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Stay on top of your tax responsibilities for 2023.

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A Video Update from
Letizia Palmer

Go Paperless!

Is it time your business went paperless? Using digital tools to operate your business can increase efficiency, reduce costs, and be more environmentally friendly.
One of the first steps when going paperless is to check your business’s digital maturity – this means identifying your business’s strengths and weakness in terms of digital ability and finding any areas for improvement.
Do your research and shop around to select the right digital tools and software to benefit your business. Many tasks can be completed using online programs and tools for document management, customer relations, accounting, and learning management.
Include your staff in the digital journey. Do this by communicating regularly with them about upcoming changes and the desired goal, involving them in the decision making with digital software, training them to use your new digital tools, and gently easing them into these changes.
If you need inspiration, look around at other businesses similar to yours and see how they’ve adopted digital resources into their day-to-day.
Finally, brush up on digital marketing. You can save a lot of money by putting a stop to physical print media such as brochures and posters. Marketing through digital channels including emails, texts, and social media is much more cost effective, but may require some getting used to.

Upcoming Key Dates

28 February
Lodge tax return for non-taxable large and medium entities as per the latest year lodged (except individuals).

Payment (if required) for companies and super funds is also due on this date.
Payment for trusts in this category is due as per their notice of assessment.
Lodge tax returns for new registrant (taxable and non-taxable) large or medium entities (except individuals).

Payment (if required) for companies and super funds is also due on this date. Payment for trusts in this category is due as per their notice of assessment.
Lodge tax return for non-taxable head company of a consolidated group, including a new registrant, that has a member who has been deemed a large or medium entity in the latest year lodged.

Lodge tax return for any member of a consolidated group who exits the consolidated group for any period during the year of income.
Lodge tax return for large or medium new registrant (non-taxable) head company of a consolidated group.
Lodge and pay Self-managed superannuation fund annual return for new registrant (taxable and non-taxable) SMSF, unless they have been advised of a 31 October 2022 due date at finalisation of a review of the SMSF at registration.

Note: There are special arrangements for newly registered SMSFs that do not have to lodge a return.
Lodge and pay quarter 2, 2022–23 activity statement for all lodgment methods.
Pay quarter 2, 2022–23 instalment notice (form R, S or T). Lodge the notice only if you vary the instalment amount.
Annual GST return – lodge (and pay if applicable) if the taxpayer does not have a tax return lodgment obligation.

If the taxpayer does have a tax return obligation, this return must be lodged by the due date of the tax return.
Lodge and pay quarter 2, 2022–23 Superannuation guarantee charge statement if the employer did not pay enough contributions on time.
Employers lodging a Superannuation guarantee charge statement can choose to offset contributions they paid late to a fund against their super guarantee charge for the quarter. They still have to pay the remaining super guarantee charge.

Note: The super guarantee charge is not tax deductible.
21 March
Lodge and pay February 2023 monthly business activity statement.
31 March
Lodge tax return for companies and super funds with total income of more than $2 million in the latest year lodged (excluding large and medium taxpayers), unless the return was due earlier.

Payment for companies and super funds in this category is also due by this date.
Lodge tax return for the head company of a consolidated group (excluding large and medium), with a member who had a total income in excess of $2 million in their latest year lodged, unless the return was due earlier.

Payment for companies in this category is also due by this date.
Lodge tax return for individuals and trusts whose latest return resulted in a tax liability of $20,000 or more, excluding large and medium trusts.

Payment for individuals and trusts in this category is due as advised on their notice of assessment.

2023 Tax Responsibilities

It’s a new year, which means new opportunities! So why not challenge yourself to stay on top of your tax responsibilities in 2023? Here are a few simple changes you can do to stay on the right path.
Firstly, know if you’re actively in business – if you’re earning an increasing income from a hobby, then the answer might be yes. Make sure you find out your business tax obligations early on to avoid errors and potential penalties.
Secondly, ensure your business details and registrations are up to date. If you’re a director of an Australian-based company, make sure you apply for your director ID and update your ABN details. You can do this online via the ATO’s website.
Stay organised and on-task. Keep complete and accurate records to monitor your business’s cash flow, inventory, and financial trajectory.
Investigate whether Personal Services Income rules apply to you. Personal Services Income, or PSI, is income produced largely from your skills or abilities as an individual. PSI rules directly affect how you should report your income and what deductions you’re eligible to claim. 
For additional help with your 2023 tax responsibilities, arrange an appointment with our team.

