As part of the 2014-15 Federal budget the Government introduced a Temporary Budget Repair Levy. Individual taxpayers with a taxable income of more than $180,000 per year will have had additional tax withheld by their employer, starting from 1 July 2014.

The levy is payable at a rate of 2 per cent of each dollar of a taxpayer’s taxable income over $180,000. It applies to both residents and non-residents from 1 July 2014 and applies to the 2014-15, 2015-16 and 2016-17 income years.

In some cases the levy is payable even if you have a taxable income of $180,000 or less.

If the levy applies to your income, it will generally appear on your Notice of Assessment you receive after you lodge your 2015 tax return.

Source: https://www.ato.gov.au/Individuals/Lodging-your-tax-return/What-s-new-for-individuals/

There are four reasons a trustee would make a family trust election:

The trust loss measures

By becoming a ‘family trust’, the non-fixed trust is subject to concessional treatment and most of the trust loss tests do not apply, or apply in a modified way. The measures apply for trust tax losses for the 1995 and later income years, and for debt deductions for the 1997 and later income years.

The trust has a tax loss, to be recouped in future years, or certain debt deductions, but the trust could not satisfy the required trust loss tests. For a non-fixed trust, the trust will need to satisfy the 50% stake test (if applicable), the pattern of distributions test (if applicable), and the control test, and not fail the income injection test, to claim a tax loss or certain debt deductions.

The company loss tracing measures

Broadly, the concession applies for the purposes of the company loss recoupment rules so that where the relevant interests in a company are held by a ‘family trust’, a single notional entity will be taken to own the interests as an individual.

Amendments to the company loss legislation allow a non-fixed trust to benefit from the family trust concession. The measures apply for 1997 and later income years.

The franking credit trading measures

Amendments to the franking credit trading measures allow a non-fixed trust that receives a franked dividend to benefit from the ‘family trust concession’. The measures apply for 1998 and later income years.

Broadly, unless the trustee of a non-fixed trust has elected for it to be a ‘family trust’, a beneficiary with no fixed interest will not be a ‘qualified person’ for the purposes of the 45-day rule. Someone who is not a ‘qualified person’ is denied franking credits, in relation to dividends paid on shares, or interests in shares, acquired after 3pm on 31 December 1997.

Trustee beneficiary reporting rules

The exclusion of trusts that have made an FTE or IEE applies from the start of the 2009 income year and to all later income years.

Generally, these reporting rules require the trustee of a closely held trust to advise the Commissioner of certain details about each trustee beneficiary that is presently entitled to a share of the trust’s net income or tax-preferred amounts. This advice must be provided by the due date for lodgement of the closely held trust’s tax return.

Source: https://www.ato.gov.au/business/income-and-deductions-for-business/in-detail/losses/family-trust-elections-(ftes)-and-interposed-entity-elections-(iees)—questions-and-answers/

The government has simplified the car expense deductions for individuals from 1 July 2015.

Prior to 1 July 2015, there were four methods for claiming car expenses:

• Cents per kilometre – capped at 5,000kms
• Logbook – unlimited kms
• 12% of original value
• One-third of actual expenses.

To simplify the rules, from 1 July 2015, the government has abolished the one-third of actual expenses method and 12% of original value method. The cents per kilometre method (with the existing 5,000km cap) and the logbook method (with unlimited kms) remain.

The cents per kilometre method has been simplified to use a standard rate of 66 cents per kilometre for the 2015-16 income year, rather than a rate based on the engine size of the car. The Commissioner of Taxation will set the rate for future income years.

Employers should be aware that the Tax Office set the approved pay as you go withholding rate for cents per kilometre car allowances at 66 cents per kilometre from 1 July 2015. Employers should withhold from any amount above 66 cents for all future payments of a car allowance. Failure to do so may result in the employee having a tax liability when they lodge their tax return.

Employees, who from 1 July 2015 have been paid a car allowance at a rate higher than the new approved amount, should consider whether they need to increase their withholding to avoid any tax liability at the end of the year.

Article source: https://www.ato.gov.au/general/new-legislation/in-detail/direct-taxes/income-tax-for-individuals/car-expense-substantiation-methods-simplified/

If you’re an individual in business, as either a sole trader or in partnership, and your business makes a loss, you may be able to offset the loss against your other income such as salary and wages.

To be eligible, you must meet the income requirement and pass one of the four tests. The four tests are:

• The assessable income test – the business has assessable income of at least $20,000.
• The profits test – the business had a profit for tax purposes in three out of the past five years (including the current year).
• The real property test – the value of real property or of an interest in real property that you used in the business on a continuing basis was at least $500,000.
• The other assets test – the value of assets (excluding real property, cars, motor cycles and similar vehicles) you used on a continuing basis in carrying on the business was at least $100,000.

You can only claim losses from genuine business activities.

You can’t offset losses from hobbies or investments.

Source: https://www.ato.gov.au/business/non-commercial-losses/

What is the private health insurance rebate?

The private health insurance rebate is a contribution the government makes towards the cost of your private health insurance.

What are the changes?

