Reduction in the minimum payment amounts for account-based pensions in 2012-13

The government has announced that pension drawdown relief will continue to be available for the 2012-13 year, extending the drawdown relief available during the 2011-12 financial year.

The minimum payment amounts for account-based, allocated and market-linked (term allocated) pensions will continue to be reduced by 25% for 2012-13. It is believed that about 125,000 self-funded retirees will benefit from this extension.

Minimum payment amounts were halved for account-based pensions in 2008-09, 2009-10 and 2010-11. In 2011-12 they were reduced by 25%.
While the government indicated that the minimum payment amounts would return to normal in 2012-13, equity markets continue to be volatile and extending drawdown relief for a further year will assist retirees to recoup capital losses as equity markets recover over time.

Source: ATO SMSF News Issue 20

A warning to Andriod users

An increase in hacker-related crime – targeted at Google Android users – has caused concern, with many hackers now using consumer apps to glean personal information and generate financial gain.

472 per cent of new viruses designed to attack Android gadgets have been detected in the past four months. This is an alarming rate, especially considering that Android accounts for more than half of the worldwide smartphone sales.

Hackers hide malicious code in popular apps that consumers download, programming them to collect sensitive information such as user identity, location or personal messages. Others are programmed to generate revenue by sending premium-rate text messages without the owner’s knowledge.

Recent updates to business benchmarks

The Australian Taxation Office has released information regarding their annual updates to small business benchmarking, with data from the 2009 financial year.

These include the following:

• The addition of new industries to small business benchmarking – including landscape construction, motor vehicle retail, panel beating and smash repairers, lawn mowing and garden services, tattooing services and pharmacy.
• The addition of total expenses to turnover benchmark ratio – allowing businesses that don’t consistently report expenses for either cost of sales or labour, to measure their performance against others in their industry.
• Merging previously divided industries that no longer require separate benchmarks.
• Revising annual turnover ranges (ie. low, medium and high turnovers) for different industries so that businesses with similar characteristics in the 2009 data are grouped together.

It is recommended that businesses review their small business benchmarks regularly. This information is available from the Australian Taxation Office or via their website.

Exposing the cash economy

Businesses that fail to declare or report all their cash transactions will be exposed this financial year when the ATO commences their crack down on the cash economy.

An estimated 110,000 taxpayers who are suspected of participating in the cash economy will be contacted by mail in efforts to deal with under-reported or omitted income, and cash transactions used to hide or evade tax obligations.

Business taxpayers will be identified through one of the ATO’s cash economy indicators:

• Small business benchmarks
• Data matching
• Allegations of tax evasion by the community

Taxpayers are encouraged to review their records to ensure they have correctly reported all income – especially cash transactions.

Intellectual property in business

Intellectual property (IP) owned by a business, including unique inventions, designs, logos, documents and processes that you or your business have developed,  can be just as important for generating revenue as property and staff.

The free online business tool ‘Intellectual Property Explorer’ was developed to help owners identify and protect their IP assests. Users are guided through an interactive process designed to help identify IP in their business and create strategies to secure these assets.

Fuel tax credits for businesses

From 1 December 2011, the Federal Government’s excise or customs duty will apply to gaseous fuels used for transport purposes.

As a result of these changes, the ATO will be offering fuel tax credits to any business which acquires, manufactures or imports duty paid gaseous fuels for use in eligible business activities.

Tax credits will apply to following gaseous fuels:

• liquefied petroleum gas (LPG)
• liquefied natural gas (LNG)
• compressed natural gas (CNG).

Effective time management

Time is money! So how can your businesses develop good time management skills and improve productivity?

• Identify the most important issues, and deal with them first.
• Sort jobs in order of importance and delgate them appropriately.
• Ensure that staff are able to deal with the jobs they are given.
• Make punctuality a company policy.
• Ensure that meetings are meaningful and impose a clear-cut agenda.
• Keep distractions, such as personal e-mail and calls, to a minimum.
• Tackle the important tasks when people are at their most productive.
• Give staff rewards and incentives to encourage their productivity.
• Prepare for unexpected issues and ensure that there will be time to deal with them.

Remember, in a faced-paced work environment, efficiency equals success!

New super reforms for SMSFs

In the 2011-2012 Federal Budget, the government announced a range of super reforms that would be introduced for self-managed super funds (SMSFs). These were designed to improve the super system and better safeguard the retirement savings of Australians. If passed by parliament, the following changes will into effect over the next couple of years:

GST fraudsters caught out

Goods and service tax (GST) fraudsters are more than likely than ever to be caught out  this year, as the ATO plans to increase its audits on GST refund claims by small businesses and  investigate cases of serious evasion. As a result of government funding, an extra 11,500 cases will be completed in the 2011-12 financial year. Last year, 28 people were prosecuted for more than $17 million worth of GST-related fraud offences.

Tax deductible expenses

Not all purchases made by a business will be tax deductible. Those that are must be related to the earning of income, but even then there are some exceptions.

Some costs have a private component, such as motor vehicle expenses, that must be apportioned between business and private use. Other costs may be totally related to a business, such as the registering of a patent or trademark, but are classed as a capital and therefore not tax deductible.

Some examples of expenses that could be claimed however, include employee salaries and super contributions, advertising, rent or leases, bank fees, interest on loans, freight and insurance, repairs, promotions and giveaways, depreciation of assests and the costs of a registered tax agent.

For more information on what expenses are tax deductible for your business and what records you should be keeping for these, please feel free to contact our office.