Single Touch Payroll (STP) is a government initiative that requires employers to report their employees’ payroll information to the Australian Taxation Office (ATO) each time they pay their employees. STP Phase 2 is an expansion of the STP initiative that aims to reduce the reporting burden on employers who need to report information about their employees to multiple government agencies.
Reporting
STP Phase 2 will streamline reporting information about employees to government agencies. The expansion of STP, also known as STP Phase 2, will include additional information such as employment type, gross income, and country codes. The changes will also aid the administration of Services Australia.
Deadline
The mandatory start date of STP Phase 2 reporting was 1st January 2022. However, the ATO has taken a flexible approach based on business readiness and individual circumstances. Employers who need more time to transition to STP Phase 2 reporting can apply for a delayed transition through ATO Online services.
The R&D Tax Incentive allows Australian businesses that undertake research and development to be refunded 43.5% of the R&D spend.
You Might Be Eligible!
The definition of R&D is broad in order to support as many different businesses and industry sectors. If your company is undertaking the following activities
developing new knowledge in the form of new or improved materials, products, devices, processes or services; and
seeking to resolve technical challenges in order to develop this knowledge and the answer is not identifiable based on currently available knowledge, and
undertaking experimental activities to bridge this knowledge gap and resolve these technical challenges.
Small employers (19 or fewer employees) must meet the SuperStream standard by 30 June 2016. Here’s what you need to do.
1. Choose a SuperStream option –
You can choose either to use a clearing house or payroll option that is compliant. Ask your accountant or bookkeeper to help you with this;
2. Collect information and update your records such as:
– employee tax file number
– fund ABN; and
– unique superannuation identifier
If your employee uses a SMSF, they must also provide
– fund bank account details; and
– fund electronic service address
3. Start using Superstream as soon as possible.
Start using SuperStream as soon as possible.
Employers with 19 or fewer employees should be SuperStream ready by 30 June 2016 (larger employers should already be using SuperStream).
However, we recommend making your first SuperStream payment no later than May 2016. This will give you time to make several payments and ensure your system is running smoothly before the 30 June 2016 deadline.
“Investors, venture capital funds and innovative companies in all industries will benefit from the measures introduced by the recent Federal Budget aimed at luring wealthy investors with globally competitive tax incentives”
What are the tax incentives?
Tax incentive for early stage investors:
This will give concessional tax treatment to investors to promote investment in innovative, high-growth potential start-up companies.
It includes a 20% non-refundable carry forward tax offset on investments in qualifying companies, capped at $200,000 per investor per year;
And a 10 year exemption on capital gains tax, provided investments are held for 12 months or more.
New arrangements for venture capital limited partnerships
This will deliver changes to the tax treatment of early stage venture capital limited partnerships (ESVCLP) to attract more investment into venture capital.
Investors will receive a 10% cent non-refundable carry forward tax offset on capital invested through an ESVCLP.
The maximum fund size for new and existing ESVCLPs will be increased to $200 million with a number of reforms made to the income tax treatment of venture capital more generally.
Who is eligible?
The tax incentives will be available for investments in companies that:
undertake an eligible business (scope to be determined)
that were incorporated during the last three income years
aren’t listed on any stock exchange
have expenditure and income of less than $1 million and $200,000 in the previous income year respectively.
The scheme is based on the successful UK Seed Enterprise Investment Scheme which raised over AUD$500 million in startup investment for almost 2,900 companies in its first two years.
In general, wealthy clients who want to diversify their portfolios with high-risk high-reward investments but wouldn’t ordinarily take the plunge in very early stage companies. The new incentives were “attractive enough” to get them over the line.
How it will work in practice?
Jessica is the founder of a startup business called PaySmart Pty Ltd that is developing a software application to automate bill payments. She is looking to raise $200,000 in equity finance to continue developing of the software.
Alex is an experienced early stage (angel) investor and believes that PaySmart has excellent growth potential. He invests $200,000 and claims a 20% non-refundable tax offset, reducing his income tax payable by $40,000.
In addition to contributing capital, Alex uses his business skills to help PaySmart grow. He sells his shares for $400,000 four years later. As Alex has held the investment in PaySmart for the minimum three year period and less than 10 years, the full capital gain of $200,000 is exempt from capital gains tax.
New laws have passed that allow small businesses to claim an immediate deduction for assets they start to use – or have installed ready for use – provided each item costs less than $20,000. This will temporarily replace the previous instant asset write-off threshold of $1,000.
If you maintain a general small business pool, this can be immediately written-off if the balance is less than $20,000.
Assets that cost $20,000 or more (which can’t be immediately deducted under other provisions) are deducted over time using the general small business pool. Under the pooling mechanism a deduction for 15 per cent of the cost is allowed in the first income year with a diminishing value rate of 30 per cent deduction on the opening pool balance allowed for each income year thereafter.
This measure starts 7.30pm (AEST) 12 May 2015 and will end on 30 June 2017.
Come and talk to us on how to tax effectively purchase and make investments in your small business.
