Over recent years we have noticed the ATO applying more and more resources in the area of Super Guarantee. Super Guarantee is the compulsory 9.5% super that employers must pay to an employee’s super fund.

We are seeing many more audits based on complaints from employees who’s super has not being paid, along with the usual random checks that the ATO performs. The ATO’s data matching capabilities have improved over time which allows the ATO to more easily pick up employers underpaying super.

More recently we have seen the introduction of compulsory electronic reporting of super for employees which further assists the ATO’s data collection efforts.

There are currently very harsh penalties for employers not paying super for employees, or even just paying it late. The Super Guarantee Charge is a penalty equal to the amount of super not paid. In the case of an ATO audit, the ATO would require this to be paid in addition to the amount of unpaid super – that’s a 100% penalty! Further, if the super is paid late, the ATO can disallow a tax deduction for the super payments.

In an attempt to encourage employers who are aware of unpaid super payments to catch up, the government has introduced legislation into parliament to offer an amnesty period to get all unpaid super up to date.

The super guarantee amnesty applies to any super calculated from 01 July 1992 to 31 March 2018 and must be used by 24th of May 2019. If the amounts of unpaid super are declared to the ATO in the correct form and paid by the due date the Super Guarantee Charge penalty will not apply and the payment will be tax deductible. There will be some interest on the late payments though.

Bizarrely, at the time of writing this blog, the legislation to enact the super guarantee amnesty has still not yet passed parliament, so we can’t be sure whether amounts declared and paid under the amnesty will receive the penalty free and deductible treatment. And there’s not many sitting days left in parliament for the legislation to pass before the next election.

The ATO website states: If you’ve missed a payment or haven’t paid an employee’s super on time, you should lodge an SG charge statement and pay the amount owing to us. We will apply the current law to this statement however, if legislation is enacted, we will apply the benefits of the proposed amnesty retrospectively.

Further they state: Employers who do not disclose their SG shortfalls during the amnesty period may face harsher penalties if they are audited in the future.

So businesses with outstanding super are in a quandary – should they take advantage of an amnesty that might not even apply, before the amnesty date passes?

If you would like to speak to one of our accountants about unpaid super, call us on (08) 93355211 to make an appointment.

Other related blogs:

Making sense of SuperStream for Employers
When do I need to pay super for contractors?


Author: Heather Cox
Email: heather@faj.com.au


Change of plans? A move overseas may be around the corner! But what does that mean for your Self-Managed Super Fund (SMSF)?

You must ensure your SMSF retains its status of an Australian Super Fund to avoid substantial penalties. To do this, there are three residency conditions to meet:

  1. The fund was established in Australia or at least one of its assets is located in Australia.
  2. The central management and control of the fund is ordinarily in Australia.
    • This requires the decision making, high level duties and activities to be performed in Australia, for example making investments and reviewing performance.
    • Generally, your fund will meet this requirement if the absence is intended to be temporary (defined as not more than two year) even if the central management of the fund is temporarily outside of Australia.
  3. The fund must either have no active members (i.e. no one making contributions or rollovers into the fund), or alternatively at least 50% of the assets must be owned by active members that reside in Australia.

Failure to meet these conditions may result in being classified as a non-complying fund, which can consequently result in the whole of the SMSF assets being taxed at 45%.

Pro tips:

  • Plan ahead if you are moving overseas to avoid significant penalties. Options include move your SMSF investments to an industry super fund, appointing further trustees such as adult children or advisors.
  • Consider suspending contributions to your fund while you are overseas. Contributions can be made into an alternate fund during this period an then rolled into the SMSF upon your return.

Follow this link for a checklist.


Other related blogs:

TBAR – what it means for an SMSF trustee
You need to act soon with collectables in your super fund
Access super before retirement

Author: Lachlan Hunn
Email: lachlan@faj.com.au






As an accountant who works predominantly with small to medium businesses, I am often asked to recommend an accounting software program to my clients.

Choosing the right accounting software to best suit your business is surprisingly difficult. Advances in technology over recent years have created both huge advancements in efficiency, but also a complexity that can be overwhelming if you are not technologically minded or financially adept.

