Warning on ATO and Medicare scams

Warning on ATO and Medicare scams

Recently we’ve been contacted by a number of clients who have received suspicious calls and messages from people claiming to be from the Australian Taxation Office (ATO) and Medicare.  It’s important that you are aware of some recent scams.

Tax scams

The Australian Taxation Office (ATO) has warned about the emergence of a scam where “…scammers are using an ATO number to send fraudulent SMS messages to taxpayers asking them to click on a link and hand over their personal details in order to obtain a refund.”

The refund scam follows a more sinister four phase scam stating there is a warrant out for your arrest for unpaid taxes in prior years. The scam starts with a text message purportedly from the Australian Federal Police (AFP). Within minutes, your mobile rings and the caller identifies themselves as being from the AFP and working with the ATO. They then ask for your accountant’s details. You then receive a call purportedly from your ‘accounting firm’ asking you to verify the AFP/ATO claims. Finally, you are provided with a way, if you act quickly, to make the AFP go away by paying a fee before your ‘imminent arrest’.

The ATO states that it will not:

  • Send you an email or SMS asking you to click on a link to provide login, personal or financial information, or to download a file or open an attachment.
  • Use aggressive or rude behaviour, or threaten you with arrest, jail or deportation.
  • Request payment of a debt via iTunes or Google Play cards, pre-paid Visa cards, cryptocurrency or direct credit to a personal bank account, or
  • Request a fee in order to release a refund owed to you.

Medicare Scam

A new phishing scam sent text messages purportedly from Medicare advising the recipient that they are owed a $200 rebate from Medicare. Once the person clicks on the reclaim link, they are asked to provide their personal details including bank account details for the ‘rebate.’

If you are uncertain about any suspicious messages please contact the registered office of the “sender” or alternatively speak with your accountant or advisor.

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Tax on overseas income – It could be higher than you think..

Tax on overseas income – It could be higher than you think..

 

Do you earn income overseas? A recent case highlights why you might pay more tax than you thought on foreign income.

If you are an Australian resident and earn income from overseas, such as income from investments, sale of assets such as property, distributions from foreign trusts, etc., you will generally need to declare that income in your Australian tax return. If you have paid tax in a foreign country on that income, you might be able to claim a foreign tax offset to reduce your Australian tax liability.

Sounds simple enough but a recent case highlights where problems can occur and you might end up paying a lot more tax than you thought.

The taxpayer in this case was a resident of Australia but was taxed in the US on gains they made on interests in US real estate. Most of the gains they made were taxed at a concessional rate of 15% (rather than the normal rate of 35%) because the interests had been held for more than one year. Some of the gains were ultimately taxed at 35% in the US.

The capital gains were also taxed in Australia and qualified for the general CGT discount of 50%.

As the taxpayer was a resident of Australia and had paid tax on the US gains, the taxpayer claimed a foreign income tax offset for all of the US tax they paid. However, the ATO amended the tax assessment and only allowed a tax offset for slightly less than 50% of the tax they paid in the US.

The problem for the taxpayer was that while the US and Australia both have tax concessions for longer term capital gains, they operate quite differently. The US applies a lower rate to the whole gain while Australia applies a normal tax rate to half of the gain. Unfortunately for the taxpayer, the Federal Court held that the Commissioner’s approach was correct. If foreign tax has been paid on an amount that is not included in your assessable income then you cannot claim a foreign tax offset on it. In this case, the portion of the capital gain that was exempt from Australian tax because of the CGT discount, was not included in assessable income.

It is not uncommon for people who have made capital gains on foreign assets to assume that they get all of the tax back that they paid overseas. Unfortunately, that’s not necessarily the case and often only a partial credit is available, if at all.

Contact PrimeAdvisory for professional advice on transactions overseas that may affect your taxable income.

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Good News For Small Business With Instant Asset Write-Off Set To Be Extended

Good News For Small Business With Instant Asset Write-Off Set To Be Extended

On 30 January 2019, the Prime Minister, Scott Morrison delivered some good news for business owners, announcing that the instant asset write-off scheme is expected to be extended through to 30 June 2020 and the current threshold of $20,000 increased to $25,000.    The government will be seeking to legislate this change when Parliament resumes on 12 February.

What is the Instant Asset Write-Off Scheme?

Initially, the Instant Asset Write-Off allowed for businesses with an annual turnover of less than $10 million to write-off business assets worth up to or less than $20,000, bought and used or installed ready for use.  This applied irrespective of whether the asset was purchased new or second-hand. This would then allow for business owners to claim a deduction for that asset in the same financial income year as the asset was purchased.

