Highland Accounting Services

2010 Individual Income Tax Rates.

The Australian financial year runs from the 1st of July to the 30th June each year, for the year ending in June 2010 the following tax rates apply to an individual residents taxable income.

The taxable income is the balance of assessable income less allowable deductions.

The tax payable is calculated on the taxable income as per the tax rates below. As the taxpayers earnings increase it will pass through the relevant tax brackets.

Some mistakenly think that as you move into a higher tax bracket, all of your earnings are taxed at the higher tax rate. Thankfully this is not the case, only the income above the tax bracket is taxed at that rate.

Using the chart below if your income was $85,000, only $5k would be taxed at 38% not the full $85k.

The income tax rates for the financial year ending 30th June 2010 for and individual who is a resident for income tax purposes.

The above rates do not include the Medicare levy of 1.5%, which is subject to income thresholds.

Nor does it include any income tax offsets, these apply to the taxpayers individual circumstances.

2009 Individual Income Tax Rates

These rates apply to individuals who are residents of Australia for tax purposes.

Tax rates 2008-09

The above rates do not include the Medicare levy of 1.5%

MYOB Accounting Plus, version 18. Recommended retail price of $749 or upgrade price is $395. Should you upgrade, my opinion is NO you shouldn’t.

MYOB Version 13 and Version 18, both copies of the software perform the same fundamental tasks.

The rate of GST in Australia hasn’t changed since its inception in the year 2000, so the calculation remains the same in version 18 as it did in version 13.

The fundamentals of accounting have remained the same, a debit is still a debit, liabilities well they are still liabilities and income and expenses, you get the idea are still income and expenses.

I have dealt with all the recent versions of MYOB, printed out profit and loss statements, balance sheets, summaries for GST and payroll, you guessed it, they are still the same.

So why is there a need to upgrade every year, this year according to MYOB, one of the reasons is that you have the “Ability to generate an ETP Payment summary in the Print Payment Summary process.” So now MYOB have given you an extra option of printing the ETP Summary. How much of the $395 upgrade fee is that worth?

Ok, it might seem that I am giving MYOB a serve, Quickbooks in another of the shelf accounting software that is priced much the same as MYOB. Yes all the above apply to Quickbooks to, as they bring out a version every year.

So before you rush out and buy that new version, look at the changes, in most instances the changes are irrelevant to your basic needs.

An employer is exempted from the obligation to register under the Workers Rehabilitation and Compensation (Claims and Registration) Regulations 1999.

There are two categories of exemption

1. Employer not engaged in a trade or business

If,

• the employer employs one or more persons (the workers) under a contract of service or contracts of service; and
• the workers are not employed for the purposes of a trade or business carried on by the employer; and
• the total remuneration payable by the employer to the workers in a calendar year does not exceed $10,200 indexed

the employer is not, in respect of those workers, required to be registered under section 59 of the Act (and the remuneration paid to those workers need not be included in any return provided to WorkCover under section 69 of the Act); and are exempt from the operation of section 46(3) of the Act (the employer excess of paying the first two weeks income maintenance of an injured worker)

For 2009 calendar year the indexed amount is $10,800

2. Employer engaged in a trade or business

If the total remuneration payable in a calendar year by an employer to workers employed by the employer for the purposes of a trade or business carried on by the employer does not exceed $10,200 indexed, the employer

• is not required to be registered under section 59 of the Act; and
• not required to include the remuneration paid to their workers in any return provided to WorkCover under section 69 of the Act;
• exempt from the operation of section 46(3) of the Act (the employer excess of paying the first two weeks income maintenance of an injured worker)

For 2009 calendar year the indexed amount is $10,800

However, if a worker suffers a disability arising from that employment that is determined under the Act to be a compensable disability, the exemption from the requirement to register does not apply in relation to the employer from the day of occurrence of the disability until the end of the financial year in which the disability occurred.

This means if a claim has been determined to be a compensable disability and the employer is engaged in a trade of business, the exemption from the obligation to register does not apply in respect of the period from the occurrence of the disability to the end date of the financial year in which the disability occurred. In this case, an employer must complete and provide to WorkCover an application to register as an employer and pay a levy, being the minimum levy for a particular financial year – for 2008-2009 the minimum levy is $50 plus GST plus OHSW fee*

* not subject to GST.

I have been in full time public practice as an accountant for 14 years. In that time I have seen clients invest their time and money into several schemes, with the intention of making fast money. I thought I might share with you a few investments that “I have never seen” make any money.

This list is compiled from my experiences as a tax accountant, it is a sample from my client list of over 1000 clients spanning 14 years.

I have never seen a client make money from Multi Level Marketing (MLM). The best known MLM is Amway, but it comes in all guises, from selling dietary products to every day goods. The form is to have a succession of people under you selling the MLM philosophy and goods. In return you will receive a commission, that commission is subsequently returned to the MLM company as they sell you motivational products and seminars.

I have never seen a client make money from a black box share investment program. A promoter of a black box share scheme will normally ask the investor to purchase software and a training course that could cost up to, if not more than $10,000.  Coupled with that you will be also expected to sign up the share software’s data download plan. The software will follow the market trends and pick the shares to be purchased.

