As you can see, for the average person, these rules rapidly descend into a complicated morass of tax law. The ATO is concerned that people are not applying the law correctly.
So, before June 30 this year, it will write to some taxpayers regarding their 2010-11 income tax returns. It will ask the taxpayers to review if the business income reported in the tax returns may be in full or part be classified as PSI and subject to the PSI rules.
The ATO encourages taxpayers to review whether the business income includes any PSI. In the event that the business income includes PSI, it said a voluntary disclosure needs to be made. This can help reduce any penalties that may be applied.
The ATO has also reminded taxpayers to be aware of when a GST adjustment is needed for property transactions. A GST adjustment may be needed on a taxpayer’s June activity statement if both of the following apply:
Data matching is ever on the increase and the latest exercise involves the ATO collecting identity and transaction details from various organisations relating to securities held in all ASX listed entities.
The ATO said the details will be electronically matched with its data holdings to identify non-compliance with capital gains tax, income tax, and GST obligations under taxation law. About 1.2 million individuals will be affected by the program.
Also, the Department of Human Services is requesting and collecting from eBay Inc. the name, address, date of birth of sellers with sales greater than $20,000 in the 2010-11 financial year.
The Department said the details collected will be electronically matched with its data holdings to identify social welfare recipients who may have not disclosed income and assets generated as a result of online trading. It said records in excess of 5,000 individuals will be matched.
Don’t forget that the tax scales will change on July 1, 2012. Those earning up to $80,000pa will receive tax cuts, but so will many others given that the flood levy ends on June 30. Those who can might wish to discuss with their accountant the possibility of deferring some income to what for them would be a lower tax environment next year.
For small businesses in particular, from July 1, they will get immediate write-off of depreciable assets valued up to $6,500 (this was previously $1,000). So, if they can defer purchase of an asset that can take advantage of this write-off, they will save tax.
Also from July 1, small business entities (turnover less than $2 million) will be allowed to claim an accelerated initial tax deduction (up to $5,000) for motor vehicles acquired in 2012-13 and later years. Good motor vehicle deals are often to be found from dealers in the run up to June 30, but this year, a purchase after July 1 will save more tax.
On the superannuation front, the overriding message is to be sure you don’t breach your contribution limits. From July 1, 2012 for a period of two years, all taxpayers, regardless of age, will be subject to a concessional superannuation contributions cap of $25,000. That cap is currently $50,000 but this will end on June 30.
I’ve only touched on a few tax issues that might exercise the mind at this time of year. SMEs should really be talking to their advisers about tax issues before it’s too late.
Terry Hayes is the senior tax writer at Thomson Reuters, a leading Australian provider of tax, accounting and legal information solutions.
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Terry Hayes is the editor-in-chief of tax news reporting at Thomson Reuters, a leading Australian provider of tax, accounting and legal information solutions.
