Category: Accountants

Background

The Director Identification Number (DIN) regime is coming.

The Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2019 (Cth) (the Bill) was passed on 12 June 2020 and subsequently received Royal Assent on 22 June 2020.

The Bill, together with other legislative changes, is part of the Federal Government’s ‘Modernising Business Registers Program’ that is aimed at unifying the Australian Business Register and more than 30 other business registers that are administered by the Australian Securities and Investments Commission.

The introduction of the DIN regime is a central component of the Bill’s objective and is given effect through amending the Corporations Act 2001 (Cth) and the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth).

What to remember

• Directors will be required to have their identity verified and have a unique and permanent identifier issued to them.
  
• Companies will need to put processes in place to ensure that all existing directors apply for a DIN within the prescribed timeframe once the DIN regime is implemented.
  
• Once the DIN regime is implemented, companies will also need to ensure that director appointment processes include the necessary steps for new directors to apply for a DIN. Once the transitional period ends, this process will need to be undertaken prior to a director appointment.

The DIN regime

The DIN regime is part of the Federal Government’s wider objective of:

• tackling illegal phoenix activity;
  
• making company directors more traceable and accountable;
  
• streamlining business registers by providing a single-point of contact; and
  
• furthering the Government’s ‘Deregulation Agenda’ by creating an electronic system than is readily accessible to everyone.

The DIN regime will involve a one-time application that requires directors of private and public companies (including foreign-born or foreign domiciled directors) and alternate directors to have their identity verified and then be allocated a DIN as a unique and permanent identifier. A DIN will continue to apply to the director even if he or she leaves their position.

DINs will be recorded in a new database that will be administered and operated by a registrar from an existing Commonwealth body. The identity of that Commonwealth body is yet to be announced.

The regime will make it easier for the registrar to verify director identities and refuse/cancel a DIN where an individual’s identity is in question. The requirements for identity verification remain to be confirmed, but will be contained in data standards made be the relevant registrar.

Additionally, the regime will also aid regulators and external administrators by establishing a transparent system that will in turn create a more timely and cost-effective process when investigating and commencing proceedings against directors.

When does a DIN need to be obtained?

The implementation date for the DIN regime has yet to be officially announced, with implementation to occur 2 years after the Bill received Royal Assent unless an earlier date is set. It is anticipated that the roll out will occur in the first half of 2021. However, commencement may well be later given the impacts of COVID-19.

Within the first 12 months following implementation, new directors will have 28 days after appointment as a director to apply for a DIN. Following this period, individuals must apply for a DIN before becoming a director. For existing directors, transitional provisions will provide a period during which they will need to obtain a DIN.

Whilst directors will be required to have a DIN, the obligation is to have applied for, rather than obtained, a DIN prior to appointment as a director.

This is to provide flexibility, and a defence, for circumstances where a DIN has not been issued for reasons outside the control of the relevant person (e.g. processing delays).

Consequences for non-compliance

Under the proposed regime, there will be civil and criminal penalties for:

• failing to apply for a DIN within the prescribed timeframes;
  
• failing to apply for a DIN if directed by the registrar;
  
• intentionally applying for more than one DIN
  
• intentionally providing a false DIN to a government body or relevant body corporate; and
  
• being actively involved in the contravention of any the above offences.

Investment property income you get from your property is considered by the Australian Taxation Office to be taxable income. It is taxed according to your marginal tax rate, and it should be declared on your income tax return.

With that said, it is essential to consider what are the critical tax considerations for your investment property in Australia. Here are some of them:

– Deductions

According to the ATO, investment property expenses can be considered as a tax deduction if they are connected to the investment property. Therefore, the management and the maintenance expenses you pay will offset any taxable income.

Some examples of what can be considered a deduction on investment properties are expenses on the advertisement in relation to advertising for new tenants, interest expenses on your investment property loan, landlord insurance, repairs & maintenance, depreciation, agent fees, mortgage insurance etc. Make it a habit to always keep your receipts for these expenses.

– Property Tax

You will also need to pay for separate property taxes such as council and water rates. These taxes are paid to the local government for activities such as public maintenance and rubbish collection. This tax is calculated based on the value of your property and its location.

– Land Tax

Land tax is calculated using the land value of your property and is paid to your state government.

Final Word

Owning an investment property and receiving rental income is a great investment option, but it also requires you to consider the income considerations. Hopefully, the considerations mentioned above will help you get a better idea of what to expect and how to legally minimize your taxes.

Talking about your tax implications can be quite overwhelming and sometimes confusing for many. If you have any questions, Glance Consultants will be happy to assist you.

Please fill out our contact form or call us at 03 9885 9793.

The superannuation fund is an adaptation made by the Government of Australia to motivate its citizens to accumulate funds that will provide them with a stream of income in their retirement years. The state does this by making it compulsory for employers to contribute superannuation on top of their employees’ salaries and wages. They also provide tax benefits for further encouragement. 

If you have a superannuation fund, you need to know that it should have a mandatory audit done by an auditor accredited by the Australian Securities and Investment Commission. The audit will include a Financial Report Audit and a Compliance report audit. 