Illegal Early Access to Superannuation

Superannuation can be illegal at times. In most cases, you can only access your super if you’re retired and aged 60 or above, or when you turn 65 regardless of your employment status.
It's important to be cautious of people known as "promoters" whose goal is to help people set up their self-managed super fund so they can illegally access their superannuation early.
"Promoters" may try to entice individuals to access their super early with the prospect of paying off credit card debt, buying a house, or going on holidays. They may also ask for personal information, which they can then exploit to steal individual’s identity.
In the event you encounter a ‘promoter’, contact the ATO immediately. Don’t give out your personal information or agree to access your super early. Illegal access of your super can result in a loss of your retirement savings, financial penalties and interest, extra tax, and potential disqualification as a self-managed super fund trustee. 
The ATO has put a factsheet together to highlight everything you need to know about accessing your super early, and what steps to take if you’re ever approached by a "promoter".

Environmental, Social, and Governance Practices

Environmental, social, and governance – or ESG – are important issues that many businesses are basing their strategies around. To ensure small to medium enterprises are not left behind in the ever-evolving business climate, they must consider these issues.
As customers become more aware of issues such as climate change and waste, businesses will benefit from implementing a reliable ESG plan. At present, it’s estimated that more than 40% of SMEs don’t yet have processes in place to minimise their carbon footprint and need to operate in a more environmentally conscious manner.
ESG is a risk management control issue – noncompliance and negative media exposure around social or environmental issues can result in a loss of customers, employees, and shareholders.
ESG also opens the door for more opportunities, particularly among socially and environmentally conscious markets, such as millennials and Gen Z.
Measuring and reporting of ESG performance is a crucial first step.

Contractor or Employee?

The difference between a contractor and an employee is not always clear cut. The courts and tax office take a number of factors into account when determining the actual status, such as hours worked, superannuation, method of payment and leave to name a few. Any written agreement stating the nature of the relationship is certainly relevant, but it’s not conclusive, and should not be relied solely upon. Both employers and contractors need to be fully aware of their situation as serious penalties are involved with sham contracting arrangements. Find out more here.

"Holiday home" included in tax concession test

A taxpayer company has been unsuccessful before the Administrative Appeals Tribunal (AAT) in a claim to secure the capital gains tax (CGT) concessions for small businesses.

In this case, the AAT affirmed the Commissioner's decision that the taxpayer did not satisfy the "maximum net asset value" test for the purposes of qualifying for the concessions. The AAT found that the individual who controlled the company could not exclude from the test his interest in a Queensland property, which he claimed was used for "personal use and enjoyment".

TIP: The small business CGT concessions are intended to offer small business taxpayers a range of unique tax concessions. However, despite being targeted towards taxpayers who typically have less complicated affairs, the rules are riddled with complexities that may not appear obvious at first glance.

Each concession has its own particular rules. However, there are two basic conditions for the relief - either the taxpayer is a small business entity (SBE) or is a partner of a partnership that is an SBE, or the taxpayer satisfies the maximum net asset value test. If you have any questions, please contact our office.

Small business benchmarks catch out florist

The AAT has recently dismissed an appeal by a florist against the Tax Commissioner's decision to issue income tax and GST assessments following an ATO audit of her florist business.

The taxpayer had reported that the cost of goods sold in her business represented 83% of her reported business income. The ATO had selected the taxpayer for audit because this figure was outside what it considered to be the industry benchmark range of between 44% and 54%.

In this case, the taxpayer was unable, due to a lack of evidence, to prove to the AAT that the assessments were excessive.

TIP: The Tax Commissioner has warned that businesses operating outside the relevant benchmarks could be subject to ATO review and/or audit, and where the businesses do not have adequate records to substantiate their performance, the ATO will make a default assessment using the appropriate small business benchmark.

Businesses may want to consider reviewing their record-keeping practices and assess whether they are at risk of an audit. Please contact our office for further information.

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Email contacts: byron@letiziapalmer.com.au;
vic@letiziapalmer.com.au; joel@letiziapalmer.com.au; michael@letiziapalmer.com.au; simon@letiziapalmer.com.au; kim@letiziapalmer.com.au

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Mt Lawley   WA   6050
Ph: 08 9227 6444

Disclaimer: This is not advice. Information provided in this bulletin may be in the form of summaries and generalisations - it may omit detail that could be significant in a particular context or to your personal circumstances. You should not act solely on the basis of material contained in this bulletin. Before you start any transactions, you should obtain appropriate professional advice relevant to your particular circumstances. Links to third-party websites are inserted for your convenience, but do not constitute endorsement of material at those sites or any associated product or service. Changes in legislation may occur quickly and we therefore recommend that our formal advice be sought before acting in any of the areas. The information in this bulletin is provided on the basis that all persons accessing the bulletin undertake responsibility for assessing the relevance and accuracy of its content.


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