News
HELP Debts: Changes to repayment bonus from 1 January 2012
Reduction to bonus
A bonus is available for voluntary Higher Education Loan Program (HELP) repayments where the payment:
- pays off a taxpayer's debt, or
- is valued at $500 or more.
Currently, the voluntary repayment bonus is 10% of the repayment amount. From 1 January 2012, this bonus will be reduced to 5%.
As the Tax Office will be closed for the Christmas period from midday 23 December 2011 until 3 January 2012, it has reminded taxpayers who wish to take advantage of the 10% bonus to ensure that their voluntary repayment is received by 31 December 2011.
Taxpayer considerations when making voluntary payment
With respect to making a payment before 31 December 2011, taxpayers should be mindful of the following:
- To ensure payment is received on time, taxpayers should confirm payment processing times with their financial institution.
- To confirm the payout amount and payment reference number (PRN), phone the Tax Office before 23 December on 13 28 61 between 8.00am and 6.00pm, Monday to Friday.
- To work out their HELP account balance, taxpayers should refer to their account information statement which was sent out by the Tax Office in June 2011. These statements do not include any second half year 2011 debts. However, taxpayers can still make a voluntary repayment toward that debt and receive the 10% bonus as long as repayment is made by 31 December 2011. Taxpayers will also need their Commonwealth Assistance Notice to work how much to pay.
- Taxpayers will not receive a bonus on repayment amounts that exceed the debt incurred.
- Taxpayers may benefit if they make a voluntary repayment before indexation is applied on 1 June each year. However, it is important to allow enough time for the payment to be received before 1 June. The indexation rate for 2011 was 3%.
- Making a voluntary repayment reduces a taxpayer's debt immediately. However, a compulsory repayment is still required if:
- the taxpayer still has an accumulated HELP debt, and
- the taxpayer's repayment income is above the minimum compulsory repayment threshold.
Further information in relation to making voluntary repayments can be accessed here:
http://www.ato.gov.au/content/downloads/cas00291063.pdf
Seasons Greetings!
Season’s Greetings to all!
From all the Principals and staff of Langley McKimmie we would like to wish you a safe and Happy Holiday Season. Our office will be closed for business from 11.30am Friday the 23rd of December 2011 and will reopen again in the New year on Tuesday the 3rd of January 2012.
Tax Measures in Government's Mini-Budget:
On 29 November 2011, the Government released its 2011-12 Mid-Year Economic and Fiscal Outlook.
As part of the Outlook, a number of tax measures have been proposed and some previous measures deferred, including:
Fringe benefits tax (FBT) - Living-away from home allowance (LAFHA)
According to the Government, the LAFHA exemption under the FBT law is being increasingly misused by a narrow group of people, particularly highly-paid executives and foreign workers.
This has seen the total amount of tax-free LAFHA reported by employers to the Tax Office increase from $162 million in 2004-05 to $740 million in 2010-11.
As such, the Government intends to make the following reforms to the LAFHA rules:
- Access to the tax exemption for temporary residents will be limited to those who maintain a residence for their own use in Australia, which they are living away from for work purposes, such as 'fly-in fly-out' workers; and
- Individuals will be required to substantiate their actual expenditure on accommodation and food beyond a statutory amount.
The Government has assured that no permanent resident legitimately using this tax exemption for accommodation and food expenses will lose any entitlements.
In addition, these reforms will not affect other tax concessions, such as those that apply to travel and meal allowances, and remote area fringe benefits.
The reforms will apply from 1 July 2012. This start date will enable the Government to undertake an extensive consultation process.
As part of this process, the Assistant Treasurer, Mr Bill Shorten has released a consultation paper. The consultation paper outlines the existing treatment of the LAFHA benefits and implementation issues in relation to the proposed reform, including whether there is a need for special transitional arrangements to ensure there are no unintended consequences.
Personal income tax reform - Dependent Spouse Tax Offset
In addition to measures announced in the 2011-12 Budget, the Government will restrict eligibility for the Dependent Spouse Tax Offset to those with spouses born before 1 July 1952.
