Disclaimer
Disclaimer
SMSF's: Share Investor or Share Trader ? (published 29/08/2010).
Are you a trustee or member of a Self Managed Superannuation Fund?
The Tax Office has released a new guide to help trustees of SMSF's understand the difference between share investing and share trading..
-Ensure you are aware of the correct tax treatment for your fund's investments.
- Contact us if you require any clarification or advice.
- Many investments have fallen in value over the past year as a result of the global financial crisis. It is expected that many superannuation funds will report significant losses in their income tax returns.
- Normally, revenue losses can be used to offset other assessable income. Capital losses however, can only be used to offset capital gains made in the same year otherwise they are carried forward to offset capital gains from future periods.
- A revenue loss is a loss arising from carrying on a business for the purpose of earning income. Generally, taxpayers who carry on a business of share trading can recognise revenue losses.
- In contrast, a capital loss is a loss made by someone who holds shares for the purpose of earning income from dividends and similar receipts (i.e. an investor), or as a longer term investment.
- Many trustees are incorrectly classifying their funds as they believe that as the fund's main activities relate to the buying and selling of shares they meet the definition of a share trader.
- The Tax Office advises that such an interpretation is incorrect as most SMSF's will not satisfy the definition of a share trader.
Remember, ensure that you correctly classify losses from the sale of your fund's investments.
Small Business Tax Calendar for 2011
Are you a small business owner ?
The Tax Office has released an updated electronic calendar to help small businesses keep track of their lodgment and payment due dates for the 2011 income year.
Be aware of the tax calendar for small businesses.
Contact us if you require any clarification or advice.
- The calendar can be personalised to suit your requirements depending on the structure and size of your small business.
- The calendar shows all the lodgment and payment due dates for the 2011 income year, such as when to lodge activity statements and when to pay superannuation guarantee contributions on behalf of your employees.
- The small business calendar is designed for the use of businesses with annual turnover below $2 million.
- Small business owners are encouraged to get the latest version of the calendar to ensure they have the latest lodgment and payment information.
- Click here for a copy of the small business tax calendar or visit the Tax Office website at www.ato.gov.au
Remember, ensure you are aware of the small business tax calendar.
Overview of Concessions for Small Business Entities
Are you a small business owner?
The Tax Office has released an overview of all the tax concessions small business entities are entitled to claim if they meet the eligibility requirements.
Consider whether you are eligible for the Small Business Concessions.
Contact us if you require any clarification or advice.
- Small businesses are eligible to make use of a range of tax concessions to allow them to reduce their tax liabilities and better fund their business operations.
- Eligible businesses can choose to use the following concessions:
- Capital Gains Tax 15 year exemption [click here for more information];
- 50 per cent active asset reduction [click here for more information];
- Capital Gains Tax retirement exemption [click here for more information];
- Capital Gains Tax rollover;
- Simpler depreciation rules;
- Simpler trading stock rules;
- Immediate deductions for certain prepaid business expenses;
- Entrepreneurs' Tax Offset
- Accounting for GST on a cash basis;
- Annual apportionment of GST input tax credits;
- Paying GST instalments;
- FBT car parking exemption; and
- PAYG instalments based on GDP.
- Businesses qualify for the above concessions if their aggregate turnover is less than two million dollars.
- Other entities may be eligible for the CGT concessions if their net assets are $6 million or less, and the FBT car parking exemption if their income is less than $10 million.
Remember, consider whether you may be entitled to use the Small Business Concessions to reduce your taxable income.
Just What Exactly is Personal Services Income ["PSI"]?
Are you self employed and earn income as a reward for your personal skills or effort ?
Taxpayers who earn income from personal services endeavours are prevented from operating under certain structures and may have certain deductions against their assessable income disallowed.
Consider whether the income you earn is "personal services income".
Contact us if you require any clarification or advice.
- The personal services income regime works by attributing any income a taxpayer earns from services provided using their own skills and preventing taxpayers from transferring income from those services into entities which may pay tax at lower rates such as companies.
- Income will be deemed to be personal services income if:
- The income is earned by a professional without any outside assistance;
- The income was paid for a contract where labour costs were more than 50% of the costs; or
- Was earned by a professional sportsperson or entertainer exercising their skills.
- Income which the Tax Office will not deem to be personal services income includes:
- Income from the sale or supply of goods;
- Income from an income producing asset;
- Income from granting a right to use property; and
- Income generated by a business structure.
- Generally taxpayers who work as contractors will fall under the PSI regime and all income from their services will be attributable to them personally.
- Taxpayers who are caught under this regime will have to report all the income deemed to be personal services income in their own tax return and pay tax at their marginal tax rate and are also prevented from claiming certain deductions.
Remeber, consider whether the PSI provisions may apply to you, and if so, whether there are any tests that you can satisfy to avoid them.
The above article are not a substitute for independent professional advice. We do not warrant the accuracy, completeness or adequacy of the information or material in this article. All information is subject to change without notice. We and each party providing material displayed in this article disclaim liability to all persons or organisations in relation to any action(s) taken on the basis of currency or accuracy of the information or material, or any loss or damage suffered in connection with that information or material. You should make your own enquiries before entering into any transaction on the basis of the information or material in this article. Please ensure you contact us to discuss your particular circumstances and how the information provided applies to your situation.
