Highland Accounting Services

If you took out a Student Financial Supplement Loan between 1993 and 2003, you will have an amount to repay if your repayment income is greater than the thresholds in the table below.

The repayment income is your taxable income plus any net rental losses, total reportable fringe benefits amounts and exempt foreign employment income.

Hopefully you have told your pay office that you have the debt so that they can take extra tax out on your behalf to cover your obligations. For the 2008 – 09 year your employer will start withholding SFSS if your wages exceed $829 per week.

Unfortunately with the SFSS there is no provision to make any voluntary payments.

At the end of the year when you do your tax return, based on your reparment income the ATO will calculate how much SFSS will need to be paid

The SFSS that is calculated and the extra tax that has been taken out of your wages by your pay office is in most cases enough to offset each other.

2008 – 09

You have or are currently studying at a university, you are most likely to have a HELP/HECS debt.

Hopefully you have notified your pay office that you have the debt so that they can take extra tax out on your behalf to cover your obligations. For the 2009 – 10 year your employer will start withholding HELP if your wages exceed $829 per week.

At the end of the year when you do your tax return, based on your HRI income (HRI= Taxable income plus any net rental losses, total reportable fringe benefits amounts and exempt foreign employment income.) the ATO will calculate how much HELP will need to be paid. The rates for the 2008 – 09 year are set out in the table below.

The HELP that is calculated and the extra tax that has been taken out of your wages by your pay office is in most cases enough to offset each other.

Voluntary repayments of $500 or more can be made at any time, this will give you a discount of 10%. So if you make a payment of $1,000 it will reduce your debt by $1,100. The ATO has a simple calculator to work out the voluntary payments here.

2008–09

The Tax Free Threshold, thats the first $6,000 earnt that you don’t pay tax on… right?

Wrong…. ???

There are many tax free thresholds, your situation governs the amount of threshold you receive.

• Non-Residents, their threshold is nil, they pay tax on $1
• Minors, people under 18 who have unearned income their threshold is $2,667. Unearned income is, bank interest, share dividends, trust distributions and is not salary or wages.
• Low income earners, under 55 who receive the low income tax offset of $1,200 can earn $14k before tax is paid.
• Low income earners, over 55 and working who receive the low income tax offset of $1,200 and the mature age worker tax offset of $500 can earn $17333 before tax is paid.
• If you receive the Australian Government Pension your threshold are;
  • single person $25,299
  • married but had to live apart due to illness $24,272
  • married person $21,692

• If you did not receive the Australian Government Pension and eligible to receive the Senior Australians Tax Offset your threshold are;
  • single person $28,867
  • married but had to live apart due to illness $27,600
  • married person $24,680

These thresholds cover most cases, but there are others, recipients of centrelink payments can receive more than $6000 threshold.

As you can see, the older you are, the more you can earn before paying tax, a plus for the retiries.

Keep your receipts throughout the year, for EVERYTHING.

If unsure keep the receipt and ask your accountant if it is relevant.

Keep your receipts organised and sort in to categories and total each category.

If you are claiming a motor vehicle, keep a log book.

An additional tax deduction of 50% off the cost of an asset will apply;

• if it has a value greater than $1000 excluding GST,
• and is bought by a small business that has a turnover less than $2 million,
• and is bought between 13 December 2008 and 31 December 2009,
• If ownership occurs between the above dates, the item can be deliverd and installed by 31 december 2010

There are additional rules for entities that have a turnover which exceeds $2 million…  (but that won’t be covered here).

So how does it work? An asset such as a motor vehicle is bought which costs $30,000, and if bought before the 30 June 2009 a tax deduction of $15,000 can be claimed for the 2009 year.

I receive numerous queries at my office, many clients expect the $15k to come back to them, unfortunately this is not the case. Assuming that your income is in the 30% tax bracket you will save $4,500 in tax.

My advice to clients is to bring forward an asset purchase, if it was planned in the foreseable future, but not to spend 30k for a 4.5k savings in tax.

Today I completed an ABN registration, and noticed some substantial changes to the process.

The changes I am discussing today are in regards to the questions asked in relation to being a contractor, this is where you will be asked:

Are you applying for an ABN to operate as a contractor?

If you answered “YES”, you will then be asked the following;

Will your work agreement allow you to pay another person to perform work on your behalf?

Will you be responsible for providing heavy machinery to undertake your business activity?