The Government notes that this reform will not affect people whose spouse is an invalid or a carer, or who receive the zone, overseas forces or overseas civilian tax offsets.
Measures deferred
The previously announced tax measures which the Government now intends to defer include:
- The start date of the standard deduction for work related expenses will be deferred until 1 July 2013,
- The start date of the 50% discount for interest income will be deferred until 1 July 2013, allowing more time for consultation with stakeholders on issues previously raised by industry,
- The start date of the phase down in interest withholding tax for financial institutions will be deferred until 2014-15, and
- The start date of the new tax system for managed investment trusts will be deferred until 1 July 2013, allowing more time for consultation with stakeholders about how to best implement the elements of the package.
Superannuation Measures in Government's Mini-Budget
In the Government's 2011-12 Mid-Year Economic and Fiscal Outlook, the following superannuation measures have been proposed including:
Low income superannuation contribution (LISC)
As previously announced by the Government, individuals earning up to $37,000 will effectively pay no tax on their superannuation guarantee (SG) contributions from 1 July 2012.
Under the LISC measure, the 15% contributions tax will effectively be refunded into their superannuation accounts. This refund is capped at $500.
As part of this measure, the Government has announced further reform including:
- Streamlining the LISC so that individuals automatically benefit from it without being burdened with extra paperwork. Rather than requiring eligible workers to fill out a tax return or other type of form, the Tax Office will verify an individual's income using available data. This change will help taxpayers who do not have to lodge tax returns, but who qualify for assistance to boost their superannuation savings.
- Individuals who receive less than 10% of their income through employment or business will not be eligible. This is in line with eligibility criteria for the co-contribution.
- To reduce administration costs, individuals will only receive a payment if their LISC entitlement is at least $20.
Superannuation co-contribution
The Government will reduce the matching rate and maximum payment of the voluntary superannuation co-contribution from 1 July 2012, when the new LISC commences.
The Government has indicated that the LISC will benefit over three times as many low-income earners as the current co-contribution, and is better targeted in boosting retirement savings.
This is because low-income earners can only access the co-contribution if they make additional superannuation contributions from their income or savings, whereas all low-income earners who receive compulsory SG contributions will automatically benefit from the new initiative.
Concessional contribution caps
The Government will pause the indexation of the superannuation concessional contributions caps for one year in 2013-14.
The Benefits of Considering Fraud Risks in Your Business
- If you do not proactively identify and manage your fraud risks, they could put you out of business almost overnight. Even if you survive a major fraud, it can damage your reputation so badly that you can no longer succeed independently.
- Reviewing your fraud risks can pinpoint opportunities to save you money. Fraud is an expensive drain on business’s financial resources. In today’s competitive environment, no one can afford to throw away the five percent of revenues that represents the largely hidden cost of fraud. Those businesses that have identified their most significant fraud costs (such as insurance and credit card companies) have made great strides in attacking and reducing those costs. If your business is not identifying and tackling its fraud costs, it is vulnerable to competitors who lower their costs by doing so.
- Fraud is a common risk that should not be ignored. Fraud is now so common that its occurrence is no longer remarkable, only its scale. Any business that fails to protect itself appropriately faces increased vulnerability to fraud.
- Completing a fraud risk review is the least expensive way to find out your company’s vulnerability to fraud. Most businesses score very poorly in initial fraud prevention reviews because they don’t have appropriate anti-fraud controls in place. By finding this out early, they have a chance to fix the problem before becoming a victim of a major fraud. It’s like finding out you have seriously high blood pressure. It may be bad news, but not finding out can be a lot worse.
- It is a great opportunity for your business to establish a relationship with a Fraud Investigator you can call on when fraud questions arise. Langley McKimmie Chartered Accountants are experts in detecting fraud and helping businesses prevent it in the future.
- Strong fraud prevention processes help increase the confidence investors, regulators, audit committee members and the general public have in the integrity of your company’s financial reports. This could help to attract and retain capital.
- Having your fraud risks reviewed also helps build a stronger ethical culture with all staff.