From 1 July 2012, the private health insurance rebate is income tested. This means that the amount of rebate you are entitled to receive now depends on your income or family income.

Each adult on the private health insurance policy will receive a statement from their insurance provider showing details of their share of the policy at the end of the financial year. You will need your statement to complete your tax return.

How do the changes affect me?

If you are single with an income of $84,000 a year or less, or a couple or family with a combined income of $168,000 a year or less, you are not affected.

If your income is above these amounts, the rebate you receive may be reduced. The Australian Taxation Office (ATO) will work out your rebate entitlement when you lodge your tax return.

Remember, if you don’t have a suitable level of private hospital cover, you may be charged the Medicare levy surcharge.

How do I avoid a private health insurance liability?

Most people claim their rebate as a reduction in the amount they pay their private health insurer.

If you claim too much rebate as a premium reduction, there is no penalty, you just have to pay back the excess rebate claimed as a liability in your next tax return.

To avoid paying back excess rebate, contact your private health insurance fund to nominate a different rebate amount.

Source: https://www.ato.gov.au/general/other-languages/in-detail/information-in-other-languages/changes-to-private-health-insurance-rebate/

In the 2015-16 Federal Budget, the government announced that it will change the tax residency rules for most people who are temporarily in Australia for a working holiday.

These people will be treated as non-residents for tax purposes, regardless of how long they are here. They will not be able to access the tax-free threshold and will be taxed at the second marginal rate (currently 32.5%) from their first dollar of income up to $80,000.

The change will take effect from 1 July 2016.

Legislation for this measure has not yet been drafted.

Source: https://www.ato.gov.au/general/new-legislation/in-detail/direct-taxes/income-tax-for-individuals/non-residents/

Suitable applicants are invited to apply for a position as a full time Accountant.

About us:

Griffin & Associates is a Townsville based accounting practice with a reputation of delivering superior accounting and taxation solutions. We are passionate about engaging with our clients and providing an individualised service.

We provide an extensive range of accounting services, including – tax and compliance advice, business formation advice, business management advice, succession planning advice and self-managed super fund administration.

Position:

We are looking for an enthusiastic person to join our team of professional accountants. We provide a flexible work environment that promotes career advancement, technical training and mentoring.

The job position involves the following:

• Completion of financial statements and income tax returns
• Cash flow forecasting
• Working closely with small businesses, including companies, trusts, partnerships and sole traders

Remuneration will be based upon qualifications and experience, with annual performance and development reviews.

Qualifications / requirements:

The successful applicant must be able to demonstrate the following attributes:

• Completion or near completion of accounting degree
• Commenced or willing to commence CA/CPA program
• Ability to meet deadlines and prioritise workload
• Strong communication stills
• Experience preferred but not essential

Griffin & Associates is an equal opportunity employer.

Application:

To apply for the job position, please forward a covering letter, resume and copy of your most recent academic transcript to Brett Zecchini:

brett@griffinassociates.com.au

The successful applicant will commence work as soon as possible.

All applications will be treated at confidential.

Net medical expenses are your total medical expenses minus refunds from Medicare and private health insurers which you, or someone else, received or are entitled to receive.

The net medical expenses tax offset is being phased out.

To be eligible to claim the offset in your 2015 income tax return, you must have either:

• Received the offset on your 2013 and 2014 income tax assessment (final year you can claim is 2015), or
• Paid for medical expenses relating to disability aids, attendant care or aged care.

Note: You may not be eligible to receive the medical expenses offset if other tax offsets have reduced your tax payable to zero.

This offset is income tested. If you are eligible for the offset, the percentage of net medical expenses you can claim is determined by your adjusted taxable income (ATI) and family status.

From 2015–16 until 2018–19, you will only be able to claim the offset for disability aids, attendant care or aged care expenses.

Source: https://www.ato.gov.au/Individuals/Income-and-deductions/Offsets-and-rebates/Medical-expenses/

You can claim a deduction for interest the ATO charge on:

• Late payment of taxes and penalties
• Any increase in your tax liability as a result of an amendment to your assessment
• Any increase in other tax liabilities, such GST or PAYG
• Any underestimation of your tax liability when you vary an instalment for GST or PAYG

You can claim any interest charge we impose in the year in which it is incurred:

• When you are charged the interest if your income tax assessment is amended
• In the year in which the interest accrues on your account

Source: https://www.ato.gov.au/individuals/income-and-deductions/deductions-you-can-claim/other-deductions/interest-charged-by-the-ato/

You can claim the cost of premiums you pay for insurance against the loss of your income. You must include any payment you receive under such a policy on your tax return.

If the policy provides for benefits of an income and capital nature, only that part of the premium attributable to the income benefit is deductible.

You can’t claim a deduction for a premium or any part of a premium:

• for a policy that compensates you for such things as physical injury
• where the policy is taken out through your superannuation

For example, you can’t claim a deduction for:

• life insurance premiums
• trauma insurance premiums
• critical care insurance premiums

Source: https://www.ato.gov.au/individuals/income-and-deductions/deductions-you-can-claim/other-deductions/income-protection-insurance/