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January 2004 Newsletter

28 January 2004 is the final date for payment of 9% superannuation guarantee contributions for employees for the quarter 1 October 2003 to 31 December 2003.

Please note that a written report must be provided to employees within 30 days of making the final contribution for the quarter and must detail:

• The amount of contributions made;
• The name of the superannuation provider; and
• The employee's membership or account number

The availability of input tax credits (ITC) for GST varies depending on the type of arrangement entered into and whether the taxpayer accounts on a cash or accruals basis for GST.

Finance or operating leases

• Under the accruals method, ITC's are claimed periodically as the individual payments become due over the course of the lease term.
• Under the cash method, ITC's can only be attributed if the payment has actually been made.

Hire purchase (HP)

• Under the accruals method, available ITC's can be claimed up front as a lump sum.
• Under the cash method, any available ITC are spread out over the term of the HP agreement.

We note that for both leases and HP's, input tax credits are only claimable to the extent of business use on the vehicle, unless Fringe Benefit Tax is levied on the vehicles private usage.

The ATO recently released a Practice Statement announcing changes to make it easier for businesses to claim deductions for depreciating low cost assets, such as office equipment and small tools.

The changes introduce the "Threshold Rule" as a method available to business (other than businesses using the Simplified Tax System) for categorising items as either revenue or capital expenditure, effective from 1 July 2000.

Revenue expenditure is deductible in the year in which it is incurred, while capital expenditure must be depreciated over the effective life of the relevant asset.

Under the "Threshold Rule", tangible depreciating assets costing $100 or less (including GST) will be categorised as revenue expenditure.  Accordingly, an immediate deduction will be available for the cost of these assets.

Since 1 January 2003, merchants have been permitted to charge their customers a surcharge for using a credit card to pay for the supply of goods and services.

According to the ATO, the surcharge forms part of the price for the supply made by the merchant, therefore the surcharge takes on the character of that supply.

On this basis, where a supply is taxable, GST must be charged on the full price of the supply including the surcharge.  Alternatively, where the supply is GST free, the surcharge will also be GST free.

From 1 July 2003, superannuation surcharge, being a tax on the superannuation contributions of taxpayers earning over $90,527, will drop from 15% to 12.5% over three years.

www.dir.nsw.gov.au/awards/wagesestimator/index.html is a website that has award wages. Employers can use this website to ensure they are meeting their award obligations.

www.osr.nsw.gov.au/pls/portal/docs/page/downloads/other/pt_revrules_redirect.htm This website has the standard Subcontractor Statement to be signed by subcontractors that declare they have their own workers compensation.  Principle employers will need to obtain this statement to ensure they are not liable for workers compensation for the subcontractor.