Please see our easy to understand Federal Budget Summary at http://www.cabel.com.au/federal-budget-2012/

FINANCIAL PLANNING: The Big Question!

It is a general assumption that the majority of you follow the news and are aware of the negative press the Financial Planning industry has been receiving for the last few years in relation to commission based fees and unethical practices. Like many, many of us would believe that we ‘trust’ our financial advisor and they would not be the ones that are being discussed in the news. So, I ask you, when was the last time you looked at who owns and controls your investments.

As accountants and auditors, it is our job to ensure that your earnings and assets are reasonable and secure. In this role, it has come to our attention that some of our clients, have large percentages of their funds entirely interested in products controlled by their financial advisors. There is not transparency to the client, that ownership leads back to the advisor, and this is a major concern for you, and for us.

We will be contacting you if we have any concerns about the investments you hold, as we do not believe in this kind of action, and will tell you as such.

BankLink Software Introduction

CABEL Partners will shortly be introducing BankLink to Superannuation

Fund clients. As the name suggests BankLink provides accounting practices with reliable, timely, and accurate client transaction data from over 100 financial institutions. We don’t get access to your accounts, only accounting information.

This software will give CABEL Partners quick, efficient and accurate access to your bank information, without double entry from statements to our software. The synergies between our accounting activities and the BankLink software are numerous.

To do this we require your permission to pull data from your bank accounts straight into our software. During the month of May you will receive a form to complete to get this process underway.

We thank you in advance for your cooperation.

Superannuation Special

Superannuation changes for employers

Superannuation is constantly changing and is still important and cost beneficial. Broadly, the latest changes will see the Superannuation Guarantee (“SG”) rate increase from 9% to 12% between 1 July 2013 and 1 July 2019; with initial an increment of 0.25 percentage point on 1 July 2013. Secondly, the SG age limit of 70 will be removed meaning employers will be required to contribute to super funds of employees aged 70 and older. To ensure you keep compliant with all your employer superannuation obligations contact the office.

Superannuation opportunity

At CABEL we consider superannuation an important issue. Contributing too much, above certain thresholds, ordinarily incurs an ‘excess contributions penalty’. The Government however has announced a concession for individuals who may have over contributed to superannuation by $10,000 or less. These individuals can request the excess contributions be withdrawn and refunded to them. This will eliminate a penalty. The excess contributions will then be taxed at your marginal tax rate.

Superannuation – Get Your Share!

For the year ended 30 June 2012 you are eligible to deduct the following superannuation contribution amounts:

Contributions above these limits can result in large penalties. Additional contributions can be made as no- concessional and these have limits as well.

For the next year, year ended 30 June 2013 and later years, the deductible limit will be $25,000 per annum regardless of your age. The Government announced 12 months ago that it may consider increasing the deductible limit for members over 50 years of age to $50,000 if their member balances are less than $500,000. The details of these proposals are yet to be released.

Tax Office Scammers at it again

Scammers never tire of attempting to impersonate the Australian Taxation Office and lure unsuspecting taxpayers into disclosing personal details including bank accounts and personal financial data. The Australian Taxation Office is again warning taxpayers of this activity:

“From time to time, we [the Australian Taxation Office] will send you emails, SMS or post messages on our official social media profiles promoting new services or alerting you to due dates, for example tax time is approaching or that your business activity statement is due. However, we will never send you an email requesting you to confirm, update or disclose confidential details like your name, date of birth, address, passwords, credit card details etc.”

Ensure you do not disclose your personal data over the internet to any unprompted email.

Charity Update

The charity space is changing. There has been a number of significant court cases in this area recently. The Government has responded by announcing the creation of a new body called the Australian Charities and Not-for-profits Commission (“ACNC”). From 1 October 2012, the Government has proposed that:

• the ACNC will be responsible for determining charity status for all Australian Government purposes and for maintaining a charity register,
• existing charities endorsed by the Tax Office as income tax exempt will be automatically registered with the ACNC,
• the Tax Office will continue to be responsible for administering tax concessions for charities

The Government hopes these changes will provide clearer guidelines and better administration of the not-for-profit sector. For more information contact Matt at CABEL Tax.

Alan Grevler & Associates Phone Number will Change 1 June 12

Please note that the Alan Grevler & Associates phone number 02 9439 3138 will be disconnected as of the 1 June 2012. Please ensure your contacts are updated to reflect this so you can still get in touch with CABEL Partners. The CABEL Partners number is 02 807 10 300. Thank you.

Phil on Long Service Leave

Phillip Browne, Managing Partner at CABEL Partners, will be taking a well-earned 7 weeks off in May and June. In his absence please contact John Hensley or Alan Grevler for assistance. We wish Phil all the best for an adventurous and relaxing break, hopefully probably more of the latter.

WHAT’S ON IN SYDNEY?

ARCHIBALD PRIZE 2012 31 Mar – 3 June 2012

Australia’s most famous annual art exhibition is now on at the Art Gallery of NSW – the 2012 Archibald Prize. See this year’s winning self-portrait by Tim Storrier alongside 40 finalist works, including portraits of Australian identities such as David Gulpilil, John Wood, Father Bob Maguire, Boy and Bear and Missy Higgins. Finalist artists include Martin Sharp, Adam Cullen, Wendy Sharpe, Garry Shead and Ben Quilty.

PYRMONT FESTIVAL 18 May – 27 May 2012

The Pyrmont Festival of Wine, Food and Art brings regional flavours to the city as the Mudgee Region’s best food and wine is showcased. The Festival will include a series of degustation dinners where Pyrmont’s top chefs and Mudgeee winemakers match food and wine, a long lunch on Jones Bay Wharf, cooking classes, wine appreciation, a wine and cheese master class and much more

EXECUTIVE SUMMARY

“The surplus years are here” said Wayne Swan, as he handed down his 5^th Federal Budget last night.  That’s a surplus of $1.5 billion in 2012-13, with growing surpluses in the next 4 years.  It is a turnaround from a deficit of $44 billion, funded by savings of $33.6 billion, and some expected recovery in tax revenues – although not up to pre- GFC levels.  The savings are coming from revenue measures, and cuts to defence and foreign aid spending.

