CHAMPION'S ADVISER The end of the 2010 financial year is almost upon us. To help you in closing off the current financial year and preparing for the New Year, we have prepared a brief listing of issues to consider that will hopefully ensure that the end of year is as smooth as possible for you.
This list is by no means exhaustive or detailed, so please use it as a prompt in your year end planning process.
If you would like more detailed information on any of the year end matters that we have identified, or if there are other matters specific to your business on which you require advice, please do not hesitate to call us.
We wish you a happy and successful new financial year.
From All the Team at Champions ISSUES RELATING TO YEAR ENDED 30 JUNE 2010
SUPERANNUATION Pay superannuation contributions by 30 June 2010 to obtain a deduction in 2010 financial year. Otherwise, ensure super is paid by 28 July 2010 to receive a tax deduction in the 2011 financial year. If super payable at 30 June 2010 is paid after 28 July, no tax deduction is available and ATO penalties may apply. From July 2010, the government have setup a free superannuation clearing house service for small business which will be administered through Medicare Australia. The service is available for small businesses with less than 20 employees. Instead of having to pay super for your employees to numerous funds, you pay one single payment (to the clearing house) and they will then forward the contributions to the numerous funds on your behalf.
PAYG PAYMENT SUMMARIES
There are a number of changes to the PAYG Payment Summary – individual non business form from 1 July 2009. Please ensure you use the latest version (Sample). Some of these changes are as follows: If you are unsure of any of the labels, please either refer to the ATO website instructions on How to complete the PAYG payment summary - individual non-business form or contact us for assistance. PAYROLL TAX LOANS
End of Financial Year 2010
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If you would like more information, click this link Small Business Superannuation Clearing House or contact us.
Reportable Superannuation Contributions generally refer to salary sacrifice contributions and contributions in excess of that required by SGC (9%) or industrial awards.
Do not forget to include reportable fringe benefits for each employee on their respective PAYG payment summary. If Champions prepared your FBT return we would have provided you with details of the reportable fringe benefits with the FBT return.
PAYG Payment summaries must be given to employees by 14 July 2010 and lodged with the ATO by 14 August 2010 for most employers.
Redundancy pays calculations and reporting can be very complex. If you are uncertain, please contact us for assistance.
The State Government announced yesterday changes to Payroll Tax in the NSW Budget.
The payroll tax rate in NSW will be cut from the current rate of 5.65% to 5.5% from 1 July 2010, six months earlier than originally planned. It will then be cut again by a further 0.05% to 5.45% from 1 January 2011.
In addition the payroll tax threshold increases from $638,000 to $658,000 on 1 July 2010.
If not already registered for payroll tax, are your total wage costs for NSW over $658,000 for the year? If they are over $54,082 per month (based on a 30 day month) please contact us, as you may need to register for payroll tax.
If you are registered, please contact us if you would like Champion’s to prepare or review the annual payroll tax reconciliation which is due to be lodged 21 July 2010.
Common errors we see with payroll tax relate to the area of contractors. If you would like our assistance to review your current contractors please contact us.
STAFF BONUSES/DIRECTORS FEES
These expenses may be deductible prior to actual payment, provided the employer is committed to paying these amounts. The employer needs to quantify the amount, inform the staff and retain evidence of this decision prior to 30 June 2010.
Don't forget to deduct PAYG Withholding and in most cases Superannuation Contributions will also need to be paid.
MANAGEMENT FEES
If management fees are charged between related entities make sure the fees are raised pre 30 June 2010 in order to claim a tax deduction in the paying entity.
It is also important to ensure the management fee amount being charged is commercially reasonable as the Tax Office are looking very closely at this area and that a management agreement is in place.
BAD DEBTS
Review your aged debtors listing for any bad debts and physically write-off before 30 June 2010 from your debtors’ ledger. Bad debts are claimed as a tax deduction in the year they are written off.
If money is owed to the company by shareholders or their associates, please contact us so we can advise if you need to do anything before 30 June 2010.
Ensure that the minimum loan repayment has been made on loans already covered by Division 7A loan agreements. Champion’s can advise the minimum repayment required.
INVENTORY (STOCK)
If you need to do a stocktake, make sure you plan for this and ensure one is done at 30 June 2010. This is a good opportunity to write down your old or obsolete stock.
WORK IN PROGRESS (WIP)
Ensure you have accurate records to record your WIP balance at 30 June 2010. You can also review the WIP for any amounts which can’t be billed and write off to clean up your WIP records.
GST
Have you remitted GST to the ATO for all disposals of fixed assets, including trade-ins?
Ensure you include any GST adjustments arising from the fringe benefits tax return, (e.g. GST on employee contributions) and any prior year balancing adjustments in the June 2010 BAS.
INVESTMENT ALLOWANCE
If the business is eligible to claim the investment allowance (small and general business tax break), then you need to ensure the new tangible depreciating assets are installed ready for use by certain dates.
For small business entities (turnover of less than $2m a year), new tangible depreciating assets of $1,000 or more the business committed to investing in between 13 December 2008 and 31 December 2009 need to be installed ready for use by 31 December 2010 to receive the 50% additional tax deduction.
For other business entities (turnover of $2m or more a year), new tangible depreciating assets of $10,000 or more the business committed to investing in between 13 December 2008 and 30 June 2009 need to be installed ready for use by 30 June 2010 to receive the 30% additional tax deduction or installed between 1 July 2010 and 31 December 2010 to receive the 10% additional tax deduction.
For other business entities (turnover of $2m or more a year), new tangible depreciating assets of $10,000 or more the business committed to investing in between 1 July 2009 to 31 December 2009 need to be installed ready for use by 31 December 2010 to receive the 10% additional tax deduction.
Please ensure appropriate paperwork, including all finance contracts, have been maintained to back up your claim as the Tax Office is looking closely at all Investment Allowance claims.
Please contact Champion’s if you require more information regarding the “small and general business tax break”.
CAPITAL ASSETS
If you have made significant gains on sale of CGT assets in the 2010 year and have other CGT assets which are worth less than what you paid for them, you may wish to consider selling them now and realising the loss. Be careful, as you can’t sell an asset and then buy it straight back to realise the loss as this would be seen as tax avoidance – known as “wash sales”. The loss can be offset against your gains and therefore reduce any CGT. To claim the loss in the 2010 year you will need to ensure the sale contract is entered into before 30 June 2010.
FIXED ASSETS
Review your asset register for any assets that have been scrapped during the year. If you do not have a copy of the register, ask Champion’s.
TRUSTS
Is your Trust Deed too old? It is time to revisit your Trust Deed and consider whether any of the clauses should be amended with appropriate legal advice. Please contact Champion’s and we will be glad to assist.
ACCOUNTING SYSTEMS
Are you getting the most out of your accounting software and internal accounting systems? If you are not sure, please call us to discuss areas that we may be able to evaluate and assist you.
For MYOB Payroll Users, there will be an update required to your tax tables as of 1 July 2010. If you are not on the most current version and not subscribing to MYOB Cover, you will not receive this update automatically.
If you require any assistance with year end processes, reconciliations, payroll, or rolling to the next financial year, please contact Champion’s and we will be glad to assist.