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Posts tagged with: Change

From 1 July 2014 – recap

Posted on December 15, 2018

Here is a quick recap of changes from 1 July 2014:

Individuals

P   Temporary Budget Repair Levy.
Adds 2% to the tax rate for every dollar of a taxpayer’s annual taxable income over $180,000

P   Increase in the Medicare Levy from 1.5% to 2%

P   Superannuation Guarantee charge increases from 9.25% to 9.5%.

P   Aged care reforms introduce new assets tests for resident’s accommodation and care fees

P   PHI information for 2014 tax returns
Changes to the way the Private Health Insurance (PHI) rebate is calculated requires extra information from individuals for their 2013/14 tax returns, which should be included on their PHI annual statement. There will be two different rebate periods – one from 1 July 2013 to 31 March 2014 and the other from 1 April to 30 June 2014.

Business

P   New ATO tax tables
The ATO has released its new 2014/2015 tax rates, updated to reflect the increase in Medicare levy from 1.5 to 2% and the Temporary Budget Repair Levy for employees earning greater than $3,461 per week (i.e. $180,000 per year).

P   No TFN or ABN
If the employee has not provided a TFN or a supplier business has not provided their ABN, the employer should withhold 49% of any payment made.

P   Increase in the Superannuation Guarantee rate.
The SG rate will increase from 9.25% to 9.5% from 1 July 2014. The government has announced that it would slow the previously announced increases to 12%, (leaving the 9.5% SG rate in place until 30 June 2018) however no legislation regarding this has been introduced.

P   SuperStream
Employers can opt-in to use SuperStream from 1 July 2014. Large and medium employers must complete their implementation by no later than 30 June 2015. Smaller employers (19 or fewer employees) are not required to start using SuperStream until 1 July 2015, and must complete their implementation by no later than 30 June 2016.

P   Paper activity statements
From 1 July, once an activity statement is lodged electronically, the ATO will no longer issue paper activity statements.

P   Company loss carry-back repeal
The government has announced that it intends to repeal the carry back tax offset for the 2013/14 and later tax years. Legislation covering this has been reintroduced, but this is not yet law.

P   Simplified depreciation rules
The government also announced that it would repeal the provision allowing small businesses an accelerated initial deduction for motor vehicles. Legislation covering this has been reintroduced, but this is not yet law.

P   Living away from home allowance (LAFHA) transitional period ended on 30 June 2014
Now, the main condition to be satisfied is that the employee must have a normal place of residence in Australia that is maintained for their “personal use and enjoyment” (i.e. still available to them, not rented out) while they are living and working in another location. In most cases, LAFHAs will also be time limited to 12 months. Employees who qualified for the transitional rules will not be entitled to another 12 month period from 1 July 2014 unless there is a change in the job location. However, if the employee is working on a fly-in- fly-out or drive-in drive-out basis the LAFHA concessions are not subject to the 12 month limit.

SMSF

P   New SMSF trustee penalties
From 1 July 2014 the ATO has greater powers to enforce the superannuation rules by levying financial penalties directly on trustees.

P   Concessional contribution cap changes
From 1 July 2014, the concessional contribution cap for taxpayers up to the age of 50 is $30,000. And for those 50 and above, the cap is $35,000.

P   Non-concessional cap changes
The non-concessional contributions cap from 1 July 2014 is $180,000 (up from $150,000) or $540,000 over 3 years.

P   Insurance inside an SMSF
From 1 July 2014, new insurance policies within a SMSF must be consistent with the death, terminal illness, and permanent and temporary incapacity conditions of release in the Superannuation Industry (Supervision) Act.

(Courtesy of KnowledgeShop)

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Personal Property Securities Register (PPSR) – Are you ready?

Posted on December 15, 2018

In our February 2014 edition, we discussed the overall effects of the Personal Property Securities Act (PPSA).

Peter Towers, the managing director of ESS BIZTOOLS Pty Ltd comments that the new Act is definitely far-reaching and has caused a great deal of concern to many business operators. A lot of that concern is because people are not fully aware of the operations of this legislation.

Definition
There seems to be some confusion as to what is actually covered by this legislation.
Under the PPSA, personal property is defined as all forms of property, other than real estate. Personal property includes a vast range of business property, assets, etc.

Types Of Transactions Included
What types of transactions are included? They are numerous and can include:

P sale of goods on consignment;
P supplying of goods utilising hire purchase or lease agreements;
P supply of goods, including a ‘Retention of Title’ or ‘Romalpa Clause’;
P goods stored in someone else’s possession;
P receivables or debtors that have been assigned
P livestock on agistment;
P share farmers for security over a crop;
P tradesmen’s plant and equipment, tools, etc, left on a construction site;
P stock inventory;
P artist’s work, sculptures, etc, which are left with a commercial art gallery, dealer, etc;
P intellectual property; and
P loans to associated entities and ‘arm’s length’ entities.
The range of activities and the types of businesses that can be affected by this legislation are quite significant.