The economy is forecast to grow by 3.25%, and unemployment will rise marginally to 5.5%, still well below Europe and the United States. Net debt will peak at 9.6% of GDP, comparing with 70% in Europe and over 70% in the United States.

The Budget has been called a “traditional Labor budget” and it is, in that the winners are families with schoolchildren, small business, the aged and the disabled.  Losers are non-residents, foreign workers, high wealth individuals and companies.  It is also a political budget – what is taken away are things we were promised but never had, such as the reduced tax on interest income, the standard tax deduction and the cut in company taxes, or concessions enjoyed by those who were unlikely to vote Labor in any case.

PERSONAL TAX MEASURES

Personal tax rates

Key Points

There will be no change to personal income tax rates which were legislated in the package of carbon tax bills in 2011.  Refer to our ‘Tax Rates post Carbon tax’ blog post from July 18, 2011.

The flood levy will cease from 30 June 2012.

There are also some changes to tax rates applying to non-residents on their Australian income.  From 1 July 2012 the first two marginal tax rate thresholds will be merged into a single threshold, with the 32.5% rate applying to all income below $80,000.

There will be changes to the part year tax free threshold for individuals and trustees who are resident for only part of a year.

Opportunity

Subject to the means testing on other benefits – $84,000 and $168,000 for the medical expenses rebate, $300,000 for superannuation concessions – and an income limit of $150,000 for the Schoolkids Bonus – any pushing of income into the 2012-13 year will have some benefit.

Low income tax offset

Key points

There are changes to the low income tax offset (LITO) which were also announced as part of the carbon tax package. Together with other tax rate changes, this will mean an increase in the effective tax free threshold for low income earners from $16,000 in the 2012 year to $20,542 in 2013 and $20,979 from 2015.

Opportunity

Think about these thresholds when considering trust distributions.

School kids Bonus

Key points

The Education Tax Offset is to be replaced by a no strings attached Schoolkids Bonus payment to be made to families receiving Family Tax Benefit A.  It will apply from 1 January 2013 and families will receive in cash each year:

-          $410 for each child in primary school; and

-          $820 for each child in secondary school.

The replacing of the Education Tax Offset means that there is no longer a requirement for receipts to be kept, or for families to wait until tax time to receive their benefit.

Changes to Family Tax Benefit A

From 1 January 2013 eligibility for Family Tax Benefit Part A will be limited to people under 18 years of age, or in secondary school.

The maximum rate of Family Tax Benefit Part A will be increased by $300 for families with one child and $600 for families with 2 or more children.  For those receiving the base rate of Family Tax Benefit Part A – at approximately $150,000 income levels – the increase will be $100 for families with one child and $200 for families with 2 or more children.

“Golden handshakes”

Key points

Currently, the ETP tax offset ensures that ETPs are taxed at a maximum rate of 15% for those over preservation age and 30% for those under preservation age up to a cap of $165,000 in 2011-12 and $175,000 in 2012-13.

However, from 1 July 2012, the offset will only be available on that part of an ETP which takes total taxable income of the recipient up to $180,000.  The rest will be taxed at marginal rates.

Opportunity

Consider timing retirement close to the beginning of the year post 1 July 2012, and monitor income earned in the remainder of the retirement year – Europe is nice in the summer for long holidays!

The Medical expenses tax offset

Key points

The medical expenses tax offset will be means tested from 1 July 2012.  For people with adjusted taxable income above the Medicare Levy surcharge thresholds ($84,000 for singles and $168,000 for families in 2012-13) the threshold above which medical expenses are eligible is to be increased to $5,000 and the rate of reimbursement will decrease to 10%.

The ‘easy’ hits

The Government has saved $2 billion and $923.5 million over the forward estimates period by taking away things we never had – the ‘standard deduction’ and the 50% discount on interest.  Is this becoming the way of the future for Governments to promise at the start of their term and take away before they have to deliver?

No more ‘standard deduction’

The Government will not be proceeding with the 2010-11 Budget announcement to allow a standard tax deduction for work related expenses and the cost of managing tax affairs.  This was to commence from 1 July 2013.

This is in consideration of other measures such as tripling the tax free threshold to $18,200 from 1 July 2012 and improvements in pre-filling, which will combine to ensure that many Australians are not required to lodge tax returns in future.

No more discount on interest income

The 50% discount for tax on interest income is also a casualty of last night’s budget.  It was to commence on 1 July 2013, but the Government cited stakeholder concern about its effectiveness and possible complexities.  This will save $923.5m over the forward estimates period.

BUSINESS TAX MEASURES

Business loss – tax claim back

Key Points
As occurs in other Countries Australia has introduced a new system for businesses which incur a tax loss. In this event taxes paid in prior years are refundable. The commencement date is 2012/2013 when tax paid in 2011/2012 can be claimed back if losses are incurred in 2012/2013. After 2013 the claim back period is extended to two years. The rules only apply to companies. The claim back is limited to $300,000.

 Opportunities

This is really a fall-back position as no one wants a loss however in our experience many businesses will incur  a loss every so often over their life cycle and at those times this will be a cash flow benefit.

Whilst there are benefits such as this for companies only other benefits arise for different structures e.g. family discretionary trusts. Each business circumstances must be weighed up in order to make a decision on a new business structure or a restructure of an existing business ( which we are seeing more and more of).

Bad debt deduction in respect of related party loans

 Key Point

No deduction will be allowed for bad debts incurred on related party transactions. It appears this may only apply to revenue losses e.g. related party financing arrangements and not to commercial debt loans on capital account. No certainty is provided in budget papers.

