MRH Business Accountants in Rockdale, New South Wales | Tax preparation service

MRH Business Accountants

Locality: Rockdale, New South Wales

Phone: +61 2 8960 3647

Address: Suite 2/534 Princes Hwy 2216 Rockdale, NSW, Australia

Website: http://www.mrhbusinessaccountants.com.au

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25.01.2022 JobKeeper Payment Eligible employers Employers will be eligible for the JobKeeper payment if all of the following apply:...Continue reading

23.01.2022 Popular tax deductions scrapped for property investors Clients with negative gearing arrangements in place are set to lose out on a popular deduction following ...last nights federal budget. From 1 July 2017, the government plans to improve the integrity of negative gearing by disallowing deductions for travel expenses. This is one change that is not going to please a lot of people, the Institute of Public Accountants' (IPA's) Tony Greco told Accountants Daily. A lot of investors have properties a long distance away from their home, and incur travel expenses when they visit their residential investment, he said. There will be an outright ban on travel expenses, thats an absolute loss, he said. Further, for properties bought after May 9 2017, the government will also limit plant and equipment depreciation deductions to only those expenses directly incurred by investors. While these measures wont be happily met by property investors, Mr Greco said that in the grand scheme of things any changes involving negative gearing could have been significantly more dramatic, given the governments housing affordability agenda. So, probably, a lot of investors are also relieved that the changes havent gone further, Mr Greco said. Michael Croker, head of tax at Chartered Accountants Australia and New Zealand, suggested that if this is a step towards a broader slow-down of the deductions on the table for Australian taxpayers, debate needs to begin now. Disallowing deductions for rental property travel expenses and depreciating assets not personally purchased by the investor will be seen as the thin edge of the wedge by some CAs. We know the ATO is also worried about increasing deductions for work-related expenses. Are other deduction claims in the governments sights as part of a slow-burn approach to reducing deductions Australians claim? If so, lets get this on the table and start talking about it," he said.

22.01.2022 Burden for retirees: Monitoring $1.6 million transfer balance cap: Effective from 1 July 2017, for every Australian, a cap of $1.6 million will be imposed on th...e amount of super that can be transferred into pension phase, and effectively force Australians to remove super benefits from pension phase if a pension account balance exceeds this amount as at 1 July 2017. If you have more than $1.6 million of superannuation in pension phase, or you expect to have more than $1.6 million in pension phase by July 2017, then you need to take action before July 2017. Why? Anyone with more than $1.6 million of super in pension phase as at 1 July 2017, will be forced to withdraw the excess over the $1.6 million from pension phase, and an excess transfer balance tax penalties will also apply (although there will be a grace period of 6 months for amounts in excess of $1.6 million, providing the excess is less than $100,000). If your super pension balance (from all pension accounts) does exceed $1.6 million, you have two options when reducing your super pension balance to below $1.6 million before July 2017. You can move the excess into accumulation phase within the super system (where earnings will be taxed at 15%), or you can withdraw the excess from the superannuation system See more

