 2012

Due date for lodgement of tax returns for entities including individuals, trusts, companies and super funds that did not have to lodge earlier than this date.

21 May 2012

Due date for lodgement and payment of the April, 2012 activity statement.

28 May 2012

Due date for lodgement and payment of the 2012 Fringe Benefits Tax return.

5 June 2012

Due date for lodgement of

• returns that were non-taxable or refund as per last year lodged

• returns that are actual non-taxable or refund in the current year, unless due earlier

21 June 2012

Due date for lodgement and payment of the May, 2012 activity statement.

30 June 2012

Superannuation contributions for the 2012 year must be received by the fund before this date in order to be deductible for the 2012 tax year

Please do not hesitate to contact us with any queries you may have in relation to your taxation and accounting affairs.

We are conveniently located in the Inner West suburb of Five Dock.

However things can get more complicated in the case of a split loan facility arrangement.  Under such arrangements, the taxpayer typically has 2 or more loans with the same bank.  One of these loans will be for the taxpayer’s home loan whilst the other loan(s) will be for his business or investment property.  The lender usually sets the level of repayments required on the loan facility based on the overall level of indebtedness but is unconcerned as to which loan the repayment is directed at.  The taxpayer will direct all the loan repayments to the home loan whilst interest accrues and compound on the investment loan.

The ATO have generally considered the above arrangement unfavourably and have denied the additional interest incurred which would not have been incurred had the principal and interest repayments been made to the investment loan.

In June 2011 the ATO issued draft Tax Determination 2011/D8.  In the draft determination, the ATO considers an arrangement with the broadly following features:

a)      The taxpayer has at least two properties – one is the taxpayer’s residence and the other is an investment property used to derive rent;

b)      The taxpayer has an outstanding loan against his residence and another outstanding loan against his investment property.  He also has a line of credit facility with an approved limit.  All these loans are typically but not always provided by a single financial institution;

c)       The loan against the investment property is typically an interest only loan for a specified period with principle and interest repayments required thereafter, or the interest only period may be extendable;

d)      The line of credit typically has no minimum monthly repayment obligations provided the balance remains below the approved limit.  Alternatively it may require minimum monthly repayments equal to the accrued interest;

e)      The home loan, investment loan and line of credit are each secured against the taxpayers’ residence and / or investment property;

f)        The line of credit is drawn down to pay the interest on the investment property loan as it falls due.  Where no repayments are required on the line of credit, the taxpayer does not make any repayments, which results in interest on the line of credit being capitalised and compounded.  Where monthly interest payments are required on the line of credit, the taxpayer meets such repayments from their cash flows;

g)      The taxpayer’s cash inflows (including that which the taxpayer otherwise might reasonably be expected to use to pay the interest on the investment loan) are all directed against the home loan which has the effect of reducing the interest otherwise payable on the home loan;

h)      If the line of credit reaches its approved limit before the home loan has been repaid, the taxpayer may apply to increase the limit on the line of credit in conjunction with a corresponding decrease in the available redraw amount in the home loan.

A key feature of the above is the use of the line of credit to pay the interest on the investment loan.  This results in interest on the investment loan, in effect, being capitalised and thus its payment deferred in order to enable the taxpayer to repay an equivalent amount on the home loan.  The ATO considers that the real effect and substance of the above arrangement is to make the payment of interest on the capital sum paid in reduction of the home loan tax deductible.

In the draft determination, the ATO states that they will not rule out applying the tax anti-avoidance provisions to the above arrangement.  The tax anti-avoidance provisions will be triggered where there is scheme which is carried out for the dominant purpose of obtaining a tax benefit.  Even though there may be a commercial purpose of paying the home loan off sooner, the ATO states that this does not prevent a conclusion that the dominant purpose of the arrangement was to obtain a tax benefit.  If the tax anti-avoidance provisions were to apply, the deduction for the interest incurred on the line of credit in the above example will not be deductible.  In addition, there may also be significant interest and penalties levied by the ATO.

When the final Determination is issued, it is proposed to apply both before and after its date of issue.

Recent Updates On Small Business Depreciation

Draft legislation has been released for public consultation to allow small businesses using the small business depreciation regime to:

a)      claim up to $5,000 as an immediate deduction for motor vehicles, with the remainder of the motor vehicle cost to be pooled in the general small business pool, depreciated at 15% in the first year and then 30% in subsequent years.

b)      immediately write off assets costing less than $6,500 in the income year in which they begin to use the asset or have it installed ready for use.

c)       allocate depreciating assets costing $6,500 or more to the general small business pool, depreciated at a rate of 15% in the first year and then 30% in subsequent years, on a diminishing value basis.

Once legislated, the above rules are proposed to apply from 1 July 2012.

The staff at Gotsis Rubic & Barbariol wish you and your families a very happy holiday season.

We look forward to helping you with your tax and providing the best service possible in 2012

If your enquiry is urgent please email us at tax@gotsisaccounting.com.au or call 0418 473 793

TAX RETURN CHECKLIST

The amount nominated in the PAYG notice is based on the untaxed income (business income, rents, interest, investments etc.) shown on your last income tax return. The amount nominated is due by the 21^st of October, 2011.