 Opportunities

Revenue loss bad debt disallowance will have limited application. However if extended to capital losses tax planning and restructuring will be required for any business as these are common place.

Small Business Tax Concessions

 Key Points

Broadly a small business is any type of entity which has an annual turnover of less than $2m.
From 1^st July 2012 small businesses will be allowed to claim an immediate deduction for each asset they purchase less than $6,500, and to depreciate more expensive assets in a single pool. In addition, the Government will also allow small businesses to immediately write off the first $5,000 of the cost of a motor vehicle in addition to normal depreciation.

 Opportunity

There are many small business incentives and this one is welcome. This will help small businesses finance the investments and will also make the tax system simpler for small business. There are rules around small business eligibility and if a business is near or heading towards $2m turnover it may be worth reviewing the business structure. Beyond the $2m turnover threshold most small business incentives are lost.

Fringe Benefits Tax

 Key Points

The Government is removing the unintended incentive for people to drive their vehicle further than they need to, in order to obtain a larger tax concession (this is why the Hume highway is busier in March each year).
Instead of providing a sliding scale of rates that rewards those who drive further, the Government is transitioning to a flat rate by 1 April 2014 that will apply, irrespective of the distance travelled. The change will result in a substantial increase in fringe benefits tax.

 Opportunity

FBT has been around since 1985 and anecdotally is a sleeping giant risk for businesses as the ATO have not been auditing or enforcing compliance for years. They have woken up and have announced a push on FBT which has a 31^st March balance date.
The savage problem with FBT is that a business is liable for FBT if it provides fringe benefit to employees whether or not the business pays income tax. In other words a business may have income tax losses and incur a FBT bill.

Living Away from Home Allowance (LAFHA)

 Key points

This is a tax concession which operates via the fringe benefits tax system and was available for inbound, outbound and Australian workers who were living away from their home. The rules will be changed to exclude inbound workers and limit eligibility for other workers to those that maintain a home for their own use in Australia and then the allowance is available for a maximum of 12 months for any one location. Fly in Fly out arrangements and travel expenses are not intended to be effected.

 Opportunities

This is a game changer to a system which has existed for over 20 years and the significance is large as it is expected to bring in $1b per year.
For businesses that rely on specialist skilled temporary visa holders this will reduce the incentive for those workers to come to Australia.
The 12 month rule is limiting as usually secondments are for 2 years plus. We will need to see the detail before managing this significant change and given it effectively commences today for new arrangements there is little time for planning.

Not for profit

Key points

The Government will extend the start date for the not-for-profit (NFP) sector reforms announced in last year’s budget from 1 July 2011 to 1 July 2012.
In last year’s Budget, the Government announced that tax concessions for businesses run by NFP entities were to be reformed to ensure they only apply to activities that directly further the entity’s altruistic purposes.
This means NFP entities will pay income tax on profits from their unrelated commercial activities that are not directed back to their altruistic purpose. NFP entities will also be unable to access to the FBT exemptions or rebates, GST concessions, or deductible gift recipient support in relation to their unrelated commercial activities

CAPITAL GAINS TAX (“CGT”)

 Removal of CGT discount for non-residents

 Key points

The Government will remove the 50% CGT discount for non-residents on capital gains accrued after 8 May 2012. The discount will remain for capital gains accrued prior to this time where non-residents choose to obtain a market valuation of assets as at 8 May 2012.

 Opportunities

If you are a non-resident ensure you get a market valuation done for assets as at 8 May 2012.

Changes to compensation payments

 Key points

CGT consequences will be disregarded where compensation, damages or certain insurance proceeds are received indirectly through a trust. This will ensure that the taxpayer has the same CGT outcome as a taxpayer who receives such proceeds directly. It will also ensure that insurance policies owned by superannuation funds that were treated as being CGT exempt prior to the 2011-12 Budget changes to compensation payments and insurance policies continue to be CGT exempt.

 Opportunities

No need to receive compensation directly.

Minor changes to previously announced deceased estate amendments

 Key points

This measure ensures that the deceased’s tax return does not need to be amended as the taxing point will be recognised by the entity transferring the asset.

 Opportunities

Reduction in compliance costs.

SUPERANNUATION

 Superannuation contributions tax to double to 30% for incomes above $300,000

 Key points

The tax rate paid by super funds on concessional super contributions (up to $25,000) will double from 15% to 30% for people with incomes above $300,000. This will apply from 1 July 2012.
Contributions which exceed the concessional contributions cap ($25,000) are subject to “excess contributions tax”. These contributions are taxed at the individuals top marginal tax rate.
The definition of “income” for the purpose of this measure will include taxable income, concessional superannuation contributions (e.g. superannuation guarantee contributions and salary sacrificed contributions), adjusted fringe benefits, total net investment loss, target foreign income and tax-free government pensions and benefits, less child support.

 Opportunities

If this measure impacts you ensure you contribute up to the cap before 1 July 2012. You will still benefit by $3,750 but not the $7,500 previously.

Higher concessional contributions cap for over 50s deferred to 1 July 2014

 Key points

The annual $50,000 concessional contributions cap for those aged 50 and over is now reducing to $25,000. The higher cap ($50,000) was originally expected to remain for those with total super balances of less than $500,000. It will now not be implemented until 1 July 2014.
A taxpayer aged 50 or over on the top marginal tax rate who is currently making full use of the $50,000 concessional contributions cap will effectively pay an extra $7,875 in tax if she or he has to restrict concessional contributions to $25,000 from 1 July 2012, and take the remaining $25,000 in cash salary.

 Opportunities

If this measure impacts you ensure you contribute up to the higher cap before 1 July 2012.
The deferral of the start date for this measure will have significant implications for salary sacrificing arrangements, deductions for personal contributions and transition to retirement (TTR) pension strategies.

GOODS AND SERVICES TAX (“GST”)

 Limiting the Commissioner’s ability to backdate GST registrations

 Key points

The Tax Commissioner’s ability to backdate GST registrations will be limited to four years with effect from 1 July 2012. This is consistent with other time periods in the GST administration regime.