14.01.2022 A practical breakdown of the steps and processes involved in taking action on the CGT relief for both segregated and unsegregated super funds. If your clients h...ave more than $1.6 million in superannuation pension phase, and/or you have clients with a transition to retirement income stream they wish to continue from 1 July this year, you must read this. Capital gains tax (CGT) relief From 1 July 2017, the maximum amount a member can transfer from the taxable accumulation phase to the tax-free retirement (pension) phase will be limited by the new transfer balance cap (TBC) of $1.6 million (indexed). For pension balances in excess of this amount on that date, the member has the option to either: Withdraw the excess from the superannuation system; or Commute the excess back to the accumulation phase. Also from 1 July, investment earnings and capital gains generated from transition to retirement income streams (TRIS) will no longer be tax free. Transitional CGT relief a special tax concession accessible between now and June 30 is available to superannuation funds that have members affected by the new TBC, or pay TRISs that will lose the tax-exempt treatment of investment earnings. Super funds where part of the funds investment return is a capital gain on individual assets will be impacted by the changes. These funds include self-managed superannuation funds (SMSFs), small APRA funds (SAFs), and public offer (retail) funds including wrap accounts and industry funds offering direct investments, i.e. shares and managed funds. The CGT relief measure was introduced to discourage the mass selling of pension-supporting investments before 1 July 2017. The intent of the new rule is to provide CGT relief on the gains accrued before that date, so as not to disadvantage members who are required to commute a pension due to the new TBC, or are impacted by the TRIS tax changes. CGT relief preserves the tax exemption for these accrued capital gains on selected investments by resetting the cost base of those investments to their market value. For members who currently have more than $1.6 million in pension phase and choose option two (above) or have a TRIS, the legislation provides transitional CGT relief for assets owned by the fund on 9 November 2016 (being the date the legislation entered Parliament). Importantly, CGT relief is not automatic the trustee of a super fund must choose for the relief to apply for a CGT asset in the approved form. For those assets that become taxable, i.e. that are transferred back to accumulation phase or support a TRIS, an irrevocable election can be made on an asset by asset basis to reset the CGT cost base to its market value, with the fund deemed to have sold and re-purchased the asset at that market value. This means the fund is only exposed to CGT on future growth in the asset value from that point. CGT relief is quite complicated. Different rules apply depending on whether the fund currently uses the segregated or proportionate (unsegregated) method in determining its exempt current pension income (ECPI). Furthermore, from 1 July 2017, SMSFs and SAFs in some circumstances will no longer be able to use the segregated method in determining the ECPI. Segregated method An asset or group of assets is transferred from the pool of assets supporting the current income in-stream, to an accumulation pool. The transfer and deemed sale and re-acquisition can occur at any point from 9 November 2016 to 30 June 2017, meaning the availability of market values during this time is key. The deemed sale to market value occurs as part of the exempt pension assets, so the capital gain is ignored for tax purposes. Income and capital gains arising from those assets after the move into the accumulation pool is subject to tax. For funds using this method, there will be no adverse CGT consequences of applying the relief and resetting the cost base of eligible assets to market value. Based solely on this outcome, in all likelihood it will be the most appropriate course to reset the cost base, provided the market value is greater than cost. Nevertheless, this should be assessed on a case-by-case basis, with the investment merits of the assets selected also taken into consideration. Proportionate method The deemed sale occurs on 30 June 2017, meaning this is the important valuation date. The resulting notional capital gain may be included as part of the 30 June 2017 assessable income of the fund, with the actuarially determined exempt pension factor applying to determine how much is taxable. Alternatively, the fund can defer the notional capital gain until the asset is actually realised for CGT. The actual capital gain arising on the real disposal using the refreshed cost base (adjusted for any subsequent cost base adjustments) will also be included in that year. In addition to resetting the cost base to market value, the date of acquisition for the purpose of applying the one-third CGT discount will also be reset. That is, you will re-start the 12-month holding period required to apply the one-third discount. So, care needs to be taken where an eligible asset is planned to be sold within 12 months of resetting the cost base. Its important to note that under both methods, the choice made needs to be documented in the approved form before lodgement of the funds 2016-17 annual return. The election is irrevocable and trustee(s)/members cannot change things if they subsequently realise they got it wrong. What should I do now? Important decisions must be made in the lead-up to 30 June. With only a few months to go, now is the time to consider whether claiming CGT relief on certain investments is worth pursuing for relevant clients. This choice will have a direct effect on the amount of income tax paid in future years. First, you need to assess whether your clients are affected by the new rules. Do you have a client with: An SMSF or SAF that has at least one member with more than $1.6 million in pension phase across all super funds and where that member is required to commute some or all of their pension in the SMSF or SAF to comply with the TBC? A defined benefit pension caught by the new 16 times pension multiple rule as well as an SMSF, SAF or retail/industry fund with direct investments paying a pension that faces being wholly or partially wound back from 1 July to accumulation phase as a result of the TBC? A retail/industry fund with direct investments requiring a pension restructure? A TRIS commenced before 9 November 2016 that faces losing the tax-exempt treatment of its investment earnings from July 1? If any of these arrangements apply, you need to consider: What method is the SMSF or SAF using to claim ECPI? Which fund assets are eligible for CGT relief? Is the current market value of the eligible asset at the time of the re-set more than its cost base? Will the asset be disposed of within 12 months of the date of the re-set? Is this asset likely to increase in value in the future or is it a defensive investment not subject to price variation? What is the ECPI percentage of the SMSF or SAF expected to be in the year the affected assets are sold? This may include the impact of other members entering pension phase increasing this percentage. For those members with a TRIS, are they able to satisfy a condition of release so that there is the potential to convert the TRIS to a standard account-based pension and retain the tax exemption on earnings (subject to the $1.6 million TBC)? Its a case of doing the numbers to assess the effect of choosing the relief and whether the fund will apply the deferral. If the client chooses CGT relief, it will result in a permanent modification of the investments cost base, but if CGT relief is not chosen, the cost base for tax calculations will be the original purchase price. For SMSFs, the decision to claim CGT relief and organise this is up to the fund trustee(s), who are also the members. For SAFs, members who identify CGT relief opportunities must work through the trustee. For public offer (retail) funds including wrap accounts and industry funds offering direct investments, it will be up to members to take the initiative and approach