If your untaxed income for the 2010/11 year financial year is less than the amount shown in your previous tax return you may vary the amount. However please note that if your estimate proves to be lower than 15% of your actual untaxed income for the year, the ATO may impose a charge.

The PAYG instalment amount will be credited towards your tax liability and it will determine whether you have more to pay or if you are entitled to a refund. Please note that it is recommended that you pay the PAYG instalment prior to lodging your tax return.

If you pay the PAYG instalment quarterly, you may be eligible to pay the instalment only once by the 21^st of October each year.

Please contact us for further information.

All of our services will be available on Saturdays including, personal tax returns, business and company tax returns, business and tax advice, superannuation accounting and advice and GST services.

Contact us for an appointment.

• 14 July 2011

Employers to provide payment summaries (Group Certificates) to the employees.

• 21 July 2011

Clients who lodge activity statements monthly: June 2011 activity statement is due for lodgement and payment.

• 28 July 2011

Quarterly PAYG instalment notice (Form R, S or T) for the quarter ended 30 June 2011 is due for payment. No lodgement is required unless the amount nominated by the ATO is varied.

If you lodge your quarterly activity statements by yourself:  June 2011 activity statement is due for lodgement and payment.

If your tax agent is lodging your quarterly activity statements:  June 2011 activity statement, tax agents have an extension to lodge and pay the activity statement to 25 August 2011.

If you did not pay the Superannuation Guarantee Contribution (SGC) by 30 June 2011, please pay by 28 July 2011. Any payment after that date will not be tax deductible. In addition, the ATO may impose fines for non-payment by the due date.

• 14 August 2011

If you are preparing the PAYG Payment Summary (Group Certificates) by yourself, the Annual Statement to the ATO must be lodged by 14 August 2011.

If the PAYG Payment Summary Annual Statement is being prepared by your tax agent, they will have an extension to 30 September 2011. If the only employees of the business are family members, the Annual Report may be lodged even later. You will need to let your tax agent know if your employees are family members only, so that your business can be granted an extension.

• 21 August 2011

The July 2011 monthly activity statement is due for lodgement and payment.

• 21 September 2011

The monthly activity statement for August 2011 is due for lodgement and payment.

• 30 September 2011

PAYG withholding Payment Summary Annual report for businesses with Tax Agent involvement is due for lodgement.  (Businesses with only family members as employees may be able to lodge the report by the income tax return due date).

• 21 October 2011

Monthly activity statement for September 2011 is due for lodgement and payment.

Annual PAYG instalment notice is due for payment.  Lodgement is only required if the instalment amount is varied or the rate method is used to calculate the instalment amount.

• 28 October 2011

Quarterly instalment notice (Form R, S or T) for the quarter ended 30 September 2011 is due for payment.  Lodgement is only required if varying the instalment amount.

If you lodge quarterly activity statements by yourself:  September 2011 activity statement is due for lodgement and payment.

If your tax agent is lodging your quarterly activity statements:  September 2011 activity statement, tax agents have an extension to lodge and pay the activity statement to 25 November 2011.

Superannuation guarantee contributions, for quarter ended 30 September 2011: contributions to be made to the fund by this date.

• 31 October 2011

Income tax returns for all entities with one or more prior year returns outstanding as at 30 June 2011 are due for lodgement. If there are no outstanding tax returns, then extension beyond 31 October 2011 applies.

• 21 November 2011

Monthly activity statement for October 2011 is due for lodgement and payment.

• 1 December 2011

Payment of income tax for companies and superannuation funds where lodgement of the income tax return that was due by 31 October 2011.

Should you have any queries in relation to the matters raised in this post, or indeed any matter relating to your taxation affairs, please do not hesitate to contact us.

All of us at Gotsis Rubic & Barbariol are looking forward to hearing from you.

• Work-related expense claims: Occupations the ATO will be focusing on will be employee school teachers, employee engineers and mechanics.
• Purchase-related costs for rental properties: The ATO will be focusing on costs associated with the purchase of rental properties.
• Personal Superannuation Contribution Claims:
• Contribution caps and excess contributions: The ATO will be monitoring compliance with the contribution caps.

High net worth individuals, investors (relating to investment expenses) and the cash economy will also be targeted.

To avoid being caught in the ATO’s radar, specialist advice on your personal circumstances should be sought.

Outlined below are some of the more important changes that will impact taxpayers lodging their 2011 tax return.

• Personal Income Tax rates have been marginally reduced from 1 July 2010.
• The Low Income Tax Offset has been increased to $1,500, up from $1,350.
• The Tax Free Threshold  has increased to $16,000, up from $15,000.
• The Medical Expenses Tax Offset threshold has been increased to $2,000, up from $1,500.
• The Senior Australian Tax Offset has been increased from $29,867 to $30,685 for singles and $25,680 to $26,680 for each for couples.
• Taxpayers receiving Youth Allowance can now claim self education expenses. A standard $550 deduction can be claimed from 1 July 2006 until 30 June 2011.
• The Paid Parental Leave (PPL) Scheme offers the primary caregiver of a child born on or after 1 January 2011  a maximum of 18 weekly payments equal to the minimum wage (currently $569.90). PPL payments are considered assessable income and need to be  included in your tax return.

If you are ready to lodge your 2011 tax return please call for an appointment or use the contact us Page. We are conveniently located in the Sydney inner west suburb of Five Dock.