Small to Medium Business

 

 

What is new?

• Employer compulsory superannuation

  From 1 July 2013, the employer will need to:

  • increase the minimum rate for super guarantee payments on behalf of employees from 9% to 9.25%
  • start making super guarantee payments for employees aged 70 years or older, as the existing upper age limit will be removed.

  From 1 January 2014, Employers must pay default super to a MySuper authorised fund.

  Important: If your super fund is decided via an industrial award or workplace agreement, then your employer’s compulsory super contributions must also be paid to a MySuper fund from January 2014. Fair Work Australia is going to review the default superannuation funds included in industrial awards and agreements to ensure that they offer a MySuper product.

• Failure to lodge on time penalty increase

  FTL (Failure to lodge) penalty is calculated at the rate of one penalty unit for each period of 28 days or part thereof that a document is overdue, up to a maximum of five penalty units. The changes came into effect on 28 December 2012 increasing the value of a penalty unit from $110 to $170.

  
  

  An automated penalty system applies FTL penalty to late-lodged documents, including:

  • activity statements
  • income tax returns
  • FBT returns
  • PAYG withholding annual reports
  • annual GST returns.

What is new in 2012-2013?

• Changes to small business concessions

  You are a small business if you carry on a business and your business turnover (aggregated turnover) is less than $2 million. There are a number of important changes for small business entities in the 2012-13 income year onwards that you need to know about, including:

  • Small businesses can now claim (write-off) an outright deduction for most depreciating assets purchased for less than $6,500 each - an increase from the previous amount of $1,000. For example, Annette buys a $5,900 camera and a $4,500 high resolution printer exclusively for use in her photography business. As each cost is less than $6,500, she can claim deductions of $5,900 for the camera and $4,500 for the printer in the 2012-13 income year.
  • Small businesses that buy a motor vehicle for use in their business can claim an immediate deduction of up to $5,000. The remainder of the cost is deducted through the general small business pool at 15% for the first year and 30% for later years.
  • Both the long-life and the general small business pools have been consolidated into a single pool which is deducted at 30%.
  • The entrepreneurs' tax offset (ETO) has been abolished from 2012-13

• Building Industry must commence recording taxable payments for all contractor services.

  From 1 July 2012, businesses in the building and construction industry need to report the total payments they make to each contractor for building and construction services each year.

  The Taxable payments annual report is due 21 July each year. The first Taxable payments annual report is due 21 July 2013 for payments made in the 2012-13 financial year. In this first year, if you lodge your business activity statement quarterly, you can lodge by 28 July 2013.

• Living away from home tax concession limited to a maximum of 12 months.

• Carry-back losses provision to allow taxpayer claim a refund against tax paid.

  A one-year loss carry-back will apply in 2012-13, where tax losses incurred in that year can be carried back and offset against tax paid in 2011-12. For 2013-14 and later years, tax losses can be carried back and offset against tax paid up to two years earlier.

  Loss carry-back will

  • be available to companies and entities taxed like companies who elect to carry-back losses
  • be capped at $1 million of losses per year
  • apply to revenue losses only
  • be limited to the company's franking account balance.

• GST credits on hire purchases

  If you account for GST on a cash basis

  For hire purchase agreements entered into before 1 July 2012 you may claim one-eleventh of the principal component of each instalment in the period you pay it.

  For hire purchase agreements entered into on or after 1 July 2012, you may claim input tax credits upfront instead of waiting until each instalment is paid, in the same way as you would if you accounted for GST on a non cash basis.

General knowledge

• What if I made a GST error in the ealier BAS?

  You may correct it in the next activity statement if the errors fall within the time limits outlined in the following table.

   

  Annual turnover	Time limit
  Less than $20m	Up to 18 months (18 monthly activity statements, 6 quarterly activity statements or one annual GST return)
  $20m to less than $100m	Up to three months (three monthly activity statements)
  $100m to less than $500m	Up to three months (three monthly activity statements)
  $500m to less than $1b	Up to three months (three monthly activity statements)
  $1b and over	Up to three months (three monthly activity statements)

  
  

  Amend the original BAS if it is outside the above time limits. However, four years limit applies. You are no longer entitled to the GST credit if four years expires.