their trustee where they believe they have an investment worth claiming CGT relief on. They will need to obtain directions from trustees on what they expect. Remember, the choice to reset the cost base and to defer any notional gain is an irrevocable election and must be made by the due date for lodgement of the funds 2016-17 annual return. The choice must be recorded on an approved form and trustees must keep records of chosen investments for future reference. Remember CGT relief measures only apply in the following circumstances: Where a client is in pension phase and exceeds the $1.6 million cap and needs to make arrangements to meet the TBC by year-end; and/or Where a client has a TRIS and wishes to continue with this income stream from 1 July and wants to re-structure to meet the new rules. Where the CGT relief measures do not apply The CGT measures are not to be used merely to refresh a clients cost bases, where they dont meet the above circumstances. The Explanatory Memorandum (EM) supporting the implementation of this law makes this aspect crystal clear. The other element made clear in the EM is that strict anti-avoidance measures and penalties will apply where these rules are misused. Example 1 Your client has a pension account with investments valued at $2 million. Under the new $1.6 million TBC, $400,000 (20 per cent) must be either withdrawn or transferred into a taxable accumulation account. One of the investments in pension phase is 1,000 shares CSL Limited bought for $66.55 on 30 June 2014 cost base of $66,550. If the share price on 30 June 2017 is $110, the $110,000 market value of the shares includes an unrealised gain of $43,450 since acquisition. As 20 per cent of the value of investments in pension phase must be either withdrawn or commuted back to accumulation phase, if the latter is chosen, then compensation is provided to deal with the fact that investments in accumulation phase are taxable. This compensation comes in the form of CGT relief where, if the client chooses the transfer option, they can elect to reset the cost base of the shares to their value on 30 June. Using the CSL shares as part of the value of the investments commuted back to accumulation phase, with the market price of $110, resetting the cost price means that future gains attributable to these shares will be based on this price and not the original $66.55 (subject to any cost base adjustments CSL may subsequently receive, such as a return of capital). If the client doesnt reset the cost base and they sell the shares for $110 in the future, a net capital gain of $28,967 (being $43,450 net of the one-third CGT discount) arises. This is then adjusted for the portion that will still be ECPI, with a $5,793 taxable gain attributed to the 20 per cent accumulation account and $23,174 being a tax-free gain under the pension rules. The taxable gain of $5,793 is added to the funds income for the financial year and taxed at 15 per cent. The bottom line is tax of $869. Example 2 Your client has one SMSF with $1.6 million in pension phase on 30 June. He has a second SMSF with $1 million in pension phase that will be rolled back to accumulation phase. Thus, where the investments in the second SMSF have a value greater than their original cost, their CGT cost base can be reset to the higher value which will be used to calculate any future CGT liability on assets in accumulation phase when the investments are sold. Importantly, the pension must cease on or before 30 June. The decision to stop the pension must be minuted along with the date, as well the adjustments required in the funds financial records to document the commutation. Obviously, the fund must pay the required minimum annual pension payment up to the time it is commuted. From 1 July 2017, the first SMSF will no longer be able to use the segregated method in determining its ECPI and will be required to use the proportionate method and obtain an actuarial certificate to determine the pension exempt factor. However, as this fund solely comprises a pension member, 100 per cent of the earnings and capital gains should be tax exempt. Example 3 Claiming CGT relief can be more complex where a fund has two or more members. Take an SMSF with a retired member with $2 million in pension phase and a second member, still working, with $1 million in accumulation phase. Under the TBC, the pension must be reduced by $400,000 to $1.6 million by 30 June resulting in the fund on 1 July having $1.6 million in pension phase and $1.4 million in accumulation phase. By this date, the fund has the option of resetting the cost base of any assets and having the notional capital gain either included in its 2016-17 assessable income or deferred until the assets are actually sold. This applies to funds that operate on a pooled (unsegregated) basis where any taxable income is split in proportion to the value of a funds investments in pension and accumulation phases. On 30 June, the market value of the SMSFs sole asset, a commercial property, is $3 million. The cost base of this asset is $2.25 million and thus there is an unrealised capital gain of $750,000 before discounting and the ECPI adjustment. If the trustee(s)/members elect to re-set the cost base on this asset, the resulting notional capital gain will be included in the funds assessable income in 2016-17. Alternatively, this notional gain can be deferred until the property is sold. Choosing not to reset the cost base is an option for the trustees if they think it is likely the fund will have a higher proportion in pension phase when the property is sold. This could be because the second member is considering retiring in the next few years, which would have the effect of increasing the tax-exempt proportion of the fund. Withdrawing benefits from accumulation accounts may also achieve this. Here is a comparison of the tax position under each option: Notional capital gain included in 2016-17 assessable income The capital gain included in the funds assessable income for the 2016-17 financial year is: Notional capital gain deferred until asset is sold Instead of paying tax in the 2016-17 financial year, the trustees may choose to defer the inclusion of the gain in the funds annual return until the asset is sold. In June 2020, the property is sold for $4 million realising a capital gain of $1 million (from the rest cost base of $3 million). After applying the one-third CGT discount and the exempt proportion say for simplicity 53 percent ($1.6 million/$3 million) the fund calculates its net capital gain for the 2019-20 year of $313,333. The fund adds its deferred capital gain of $166,667 to this net capital gain, bringing its total net capital gains for the 2019-20 income year to $480,000. Thus, tax payable in the 2019-20 financial year is $72,000 ($480,000 x 15 per cent). Election to reset cost base not taken If the election to reset the cost base was not taken so that the cost base remained at $2.25 million on the property being sold for $4 million, the resulting tax position is: Are you confident in providing this advice to your clients? This opportunity is complex and must be addressed with your SMSF clients, sooner rather than later. The advice in most instances will be a combination of tax, super and investment advice that must be presented to clients as a statement of advice (SOA). Areas of caution for accountants Does your Australian Financial Services Licence (AFSL) cover the extent of the advice your client requires? For example, if assets need to be rolled out of pension phase back into superannuation phase, which assets are better held in super and which in pension? Its all about expected future returns so this is investment advice which is not generally covered by an accountants limited AFSL. Do you have the expertise and experience in house to provide this advice in a compliant SOA? Questions to ask yourself when preparing the advice Is the advice directed to the SOA trustee or the individual members? Will this change depending on segregated or unsegregated assets? Will multiple SOAs need to be generated? Dont risk providing incomplete, incorrect or non-compliant advice to your valued clients.

