2012 has been a tough year for many Australian business owners and while many of us are winding down for a much-needed Christmas break, we look at what is likely to be on the agenda for 2013.
No age limit for super contributions
From 1 July 2013, the upper age limit for superannuation contributions will be abolished. Employers will be required to contribute to the complying super funds of eligible mature age employees aged 70 and older.
Payslip reporting of super payments
From 1 July 2013, employers will need to provide additional information about superannuation contributions on an employee's payslip. Employers will need to report the amount and expected date of contributions they are making.
Living away from home
If you have employees living away from home, you need to know about the changes to the Living Away From Home Allowance system. The Government tightened the eligibility rules from 1 October 2012 for all new agreements entered into from 8 May 2012. Transitional rules can apply to arrangements entered into prior to 8 May 2012 but the full set of new rules will apply from 1 July 2014 or when the arrangement is modified (whichever comes first).
In-house fringe benefit changes
The concessional fringe benefit tax treatment of in-house fringe benefits provided by employers under salary sacrifice arrangements was abolished from 22 October 2012 (transitional rules apply until 1 April 2014 for existing agreements). This change will particularly affect retailers providing discounted goods such as clothing, and organisations such as private schools that provide discounted education for children of employees.
Building and construction industry reporting
A new reporting regime came into effect on 1 July 2012 requiring businesses in the building and construction industry to report payments to contractors. The first of these reports is due on 21 July 2013. Businesses affected by the reporting regime need to report the contractor's ABN, name, address, gross amount paid for the financial year, and total GST included in the gross amount.
The impact of the Federal Election
Prime Minister Gillard's recent comment that the election will be "around 3 years since the last one" has speculation rife about an August election. The problem with elections, and particularly where there is a potential change, is that business slows down as the big end of town sit and wait to see the outcome before committing to new initiatives.
SportsBet currently has the Coalition on $1.28 to win and Labor at $3.50. But pre election polls and sentiment are not reliable because people are not truly invested (no pun intended) in the outcome until the weeks leading up to the actual vote.
Banks and lending
We're already seeing signs that the mining boom is slowing and along with it, the capital spending boom. Unemployment is rising marginally and while there is employment growth, it is weak. It's not all doom and gloom though with low interest rates feeding growth. However, banks will still be picky about who they lend to and are sensitive about reliability. In 2013, you will need to ensure that you have a good relationship with the bank. Don't let problems get out of control or they might just shut you down before you have a chance to try and talk them around.
Super guarantee increases
On 1 July 2013, the first of the proposed incremental increases to superannuation will come into effect. The change will lift the superannuation guarantee rate to 9.25% for the 2013/2014 financial year. So, for an individual on a base salary of $60,000, the change will represent $150 extra compulsorily contributed to superannuation. The super guarantee rate is then proposed to increase every year until reaching 12% on 1 July 2019.
High income earners to pay higher tax rate on super
While not yet law, the controversial increase to the tax rate of super contributions for high income earners is due to come into effect on 1 July 2013. This will mean that if you earn over $300,000, you will pay 30% instead of 15% on superannuation contributions (only on the portion above $300,000).
Life is getting harder for non-residents. The big issue is the Budget announcement that locked non-residents out of the 50% CGT discount. This means that if you are not a resident of Australia and make money on the sale of an asset, you cannot access the 50% CGT discount from 8 May 2012. However, we have not seen the legislation supporting this change. In general, you can expect to see some of the tax benefits previously available to non-residents slowly whittled away as the Government seeks to achieve a surplus.
Paid parental leave for Dads
New paid parental leave for Dads comes into effect on 1 January 2013 providing two weeks of Government funded pay. The paid parental leave applies if the Dad or partner (including same sex couples) is an Australian resident, meets the work test, has an adjusted taxable income of $150,000 or less, and is on unpaid leave or not working during the two weeks. The entitlement to parental pay does not change your entitlement to leave itself.
With $458,451 million tied up in Self Managed Superannuation Funds (SMSFs), it is not surprising that the Tax Office takes an active interest in this area. 2013 will see an even greater focus on ensuring that the assets of superannuation funds are kept separate from their members until they retire. There is a lot you can do with your superannuation and through a superannuation fund but you need to understand the rules.
For SMSFs, property investment using Limited Recourse Borrowing is a major area of focus. If the purchase of the property is not structured correctly, trustees may be forced to sell the asset.
The value of assets contributed to superannuation is another area the Tax Office is sensitive about. Earlier this year, the Tax Office released final valuation guidelines on how superannuation fund assets must be valued. These guidelines require fund assets to be valued at market value and apply now. In 2013, you can expect to see a greater focus and enforcement of these valuation rules.
Off market transfers
An off market transfer is when assets from a related party are transferred to or disposed of by a SMSF outside of the underlying market.
For example, when a trustee transfers shares directly to a SMSF - instead of the trustee disposing of the shares on the market and then the SMSF purchasing the shares. A ban on off market transfers was due to come into effect on 1 July 2012 but delayed until 1 July 2013.
From this date, all acquisitions and disposals of assets between SMSFs and related parties must be conducted through that market, or if no market exists, must be supported by a valuation from a suitable qualified independent valuer. The big question in 2013 is, when we see the final detail of the ban, what assets will be covered?
If you would like any information about the impact of these issues on your business or personal tax situation, contact us on 02 9957 4033.
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Last updated December 2012. This article is provided for information purposes only and should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.