 Opportunities

None available.

OTHER MEASURES

 Government payments – payment period reduced

 Key points

From 1 January 2013, the period of time that people who travel overseas and continue to be paid Government benefits will be reduced from 13 to 6 weeks. This will apply to most income support and family payment recipients. The Age Pension will be excluded as it can be paid overseas indefinitely, once certain criteria are met.

 Opportunities

None available.

New income support supplement

 Key points

The Government will provide an additional amount to income support recipients. This will be $210 pa (singles) and $175 pa for each member of a couple.

 Opportunities

Minor increase to Government assistance if eligibility criteria met.

In my experience, there are two kinds of people in the world: those who  understand their accountants – and those who don’t. If you’re in the former  category, move along. There isn’t a whole lot else for you to see here. But  if you’re in the latter category – and I know there are a lot of you out there – read on.

If I had a dollar for every time someone told me how much they wanted to  change their accountant, I’d be super rich. And, surprisingly often, the  conversation always seems to go like this …

Them: “I’m looking for a new accountant. Do you know one?” Me: “What’s  wrong with the one you’ve got?” Them: “Oh, you know, there’s nothing really  wrong with them. But they’re not really proactive.” Me: “What do you want  them to do?” Them: “Well, they just give me these reports every month and I  don’t understand them. I just want them to tell me what to do. Not just give me  a bunch of options.”

This is a classic case of abdication. And it drives me freaking nuts.

Excuses, excuses

I can hear thousands of people say: “I don’t have time to get into the nuts  and bolts of accounting. That’s not my core strength, that’s why I outsource to  an accountant!”

Fair enough. We’re all busy business owners. Of course, you should delegate  functions like this to the experts. But there is a HUGE difference between  delegation and abdication. When you offload your accounting functions, you still  need a strong understanding of how to read financial statements, analyse your  cash-flow and create budgets.

If your eyes are already glazing over at that last statement, then I’m sorry  to say that your business is only going to go so far. Sure, you can still  generate a decent income, but getting a handle on your financial reports is the  cornerstone to much bigger and faster business growth.

I’m sure I don’t need to convince you that understanding your finances is  important in the world of small business. Very few people would argue with  this.

Instead, I’m constantly hearing statements like this:

“But I just don’t get it. Maths isn’t my strong point.” “I just don’t have  a head for numbers.” “My accountants sends me those spreadsheets and they  mean nothing to me.” “I’ve tried to learn this stuff, but it makes no  sense.”

Why do smart people say this?

Here’s the most frustrating thing. These statements come from intelligent  people. And I find it utterly confounding. Because guess what? Understanding  your finances is not rocket science. In fact, it’s not even close. If you can  count the dollars in your wallet, you can understand your financial  statements.

When I start talking to some business owners about tax, I can actually see  their eyes drift off into another direction and their body language shut down.  And that’s the crux of the issue. It’s not that these people aren’t smart enough  to understand. They just THINK they won’t understand – and so they don’t even  try.

These are the same people who will then blame their accountant for not being  proactive with advice on where to spend their money, what to invest in, or how  to steer the business.

While I will happily admit that there are accountants out there who do little  more than submit BAS statements and don’t take enough of an interest in their  clients’ businesses, there are those who do. But, even then, it’s not their job  to make your business successful. It’s yours.

They are not at the coalface involved in the day-to-day workings of your  business. They aren’t privy to the nuances of your business relationships or the  interpersonal dynamics that may affect your business direction. The buck stops  with you.

It’s really a simple two-step process:

1. Get over the fear. The only person who can do that is  you. Your accountant isn’t responsible for this.

2. Equip yourself with basic accounting knowledge. You don’t  need a degree. Personally, my recommendation would be to get one-on-one tutoring  from an experienced bookkeeper. Ask them to cover the issues that are  particularly specific to small business owners.

If you find yourself saying any of the above statements, remember this:  understanding finances is easy.

Seriously, go into it with an open mind. Do a simple course like “Accounting  for non-accountants” or “Accounting for small business”. There are many courses  like this available at most evening colleges.

If you’re not the “classroom” type, invest in some one-on-one tutoring from a  bookkeeper or accountant who can show you the fundamentals.

This is a good time to make a confession. I’m a former accountant. And while  that statement might sound like an introduction to a Monty Python sketch, I just  want to be upfront about it. However, while I may have done accounting at uni,  let me assure you that I’ve forgotten most of it. It was a lifetime ago.

I could not tell you how to calculate fringe benefits tax on a recent meal I  had with a client or when to modify my cost base for capital gains tax  purposes if my life depended on it. Hell, I sometimes have trouble filling  in my BAS statement.

So I’ll admit, there isn’t a great deal left in my knowledge bank on  accounting methodologies. And clearly, accounting wasn’t my forte either, which  I why I became a writer. However, the gift that background gave me was that I  know I have no fear when faced with a balance sheet or financial report.

All these numbers may seen daunting to to begin with. But when you read the  statement it really is like reading a story. The story of your business.

If you find yourself procrastinating over reviewing the reports your  accountant sends you, or if your eyes glaze over whenever the topics of  accounting comes up, then GET OVER IT or you will never reach the   potential of your business.

Read more: http://www.smh.com.au/small-business/managing/blogs/enterprise/how-to-understand-your-accountant-20120502-1xyrb.html#ixzz1ts8l0rIP

Section 25-5: more  than meets the eye?

