Autumn 2002 Newsletter

NSW LAND TAX

The NSW land tax threshold for the 2010 has been determined at $376,000 (up from $368,000 for the 2009 year). The tax rate remains at $100 plus 1.6% of the value exceeding $376.00.

NSW land tax is levied on land held for investment or commercial purposes on 31 December each year. If you purchased land for these purposes during the year ended 31 December 2009 you may need to register for NSW land tax. Please contact our office if you wish to discuss this matter.

ATO LOOKS CLOSELY AT EMPLOYERS

EMPLOYING CONTRACTORS

In a recent speech, a senior tax officer indicated that the ATO was now taking a good hard look at employers arrangements with ‘contractors’, to ensure that they are, in fact, genuine contractors and not just employees being treated as contractors to cut costs.

He said that “Evidence suggests that the current tighter economic conditions have increased the prevalence of such arrangements as more businesses feel the need to cut costs, and labour market conditions can make employees more vulnerable to these practices.”

“Increasingly it seems that many employers prefer to treat workers as contractors as it can enable them to cut costs in terms of workers compensation, payroll taxes and superannuation guarantee. They can also negotiate pay rates outside of normal wages and conditions and do not withhold tax.”

The Tax Office has commenced an audit campaign that will tackle non-compliance in this area by focusing on businesses that do not withhold from payments to workers as required and fail to make superannuation guarantee contributions.

CASH ECONOMY – ATO CRACKDOWN

The Tax Office has been promising to ‘up the ante’ on the cash economy for some time now. With thousands of letters about to hit possible future audit ‘targets’ and the new benchmarks the ATO has just released on different cash industries, they are definitely starting to play for keeps.

If any client receives a letter from the Tax Office as described below, please contact our office straight away.

The Tax Office has released copies of letters which will be sent out to thousands of taxpayers who are in the cash economy.

The ATO stated that it was sending letters to business that have:

ü made substantial bank deposits that do not appear to be consistent with reported income; or

ü made multiple international bank transfers out of their bank accounts that don’t appear to be consistent with their reported income; or

ü reported income that doesn’t appear to support the owner’s personal living expenses.

One of the letters sent out advises the taxpayer that their business has reported a net income that appears to be lower than required to support a reasonable level of personal living expenses.

It states that the Tax Office uses a range of indicators to identify businesses for reviews and audits including:

· identifying businesses with the opportunity for cash economy activity;

· comparing tax return information to other similar businesses in their industry;

· using information from organisations such as Centrelink, business suppliers and banks; and

· reviewing information provided by the community.

The letter finishes up by saying that the ATO will be monitoring the taxpayer’s activity statements and/or income tax returns during the next six months. This may result in the business being selected for an audit.

ATO WARNS ABOUT IDENTITY THEFT

The Commissioner of Taxation has advised that identity theft is a particular problem that can take years to put right.

For this reason, tax file numbers or (TFNs) must be kept safe.

Only certain people can ask for a taxpayer’s TFN, including the Tax Office, Centrelink, their super fund, bank or financial institution, and their employer (once they have started working for them).

The warning from the Tax Office is that if anyone asked for their TFN through an email, phone call or suspicious door knocker, they should not offer any information and should call the Tax Office on 132861.

While the Tax Office does send emails or SMSs promoting new services or alerting to due dates, it will never send an email requesting a taxpayer confirm, update or disclose confidential details such as their name, date of birth, address, passwords or credit card and bank account details.

If the Tax Office needs to know this information, it will mail a letter to the taxpayer’s postal address.

TAX REFUND E-MAIL SCAM

The Tax Office is warning people about another bogus email circulating that claims to offer a tax refund. The email claims to be from the ATO, and shows a Tax Office email address as the sender.

The email uses the Tax Office logo and includes the words ‘You are eligible to receive a tax refund of $250.50’ in the subject heading and the following text (though there may be variations):

Dear Australian Taxation Office customer,

After the last annual calculation of your fiscal activity we have determined that you are eligible to receive a tax refund of $250.50 AUD.

