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Welcome to the September newsletter.
Interest Rate Cut: What Does it Really Mean?
Most of us were relieved with the Reserve Bank decision to cut official interest rates on 2nd September. However it is not good news for all and the CBA’s Chief Equities Economist Craig James has provided some thoughtful analysis on what the decision really means to us. As Craig illustrates in the attached article <
click here> there are a number of issues to consider in light of this cut. The main media headlines do not always present a balanced view and we encourage you to read the CBA article.
Insurance
A common perception is insurance is a necessary but unwanted cost. The truth is most people cannot afford not to have adequate insurance. For businesses this is always the case. Many businesses have key people. They are not always the owners. They may be part of a sales team, the IT person, executive management or financial controllers. Often the ‘key people’ have ‘decision making powers’ or ‘unique talents’. Consequently if these people are lost permanently to the business it will have a significant impact on the business profits. This can be insured against. Key person insurance is a policy owned by a business on the life of a key person in the business. Any proceeds from a claim would assist covering for effects on profits plus costs of recruiting and training new people.
Generally the premiums are tax deductible and any benefit received is assessable income. However if the insurance is for a capital purpose then the premiums are not deductible and the benefits are tax-free. The point of difference relates to the ‘purpose’. If it is revenue protection then the first scenario applies. If however it is for a capital purpose then the second scenario is relevant.
We suggest you consider your business situation and whether you are covering its risks adequately with respect to key people. If you wish to discuss this further please contact your usual partner here at Macquarie Partners.
ATO Compliance Program
The ATO have announced an increased focus on small to medium enterprises (SME’s) which will occur over the next four years. Whilst we are confident the clients of Macquarie Partners would pass any scrutiny from the ATO it is a timely reminder of the need to maintain adequate documentation. We find often when dealing directly with the ATO a major focus is whether adequate documentation of transactions or arrangements exists. This focus intensifies on non-arms length dealings.
Areas the ATO may look at include:-
• Fringe Benefits provided to employees (in particular non-arms length employees)
• Capital Gains concessions claimed for small businesses
• Business Structures
• Changes to trading circumstances
• GST – BAS information compared to annual income tax returns lodged
• The business systems used including recording keeping, accounting software and timely lodgment of activity statements and taxation returns.
If you would like us to provide some useful feedback on any of the above areas and possibly ways to improve your documentation and systems please contact us to discuss.
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ATO Key Dates
Sunday 21 September
• August 2008 monthly activity statement – due date for lodgment and payment – self-assessed deferral request is available.
Tuesday 30 September
• Pay as you go (PAYG) withholding payment summary annual report – due date for lodgment for a payer who has agent involvement in preparing the report and
- is not a large withholder, or
- did not qualify for the closely-held concession.
Sunday 21 October
• Annual pay as you go (PAYG) instalment notice (form N) – due date for payment
- lodgment only required if the amount is being varied, or if you are using the rate method to calculate the instalment.
• Quarterly PAYG instalment activity statement quarter 1, 2007-08 (July-September 2007) for head companies of consolidated groups – due date for lodgment and payment.
• September 2007 monthly activity statements
- due date for lodgment and payment.
Sunday 28 October
• Quarterly instalment notice (form R, S or T) quarter 1, 2007-08 (July – September 2007)
- Due date for payment
- Lodgment only required if varying the instalment amount.
Monday 29 October
• Superannuation guarantee – due date for contributions to be paid to a complying super fund for quarter 1, 2007-08 (July – September 2007).
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