Abstract:  Section 25-5 of the Income Tax Assessment Act 1997 (Cth) is known as the provision under which taxpayers are able to claim deductions for the costs of completing their tax returns. Its scope, however, can be wider, extending to other tax-related costs and to costs incurred by an entity other than the taxpayer itself. This article explores the broader scope of the s 25-5 deduction. The article examines in detail a pair of important court decisions in 2003, and draws two lessons from them. The first is to look beyond the obvious applications of s 25-5 when considering the availability of deductions for clients. The section can benefit clients beyond the costs of preparing income tax returns, and beyond the “obvious” taxpayer. The second is to ensure that adequate documentation is retained in relation to work performed for clients, rates applied to invoice work, and the manner in which items are invoiced.  Read More…

Death and taxes: the “threat”of CGT event K3

Abstract: The manner in which the CGT legislation applies in the event of death is not as certain as it may appear, particularly in the case of non-resident beneficiaries to a deceased estate. In this article, the authors outline the consequences under Australian legislation for a non-resident beneficiary of the estate of an Australian resident taxpayer and, indeed, any resident beneficiaries of that same estate. The article shows that there may be an unfortunate consequence, namely, the taxation of an unrealised capital gain on death, where thought is not given to planning and drafting in the case of an estate which has a non-resident beneficiary. Drafting and non-drafting techniques are discussed which may alleviate that threat. The article also considers the impact of the announcements in the 2011 federal Budget in relation to the application of taxation law to deceased estates and, in particular, in relation to CGT event K3. Read More…

Six-year land tax exemption– maybe you need a caretaker

Abstract: In this article, the authors discuss the practical difficulties of applying the six-year absence rule for the purposes of New South Wales land tax. This rule allows a homeowner to rent out their principle place of residence for up to six years without paying land tax. It is submitted that the operation of the rule makes it practically unworkable. Examples are provided which highlight the fact that this rule is almost nullified by pragmatic difficulties. However, one option is discussed which may go some way towards assisting with these difficulties. The rule is also juxtaposed with the capital gains tax provisions in the federal income tax law. Read More…

]]> http://www.cabel.com.au/taxation-in-australia-articles/feed/ 0 http://www.cabel.com.au/cabel-ties-march-2012/ http://www.cabel.com.au/cabel-ties-march-2012/#comments Fri, 23 Mar 2012 05:33:49 +0000 Anna http://www.cabel.com.au/?p=994

3 YEARS OUT FROM RETIREMENT

We are seeing a changing of the guard as the “baby boomer” generation retires. In the KPMG and Family Business Australia Survey of Family Business Needs, it was found that:

• 61% of respondents plan to retire in less than 10 years.
• 38% of respondents were over 50.
• Over 1/3 wish to sell on the open market.
• About 1/4 wish to sell internally.
• Over 60% wish to pass the business to the next generation.
• 3% wish to close the business.

A lot of wishes! Our anecdotal evidence indicates a 3 Year Plan helps bring these wishes to plan then to action. For example, at the start “re-incorporation” may be needed. Another example, demerging parts of an entity works well and restructuring well ahead can bring tax planning benefits.

Phil Browne – Business and Taxation Consulting

CENTRELINK BENEFITS

In times of fluctuating income it is important to keep in mind the benefits which can be accessed from Centrelink, in particular Family Tax Benefit Parts A and B.  We have had experience with some clients whose income has changed or ceased temporarily who have been able to benefit from accessing these benefits until their income returns to its usual levels.  Broadly, Family Tax Benefit A is available to families who have dependent children (there are requirements that the child be studying where he/she is over 16 years of age) who satisfy the income test. Income levels at which Family Tax Benefit A are payable are quite complex to determine and depend upon the age and number of children in a family. For example, for a family with three children aged 0 – 17 the maximum income level is $123,881, while for a family with three children aged 18 -21 years (excluding students aged 18 – 19) the maximum income level is $163, 881. Family Tax Benefit Part B is limited to families (single parent or couple) where the primary earner has an adjusted taxable income of $150,000 per year or less.

Please see the below link to the Centrelink website which outlines the operation of Family Tax Benefit A and the complexities of the income test.

http://www.centrelink.gov.au/internet/internet.nsf/payments/ftb_a.htm

CABEL Team News

We are very excited to announce that during February we took on 4 new employees at CABEL Partners. They are:

Aman Singh – Aman is a quiet achiever with 5 years’ experience in business and accounting, studying his CPA.

Mandeep Sihota – Mandeep is results focused, CPA qualified and has 6 years’ experience in tax and accounting.

Ajay Patel  – Ajay is a diligent Accountant, studying his CA, with 5 years’ experience in the field.

Kent Ireland – Having recently returned from living in Canada, Kent brings bookkeeping and accounting experience to CABEL Partners, and a conscientious attitude.

These four hard-working gentlemen are already working at full capacity for CABEL, tackling work with gusto and achieving high level results for the firm. They join James Peake and Minsi Guo in Business Services, with Manager Michael Haynes.

CABEL Tax Tip – How much Salary to Sacrifice?

Did you know that if you Salary Sacrifice ALL your salary you will not be able to claim

any work related expenses? E.g. car, subscriptions, depreciation etc.

Everyone’s circumstances are different however as a rule of thumb one would not normally sacrifice such that your taxable income is less that $37,000. Less than this level means you will pay more tax in your superannuation fund than you save. Whenever salary sacrificing we strongly suggest you co-ordinate between your accountant and your financial planner ahead of commencement. CABEL Financial’s Joel Xuereb, and CABEL Tax’s Matt Eakin can assist you, contact them on 8071 0306 or 8071 0300 respectively.

BE IN CONTROL OF YOUR INVESTMENT PORTFOLIO

CABEL Partners will shortly be introducing Praemium to clients who have a Self Managed Super Fund. Praemium uses leading edge technology to deliver cost-effective investment administration and portfolio management services. At CABEL, Praemium will allow clients to login via the internet to a Self Managed Super Fund investment portfolio and monitor its progress at any time. The benefits of this software include:

• Daily updates on the position of investments within the fund;
• Portfolio valuations and real time information on earnings;
• Regular reports on earnings;
• We handle your accounting and tax as one seamless service.