Please submit the tax refund and allow us 3-5 business days in order to process it.

The email asks people to complete a refund form by clicking on a link in the email which directs them to a bogus Tax Office Website and asks for personal and credit card details.

The ATO advises that anyone who entered their credit card information into the bogus site should immediately report it to their credit card provider.

INTRODUCTION OF

“MODERN AWARDS" ON 1 JANUARY 2010

Employers who are covered by Australia’s Federal workplace relations system (and that is the vast majority of private sector employers, including many not for profit organisations) need to be aware that from 1 January 2010 there will be very significant changes to the existing arrangements covering their staff.

The Ten National Employment Standards

The Fair Work Act 2009 (“the Act”) provides that from 1 January 2010, National Employment Standards (NES) will take effect. There are 10 NES that provide for minimum terms and conditions for all national system employees whether or not they are covered by an award or agreement – eg everyone from the factory floor to senior management. The following are the 10 “NES”:

1. maximum weekly hours;

2. requests for flexible working arrangements

3. parental leave and related entitlements

4. annual leave

5. personal/carer’s leave & compassionate leave

6. community service leave

7. long service leave

8. public holidays

9. notice of termination and redundancy pay

10. Fair Work Information Statement.

Modern Awards

Also from 1 January 2010, Modern Awards made by the Australian Industrial Relations Commission (AIRC) will take effect and existing awards (including State awards known now as NAPSAs) will no longer be applicable – i.e. most old awards will lapse on 1 January 2010.

Modern Awards are progressively being made by the AIRC covering employees, primarily by reference to industries, but also some will cover employees in defined occupations such as nurses. Once these modern awards become effective the awards they replace cease to operate and can never operate again.

So it is vital that all who are covered by awards now, whether they be Federal or State awards, be aware that on 1 January 2010 new modern awards will replace these instruments.

Not for profit employers using corporate entities

Many “not for profit” operators in aged care services (and related activities) and educational establishments currently operate under NAPSAs and employ staff through a corporation.

From 1 January 2010 these industrial instruments will be replaced by modern awards and the NES, which will be the minimum terms and conditions that will be applicable. Thus, for example, those who are in aged care service will not have existing

State awards covering them anymore from that date, they will instead have to employ staff under the Aged Care Services Award 2010 (a Modern Award) and abide by the 10 NES.

Employers with existing agreements

Those employers who operate under a federal agreement or a preserved state agreement (PSA) will be in a slightly different position on 1 January 2010 compared to employers covered by awards. These old agreements will continue to apply after 1 January 2010 (until replaced), except that the NES provisions will override any part of an agreement that is more detrimental to an employee than the NES, and the agreement has to provide wages at least at the level of the wages in the Modern Award for the workforce covered by the agreement.

So, those employers will need to compare the provisions of the agreement with the provisions of the NES. If the agreement provides a lesser standard than that provided by the NES, then the NES provision will apply to the exclusion of the agreement provision. If the agreement rates are less than the rates provided in the award then the rates in the Modern Award must be applied.

Get Ready

We hope the above very brief explanation of the changes starting on 1 January 2010 will make employers aware of these changes and the fact that they may need to act in some way to ensure compliance with the new measures. More detailed information can be found at the Fair Work Website at www.fairwork.gov.au

HALL JACKSON SERVICES

We would like to remind our clients that we offer the following services through referral to our valued contacts

· Financial planning, investment and retirement advice;

· Business succession, estate planning and risk insurance; and

· Residential and commercial lending (including short-term financial), asset purchase and refinancing.

Please contact our office if you would like to discuss any of the above services. A full list of services can be found on our website at www.halljackson.com.au

QUOTE FOR THE SEASON

“Inspiration does exist, but it must find you working”

Pablo Picasso (1881 - 1973)

HAPPY HOLIDAY