Taxing Times

July 2010

Interesting times as Australia witnesses a change in Prime Minister – an event to be remembered as Gillard moves into Rudd’s shoes as the first female PM of the “land down under”.

It certainly has been an interesting week in the political arena. From Rudd to Gillard - apparently due to Rudd spending time launching a children’s book rather than “pulling the trigger” to commence the double dissolution election. On the back of that scenario there is also the deadlock of the proposed tax on the resource industry. Seems our politicians are full of angst while the mining industry and Gillard discuss the removal of current adverse advertising and a possible change in the Federal budget…..Watch this space….

Happy to say the ATO has paused further development on their IT systems change program

I must say I do feel for the employees of the ATO as I am sure that the technical issues associated with the emergence of the department’s new system led to more than just a few headaches. It was a period of hot tempers all round as accountants were faced with ongoing calls from people demanding to know where their tax assessments and refunds were. No point asking them to call the ATO….can’t get through. I’m sure I heard whispers of Accountants wishing to sue the ATO and to be compensated for the time it took to answer all the related enquiries. Well good luck to them I say. I don’t think there would be an accountant in Australia with the funds to put their money where their mouth is. To make matters worse, after a long wait by many, the ATO sent out assessment notices without the long awaited for cheques attached. Strangely enough payment advices were coming out what seemed quicker than ever before. It seems there is a hold on further advancements to the system for the moment as the ATO finally realized that they were…shall we say… “up the proverbial without a paddle”. A sigh of relief for the moment.

When all else fails it is Best to Laugh in the Face of Adversity!

Despite the belief of most people…some Accountants do have a sense of humor!

Be warned – “the ATO has their eyes on you”

You would think that with all the excitement that is currently happening that the ATO would not have time to worry about keeping their eyes open for tax avoidance. Think again! Big brother is watching!

Last year the ATO found more than 400,000 discrepancies between income that has been declared on tax returns and the information it collects from various agencies.

With data matching to banks, investment bodies and Centrelink, the ATO collected an extra $260 million without having to venture too far out.

A review of Capital Gains tax on 2700 returns also allowed the ATO to collect an extra $17 million.

Investment losses is another area of keen interest due to market volatility. Make sure you know the difference between a capital loss and a revenue loss if you delve into the sharemarket.

Another issue of major importance this year is “contractor versus employee”. Know the difference. The ATO is out to ensure that employers pay superannuation due to their workers. If you are engaged in the business of hiring people, you are expected to know your obligations. Ignorance is not a defense.

Welcome to the new Financial Year – Let’s look at just a few of the

changes individuals and business entities face:

• · low income tax offset will increase from $1,350 to $1,500

• · Thresholds raised on Medical Expenses Rebate - The medical expenses rebate is currently available for people who have spent $1,500 or more on medical expenses after Medicare and private health refunds. The amount received as a rebate was 20% of the amount over the $1,500 threshold. As from July 2010 the threshold will increase to $2,000.

• · PAYG withholding changes as from 1 July. You can obtain the updated tax tables by copying and pasting the link below into the URL address bar:

http://www.ato.gov.au/businesses/content.asp?doc=/content/33283.htm&alias=taxtables

• · Medicare levy low income threshold to increase

• · Capital Gains Tax Improvements especially in the concessions including the rollover relief
• · Addressing the skills shortage

Marian Trinick

Professional National Accountant

Cockburn Financial and Business Services

www.cockburnfinancialservices.com