Home' News Bulletin : ADA News Bulletin June 2015 Contents 33
YEAR END TAX
for dental practices
Financial year end is fast approaching and there could be a
number of taxation matters to address or seek advice on before
We have outlined a summary of important areas to consider.
These are areas of focus for the ATO and items to review for the
important in 2014/15
For those that have a company in their practice structure –
reduction to company tax rate from 1 July 2015.
In this year’s Federal Budget announcements, the Government
has committed to reduce the company tax rate from 30% to
28.5% for income years beginning on or after 1 July 2015.
Unincorporated practices will receive a 5% discount on tax payable
As a result of the reduction to the company tax rate from 1 July
2015, small practice companies should consider the following:
• The timing of income and deductions being recognised for tax
purposes in the 2014-15 year versus the 2015-16 year.
• The impact on franking credit account balances and whether to
pay franked dividends in the 2014-15 year versus the 2015-16 year.
• The adjustment to Pay As You Go (PAYG) instalment rates for
quarters commencing from 1 July 2015.
• The $6,500 write-off threshold for depreciating assets, costs
incurred in relation to depreciating assets and low pool values
under the small business entity capital allowance rules was
reduced to $1,000 effective from 1 January 2014.
• The special rules for motor vehicles costing more than $6,500
whereby the first $5,000 plus 15% of any excess cost was
immediately deducted also ceased to apply from 1 January 2014
and motor vehicles are now subject to the same rules as other
The gradual increase in the Superannuation Guarantee rate to
12% has been re-phased, with the 2014-15 year rate of 9.5% now
frozen until 1 July 2021, from which date it will increase by 0.5%
If your entity is a trust, then it is crucial that your trustee resolution
to appoint or distribute income to beneficiaries is effective as at
30 June 2015. This means that tax planning for trusts should be
done as soon as possible to ensure the resolution can be made
with tax effective considerations in mind and also finalised/
documented prior to 30 June.
areas of ato foCus iN 2015
The ATO has developed small business benchmarks for over
100 industries, using data from income tax returns and business
activity statements. Taxpayers can use these benchmarks to
compare their performance with the rest of their industry.
Moreover, they enable the ATO to identify taxpayers whose
performance is outside of the benchmark range and are more
likely to be subject to compliance activities such as reviews and
The ATO is concerned with small businesses who over-claim
tax concessions, whether as a result of deliberate attempts to
hide income or through inadvertent mistakes such as businesses
inappropriately seeking capital gains tax concessions.
The ATO has expanded their information-gathering capabilities
to include more small business transactions, such as payments to
contractors and capital gains from the sale of shares and property.
The ATO will use this data to identify businesses that fail to report
income, potentially leading to the issue of default assessments and
in some cases, prosecution.
The ATO will focus additional compliance activities on taxpayers
with capital losses, poor tax and economic performance and large
one-off or unusual transactions including wealth shifting.
The ATO’s “Building Confidence” publication reminds individual
practitioners of its extensive data matching capabilities, based on
information it receives from various sources including banks, share
registries, employers, government agencies and via its network of
global information exchange agreements.
In terms of focus areas for compliance activities, the ATO continues
to closely monitor:
• Work related expenses, particularly overnight travel, motor
vehicle expenses for travel between home and work and the work-
related usage proportion of electronic devices such as computers
• Rental property expenses, particularly in relation to holiday
homes, splitting of income and expenses by spouses, and
deductibility of interest where a loan is partly for private purposes.
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