Streamlined GST reporting option for quarterly lodgers

1. Taxpayers who pay GST quarterly are now given three options:
   • Option 1: Calculate and report GST quarterly;
     
   • Option 2: Calculate GST quarterly and report annually; or
     
   • Option 3: Pay GST instalment quarterly and report annually.
     
2. Option 2 was introduced to streamline the GST reporting obligations for taxpayers.
3. Taxpayers electing option 2 are required to report the following amounts on their quarterly Business Activity Statements (BAS):
   • Total sales at label G1;
     
   • GST on sales at label 1A;
     
   • GST on purchases at label 1B; and
     
   • Wine Equalisation Tax and Luxury Car Tax at labels 1C, 1D, 1E or 1F if applicable.
     
4. Taxpayers are then required to lodge an ‘Annual GST information report’, which will be mailed to them, to report the annual amounts for the following items:
   • Export sales at label G2;
     
   • Other GST-free sales at label G3;
     
   • Capital purchases at label G10; and
     
   • Non-capital purchases G11.
     
5. Taxpayers need to lodge the annual report by the due date of their tax returns or 28 February of the following financial year if they are not required to lodge an income tax return.
6. For more information, click here.

$20,000 instant asset write-off for small businesses has become law

1. New and second hand assets acquired between 7.30pm on May 12, 2015 and June 30, 2017 can now be immediately written off by small business entities.
2. Assets costing $20,000 or more will continue to be deducted over time using a small business pool.
3. The low pool value threshold will also increase to $20,000 to allow for an immediate deduction if the pool balance is less than $20,000 at the end of an income year.
4. The 'lock-out' rule has been suspended until the end of June 30, 2017. This means small business entities that have previously elected out of the simplified depreciation regime can now re-enter the scheme without having to wait for the 5-year lock-out period to lapse.
5. A small number of assets may not be eligible for the accelerated depreciation, including:
• Horticultural plants;
• Capital works;
• Assets allocated to a low-value pool or software development pool;
• Primary production assets that have been elected to be depreciated under the normal depreciation rules rather than the simplified depreciation rules; and
• Assets leased to another party on a depreciating asset lease.
6. For more information on the new law, click here.

Tips for service-based businesses

1. A service business serves its customers by selling their time, skills and knowledge to achieve a result. Examples include accountants, lawyers and financial advisers.
2. Business owners can attract more customers to the business by:
   • Knowing the services they provide well, so they can attend to all customer queries;
     
   • Having success stories, testimonials and examples ready to share with the potential customers; and
     
   • Knowing their point of difference or unique selling point that sets them apart from their competitors and using this knowledge advantageously when marketing the business.
     
3. To have an effective pricing strategy, it is important that a business:
   • Research its competitors and similar businesses;
     
   • Review all business costs; and
     
   • Consider how its own pricing may influence who its potential customers are.
     
4. For more information, click here.

Claiming home office expenses

The type of home office expenses taxpayers are eligible to claim as a tax deduction will depend on the primary use of the home office.

Where the home office is the sole location for conducting a business, taxpayers can claim occupancy costs, such as rates, mortgage interest, rent and insurance together with running costs, apportioned depending on business use.

Where a home office is used for work-related purposes and the taxpayer has a main office elsewhere but chooses to work from home, taxpayers can only claim running costs.

When claiming running costs, taxpayers can choose to claim on the basis of apportioning actual expenditure or use the Tax Office fixed rate of 45 cents per hour.

The Tax Office rate covers costs including decline in value of computers and other assets, electricity, internet and phone rental costs.

Taxpayers need to keep a diary over a 4 week period demonstrating the average time spent using the home office for business purposes.

The 45 cents rate for home office expenses applies from July 1, 2014, which is up from 34 cents.

For more information, click here.

Discussion open to employers regarding the new payroll reporting procedure

Single Touch Payroll is a new reporting system where employers are required to electronically report payroll and superannuation information to the Tax Office when employees are paid, using Standard Business Reporting-enabled software.

Single Touch Payroll will be available from July 2016 to streamline the employers’ reporting obligations by:

• Providing a digital channel to simplify the process of completing tax file number declarations and Super Choice forms;
• Notifying superannuation funds and government agencies, such as Centrelink, when an employee ceases employment; and
• Eliminating the need to report employees’ PAYG withholding through activity statements and payment summaries.

Employers may be required to use or acquire appropriate payroll software in order to comply with Single Touch Payroll.

The Tax Office is asking employers and other stakeholders to provide comment on:

• Transition arrangements;
• Suggestions on how to minimise implementation and compliance costs; and
• The potential for employers to remit employee PAYG withholding and the superannuation guarantee at the same time employees are paid.

For more information, click here.

Deducting amounts from employees' pay

Taking money out of an employee’s pay is called a deduction.

An employer is allowed to deduct money from an employee’s pay only if:

• The employee agrees in writing and it is principally for their benefit;
• The deduction is allowed by law, a court order or the Fair Work Commission; or
• The deduction is allowed under the employee’s award or registered agreement

Money cannot be deducted from an employee’s pay if:

• The deduction benefits the employer directly or indirectly and is unreasonable in the circumstances; or
• The employee is under 18 years of age and their parent or guardian has not agreed in writing.

Employers cannot take money out of an employee’s pay to fix up an overpayment made as a result of a payroll error, unless the deduction is allowed under a registered agreement, award, legislation or court order.

Instead, the employer and employee should discuss and agree on a repayment arrangement.

If the employee agrees to repay the money, a written agreement must be made and specify:

• The reason for the overpayment;
• The amount of money overpaid;
• How repayments will be made by the employee; and
• The frequency of repayments.

If the repayment cannot be agreed on, an employer may need to seek legal advice.

For more information, click here.

Australian small business and family enterprise ombudsman

The Government has committed itself to transform the Australian Small Business Commissioner into the Australian Small Business and Family Enterprise Ombudsman.

This proposed change has been released to the public for consultation.

The Ombudsman functions and powers will include:
• Commonwealth-wide advocate for small business and family enterprises;
• Concierge for dispute resolutions; and
• Contributor to the development of small business friendly Commonwealth laws and regulations

Interested parties can submit their comments on the exposure draft legislation by no later than Tuesday, 7 April 2015.

Submissions can be made either by post or electronically.

For more information, click here.