This software will give CABEL Partners quick, efficient and accurate access to your information and allow us to arrange for changes to be made within a faster time period. In addition we can undertake timely and informed tax planning services to ensure alignment with our client’s investment strategy. More information will follow.

Are you managing to keep regular control of your bookkeeping? Would it be easier to allow someone else to manage it who already undertakes your tax and accounting? CABEL Partners offers efficient Bookkeeping services to assist you reach your goals. For more details contact Ali Burton on 8071 0300 or ali@cabel.com.au

USAGE OF COMPANY ASSETS

From 1 July 2009, the usage of private company assets may be taxed if private company owners use the assets of the company for free or at less than market value; this is not a commonly known issue. This can apply to all assets, including cars and houses.

This means that, for instance, company owners (and/or their friends or family) use of the company car(s) will be taxed if an arms length payment is not made to the company.

There are a number of exceptions in the law that eliminate this issue arising.

In order to review your usage of assets and/or review the application of the available concessions contact Matt in CABEL Tax on 8071 0300.

GUIDANCE FOR CHARITIES

The Australian Government is introducing a statutory definition of ‘charity’. This will assist in clarifying much uncertainty in the Not-For-Profit sector. This new definition will also be supported by the Government’s establishment of the Australian Charities and Not-for-profits Commission (“ACNC”). “The Government’s vision is that the ACNC will minimise government reporting requirements faced by charities and allow them to focus on their core business of supporting the community”. The Government announced that the start date for the ACNC will be 1 October 2012. We hope this new definition of charity, in conjunction with the ACNC, will assist clients to better manage their charitable activities.

WHAT’S ON IN SYDNEY?

PICASSON Til Midnight – 24 March 2012

Celebrate with us as we say adiós to the master before he leaves our shores forever.  For two nights only the Art Gallery of NSW will stay open until midnight with late viewings of the exhibition Picasso: masterpieces from the Musée National Picasso, Paris and a host of free events that go well into the night.

EARTH HOUR – 31 MARCH

The annual lights-out event Earth Hour will be held on Saturday 31 March 2012 from 8.30pm-9.30pm.

LIVING IN HARMONY FESTIVAL – 21 March – 28 April At Sydney Town Hall.

Celebrate Sydney’s colourful backyard at the City of Sydney Living in Harmony Festival 2012.

Living in Harmony is an opportunity to experience the richness of our city’s culture, heritage and people through tours, cultural days, talks, workshops and panel discussions.

For the past ten years, the City has hosted the Living in Harmony Festival to mark Harmony Day and celebrate our community’s vibrant cultural diversity.

Internet Access On Mobile Phone

The Tax Office accepts that if an employer provides the use of a mobile phone to an employee which includes internet access, the fringe benefits tax exemption will apply to the internet download charges (provided the provision of the mobile phone satisfies the FBT requirements, in particular that the phone is provided “primarily” for use in the employee’s employment). If you need more information, please contact our Tax Specialist Kaylene Hubbard on 8071 0300.

Interesting New Data Matching By ATO With WorkCover

The ATO will collect the names and addresses of entities within the States’ and Territories’ WorkCover Authority for the 2010 financial year. It says the data will be matched with ATO data holdings to identify non-compliance by employers with lodgement and payment obligations under taxation law.

MYOB, Quickbooks and general bookkeeping experts!

You will soon receive a letter regarding the MYOB, Quickbooks and general bookkeeping skills of our staff at CABEL Partners. CABEL Books provides high level bookkeeping services in conjunction with your accountants to provide pro-active and timely accounts. By fusing our bookkeeping and accounting services, we aim to provide you with certainty where nothing “slips through the cracks”. If you are interested in using our bookkeeping services, please contact Ali Burton on 8071 0300.

Invoicing and paying bills at CABEL Partners

Many of the original CABEL clients are familiar with Suet (Sweet), our internal bookkeeper.  Our newly acquired clients previously of Alan Grevler & Associates may not be so familiar. Suet is the very lucky contestant who gets to ring our clients if they have not paid their invoice. A tough job, but someone has to do it. In the next week or so we will be sending a letter to introduce Suet to you and her credit control method. So, if Suet rings you will know why, and what you can do to avoid getting that call!

Pay as You Drive, Car Insurance

You can Pay-As-You-Go when it comes to tax, and you can also do it for your car insurance.  People in our office have switched their car insurance from the more traditional companies and models to companies offering Pay-As-You-Drive policies – and have found it has saved them money. If you use your car only for short trips, or have a second car that mainly does the grocery and the school run, you may find savings too.

The way it works is that you ‘buy’ a certain number of kilometres from the insurance company, and you are covered while you are within that kilometre limit.  If you need more, you buy more, and there is no ‘penalty’ charge for doing this.  If you do not use all the kilometres you bought, they carry over to the next year.  Again, there is no ‘penalty’ for doing this.  It is worth checking out – try www.payasyoudrive.com.au

A Penny for your thoughts…

In the next week or so, we will be sending out surveys to our clients requesting your feedback on our performance over the last 3 – 6 months. For many of you, this last 3 months will be your first with CABEL Partners and Alan Grevler & Associates as a merged organisation. We are working very hard this year to get our processes in place and our services at top notch. Your assistance in this will be worthwhile. We would greatly appreciate 5 minutes of your time to complete the survey. Watch this space.

New Work Health & Safety Laws 1 Jan 2012

NSW is working towards new work health and safety (WHS) laws to take effect from 1 January 2012. The WHS laws will replace the occupational health and safety (OHS) laws in NSW. These new laws will be consistent across Australia, making it easier for you to operate in different parts of the country.

If you are complying with the current OHS laws then you are well on your way to complying with the new WHS laws. However, there are some changes and you need to know how they will affect you.

 What are the main changes?

