3rd Quarter 2013

New regulations apply to self-managed super funds (SMSFs) from the 2012-2013 income year. They require trustees of SMSFs to:

• value the fund's assets at their market value for the purpose of preparing financial accounts and statements of the fund
• consider insurance for their members as part of the fund's investment strategy
• review the fund's investment strategy on a regular basis to ensure that it continues to reflect the purpose and circumstances of your fund and its members.

The obligation that you as a trustee of an SMSF are required to keep money and other assets of the fund separate from any money or assets held by you personally or by a standard employer-sponsor or an associated standard employer-sponsor is now a prescribed operating standard.

Trustees who fail to comply with the above requirements may be subject to penalties.

SMSF AUDITOR REGISTRATION REQUIREMENTS

From 1 July 2013 auditors will be required to be registered with (ASIC) to conduct SMSF audits. ASIC will accept applications online from 31 January 2013. Transitional arrangements for existing approved auditors will be available for those who apply with ASIC before 1 July 2013.

Auditors will need to meet a number of requirements set by ASIC to be registered as an approved SMSF auditor. These are:

• hold a tertiary accounting qualification which includes an audit component or have successfully completed study in audit as part of a professional accounting body program
• hold professional indemnity insurance
• have 300 hours of SMSF audit experience in the three years prior to registration, subject to transitional arrangements
• pass a competency exam
• ability and agreement to meet ongoing obligations, including continuing professional development, professional indemnity insurance, compliance with auditing and assurance engagement standards, competency standards and independence principles.

WHAT THIS MEANS FOR SMSF TRUSTEES

From 1 July 2013, your SMSF auditor must be registered with ASIC and have a SMSF Auditor Number (SAN). You will be required to report the SAN on your SMSF annual returns for the 2012-2013 income year onwards. The SAN is a non-mandatory label in the 2011-2012 annual return.

The government is improving super to help protect and grow the savings of all Australians. As a business and an employer you play an important part in helping your employees save for their future. Changes commencing from 1 July 2013 include:

• an increase in the super guarantee rate from 9% to 9.25% and a gradual increase to 12% over the following six years (by 1 July 2019); and
• removal of the existing upper age limit for paying super for an employee and you will need to start making super guarantee contributions for employees who are 70 years of age or older.

THE SUPER GUARANTEE CHARGE PERCENTAGE (%)  

To give employees more information about their super, employers will also be required to report on employee payslips the amount of super contributions paid into their account and the date the contribution was made (subject to further consultation with industry).

You may need to update processes and systems to incorporate these changes.

Higher financial penalties will soon be in place for breaches of most Australian Government laws. Several of the penalties administered by the ATO are calculated using penalty units rather than dollar figures or percentages of shortfall amounts. On 28 December 2012 the value of a penalty unit will increase from $110 to $170.

For taxpayers, the implications of this legislative change are:

• administrative penalties that are calculated by the ATO using penalty units will be increased, and
• maximum available penalties for court-imposed fines will also rise.

The new penalty unit value will only apply to breaches that occur on or after 28 December 2012. This means that the changes will not impact on breaches that occur before 28 December 2012 or current proceedings for offences that were committed before this date.

The penalty unit value has not been adjusted since 1997. Under the new legislation, the value of the penalty unit will be reviewed every three years.

Three changes you might have missed to the simplified depreciation rules that apply to small businesses from the 2012-2013 income year:

1. INCREASE TO INSTANT ASSET WRITE-OFF THRESHOLD

You can now claim (write off) an outright deduction for most depreciating assets purchased that cost less than $6,500 each. This has increased from $1,000.

Example:

Belinda buys a $5,500 camera and a $4,900 high resolution printer for her photography business. Both the camera and the printer are depreciating assets used entirely for business. As each cost less than $6,500, she can claim as a deduction $5,500 for the camera and $4,900 for the printer in the 2012-2013 income year.

2. ACCELERATED DEDUCTION FOR MOTOR VEHICLES

From 2012-2013 income year, if you buy a motor vehicle for use in your business, you can claim an immediate $5,000 deduction. The remainder of the cost is deducted through the general small business pool at 15% for the first year and 30% for later years.

Example:

In the 2012-2013 income year Peter bought a $37,000 ute which was used 50% for business purposes. Louie calculates his depreciation deduction for the 2012-2013 income year this way:

$5,000 + 15% x ((50% x $37,000) - $5,000) = $7,025.

3. SIMPLIFIED POOLING

From 2012-2013, most depreciating assets that cost $6,500 or more (regardless of their effective life) can all be 'pooled' under the simplified depreciation rules and deducted at a single rate of 30%. The exception is newly acquired assets (like Peter’s ute) which are deducted at 15% (half the pool rate) for the first year.

If you had a long life pool (which no longer exists), its closing balance is rolled over to form part of the opening balance of the general pool for the 2012-2013 income year (to be depreciated at a rate of 30% instead of 5%).