ATO Focus on Cafes & Restaurants – Box Hill

The ATO will be making visits over the next few months to cafés and restaurants in Box Hill, Melbourne. The aim is to meet with owners and ensure they understand their tax obligations. It has been noted by the ATO, ““Where taxpayers are unwilling to work with us or continue to cause us concern, we will undertake further investigation.”

Capital Start-Up Costs Immediate Deduction

From July 1st 2015, small businesses and entities that intend to carry on business may immediately claim certain start up costs.

These costs include:

  • advice from a professional in regards to structure and operation of the proposed business
  • fees relating to the set up of the business and operating structure (for example, ASIC fee for registering a company)

These expenses can now be fully deducted in the year in which the expenditure was incurred. Before July 1st, these expenses had to be deducted over a five year period.

Payment of Death Benefits from Superannuation Funds

The Superannuation Complaint’s Tribunal has recently released some guidance in relation to the payment of death benefits from superannuation funds due to an increased number of confusion and complaints.

“There are some common misconceptions about superannuation death benefits that can result in unexpected outcomes for the beneficiaries of a death benefit, and may result in a complaint being made to the Tribunal.

The most common misconception, arguably, relates to the purpose of superannuation.

Broadly speaking, the purpose of superannuation is to provide income in retirement to members and their dependants; it does not form part of a person’s estate.

Accordingly, a superannuation death benefit should be paid to dependants and those who had a legal or moral right to look to the deceased member for financial support had they not died.

The ability of a superannuation fund to pay a death benefit directly to a dependant rather than to the estate has a number of advantages.

Firstly, it ensures that the benefit is paid directly for the benefit of the dependants and is not available to creditors who would be paid first from the assets of the estate.

Secondly, it can usually reach the beneficiaries quicker than if a grant of probate or letters of administration has to be obtained and the estate called in and distributed.

Thirdly, as a general rule, superannuation death benefits are protected from bankruptcy.

Therefore, even if the deceased member was bankrupt, or if the estate is insolvent, funds can be paid direct to the dependants to replace the income stream that may be lost as a consequence of the death.

However, if you would like to ensure that your superannuation is distributed a certain way then it is important to find out if your superannuation fund has the option for a binding nomination and if so, ensure you meet the requirements, including renewing your binding nomination every three years.”


Small Business Tax Cuts

From the 1st July 2015, the ATO implemented a new two-tier tax system for companies. The tax rates are as follows:

  • 28.5% if the company’s aggregated turnover is less than $2 million
  • 30% if the company’s aggregated turnover is more than $2 million

As a small company, no action is required at this point. The new rate will automatically be applied to PAYG instalments.