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June practice update: new rules for selling property over $2M
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RMS Accountants: Your Farm Accounting Experts

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RMS Practice Update - June 2016

Welcome to RMS Accountants new format for newsletters. Our newsletters will keep you up to date with accounting news that may impact your farm. 

From time to time, we will also include responses to frequently asked questions (FAQ's) from clients; as well as tips for staying on top of your bookwork.

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New rules for selling property over $2 million

From 1 July 2016, new rules will apply to sales of taxable Australian property (e.g., real estate) with a market value of $2 million or above.

A 10% non-final withholding tax may be applied to all contracts to sell such property entered into on or after 1 July 2016.

Australian resident vendors selling such property  will need to obtain a clearance certificate from the ATO prior to settlement to avoid the 10% non-final withholding tax.

Editor:  This new 10% withholding tax was really only intended to apply to non-residents selling Australian property. 

However, it equally applies to Australian resident vendors and forces them to obtain a clearance certificate from the ATO to, in fact, prove that they are Australian residents.

Generally speaking, clients will be affected for sales of residential and commercial properties, or companies or trusts that hold such properties.

2016/17 Federal Budget

The government handed down the 2016/17 Federal Budget on Tuesday 3rd May. 

It included (among many changes) proposed personal income and company tax cuts from 1 July 2016, the extension of GST to all imports (irrespective of value) from 1 July 2017, an increase in the small business entity (‘SBE’) turnover threshold from 1 July 2016, and (as you may have heard) many, many superannuation changes.

Of course, they are all dependent on the Turnbull Government winning the election on 2 July and the legislation then surviving Parliament after that.

Editor: We'll keep you informed!

SMSFs and Collectables – last opportunity to comply!

From 1 July 2011, SMSF investments in collectables and personal-use assets have been subject to stricter rules than SMSF investments in other assets (such as shares and property).

Editor: Assets considered collectables and personal-use assets include things like artwork, jewellery, antiques, vehicles, boats and wine.

However, SMSFs that already had investments in such assets before 1 July 2011 were given five years to comply with these rules (i.e., until 30 June 2016). 

Therefore, any SMSFs with such investments need to consider their situation carefully and take appropriate action (if necessary) before 1 July 2016.

Such action may include (for example):
  • reviewing current leasing agreements (items can't be leased to or used by a related party, including business premises);
  • making decisions about storage (items can't be stored or displayed in a private residence of a related party, and decisions about storage must be documented and the written record kept); and
  • arranging insurance cover (items must be insured in the fund’s name).
In addition, if the trustees of the fund are considering disposing of these items, they can be transferred to a related party without a qualified independent valuation, but only if the transfer takes place before 1 July 2016 and the transaction is made on arm’s-length terms.

If these requirements are not met from 1 July 2016, penalties may apply.

Contractor payments data matching program

The ATO has advised that it is continuing its  Contractor payments data-matching program.

It will acquire data from businesses that it visits as part of its employer obligations compliance program during the 2016/17, 2017/18 and 2018/19 financial years.

The data collected from businesses is used to identify contractors that may not be meeting their taxation obligations through:
  • not registering correctly with the ATO;
  • non-lodgment of returns;
  • failing to report payments received; and
  • not paying amounts of tax due to the ATO.
This is an ongoing data matching program and has been conducted for more than five years.

New Simpler BAS on the way

The ATO has been working on ways to deliver a simpler business activity statement (BAS) to simplify account set-up, record keeping, BAS preparation and lodgment for agents and their clients, and make it less costly.

To achieve this, several GST labels will be removed from the BAS, with small businesses only required to report:
  • GST on sales (1A);
  • GST on purchases (1B); and
  • Total sales (G1).
They will begin user testing from 1 July 2016 and a simpler BAS should be the standard option for all small business from 1 July 2017.

ATO reminder about 30 June SuperStream deadline

With the 30 June 2016 deadline looming, the ATO strongly encourages small businesses to get on board with SuperStream as soon as possible.

SuperStream is the standardisation of how employers make super contributions on behalf of their employees, and involves employers sending all super payments and employee information electronically in a standard format.

Using it is mandatory.

Editor: Unless the employer and the SMSF are related parties…

Options for becoming 'SuperStream ready' include using:
  • a payroll system that meets the SuperStream standard;
  • a super fund’s online system; or
  • a messaging portal or a super clearing house like the ATO’s Small Business Super Clearing House (SBSCH).
The SBSCH is a free, optional service for small business with 19 or fewer employees, as well as businesses with an annual aggregated turnover of $2 million or less.

Editor: If you’re worried you won’t be able to use SuperStream as you don’t operate electronically, there is a SuperStream option to suit every business, including using third parties to pay your super using SuperStream on your behalf.

If you have any questions, let us know and we'll help you out.

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Just like you, we are are always looking to grow. If you happen to know anyone who might benefit from our services, please know that we have the capacity to take on a small number of new clients, and we would be happy to meet with them for a free initial consultation.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
Copyright © 2016 RMS Accountants, All rights reserved.


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