• If you are an employer, sole trader, association, partnership, corporation or volunteer organisation with paid workers, you will be classed as a person conducting a business or undertaking (PCBU). PCBU will replace the current term employer.
• If you are an employee, volunteer, labour hire staff, apprentice, work experience student, trainee, outworker, sub-contractor or contractor, working for a PCBU you will be classed as a worker. Worker will replace the current term employee.
• If you are a supplier, designer, manufacturer, importer, or manager or controller of a workplace, you will have specific duties in addition to those as a PCBU.
• Health and safety representatives (HSRs) will replace current OHS representatives and play a key role in consultation.
• Your industry may also be affected by specific changes.
• If you work in – or even just visit – a workplace, you will have WHS rights and duties.

 What should I do?

WorkCover is here to help you get ready, providing information, advice and regular updates. For the latest on the new laws or to register for our free workshops and presentations, visit www.workcover.nsw.gov.au/newlegislation2012   For specific advice, call WorkCover on 13 10 50.

WHAT’S ON IN SYDNEY?

SYDNEY CELLAR DOOR 25-26 February 2012

2012 Sydney Cellar Door is held on Saturday 25 & Sunday 26 February in Hyde Park South from 11am – 6pm each day.

For more info see: www.nswwinefestival.com.au/

AUSTRALIAN OPEN SURF FESTIVAL – 11-19 February 2012

The world’s top action-sports athletes are set to converge at the birthplace of professional surfing, Manly Beach, Sydney, Australia for the country’s biggest-ever surf, skate and music event; The Australian Open of Surfing, presented by Hurley and Billabong.

For more info see www.australiaopenofsurfing.com

The Year in Summary – Phil Browne and John Hensley

Our aim is to be the best all-round services firm for you. We realise a firm can’t stay small and properly advise growing business and individuals. This year has seen us grow in Tax Consulting, consolidate in Audit, introduce Bookkeeping and consolidate Business Services. Our associated Financial Planner has grown and been rebranded to reflect its closer ties with us. The glue that holds us together for you is the business support team lead by Anna and we wish to thank them as they are often unseen.

We have welcomed a number of new staff including our Audit Manager Dennis as his predecessor moved interstate and a new Business Services Manager Michael as his predecessor moved back to England! Employment and recruitment management has been a big issue for us as it has been for many companies of our size.   Ours and our client’s experiences, have made us very aware of the very different Fair Work laws and as a result we have put on Liz Newman as a People & Culture Consultant for us and our clients.

The year finished with a bang with the merger of CABEL Partners with Alan Grevler & Associates. The new team and their clients have brought very positive benefits to our firm and we are excited to work together as a team. Alan is an excellent consultant and as he integrates into CABEL he will spend more time consulting to you on these services, where he has extensive knowledge. It is great benefit to us all that he will now have the time to do this.

For CABEL Partners, 2012 is a year for internal consolidation and stabilisation for us and we hope that will prove beneficial to you. In the meantime we wish you a Merry Christmas and a Happy New Year.

Phil & John

A Message from Alan Grevler

2011 has been a tumultuous year whichever way one cares to measure it. One of the more insignificant milestones to occur was that the merger between CABEL Partners and Alan Grevler & Associates just turned one month old, and quite a month it has been.

The combined firm has made a huge effort in getting our individual synergies aligned and the work flowing as fast as possible. Even in this very short space of time I can see real progress and tangible benefits from having access to in house specialists in taxation, auditing and financial planning which was one of the big drivers behind the merger.

Not unexpectedly we did slow down as we allowed considerable time and input to properly bed down the processes and align our operations. The whole experience has been a breath of fresh air and is probably something I should have done in a bygone age before I turned grey.  I can already see enormous benefits that will be coming the way of our clients and the firm and I am looking forward to 2012 with enthusiasm, energy, optimism and a new spring in my step.    

If anyone has any questions, suggestions or objections please feel free to contact me on 8071 0300 or alan@cabel.com.au as some of the best ideas come from our clients.

Lastly I would like to wish all our clients a very merry Christmas and a healthy, happy, prosperous and rewarding new year.  

Take care,  Alan

Warranty for Defects

There is new legislation coming into place regarding warranty for defects.

These Regulations amend the Trade Practices Regulations  to give practical effect to the Australian Consumer Law provisions dealing with requirements for warranties against defects and repair notices and reporting requirements for goods or product-related services associated with death, serious injury or serious illness.

Further information can be found at  www.comlaw.gov.au/Details/F2010L03014

Safety Driver tips c/- The Executive Connection (TEC)

Good Vision in a Downpour

Have you ever had trouble with vision during a downpour while driving your car? Sheets of rain obscuring your  view of what is going on around you? Well here is a tip  that will help. Put on your SUNGLASSES,  and miracle! You are not only helping yourself to drive safely, but you     might also save someone else’s life! Let us know if you agree on our blog!

Cruise Control in the Rain? A no no…

Many people may think that driving in the rain on cruise control is     safe because it maintains a safe speed. However, if the cruise control is     on, your car may begin to hydro-plan when the tires lose contact with the road     and your car will accelerate to a higher rate of speed making you take off     like an aeroplane. So, don’t use your cruise control in bad weather. Now,     that said, let’s hope Summer arrives soon and there won’t be rain!

If you would like to know more about TEC please go to www.tec.com.au

BEX becomes CABEL Financial

The 1^st of January 2012 will be an exciting day for Joel Xuereb and Jessica Waller, of BEX Financial as they will become CABEL Financial, and join the CABEL Group.

CABEL Partners was created in April 2010 when Phil Browne took John Hensley on as a partner, and we merged the names of the two firms, which you will see in the initials of CABEL, as well as Chartered Accountants, and the Link to our former names.

Joel  has been working in Financial Planning for 10 years, and has a unique and focused approach to partner with his clients in their financial journey through life.  Joel  took on Jessica Waller to assist him in August 2010. Jessica had recently graduated with an  Economics degree, and has proved to be an enthusiastic and delightful member of the team.

Much positive feedback is received from Joel’s clients about their experience with CABEL Financial, the advice provided, and the regular contact to review their situation.

