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  What's Happening at DSR in October?

In this issue: 

 Property and SMSFs
 Buying a small business?
 Employee or Independent Contractor?
 Watch the super caps
 Tax tip - claiming a deduction for you car
 Going forward with Banklink
 Recommendations
 Important Dates
 About DSR



Welcome Note

Welcome to What's Happening at DSR in October.

All of us at Davis Stewart Rowland are looking forward to helping you achieve your business and personal goals and work towards building a successful retirement plan.

We aim to bring you interesting and tax effective ideas for saving you money, explore new developments in taxation and the way we do business, and keep you up to date with issues that may affect you and your business.

Remember...

'whatever your financial and accounting needs we can work with you to find a solution".


 



Property and SMSF - loosening the rules

If your SMSF has borrowed money (or thinking of borrowing money) to acquire ‘bricks and mortar’ property then there are a few things you need to know.

A new ATO ruling released last month helps to clarify what you can and can’t do with property that is under a limited recourse borrowing arrangement (LRBA).

The ruling addresses three key areas:

• Under the borrowing rules in the Superannuation Industry and Supervision (SIS) Act, the borrowing must be used to acquire a “single acquirable asset.” The ruling seeks to define what constitutes a single asset.

• The borrowing rules allow an asset that is held under a borrowing arrangement to be improved, however, the trustees cannot use borrowed funds to make the improvements. There is a fine line between what is a repair or improvement and the ruling attempts to clarify how the ATO assess the difference between these terms.

• Also, if you do improve the property, any improvement must not result in the asset becoming a different asset. The ruling looks at the factors the ATO considers, and what your SMSF auditor needs to consider, when they assess whether a property has been changed to such an extent that it is no longer the same asset.

If a fund falls outside of these rules, the fund must sell the asset.
 
Imagine having to sell a property your fund recently acquired, leaving your fund with the stamp duty, legal and agent’s fees (or perhaps making a loss because the market conditions were not as good as they were when you purchased the property).  Read on...







 



What is the difference between price and value?

You are looking to buy a small business.

You see something you are interested in: right industry, right location but is it the right price? In today’s market everyone is looking for a bargain. The difficulty in assessing the price of a small business is that there may not be a lot of ready comparisons available in the market. If you are looking to buy a business where there is a large and active market - like a newsagent, pharmacy or coffee lounge - then comparisons will be available. And, there are industry models that typically set the pricing for these types of business. However, if you are looking at a more unique business where there is not a lot of public information, the going can get tougher.

If you need an opinion on price, be careful and make sure you get the information you are really after. Read on...



Employee or Independent Contractor?

There are a number of factors to help determine the  difference between an employee and an independent contractor, although no single factors determines if a person is either an employee for independent contractor.


Employees 
  • Perform work, under the direction and control of their employer, on an ongoing basis working set or standard hours
  • Are provided with the tools and resources to complete the work
  • Bear no financial risk for the work done
  • Entitled to have superannuation contributions paid into a nominated superannuation fund by their employer 
  • Have income tax deducted by their employer 
  • Are paid on a regular basis (e.g. weekly / fortnightly / monthly) 
  • Are generally entitled to get paid leave in accordance with NES (e.g. annual leave, personal / carer's leave, long-service leave)

Independent contractors
  • Decide how to carry out the work and what skills are required to preform the work
  • Bear the financial risk for making a profit or loss on each job 
  • Generally pay their own superannuation and tax, including GST 
  • Generally have their own insurance, including workers compensation and/or income protection and public liability 
  • Are contracted to work for a set period of time, or to do a specific job
  • Decide what hours to work to complete the job 
  • Generally submit an invoice for work completed or are paid progress payments during or at the end of the contract or project 
  • Do not get paid leave.

If you would like to discuss your staffing situation further contact us.






 

 Too much super can mean extra tax - so be aware of the caps

For the 2011-2012 financial year the concessional contributions cap is $25,000 for those under 50 years old on 30 June of the financial year.  If you are 50 or over on 30 June 2012, the transitional contributions cap is $50,000. The non-concessional cap is $150,000.

A concessional contribution is generally made to a super fund on your behalf in a financial year and is included in the assessable income of the super fund (for example, super guarantee, salary sacrificed amounts and any amount you are allowed as a personal super deduction in your income tax return) 

A non-concessional contribution is generally made to a super fund on your behalf in a financial year and is not included in the super fund's assessable income (for example, personal contributions you make from your after-tax income).

Contributions over the allowable cap amounts are subject to 31.5% tax. This is called the excess concessional contributions tax. Any excess concessional contributions also count as non-concessional contributions.

The total of all concessional contributions to your super fund accounts in a financial year are counted toward your allowable concessional contributions cap.              

If you have concerns about your super contributions speak to us today



Tax Tip
 
I have a job which requires me to use my own car. What do I need to do so that I can claim a tax deduction for my car?

There are four different methods for claim work related motor vehicle expenses and each has a different record keeping method. The choice of method can be made on the basis of which is more favourable to you. However if you don't have a current log book or have not retained all receipts you will be limited in which method you can choose. 

Speak with us on the best method for you.
 



 BankLink - Make the Change

The Banklink System is an excellent alternative to bookkeeping and MYOB.

It allows us to complete your accounts efficiently and accurately, whilst saving you precious time and money.

Your financial institution can simply provide our office with your bank statement data electronically and securely encrypted. From here we can process all your transactions with minimal input from you.

IT REALLY IS THAT SIMPLE.

So do yourself a favour and talk to us today about using Banklink for your business.



Recommendations    
        
As you well know, the lifeline of any business comes from the recommendations from existing clients.

We know that you have been pleased with our service levels so far, and believe that you may know of other businesses like yours that we could help in the same way. Do you know of anyone who would require our services? We are happy to sit down and discuss their accounting.

And to show our appreciation, each time one of your new business referrals becomes a client, we will send you a bottle of Cloudy Bay Sauvignon Blanc 2009 as a thank you.

 



 

Important Dates

 28 October - Super guarantee contributions, quarter 1, 2011-12

31 October - Income tax returns for all entities where one or more prior year income tax returns were outstanding as at 30 June 2011

- Income tax returns for all entities where they are not covered by the registered tax agents concessional due dates



About Davis Stewart Rowland

Davis Stewart Rowland is a three partner firm located at The Entrance on the NSW Central Coast. With over 50 years experience we have an in-depth knowledge of what the business owner and investor needs to embark and stay on the path of growth and wealth creation.

We have a unique appreciation of the issues business owners and investors face, which makes us an integral part of our client's advisory team. Our comprehensive approach includes:

  • Benchmarks
  • Tax minimisation plans
  • Cash flow forecasting
  • Business information processing
  • Management & strategic advice

Whatever your needs we can help find a solution.

Contact us today 

  
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