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October 2003 Newsletter

From the 1 July 2003 employers are required to pay the 9% compulsory superannuation payments for employees at least every quarter.

For the quarter ending 30 September 2003, the cut off date for payment is 28 October 2003.

Please note that payment made to the respective superannuation fund must be received by the 28 October 2003 in order to be processed.  Payments received after this date may be rejected by the superannuation fund.  If this occurs the employer will be required to pay the superannuation liability to the ATO along with a levy and penalty.

In addition to the above changes, the employer is also required to report details in writing to the employees of the superannuation contributions "paid" at least once a quarter.

Reporting these details on employee's pay slips will be an effective way to meet this requirement. Take note the reporting requirements are the amounts actually "paid" for the period not accrued.

For those clients using MYOB, we have been informed that a new version capable of reporting the actual payments made will be available the week commencing 20 October 2003.

If a debt owed to a company by a shareholder becomes statute barred because the limitation period (6 years) for recovery of the debt has expired, this will trigger a forgiveness of the debt, not only for the purposes of the commercial debt forgiveness rules but also for the purposes of the Division 7A debt forgiveness rules.

The Division 7A consequences will be a potential deemed dividend and this will be so regardless of when the debt was incurred.

As part of the year end compliance, we will review any pre 4 December 1997 loans in light of the above.

The ATO has indicated that property investors will be a major part of the Compliance Program for 2003/4, with a planned 10,000 investment property owners under scrutiny.

The ATO has indicated they will be paying particular attention to capital gains made on sales, depreciation claims, and interest payments on borrowings.

Below are some common errors made by taxpayers when calculating their rental loss:

• Claiming expenses when a property is not available for rent (eg: a holiday home)
• Claiming initial capital improvements as being repairs
• Claiming interest on loans that are partially or wholly for private purposes
• Estimating construction costs of buildings instead of relying on cost estimates provided by independent qualified professionals
• Incorrectly apportioning borrowing expenses
• Incorrectly classifying assets as depreciating assets for the purposes of the Uniform Capital Allowance regime
• No apportionment of deductions when non-commercial rental is being charged to friends or relatives

• On the Office of State Revenue's website, there is a Pay-roll Tax Monthly Calculator July 2003 - May 2004 to assist in calculating the monthly liability.  Go to www.osr.nsw.gov.au

• www.abr.business.gov.au has public information about your business via your ABN and a link to ASIC information.  By entering your ABN you can confirm your details are correct.