In his latest blog, respected financial advisor Geoff Steer offers SME owners a few not so obvious tips about what to look for in the 2012 Federal Budget and how to exploit the benefits therein.
Should you pre-pay your private health insurance?
From 1 July 2012, the Federal Government Rebate on Private Health Insurance will be means tested and health fund members will no longer be guaranteed the minimum 30 per cent rebate. If your income is likely to exceed $84,000 for singles or $168,000 for couples, you should consider paying your health insurance premiums in advance prior to 1 July and you will avoid the means testing and benefit from the 30 per cent rebate for another year.
Company directors personally liable for company debts
Currently under the director penalty regime (DPR), company directors who fail to comply with their obligations to pay amounts withheld from employee salaries under the PAYG withholding regime to the Tax Office can be personally liable for the amount. The government has proposed changes to the DPR to expand it so that company directors will be personally liable for unpaid superannuation guarantee charges. Should the proposed changes be made, by law you will need to ensure your business is paying and reporting its PAYG withholding and SGC obligations on time.
Are you the trustee of a discretionary trust?
Before 30 June you will need to make beneficiaries entitled to trust income by way of a resolution. In years gone by these resolutions have generally been made after year end. However the Taxation Office has made their expectations clear that resolutions must be documented prior to 30 June. Failure to make a resolution by 30 June could result in the income of your trust being taxed at 46.5 per cent.
Check your salary sacrificing arrangements
The superannuation concessional contribution cap will be $25,000 for 2012-2013. If you are over 50, your concessional contribution cap has reduced from $50,000 to $25,000. If you are salary sacrificing amounts into superannuation, now is the time to review your arrangements to ensure you do not contribute in excess of the concessional cap.
More paper work for the building and construction industry
The government is introducing legislation that will require businesses in the building and construction industry to report to the Taxation Office payments made to contractors each income year. This is essentially a return to the old Prescribed Payments System (PPS) that was scrapped over a decade ago.
Government back flips
As a result of the new Federal Budget, you will not be getting:
- A reduction in company tax rates.
- A discount of tax paid on interest earned.
- A standard deduction for work related expenses.
- Tax breaks for green buildings.
What you will be getting
The government confirmed previous announcements of two significant concessions for SMEs that will enable qualifying businesses to claim deductions as follows:
- Motor vehicles – an instant tax write-off for the first $5,000 for any motor vehicle bought in the upcoming financial year (2012/2013).
- Other assets – an immediate write-off of all assets under $6,500 from 1 July 2012.
The government has also simplified how other forms of write-offs are managed. The change will allow SMEs to write-off other assets (except buildings) at a single rate; normally multiple rates apply depending on the type of asset.
Geoff Steer is a Founding Partner of Matthews Steer Chartered Accountants. Geoff was recently ranked one of Australia’s top 10 financial advisors by the AFR Smart Investor Magazine’s 2011 Masterclass.
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