The first step is to identify the important factors that will affect your choice, because the recommendation will depend on the characteristics of your business. Please note that my knowledge of the available programs is limited to my experience, and despite working with many programs for over 10 years now, I still do not claim to know them all inside and out. But here’s my tips:

  1. Do you have a good internet connection? If not you should choose accounting software that can be used on your desktop. Cloud software like MYOB Essentials, Xero, SAASU, Wave Financial etc. will not work well if your internet drops out, or if your connection is slow. If you can’t rely on your internet connection, my recommendation would be MYOB AccountRight. This product can be used on the local computer with no internet, and can also be uploaded to the cloud when needed so you can work with your accountant or in other areas where internet is available.
  2. Are you technologically and financially savy? I have found that business owners who already have experience with using accounting software and who have the knowledge to use a program to its greatest extent tend to prefer MYOB as there are more reports available and in a superior format (in the MYOB AccountRight products, but not in MYOB Essentials). On the other hand, if you are just starting out and learning how to use a product, most people seem to find Xero the most user friendly. I also like SAASU which is a bit cheaper and provides a much larger number of transactions on the basic package.
  3. Is cost important? Prices vary between different products and within product ranges. The cost of a subscription is dependent on how many transactions, number of employees, cloud or desktop, other features required like inventory, stock on hand, multicurrency etc. If you have a very simple business and just want the cheapest option have a look at Wave Financial. This is a cloud based software from Canada, but available in Australia. They do not charge a subscription fee, but rather charge a commission on sales that are paid for through the software. If you prefer a flat subscription fee the best value software I have seen is Intuit QuickBooks online. For $15 per month you get unlimited transactions and invoicing and payroll for up to 10 employees. SAASU is also good, but you only get payroll for 1 person on the $15 package and limited to $1,000 transactions.

If you are just starting a new business or looking to improve your record keeping you can book an appointment at FAJ for advice on accounting software by calling us on (08) 9335 5211. Our bookkeeping team has experience with all of the software products mentioned above and are also able to manage changeovers from old products, new business set-ups and training for business owners.

Other related blogs:

What are bank feeds?


Author: Heather Cox
Email: heather@faj.com.au



Holding costs are expenses associated with the continuing ownership of an asset like real estate or share investments. These costs help to reduce the amount of any taxable capital gain when the asset is eventually sold.

Examples of expenses that may be considered as holding costs include:

  • Council rates
  • Interest on loans used to finance the investment
  • Insurance
  • Land tax
  • Repairs & Maintenance

But holding costs do not include costs previously claimed as a tax deduction. So if you have a rental property and normally claim council rates as a tax deduction against rental income, the rates cannot form part of the cost base. However if you incur council rates on vacant land, you are not entitled to a tax deduction and could therefore record these as holding costs.

Importantly, to be eligible to add holding costs to the cost base of a CGT asset, the asset must have been acquired after the 21st of August 1991.

The concept of holding costs and their significant effects can be better understood through an example.

Mr and Mrs Smith purchased a holiday home in Margaret River on 1 July 2012 for $500,000. The property is considered a CGT asset as their main residence exemption is being utilised on a separate property in Perth. The holiday home was sold on 30 June 2017 for $800,000 which would ordinarily result in a $300,000 capital gain.

Mr and Mrs Smith incurred the following holding costs over the 5 years of ownership.

  • Insurance $10,000
  • Council Rates $15,000
  • Interest $75,000

As the residence was a holiday home (Purchased after 21 August 1991) and a deduction was not allowed during the time of ownership, these costs are eligible to be included in the cost base of the property. Therefore, the cost base will increase to $600,000 and the capital gain will reduce to $200,000.

Pro tips:

  • holding costs cannot be used to increase a capital loss
  • ensure that records of these costs are kept in the form of receipts, bank statements etc.

Other related blogs:

Capital Gains Tax and Building a House
Capital Gains Tax – Main Residence Series: Rent out your House
CGT Main Residence Exemption and Moving Overseas
Subdividing you main residence and selling the ‘backyard’


Author: Georgia Burgess
Email: georgia@faj.com.au





It’s a question we’re often asked – what should be on my tax invoice?

I’m sure you know that an invoice is a record of purchase and allows your customers to pay for goods or services you’ve provided them. Invoices give details of the purchase and price that’s agreed to. This allows you to maintain the correct records and meet your tax obligations. If you are not required to be registered for GST then your invoices are known as regular invoices. If you are registered for GST then your invoices must include the words “tax invoice.”

So what should be on your tax invoice?

Your tax invoice must include enough information to clearly determine the following seven details.