What Is The Problem?
Prior to the introduction of the PPSA, the lessor or the person making goods available for hire owned the goods at all times. If the customer defaulted, the equipment owner simply repossessed their stock, since that stock did not form part of the insolvent estate.

However, the PPSA has changed all that. This legislation has been introduced as a consolidation of around 70 acts of Parliament, from Federal to State and Territory governments around Australia. It’s been made to try to make life easier. But one of the fundamental problems that has emerged is that if businesses do not recognise the need to seriously consider registering their security interest on the PPSR, then they could, in fact, lose ownership of the assets for which they have paid.

So it’s worth repeating: if the businesses fail to register their security interest, created under this legislation, then on the insolvency of the customer – which can be an appointment of an administrator, liquidator, receiver or trustee in bankruptcy – then the original owner of those goods or assets may lose the benefit of that asset, because the liquidator or receiver will be able to sell that equipment on behalf of a secured creditor.

Undoubtedly, the biggest change the PPSA has introduced is that ‘Title is no longer king’. For the last 200 years in Australia, we’ve had this concept, even going back to the earlier times in England, whereby whoever owns the ‘title’ owns the ‘property’. That is not necessarily the case when it comes to the PPSA, unless the owner of the property has registered their interest on the PPSR.

Many SME businesses do not seem to appreciate that businesses, lease premises or supply goods, will be impacted by this legislation.

However, there are some unfortunate consequences if the business does not register its interest in its assets. The business will effectively lose control of their assets in the event of their customer’s default, bankruptcy or insolvency. If this occurs, other parties, such as the customer’s bank, their receiver liquidator or administrator, will rank ahead of the business who owns the goods, under the PPSA legislation. Those liquidators, administrators, etc, will be able to deal with the business’ goods as they wish. In effect, the business’ goods will become available to satisfy the claims of their customer’s bank and their customer’s other creditors. The business who originally owned the goods will be reduced to an unsecured creditor.

However, registration of a title is not mandatory, but is voluntary. ‘Retention of Title‘ arrangements will remain unenforceable between a business and its customers without registration under the PPSR legislation. It is up to the individual businesses to decide whether to self-insure and not register, or to register for some or all of their customers. Peter Towers believes that businesses need to establish a sum of money – this might be $1,000 or $10,000 – that if an invoice exceeds that amount and that amount was not paid, the business would face financial embarrassment. He believes that that should be the guide to identify the minimum amount of a tax invoice to be registered under the PPSR.

From time to time, businesses also need to look at the value of assets they supply, or assets they store on someone else’s premises. What value would embarrass the business if, for some reason, they were unable to reclaim the use of that asset, because it has been seized by a liquidator, receiver or administrator, on behalf of the landlord of that property where the asset was stored?

We can assist
We can help you develop an effective system within your SME to protect you from the consequences of the PPSR. This system will identify transactions and events that should be considered to determine whether a security interest should be lodged on the PPSR.

Don’t hesitate to call us!

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Easy come, easy go: The PPSR & your business

Posted on December 15, 2018

31 January 2014 should be seared into the brains of business owners and operators.

When the Personal Property Securities Act (PPSA) came into effect in January 2012, it provided a two year grace period to register security interests on the Personal Property Securities Register (PPSR). The PPSR is a national register of who has security over different forms of property (other than land and buildings). If you sell goods under retention of title or consignment arrangements, if your business hires or leases goods or equipment to others, if you buy or sell used goods, you need to register your security interests by midnight on 31 January 2014 or risk losing that property.

Imagine this…you are in business and have supplied stock to a retailer. You haven’t been paid for the stock but continue to supply to the retailer under normal terms of trade. When the next delivery arrives at the retailer it can’t be delivered because the store is closed and chained up. Your business hasn’t been paid yet. You sold the goods on a retention of title basis so the stock belongs to you until the retailer pays you, right? The answer is not necessarily. If your security interest in the stock is not on the PPSR, then your rights may not be recognised even if you can prove you have legal title. One business has already learnt this lesson the hard way when they lost the rights to assets they held legal title over because they did not register their security interest on the PPSR but a financier did (see Maiden Civil v QES [2013] NSWSC 852[1]).

The PPSA is one of the most important changes to business in many years. It means that ownership is no longer king if you get into a stouch about who owns what. It’s important to review whether or not your business is affected, and if so, register quickly.

If you are buying assets or entering into agreements, it’s also important to check the register to find out who has a security interest over the property involved.

The PPSR is not just for business. If you are personally buying anything valuable that is second hand, for example a car, you should check the register.

See www.ppsr.gov.au for more information and to access the PPSR.

(Courtesy of KnowledgeShop)

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Hall Consulting Group