What does The Extension Mean?

In the words of “Sco-Mo” himself, it means that “Businesses can go out and invest today, whether it’s a vehicle, a piece of plant or equipment, all of it up to $25,000 and immediately write-down the asset”.

We look forward to providing an update following formal parliamentary approval.

In the meantime, for help with planning your tax effectively and taking advantage of all available business tax benefits contact us.

 

 

 

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Key Considerations For Grandparents Funding Private School Fees

Key Considerations For Grandparents Funding Private School Fees

As we roll into a new school year, it’s not uncommon for grandparents to contribute to their grandchildren’s private school education.

If you are supporting your family by helping fund a grandchild’s private education, before the first term’s school fees are due it’s important to receive professional advice on the best way to contribute towards private school fees. At PrimeWealth your advisor can offer specific guidance based on your unique circumstances, however here’s a quick checklist of the key considerations:

Do the maths

Make sure that you have accounted for all your living expenses allowing you to live comfortably without the need to draw on any retirement savings in a way that is unsustainable.

Plan ahead

This will avoid selling investments at a time that may not be optimal, it’s important to ensure that ample funds are accessible when you need them, including a buffer.

Understand the impact on Asset testing

If you are maintaining control of the funds set aside for fees, these will be considered as an asset by Centrelink and could impact any Age pension entitlements.

Understand the gifting rule

If you are transferring funds to one of your children or grandchildren, be aware that the Department of Human Services gifting rule currently allows for a gift up to $10,000 in one financial year and a maximum of $30,000 over five financial years without your pension entitlements being affected.

Taxation

Get advice on the best structure for investing any funds set aside for school fees. “Education Savings” products can be internally taxed at a corporate tax rate which could be more than holding an investment directly.

Estate Planning

If you are no longer around to manage any funds for education purposes, ensure that you have considered this in your estate planning.

Control

Ensuring you maintain control of funds until they are required means you keep the funds in any circumstance that you may not have prepared for such as a child not attending private school or university.

 

Please contact PrimeWealth for further support and advice, taking into account your unique circumstances and financial goals.

 

 

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7 Things To Review For Enhanced Business Performance

7 Things To Review For Enhanced Business Performance

If you are a business owner in Australia, there’s a big chance that you are now back at the desk after a break. The Christmas holiday period is a great time to rest and reflect over the previous year and think about what you want to achieve in 2019.

There’s no better time to review the performance of your business given you should have a team that’s rested and ready to help you achieve your goals and growth targets for 2019.

Here’s our guide for the critical business activities to prioritise reviewing to ensure if you’re on track for a good year.

1. Review your reporting systems
Take some time to understand how you currently measure effectiveness. Particularly sales and employee performance. Do you know what your cost of sale is, whether you are achieving sales at the right costs and what the most effective sales channels are?

2. Review your cash flow requirements
Cash flow constraints can considerably hinder business growth. Effective balance sheet management of accounts receivables, accounts payables and inventory levels help make sure that you have sufficient cash to operate effectively. It’s also critical that adequate cash is being set aside to meet Tax and Super obligations

3. Review your products and services
If you have good reporting, you’ll understand how profitable each of your products and services is. Understanding this means you can plan for the year ahead, focussing on promoting profitable (and eliminating unprofitable) products or services.

4. Review your staff performance
Do you have good systems for understanding what your team members are working on and also for recognising achievements? A strong culture and communication amongst staff will ensure your team is motivated and focussed on the overall company objectives.

5. Review your operating costs
Getting a handle on all your operating costs and then reviewing for improved deals and more competitive suppliers can have a significant impact on profitability. You can even task staff with finding ways to streamline costs and reward them for finding savings.

6. Review your most profitable customer relationships and satisfaction
Understanding which customers are generating the most revenue and or profit should be a top priority. After all, we all know it’s cheaper to retain a customer than to acquire a new one. Customer retention has a considerable impact on growth. Using tools such as Net Promoter to track customer satisfaction and the likelihood of referral can streamline satisfaction monitoring.

7. Review any debt or finance arrangements.
Make sure you have the most cost-effective finance facilities in place, and you are reducing any debt effectively.

Last but not least, make sure that you involve your trusted advisors in helping you review your business. An experienced advisor can help you take an “outside-in” look at your business and also bring valuable experience and therefore suggestions for improved business performance.

PrimeAccounting specialise in working with private business owners, keeping them on track with finance and accounting services. Contact us for an obligation free Business OnTrack consultation on improving your business performance.

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