 

Financial Report Audit

The following are the primary requirement to get a financial Report Audit:

● An audit engagement letter signed by the trustees

● Trustee representation letter which is signed

● Financial accounting reports, such as member statements, income statements, balance sheets, etc. 

● Duly accomplished annual tax return

● Supporting documents

 

Compliance Audit Report

Here are the documents needed for the Compliance audit report

● A signed copy of pension documentation if it is in pension mode

● Permanent files copies

● Actuarial Certificate

● Life insurance certificate (if applicable)

● ASIC annual return if employers are acting fund trustees

Once the auditor receives the files mentioned above, they will proceed with their auditing task. If there are breaches, auditors will try their best to rectify the matter legally. 

 

Final Word

When getting an auditor who will be in charge of auditing your superannuation fund, make sure that ASIC accredits them. You can check their legitimacy by going to the website and confirming their registration. 

If you have more questions that are not covered by this article, kindly fill out our contact form or call us at 03 9885 9793.

We will help you and assist you with your superannuation fund concerns and enquiries. 

Are Cryptocurrencies subject to tax? It depends on what happens.

Recently, the cryptocurrency has been discussed in Australia with the ATO implementing new measures to get cryptocurrency users to pay tax. This subject matter had raised many bags of dust, with people suggesting this deal won’t make it through. But it is clear now that you will be taxed for using your cryptocurrency. This article will discuss how you can handle these taxes.

 

Why are cryptocurrencies subject to tax?

For the Australian Tax Office (ATO), bitcoin and other forms of cryptocurrencies are not money, foreign, or Australian currency. Instead, cryptocurrencies are classified as property and an asset, which qualifies as taxable under capital gains tax. The everyday use of your bitcoin does not carry a tax obligation. However, your cryptocurrency is taxable when:

1. You sell or gift your cryptocurrency
2. Trade or exchange cryptocurrency for fiat currency or another cryptocurrency
3. Convert your cryptocurrency to a fiat currency
4. use your cryptocurrency to obtain goods and services, and so on.

 

Is your cryptocurrency taxable in the event of a hard fork?

In the event of a coin split or a hard fork, as it happened with the release of Bitcoin cash in August 2017, the tax liability imposed is of two kinds, namely:

1. When cryptocurrency is held as an investment: in the event where you hold a coin as an investment, and there’s a hard fork or coin split, the ATO will only charge you capital gains when you chose to dispose of the new coins.
2. Cryptocurrency held in business: when the cryptocurrency is contained in the industry, it is seen as trading stock; capital gains are charged on the coins when it is put out for sale.

 

Is a cryptocurrency trader taxable for his trades?

The ATO is specific on the tax liability of a cryptocurrency trader. The trader is taxable for capital gains as to the profits made from the trade; the trader can also deduct his losses.  

 

Cryptocurrency tax exemptions

The following are tax exemptions that are available to cryptocurrency users in Australia. 

1. When cryptocurrency is used to make a purchase for goods and services for personal use
2. When cryptocurrency is held for more than 12 months; the holder is eligible for a 50% capital gain tax.

“You have to understand accounting and you have to understand the nuances of accounting. It’s the language of business.” – Warren Buffett

A misconception among small business owners is that accounting only involves managing your books and paying your dues. But there are many little things in accounting that you should consider. This is where the problem usually starts. If you’re not careful, you might end up messing up your cash flow, or worse, paying penalties for unpaid taxes. It’s time to look at your accounting practices and make sure you’re not making any of these mistakes.

1. Mixing Personal Spending with Business Spending

Confusing your personal spending as a business spending is a common mistake among entrepreneurs. For instance, when you’re doing your monthly supplies run, it’s easy to pick up some items for personal use and unintentionally tag all them as a business cost. The key is to keep all your receipts. This way, you have proof of your expenses should your business requires to be audited. Worried about losing receipts? Scan or take photos of them, so you have a digital copy. Consider filing them by month or year and labelling them appropriately by category or department. When you categorise your business expenses, you won’t have problems finding records or receipts.

2. Taking Sales Tax for Granted

It’s quite easy to forget about your sales tax —especially if you have no idea how to deal with them. To make sure you’re complying with all your tax requirements, consider consulting or hiring experts to look into your finances.

3. Working with an Inexperienced CPA or Bookkeeper

Your CPA and bookkeeper are your sidekicks to managing the financial side of your business. It’s essential to work with professionals who have enough experience in their field. If you’re new to accounting and will have to depend on your CPA or bookkeeper’s knowledge and skills, take the time to choose candidates and professionals to hire.

4. Thinking Every Deal Closed Always Equates to Cash Flow

When you’re updating your books and forecasting cash flows, be mindful of how you record your deals. When you don’t consider the money your company needs to put out to complete a project, your books could give an inaccurate picture of your business’s financial status. What happens when instead of earning from a deal, you end up losing money? Do you need assistance with accounting? Glance Consulting offers bookkeeping, accounting, and cash flow forecasting services. Let us help you get the peace of mind that you have your books in order and your finances straightened out.

Please fill out our contact form or give us a call at 03 9885 9793 to learn about our accounting services.