Other Year End Tax Reminders
In addition to the tax planning opportunities, there are a number of reporting requirements regarding motor vehicles and the building and construction industry.
If you use a Motor Vehicle for Business Purposes you may need to:
- Record Motor Vehicle Odometer readings at 30 June 2016
- Prepare a 13 week log book if your existing one is more than 5 years old. Please note, if you commence the log book prior to the 30 June 2016, the usage determined will still be appropriate for the whole of 2015/16. As such, it is not too late to start preparing one for the current financial year.
Reporting in Building and Construction Industry
Businesses that operate in the building and construction industry must report the total payments they have made to each contractor for building and construction services before 28 July 2016. It is important that your accounting system captures all the key information to enable you to report this information to the Australian Taxation Office. Should you require assistance in relation to your reporting requirements please contact our office.
Information to Include on Employees' PAYG Withholding Payment Summaries
PAYG Withholding Summaries are required to be issued to employees by 14 July 2016 and are now required to show the Reportable Fringe Benefits and the total of Salary Sacrificed Superannuation contributions which have been deducted from each employee's wage or salary. Should you require any assistance in relation to preparation of these PAYG Payment Summaries please contact our office.
Trust Distribution Resolutions Due by June 30, 2016
The Australian Taxation Office (ATO) now require Trust Distribution Resolutions to be made prior to 30th June. If these resolutions are not made by this date the income of the trust will be subject to the highest marginal rate of tax, which could be significantly higher than the rate which would otherwise apply. Previously the ATO allowed up to 31 August to make the distribution resolution.
Establish Corporate Beneficiaries
If it is intended to distribute income to a company beneficiary from a discretionary trust, this company must be established before 30 June 2016. If you are intending to use a company beneficiary, please contact our office to discuss the suitability and the process to establish a new company.
Undrawn Beneficiary Entitlements and Debit Loan Accounts Owing to Companies
Where Corporate Beneficiaries have been used in the past or loans have been drawn from companies, consideration must be given to repaying monies to the companies. This is to minimise the dividends that may be required to meet the repayment requirements of the Debit Loan Account (Division 7A) provisions of the Income Tax Assessment Act.
As the loan balances increase so do the minimum required repayments. In some cases it may be necessary to declare a dividend in the current year but making repayments to the company can assist in minimising the dividends to be paid resulting in a more tax effective outcome. It is important that these payments to the company are banked prior to 30 June 2016.
Advise the Australian Taxation Office (ATO) of the Tax File Numbers of Beneficiaries
Where a beneficiary is to receive a distribution from a trust for the first time in the 2016 financial year, it is important that you advise the ATO of the Tax File Number of this beneficiary. This is particularly important in the case of new company beneficiaries and children who may have turned 18 years of age during the year. In addition, if a new Trust has been established during the year, you must provide the ATO with this information for all beneficiaries. These notices must be lodged with the ATO by 31 July 2016.
If this information is not reported to the ATO, Trust TFN Withholding Tax will be required to be paid to the ATO by 30 September 2016. This Trust TFN Withholding Tax will be available to offset against any tax payable by the beneficiary and, if it is greater than the tax payable by the beneficiary, a refund will be paid. As such, no extra tax is payable but there is a cashflow disadvantage if these details are not reported on time.
Where we are assisting you with the preparation of Distribution Resolutions, we will attend to these reporting requirements on your behalf. However, if you are preparing your own resolutions and you have new beneficiaries, please contact our office to arrange for the preparation of the necessary documents.
Prepare June 30 Stock Count Working Papers
If you have started an account based pension please ensure that you have withdrawn the annual minimum amount required.
Expecting a Tax Refund
You must nominate a bank account to which the ATO can electronically transfer your refund. The ATO will no longer be issuing cheques to individual taxpayers.
Other 2015 Year End Tax Planning Opportunities
- Back to the overview of the 2016 Year End Tax Planning Guide
- Pre June 30 Tax Minimisation Strategies
- Other Tax Effective Strategies
- Changes in Tax Rates
- Accelerated Depreciation Write Off
- Other Year End Tax Reminders
- Personal Tax Planning Opportunities
- Superannuation Tax Planning Opportunities
Disclaimer: This newsletter contains general information only. Regrettably, no responsibility can be accepted for errors, omissions or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.