If the answer is “NO” to the above two questions, then next you will be asked;

Will the payments you receive be based on a quoted price that you provide to persons making use of your services?

Will you be responsible for the cost of rectifying any defect in the work you perform?

And if  ”NO” is answered again, then the ATO would not regard you as operating an enterprise, therefore unable to apply for an ABN.

If at this point, you continue on and register for the ABN, you may be commiting an offence and be prosecuted for providing a false or misleading statement.

My thoughts - I have always disliked people being put on as contractors, when quite clearly there is a employee/employer relationship. The main reason why people are contracted rather than employed is so their “Boss” does not have to pay their entitlement such as workcover and superannuation.

These changes will make people more aware, and hopefully less will be now be employed as contractors and more as employees.

Unfortuneatly the contractor will need to make the choice of possibley not working or being  prosecuted for providing a false or misleading statement when applying for the ABN. Where as the “Boss” still has the power over the contractor and can still take advantage.

You are receiving family tax benefits,  below are some helpful tips to stop you from owing Centrelink at the end of the year.

As we all know, Centrelink asks for a estimate of your years income so they can pay the FTB.

• Tip 1, Overestimate your income and any adjustments will be in your favour.

Your child is a dependant if their income is less than $12,287(2009). But if your child finishes school in December and starts work and earns more that $12,287, then you will need to pay back what you received while they are at school.

• Tip 2, Stop payments at the start of the financial and if the child hasn’t earnt enough, the adjustment will be in you favour.

If you think your family income may come close to the cut off thresholds, or exceed the threshold.

• Tip 3, Don’t claim any FTB at all during the year, wait till you have completed the relevant tax returns. At that point you will know exactly what you income is and whether you are eligible.

Please add you experience/tips in regards to claiming Family Tax Benefit.

One of the options of claiming the Family Tax Benefit has, up to the 30th June 2008, been through the lodgement of your tax return as well as through centrelink and Medicare Australia.

From, 1st July 2009 claiming the Family Tax Benefit and recieving the reconciliation payment through your tax return will stop.

You will still be able to claim the benefit, but will only through Centreling and Medicare Australia, and you can claim fortnightly based on your estimated income, or you can claim annually. 

If claiming annually both you and your partner (if applicable) must have lodged the relevant years tax return for payment to be made.

I am currently working on a client, that has not lodged a tax return since 1996. When you prepare tax returns over a 14 year period in a single sitting, you notice some real changes to the tax rates. For instance from 1st July 2009 the Low Income Tax Offset starts to reduced at $34,000 where as 5 years ago it started reducing at $21,600
Below is an example of the tax payable on 2 amounts of income. I have calculated the Tax payable and Medicare levy and if relevant the Low Income Tax Offset paid,the two amounts are $25k and $50k for the years ended 30th June 1998 and 2008.

• On $25k the tax payable in 1998 was $3,435 and in 2008 the tax payable is $2,475
• On $50k the tax payable in 1998 was $14,851 and in 2008 the tax payable is $10,350

You would have to agree that there is a noticeable change in the tax rates, and I know that there other factors that need to be considered, like inflation and GST.

Was out on the weekend with my wife, it was suggested that for lunch, we go to a nice vegetarian eatery in a plant nursery at one of Adelaide’s beach side suburbs.
What can I say, the meal was fantastic, followed by coffee and cake. All a very enjoyable experience, until… time to pay, oh no, they don’t have a merchant facility, they only accept cash. So across the road I run to the services station to get some cash out to pay the bill. So will I go back….. maybe if I have the cash in my pocket. My wife was told, while she was waiting for me, by the owner that it is not cost effective to have a merchant facility.
So what does a merchant facility cost, they normally have a flat monthly fee of say $25, and a transaction fee of up to 2% for credit and up to 1% for EFTPOS (these are only estimates)
For for the business to say that it is not cost effective, then one would assume they have no costs in going to the bank, sorting the cash and cheques to be banked and the potential of lost clients (like me who eftpos 95% of my transactions) is nil, or is it.
I have staff that fill out my deposit forms, tallies the cash and cheques and then travels to the bank, stands in a queue and then comes back. Wages and on-costs would be $25 per hour. But hang on, I could go to the bank myself, but that would not be a good idea as my time in my business is worth more than $25 per hour.
So if the above business feels that it is not cost effective to have a merchant facility, then they don’t have staff that does the banking or…. they don’t put a value on their time in the business.
So is it cost effective, to have a merchant facilities or not?