Lidgerwoods Accountants - December 2011 Newsletter

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December 2011 Newsletter

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.


Our new firm celebrates our 1st Birthday!!

We are delighted to be sending this our very first E-Newsletter on the anniversary of our very first year of operation - and what a fantastic year it's been. Thanks to you (our clients) we have survived that first critical year of any business and, we are not looking back. It really is a pleasure to come to 'work' each day and to enjoy servicing all of our clients. We are here to help you in all things concerning tax and business compliance - a role that we have been doing for our clients collectively for over thirty years.

This E-newsletter will be the first of many and is a direct result of asking our clients what they want - the repetitive answer was that our clients want proactive information from their accountant.

In each edition you will see links to new articles that will affect the broad taxation issues of our clients, and our aim is that you will at least personally get something useful out of each edition.

We also announce the launch of our brand new Website at www.lidgerwoods.com.au. We hope you visit our site that contains the basic information about our new firm and the services we offer.

As a result of our extraordinary growth, you may also see a third edition to our small office being Kate Marcuzzi who will be undertaking part time administrative work at our office from December 2011.

Finally, your feedback is always most welcome - so if you have anything you wish to say or want to voice your opinions, just drop us a line.

MARC LIDGERWOOD & SOPHIE NEWNAN - 'The Team' at Lidgerwoods Accountants


The Day After - Your Work Christmas Party

Christmas is a great time to relax and enjoy the silly season. It is also a popular time to kick back and enjoy your business successes (and failures) with employees, clients and family by undertaking some sort of social event.

You have your fun but then regret both your headache and the size of the bill the next day, and guess what – you now have potential non-deductible expenditure or fringe benefits headaches also.

Quite simply, fringe benefits tax is payable where the benefit is provided to an employee in respect of employment, but you should also be aware that it upholds it’s very own entire Act of Parliament! Therefore you need to be aware that fringe benefits tax is very complex and all factors of each event need to be taken into consideration such as:

  1. Was the event at your premises or not?
  2. Did you provide food and/or drinks and did you package them together?
  3. Did you provide gifts or some sort of entertainment also?

Every scenario is unique and has differing consequences. If you have any questions in relation to your annual party or gift giving, (and please no taunting us with your exciting adventures or events) please contact Lidgerwoods Accountants.


Audit Shield Serviceauditshield.jpg

All clients would have recently received our offer to be covered for professional services in the event that you are reviewed or audited by the ATO or other government department. This service was requested by a number of our clients over many years, and I’m happy to say that a resounding number of our clients have decided to take up this insurance offering beginning 1st December 2011.

We agree that this cover is not warranted by many of our clients, and again confirm that it is not compulsory to do so, but if you do not want to take up the offer we do ask that you return the signed declination page to our office in the return envelope.

It is not too late to accept the offer though. All you need to do is pay the invoice we sent out recently, or request another copy of this invoice. If you’d like to discuss the cover in more detail, please contact our office


Superannuation: Common mistakes made by employers

The ATO has reminded employers of their superannuation obligations and has set out common mistakes they are seeing, including:

  • paying insufficient super contributions for eligible employees;
  • missing the quarterly cut-off dates (28 October, 28 January, 28 April, 28 July);
  • not understanding that in some circumstances super should be paid for contractors, even if the contractor quotes an ABN;
  • not keeping accurate records;
  • not lodging a Superannuation Guarantee Charge statement if they have not paid their employees' super to the fund by the due date or don't pay the correct amount; and
  • not passing on an employee's tax file number to their super fund. Employers must provide their employee's tax file number to their super fund within 14 days of receiving it. If they don't, the employee's super contributions will be subject to extra tax and may not be accepted by the super fund (and the employer may also be penalised).

Superannuation non-compliance is becoming more and more frequent amongst some of our clients – especially when cashflow is tight. Given the increased activity we see by the ATO in this area Lidgerwoods Accountants recommend you contact our office if you consider your superannuation compliance is not up to date.


Record-keeping for businesses

With the introduction of benchmarking (with over 100 industries now benchmarked at the ATO), record-keeping has become the name of the game when a taxpayer is audited so they can prove their figures are correct. Not surprisingly, the Tax Office says that businesses reporting outside the benchmarks may attract their attention as it may be an indication that the business is not recording and paying tax on all transactions, especially cash.
The following is an excerpt from the ATO's stance on record-keeping and we thought it may be a useful reference to our clients:
The ATO would expect a retail business to:

  • record each individual sales transaction through their cash register or point-of-sales system;
  • conduct a daily sales reconciliation between the 'z' total (or end-of-day report if they use an electronic system) and cash in the register, taking into account cash taken from the register for business and personal expenses;
  • transfer the daily sales total into a cash receipts book regularly;
  • perform bank reconciliations between bank statements and the cash receipts book, at least monthly;
  • retain for a period of five years:
    • the 'z' totals or point-of-sales system end-of-day reports;
    • daily reconciliations;
    • bank records and cash receipts book; and
    • till rolls or end-of-day reports that record details of each individual transaction (if 'z' totals have been reconciled with actual cash sales and banking, detailed till rolls may be discarded after one month); and
    • maintain a filing system to keep track of paid and unpaid accounts.

If you have any questions in relation to your record keeping or income substantiation please contact Lidgerwoods Accountants.



Are all allowances what they say?

A recent case that came before the Administrative Appeals Tribunal involves a claim that was made against an allowance that was described on a truck driver's payment summary as a LAFHA or living-away-from-home allowance.

The taxpayer's return treated the amount received as a 'reasonable travel allowance' which, if it were, any deductions would not require substantiation.
It turns out it was neither a LAFHA nor a travel allowance but was merely a loading which had been negotiated between the employee and the union.
As such, any claim for travel expenses required full substantiation. The taxpayer had no receipts or other evidence to prove his claim and his appeal was dismissed.

This case demonstrates how important it is for employers to correctly describe allowances and benefits on payment summaries and for employees to understand exactly what they mean. If you have any questions in relation to the allowances you are paying or receiving please contact Lidgerwoods Accountants.


Lidgerwoods Accountants – Christmas Closing Period

We wish to advise that our office will be closed on Friday 23rd December 2011 and reopen on Thursday 5th January 2012. If any urgent issues arise over this period, please send us an email and we will reply when possible.

We thank you for your continued business and support. We wish you and your families a safe & Merry Christmas.

MARC & SOPHIE



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