  1. that the document is intended to be a tax invoice
  2. the seller’s identity such as your business name or trading name
  3. the seller’s Australian Business Number (ABN)
  4. the date the invoice was issued
  5. a brief description of the items sold, including the quantity (if applicable) and the price
  6. the GST amount (if any) payable – this can be shown separately or, if the GST amount is exactly one-eleventh of the total price, as a statement such as ‘Total price includes GST’
  7. the extent to which each sale on the invoice is a taxable sale (that is, the extent to which each sale includes GST)

In addition, tax invoices for sales of $1,000 or more need to show the buyer’s identity or ABN.

Author: Kay Giles
Email: kay@faj.com.au

It is a commonly held belief that if an employer provides a ‘Ute’ or similar commercial vehicle to an employee, that it is 100% tax deductible and will not attract Fringe Benefits Tax (FBT).

However most people are not aware that in this situation the ATO has always required that the employee’s private usage must be ‘minor and infrequent’ and the vehicle must be an ‘eligible vehicle’ for that exemption to apply.

In an attempt to clarify the rules around FBT exempt motor vehicles, the ATO has released new guidelines that provide ‘safe harbour’ to those employers that work within the ATO’s guidelines.

In a nutshell:

Eligible vehicles include either:

  1. A road vehicle designed to carry a load of at least 1 tonne (other than a vehicle designed for the principle purpose of carrying passengers) or more than eight passengers; or
  2. The vehicle has a designated load capacity of less than 1 tonne but is not designed for the principle purposes of carrying passengers

To meet the ATO’s safe harbour relief the conditions below must be met:

  1. The Employer provides an ‘eligible’ vehicle to a current employee;
  2. The vehicle is provided to the employee for business use to perform their work duties;
  3. The employer has a policy in place that limits private use of the vehicle and obtains assurance from the employee that their use is limited to that
    described below;
  4. The GST inclusive value of the motor vehicle is less than the luxury car tax threshold when acquired;
  5. The vehicle is not provided as part of a salary packaging arrangement and the employee cannot elect to receive additional remuneration in lieu of the
    use of the vehicle;
  6. Employees must provide written assurance each year that private use of the motor vehicle provided is limited to travel:
    a. Between their home and their place of work and any diversion adds no more than two kilometers to the ordinary length of that trip;
    b. No more than 1,000 kilometers in total for each FBT year for multiple journeys taken for a wholly private purpose; and
    c. No single, return journey for a wholly private purpose exceeds 200 kilometers.

If you are an employer and would like some assistance to reduce you potential FBT exposure in this area, please us on (08) 93355211 to make an appointment.

Other related blogs:

Reducing FBT with the otherwise deductible rule

Author: Heather Cox

The First Home Super Saver Scheme (known as FHSS Scheme) that was initially introduced by the Australian Government in the Federal Budget 2017-18 has passed through parliament and is now law. Its purpose is to make it easier for home buyers to save for a deposit on their first home. This is achieved by saving for a home deposit inside a super fund which has low tax rate. It’s also possible that a super fund may have a higher rate of return over a standard savings account.

So here’s how it works. From 1 July 2017, first home buyers can make voluntary contributions (both before and after tax) of up to $15,000 per year up to a total of $30,000 across all years, to their superannuation account in order to purchase a first home. These contributions along with the earnings can then be withdrawn for a home deposit in the future.

You can use this scheme if you are a first home buyer and both of the following apply:
• You either live in the premises you are buying, or intend to as soon as practicable.
• You intend to live in the property for at least six months of the first 12 months you own it, after it is practical to move in.

The Australian Tax Office provide further information on their website.

Other related blogs:

First home buyers super saving scheme

For advice and assistance with your home loan:

FAJ Home Loans

Author: Nick Vincent
Email: nick@faj.com.au

The 2017/18 federal budget introduced a downsizing superannuation contribution scheme starting from 1 July 2018. It may be available to you if you’re over 65, your downsizing your home and you choose to contribute some of the proceeds from the sale into your super fund. The contribution is capped at $300,000 per person (so $600,000 for a couple).

The Government’s aim is to encourage the older population to downsize their larger than needed homes to free them up for the younger generation looking to buy their family home.

The eligibility requirements are:

– You must be 65 or over (there is no maximum age limit)
– The sale contract of the property must be dated on or after 1 July 2018
– You (or your spouse) must have owned the property for 10 years or more prior to sale
– The home must have been your main residence for at least 10 years
– The downsizer contribution must be contributed to the super fund within 90 days of receiving the sale proceeds (usually 90 days from settlement)

The good thing about the downsizing contribution is that it does not count towards any of your yearly contribution limits and can be made by anyone over the age of 65. Moreover, the work test is ignored for this contribution, so it is a great way for someone who is over 65 and fully retired to put more money into their super fund where they otherwise could not.

