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Newsletter November 2010

The ATO has provided several warnings of it’s crack down on the cash economy. Cash economy activities include businesses:

• paying wages 'cash-in-hand',
• skimming some or all of its cash takings,
• running a part of their normal business activities 'off-the-books',
• not reporting the value of goods and services provided in exchange for other goods and services,
• operating underground – that is, avoiding their obligations by not registering or lodging returns.

The ATO can use a broad range of indicators to identify businesses who they will review or audit. The audit activities have a strong focus on reviewing records maintained by taxpayers and identifying omitted income. In identifying taxpayers participating in the cash economy, the ATO may look at;

• Small business benchmarks - where they identify a business that operates outside of the benchmark for their industry, they are likely to be subject to audit or review. They may also use benchmarks during an audit to make default assessments. A default assessment is where they may calculate how much someone should pay when the business owner does not have proper records that fully explain and document their business activities.
• Data Matching – the ATO may obtain data from a range of sources including banks, other government agencies and industry suppliers that identify income, business expenditure or personal expenditure. They can use this data to identify businesses who are potentially skimming some or all of their cash takings, running part of their business off-the-books or in other ways not reporting all their income. Data matching is one of the main tools they use to detect businesses participating in the cash economy.
• Unrealistic Business Income – the ATO can identify businesses that are reporting income that is clearly not enough to meet reasonable living expenses. They also check if the income reported is enough to pay for the purchase of luxury items identified through data matching, such as luxury cars or property. They refer to this as 'conspicuous consumption'.

Businesses can claim an additional tax deduction when they buy certain assets, and when they spend money to improve existing assets, for a limited time. It is called the Small Business and General Business Tax Break – ‘business tax break’ for short. The Australian Government announced the tax break as an ‘investment allowance’ in December 2008 aimed at helping businesses meet the challenges of the economic downturn. The government later extended this tax break to allow small businesses to claim a 50% tax deduction on eligible assets bought by 31 December 2009.

For those to advantage of the tax break, we wish to remind you that to be eligible to claim the deduction, you have until 31 December 2010 to first use or install the asset ready for use in their business.

With Christmas Day, Boxing Day and New Year’s Day all falling on weekend days this coming Christmas, there are no hard and fast rules across the nation for your business obligations over this time.

Each State and Territory will determine which days will be official ‘public holidays’. For NSW/QLD the public holidays are as follows;

Christmas Day	Saturday 25 December 2010	Public Holiday
Boxing Day	Sunday 26 December 2010	No Public Holiday
	Monday 27 December 2010	Substitute Boxing Day Public Holiday
	Tuesday 28 December 2010	Additional Christmas Day Public Holiday
New Year’s Day	Saturday 1 January 2011	New Year’s Day
	Monday 3 January 2011	Additional New Year’s Public Holiday

 

 

Land tax is a tax levied on the owners of land in NSW as at midnight on 31 December of each year. In general, your principal place of residence (your home) or land used for primary production (a farm) is exempt from land tax. You may be liable for land tax if you own or part-own:

• vacant land, including vacant rural land
• land where a house, residential unit or flat has been built
• a holiday home
• investment properties
• residential, commercial or industrial units, including car spaces
• commercial properties, including factories, shops and warehouses
• land leased from state or local government

The Valuer General has determined that the land tax threshold for the 2010 land tax year is $376,000. The premium land tax threshold for the 2010 land tax year is $2,299,000.

If you believe you will be liable for land tax, you will need to complete a land tax registration form which is to be lodged with the NSW Office of State Revenue.

The Directors and staff of Wearne & Co are very pleased to announce that we have joined a National Accounting Group, Countplus Limited, which will be listing on the Australian Stock Exchange in late December 2010.

The group will initially have 18 member companies around Australia, that specialise in accounting, taxation, business advisory and financial services. Although we will be part of a much larger group, each company in the group will continue to operate independently of each other. Wearne & Co will continue to operate as it has in the past, and we will continue to work with you as we have previously done. We see this national affiliation as a great opportunity for us and our clients.