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Everything you need to know about EOFY

There’s always plenty to think about at this time of year. We’ve put together some tax time resources to summarise the key changes and to help you see how they relate to your business.

Download the Whitepaper (PDF 212KB) that contains a summary of the key tax changes announced in the 2012 budget.

A detailed summary of the major tax changes

Personal tax changes related to clean energy legislation (Carbon Tax)

In July 2011, the Federal Government announced changes to the personal income tax system as part of the plan for a clean energy future. From 1st July 2012, the Government will deliver tax cuts to low and middle-income individuals by increasing the tax-free threshold and adjusting the first two marginal tax rates.

Key facts

• Tax-free threshold increases from $6000 to $18,200 and the maximum value of the Low-income tax offset (LITO) reduces from $1,500 to $445.
• First marginal tax rate increases from 15% to 19% on taxable income that exceeds $18,200 but not $37,000.
• Second marginal tax rate increases from 30% to 32.5% on taxable income that exceeds $37,000 but not $80,000.

What does this mean for small business?

• Frees up one million low-income earners from needing to lodge a tax return from 2012/13.
• Individuals can now earn up to $20,542 from 2012-13 without paying any net income tax.
• Around 60% of taxpayers receive a minimum tax cut of $300 and no one will be required to pay more income tax.

Removal of Temporary Flood and Cyclone Reconstruction Levy (Flood Levy)

In July 2011, the Federal Government introduced a Temporary Flood and Cyclone Reconstruction Levy (Flood Levy) to assist affected communities to recover from natural disasters by providing additional funding to rebuild roads, bridges and schools.

Key facts

• The Flood Levy was applied to payments made from 1st July 2011 to 30 June 2012.
• From 1st July the Levy will be abolished.

What does this mean for small business?

• Your employees’ take home pay amount will change.

Taxable payments reporting - building and construction industry

From 1st July 2012, businesses in the building and construction industry need to report the total payments they make to each contractor for building and construction services each year to the ATO via a taxable payments annual report.

Key facts

What needs to be reported?

Businesses would be required to report actual payments made and include the following details:

• The contractor’s name
• The contractor’s ABN
• The contractor’s address (if known)
• The total amount paid or credited to the contractor over the income year
• Whether any GST has been charged and
• Any other information the commissioner may require.

Businesses are only required to provide an aggregate report for each contractor they make payments to during the income year.

Who needs to report?

From 1 July 2012 you need to report if all of the following apply:

• You are a business that is primarily in the building and construction industry
• You make payments to contractors for building and construction services and
• Both the supplier and purchaser have an Australian business number (ABN).

You are considered to be part of the building and construction industry if:

• 50% or more of your business activities in the current financial year relates to building and construction services.
• 50% or more of your business income in the current financial year is derived from providing building and construction services.
• 50% or more of your business income in the financial year immediately before the current financial year is derived from providing building and construction services.

What does this mean for small business?

The aim of this new reporting system is to improve compliance by certain contractors of their tax obligations. The information reported about payments made to contractors will be used for data matching to detect contractors who have not:

• Lodged tax returns
• Included all their income in returns that have been lodged.

Changes to leave loading

There will no longer be a separate tax scale for employees entitled to leave loading. It means that these employees will no longer have higher withholding from every pay during their time at work.

Key facts

• Employers making leave loading payments as a lump sum will need to use the marginal tax rate for back payments, commissions, bonuses and similar payments.

What does this mean for small business?

• Employees will now be taxed more accurately when the leave loading is paid.

Changes to Pay As You Go (PAYG) Withholding Payment Summaries

The 2011/12 Financial Year is the last year that employers can make transitional employment termination payments and Community Development Employment Projects (CDEP) payments.

Key facts

• You can no longer include these payments on your payment summaries for the 2012/13 financial year.

What does this mean for small business?

• Your employees’ take home pay amount will change.

More help from MYOB

MYOB’s top 10 tips for a happier new financial year

WHITEPAPER: ‘Federal Budget & compliance impacts on businesses in 2012’

Our free whitepaper contains a summary of the key tax changes announced in the 2012 budget. It also focuses on other tax and compliance measures announced over the past 12 months. All of these changes impact Australian businesses and apply from 1 July 2012.

MYOB Support Notes

Need help with your MYOB product or service? MYOB Support Notes are an excellent resource for finding the answers. The following links provide detailed insights into three of the big tax changes facing Australian businesses in 2012/13.

• Superannuation changes from 1 July 2012
• Carbon Tax – 1 July 2012
• Reporting of contractor payments in the building and construction industry from 1 July 2012

EOFY online seminars

Want to get the lowdown on how your software helps you at EOFY? Learn from the people who built the software in one of our online seminars.

EOFY Classroom Training

Learn how to reconcile your company file and prepare for regular periodic and end-of-year reporting, including completing your BAS using BASlink, correcting data imbalances, reconciling GST and super, preparing data for your accountant and more.