The downside is that it could affect your eligibility to receive the age pension. Age pension eligibility takes into account all financial assets including money in super, but the family home is exempt from age pension eligibility calculations. So by shifting value from a non-assessable home to an assessable super investment you may exceed the age pension asset or income thresholds and reduce your pension eligibility.

Before considering using the downsizing contribution it is highly recommended that you speak to your accountant or financial planner. This way you can confirm your eligibility for the contribution and whether it will affect your age pension.

Other related blogs:

Contributing to super – options for employees
What are the benefits of super salary sacrifice?
Allowing catch up concessional contributions

Author: Rhys Frewin
Email: rhys@faj.com.au

The 2018 federal budget introduced changes to depreciation deductions in relation to residential rental properties. These changes aim to limit the ability to claim the depreciation deduction to the investor who initially purchased the asset.

Previously property investors could claim expenses for depreciation of certain items in a rental property, regardless of whether they were purchased new or second-hand.

From 1 July 2017 you cannot claim depreciation of second-hand equipment in residential rental properties if it was acquired on or after 7:30 pm on 9 May 2017. This means that if you entered into a contract to purchase a property prior to 9 May 2017, as per the previous rules you can continue to claim depreciation deductions on any pre-existing assets in that property. However if purchased after the date, you must have purchased the item new and not second-hand to be able to claim depreciation on the asset.

Additionally, you cannot claim depreciation on items installed on or after 1 July 2017 if they has ever been used for a private purpose. Therefore properties which have been lived in and turned into an investment property by their owners before 1 July 2017 are not affected, and owners can continue to claim plant and equipment depreciation.

Plant and equipment items are assets that can normally be easily removed or relocated, such as floor coverings, appliances and air-conditioning.

Any investor who purchases a brand new property can continue to claim depreciation for plant and equipment items as normal. Similarly depreciation can still be claimed on eligible new assets regardless of when the property was purchased.

The legislation states that these changes will not affect depreciation of plant and equipment for non-residential/commercial properties. The changes will also not apply to assets held in residential properties owned by an entity carrying on a business of property investing, or an excluded entity being a corporate tax entity, superannuation plans other than a Self-Managed Super Fund, public unit trust, or a managed investment trust.

The changes will not affect the ability to claim capital works deductions, which are the deductions on fixed items and structural improvements such as new kitchens and bathrooms.

However when purchasing second-hand assets, the cost of the plant will form part of the cost base of the property disposed and by extension will reduce the capital gain tax liability upon sale.

Other related blogs:


Author: Danielle Pomersbach
Email: danielle@faj.com.au



What is the CGT main residence exemption?

Broadly, the CGT main residence exemption allows homeowners to pay zero capital gains tax (CGT) where profits are made upon selling their primary place of residence (their home).

The CGT main residence exemption rule also provides a partial exemption from CGT if the dwelling was the individual’s main residence for only a part of the ownership period i.e. if the property was used to produce assessable income like rent.

In scenarios where individuals do not treat any other home as their main residence they may be able to treat their previous home as their main residence for up to 6 years beyond when they moved out if their main residence is rented out or an unlimited amount of time if the home is left vacant.

What’s changing for foreign residents?

In the 17-18 Federal Budget the government announced changes to prevent Australian home owners who are deemed to be foreign residents at the time of sale from accessing the CGT main residence exemption. The change is not yet law at the date of this blog. If the law is passed the exemption can still be accessed if you sell your home on or before 30 June 2019 so long as the property was not purchased after the 9th of May 2017.

If you acquired the property after that date you will be subject to the new rules regardless of whether or not you sell before 30 June 2019 (assuming the law is passed).

What defines a foreign resident?

For the purpose of the legislation ‘foreign resident’ means someone who is not a tax resident of Australia. Foreign residents or those living outside of Australia including Australian Citizens and Permanent Residents should seek professional advice as to whether or not these changes affect them.

Pro tip:

If the law passes, and you are already or it is likely that you will become a foreign resident in the future it may be worthwhile considering selling your primary residence before 30 June 2019 rather than after, to benefit from the main residence exemption.

Further reading

Other related blogs:

Author: Georgia Burgess
Email: georgia@faj.com.au