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In this Winter 2011 Issue;
Financial Statements - Directors, do you know what's in them ?
ATO reminds employers of superannuation obligations
Car fringe benefit taxation changes
No more income for the kids - Low Income Tax offset ends
ATO Fraud detection in focus on cash and directors
Client Spot : Fireboar
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Directors' Responsibilities On Financial Statements
The Federal Court has made a very important judgement on directors' duties in the CENTRO Properties case. The court has decided that it is the directors' responsibility to ensure that there has been correct treatment of items within the Balance Sheet.
The case arose over a challenge as to the treatment of some liabilities which the court has decided should have been treated as current liabilities and not long term liabilities. The court found "that the directors failed to take all reasonable steps required of them, and acted in the performance of their duties as directors without exercising the degree of care and diligence the law requires of them".
Even though the court case involved a major public company, decisions made in cases such as this relate to all companies and therefore this judgement needs to be reviewed by all company directors, as it emphasises a very important aspect of company directors' duties in that the directors are signing off on the financial accounts and therefore need to have satisfied themselves that the financial accounts have been correctly prepared.
It you have any queries on the composition of the items within your company's Balance Sheet or Profit & Loss Account, please do not hesitate to discuss these questions with us. |
ATO reminds employers of superannuation obligations
The ATO has recently revealed some common superannuation mistakes made by employers. They include paying insufficient superannuation contributions for employees, missing the quarterly payment cut-off dates (ie 28 October, 28 January, 28 April, 28 July), and not understanding that in some circumstances superannuation should be paid for contractors, even if the contractor provides an Australian Business Number.
TIP: The ATO has been selecting various industries on which to focus its compliance activities. This year, in its compliance program, the ATO intends to target the following industries in relation to superannuation guarantee obligations: cafes and restaurants; real estate services; carpentry services; computer system design and related services; and accommodation. |
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Car fringe benefit taxation changes
Legislative changes to simplify the method for determining the taxable value of car fringe benefits has been formally implemented. Broadly, the changes introduce a flat 20% rate to replace the previous method which, according to the Government, encouraged people to drive their vehicles further than they needed to in order to obtain a larger tax concession.
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Low income taxpayer offset ends for most minors
From 1 July 2011, the ability of minors (children under 18 years of age) to access the low income tax offset to reduce tax payable on their unearned income (dividends, interest and rent) has been removed. The Government said the tax law amendments are designed to discourage income splitting between adults and children. This change essentially removes the ability for family trusts to distribute most of the tax free amount ($3,333 in 2011) to children under 18 yrs.
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Unpaid directors’ fee schemes and private companies on ATO radar
The ATO has warned taxpayers of an arrangement where a private company claims a deduction for unpaid directors’ fees. Under the arrangement, a private company makes a resolution before 30 June in relation to amounts payable to directors that reflect that the company is irrevocably committed to the payment.
The company claims a deduction for the payment, but the actual payment is never made. The Commissioner of Taxation said he was concerned that some companies may be using the arrangement to claim amounts that were never intended to be fully paid out.
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Fraud detection in focus on cash and directors
The Commissioner of Taxation has released the ATO's compliance program for the 2011–12 financial year. Under the program, the ATO plans to enhance its tax fraud detection and management strategies, concentrate on sham contracting arrangements and continue its extensive data matching and risk profiling activities. The ATO said it also aims to reduce phoenix arrangements through audits of directors, focus on those who fail to report some or all cash transactions and check employers’ super guarantee payments.
TIP: The ATO’s compliance program is wide-reaching covering individuals to large businesses. Please contact our office for further information.
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Client Spot
www.fireboar.com
The maintenance of Fire Prevention equipment ensures that a system performs as originally designed in case of a fire. Regular inspections will not only comply with the Australian Standards but also ensure that you can rest assured in the knowledge that your fire equipment will function and perform with reliability and integrity when you need it. read more
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