I have never seen a client make money from a tax investment scheme. Emu farms, Tea Tree Oil are just a couple of tax investment schemes. Basically the promoters will sell these schemes on the basis that you will get a tax refund to cover the cost of the initial purchase price. Of all the schemes I have seen, the majority rarely see a couple of years of operation, therefore the investor will not get any returns on the initial outlay. Not getting a return on the investment wasn’t a problem to start with as the Tax Office gave a refund to cover the cost of the scheme. The Tax Office subsequently made changes to the claim process, forcing investors to pay back most of the refunds given.

I have never seen a client make money from a forestry investment. Forestry investments are a tax investment scheme as mentioned above, but somehow have out lasted all the others. The investor buys a wood lot for a nominated value and may receive a tax deduction for the purchase. Through the term of the investment the lots are harvested producing small returns until the final harvest, giving the final payment. Clients have purchased wood lots in the early years of my practice, but all of the companies involved are now no longer in business.

I have never seen a client make money from a Ponzi Scheme. What is a Ponzi Scheme you may ask? Dictionary.com describes as “A fraud disguised as an investment opportunity, in which initial investors and the perpetrators of the fraud are paid out of funds raised from later investors, and the later investors lose all funds invested.” The perpetrator of the scheme will induce investors with a high return, the first one I heard about was offering a 50% per annum return, and subsequent schemes I have heard about have had a return well over 20%.

Would love to hear your thoughts, please take time to subscribe so you can make a comment.

Have just completed the CanDo4Kids corporate challenge, the Amazing Race. Highland Accounting Services team, the Wombats raised $4,500 for CanDo4Kids. Aaron, Mike, Paul and myself are looking forward to participating in the 2010 corporate race

The Australian Taxation Office (ATO) has begun to accept credit card payments for debts between $10 and $10,000. The ATO will accept Visa, Mastercard or American Express and will charge a card payment fee of .67% for Visa and Mastercard and 1.02% for American Express.

On a $10,000 payment the fee will be $67 for Visa and Mastercard and $102 for American Express.

The ATO on your receipt will show the debt payment and the card payment fee as separate items, the card payment will be tax deductable.

To make your payment you will need to visit https://www.optussmartpay.com/governmenteasypay-ato/ and have your EFT Code and obviously your credit card.

The EFT Code is normally on your payment slip attached to your Notice of Assessment or Activity Statement.

Any interest charged on your credit card in relation to the ATO debt will be tax deductable

The ATO General Interest Charge for the October to December Qtr 2009 is 10.3% and is a tax deductible payment

Single parents will, once their youngest child turns 8, start to pay more tax, how will this happen I hear you ask?

While the youngest child is under 8 a single parent will receive Parenting Payment Single. When the child turns 8 the parent will stop receiving Parenting Payment Single and start receiving the Newstart Allowance.

How does receiving Newstart effect your tax differently to Parenting Payment Single? The answer is that the parenting payment is treated as a pension and the tax payer receives a larger tax offset.

Newstart entitles you to a Beneficiary Tax Offset of 15% of the amounts of Newstart payments greater than $6,000, if your Newstart payment is $7,000 you will get an offset of $150.  If Newstart is $5,000 the offset is nil.

Parenting Payment Single entitles you to the Pensioner Tax offset of $2,240 if your taxable income is below $20,934. So what this means is if you receive $7,000 0r $6,000 0r even $20 of Parenting Payment Single you will receive and offset of $2,240.

I will do a quick example for the difference in tax that you would pay once your child has turned 8.  I am working on a total income of $20,000, ($8,000 earned as  Centrelink money and $12,000 earned from wages). These figures do not reflect Centrlink’s payments or income tests.

If your child is older than 8 years and you receive the Newstart allowance then the tax payable would be $600.

If your child is younger than 8 years  and you receive Parenting Payment Single, for the 2009 year your tax payable would be $nil.

If you earn $1 of Newstart Allowance your tax free threshold is $14,000 including the low income tax offset where as 1$ of Parenting Payment Single will give you a tax free threshold of $25,300 including the low income rebate.

I had an appointment with a prospective client recently, who has just recently arrived in Australia and was preparing his first tax return. His friends had suggested that, as it is his first tax return, he would get all the tax paid during the year back.

As the interview progressed I pointed out to him that he wouldn’t be getting the full refund.

His reply was that his friends had stated that he should, and that his friends had recieved the full amount back. This is when I suggest that his friends were incorrect and that I could not lodge his tax return based on his expectations. (I might add he argued the point and so I suggested he let his friends prepare his return as they were obviously more qualified).

MYTH:

As it is your first return, the tax office will refund all the tax paid on your PAYG Payment Summary.

FACT:

Whether it is your first or tenth tax return, the calculation is the same. Assessable income less allowable deductions equals your taxable income. The tax is calculated on the taxable income, Medicare levy is added and any offsets are taken away.

If the balance of tax payable + Medicare levy – tax offsets is less that the PAYG installments paid during the year, you get a refund.

This site has been providing tax information for some time, until now haven’t asked for anything in return. I am looking for donations for our team in the Amazing Race.

Highland Accounting Services have sponsored a team of 4 in the race. The team consists of myself, son Aaron, brother Paul and friend Michael.

I was asked to sponsor and participate in the race by my son Aaron, his son Noah (my Grandson) has receive help from the CanDo organisation since his birth in April 2009 for his vision impairment.

All donations over $2 are tax deductible. Have put more information on the CanDo4Kids page