Look out for an introduction from Joel in the new year where he will explain in more depth how CABEL Financial works and the potential benefits to you .

From 1 January 2012, the government is changing the HELP voluntary repayment bonus, applied to payments of $500 or more, from 10% to 5%.

To take advantage of the 10% bonus, your clients will need to ensure their voluntary repayments are received by us on or before 31 December 2011. To ensure payments are received in time, your clients should check with their financial institutions for processing deadlines.

As in previous years, we will close during the Christmas-New Year holiday period. We will be closed from noon 23 December 2011 until 8.00am 3 January 2012. If your clients need to confirm their payout amounts and payment reference numbers (PRN), they will need to phone us before 23 December on 13 28 61 between 8.00am and 6.00pm, Monday to Friday.

For more information, refer to HigherEducation Loan Program – voluntary repayments or contact Minsi Guo at the CABEL Partners office on 02 8071 0300.

 What will it mean for you?
As we outlined in our previous blog post on the carbon tax, it is what it says it is – a tax on carbon paid by the companies who produce it.

From July 1, 2012 the 500 biggest polluters in Australia will pay $23 for every tonne of carbon they release into the atmosphere. The rate will gradually increase until July 1, 2015, when it will become set by the market and will no longer be a carbon “tax” but will be emissions “trading scheme”. The main exclusions are household fuel and agricultural emissions.

The cost of the carbon tax to these polluters is intended to drive them to implement “cleaner” processes. It is also intended that these costs will be passed on to consumers – so that consumers reject products that carry the on-cost of the carbon tax and switch to those that don’t.

 Let’s look at what the additional costs are forecast to be for consumers.

Treasury estimates that the average family will pay $9.90 more a week in the year the tax is introduced. That is split $3.30 between electricity increases (10 per cent), $1.50 to gas (9 per cent) and 80 cents to food (less than 0.5 per cent). The overall impact is forecast to be a 0.7 per cent price rise.

The additional costs will also be passed on to business consumers by way of increases in the cost of electricity and other business inputs. There is no direct compensation package for business, as they will pass additional costs on to consumers, and consumers have been compensated.

 Now let’s look at the compensation provided for consumers:

Consumers will be compensated through the tax system as follows:
- Tripling of the tax free threshold from $6000 to $18,200. It is stated that this will remove 1 million people out of the income tax net, and that those taxpayers on less than $80,000 will pay an average $300 less tax.

Further, retirees and family tax benefit recipients will also be compensated as follows:
- One-off payments of up to $250 (singles) to those who have a Commonwealth Seniors Health Card and a quarterly seniors supplement of up to $338 (again singles).
We are told that this is an average $10.10 of assistance.

Carbontax.net.au has a facility for you to do your own calculations on its “household compensation calculator”. The calculator provides 43 predetermined scenarios, estimating your benefits and assuming you have average consumption patterns. However, it obviously cannot factor in any variations you may make to your consumption patterns and what changes you may make in the products you use etc.

From a tax planning perspective, have a think about how you can make (however small) an advantage from the tax changes:
- Incur all the tax-deductible expenses you can before the tax-free threshold increases on July 1, when you’ll get more benefit.

- Delay any income you can until after the increase.

If you have any queries or you would like to discuss, please comment below, or email me at kaylene@cabel.com.au

Kaylene Hubbard
Senior Tax Consultant
CABEL Partners

Land Tax is levied on the total value of all taxable land owned in NSW[1].

A simple example includes investment properties. However, exemptions do apply.
One particular exemption includes the Principal Place of Residence (“PPR”)
exemption, which provides a full exemption from land tax; with some clients
incurring Land Tax of over $50,000 annually, these savings are welcomed. You
can claim the principal place of residence exemption for land, including strata
lots, that is used and occupied as your principal place of residence (your
home).

Interestingly, the legislation allows situations where you can move out of your PPR, and move into another
residence that you do not own and still be entitled to claim the PPR exemption for the first property. Almost
as if it were an investment property. The NSW Office of State Revenue (“OSR”) provides
such periods of absence could include, “if you are posted overseas or
interstate” or you choose to take an extended holiday.

This means that an owner of a PPR can move to another residence, rent out their PPR at market rate, and still
maintain their PPR exemption. While the legislation provides that this
exemption applies for no longer than 6 years, it strangely enough provides that
within each of these years the property is rented out the rental period must
not “exceed a continuous period of 6 months, or a total period of 182 days”.
This means that the legislation allows you to be absent from your PPR and rent
it out just as long as the rental period is no longer than 6 months of each of
those years you are absent.

But don’t despair we have potential solutions. Firstly, it is possible to straddle the rental periods on either
side of the land tax year. This will effectively allow a year long rental
period whilst being no more than 6 months in either one land tax year i.e. the
rental period will be 6 months in each land tax year, 6 months in one and 6
months in the other. However, at the conclusion of the year, or second 6
months, the rental agreement will have to cease.

Another option, either at the end
of the above or from the start, for the owner of the PPR to maintain an
exemption from land tax is to allow someone to occupy the PPR on a caretaker
basis. This type of occupancy can be on a continuous basis for the full 6 year
period. This will eliminate the need to manage the intermittent rental period
issue that arises when the property is sought to be rented for no more than 6
months in the land tax year. This care taker provision provides that monies can
be derived from the PPR, “but the income is no more than is reasonably required
to cover council, water and energy rates and charges and maintenance costs of
the owner in respect of the residence.”

This provision does not provide a
blank cheque to charge market rate rental. Rather it is to provide for a
caretaker to move into the PPR and pay to the owner certain reasonable costs.
What constitutes “reasonably required” is a question that needs to be
determined on a case-by-case basis. Owners with larger residences hosting
gardens, tennis courts and pools would have greater ability to substantiate greater
payments; this is due to the higher maintenance costs of maintaining such a
residence.

If you are renting out you PPR orwish to do so, speak to CABEL Partners and we can assist.