13.01.2022 We believe integrity is doing 'what you said, when you said'. It is the intelligence, energy and integrity of our people that drive the consistent achievement of exceptional client outcomes. Most individuals and business owners are very busy and find co-ordinating the services of their accountants, specialist tax advisors, finance brokers, insurance broker, financial planner and lawyers a real pain.What we do is manage your complete personal and business financial univers...e. The comfort of knowing that everything is taken care of is tremendously valuable to those achieving and seeking lasting success. Everything we do has always been guided by a set of principles that define our character and culture, forming the core of MRH Business Accountants. These universal principles are the shared convictions that we bring to our professional and personal conduct and are the fundamental strength of our business. We provide services to a diverse range of clients, from large corporate organization to small businesses and to Individuals.

11.01.2022 Is your Business affected by economic downturn or forced closure due to COVID-19? The Australian government has announced changes to assist Australian businesses. If youre in business, MRH Business Accountants can help you navigate through all the stimulus and support packages that may apply to you. There will be challenges; but helping you through this time is the prime focus of our combined team.

10.01.2022 2015/16 Federal Budget Small businesses are the big winners from the 2015/16 Federal Budget. A lower company tax rate of 28.5% and an immediate tax deduction for assets with a value of less than $20,000 will be welcomed news for small business which have for years, been neglected by politicians. Tax underpaying multinationals are the big losers from this years budget, with an additional anti-avoidance measure to be introduced, directed at profit shifting. Below is an over...view of the main measures of this years Federal Budget. From 1 July 2015 The company tax rate that applies to small businesses, with a turnover of less than $2 million, will be lowered to 28.5%. However, the maximum franking credit rate for a distribution will remain at 30%. Sole traders and individuals operating a business through a trust or partnership will receive a discount of 5% on their business income, if their business has an annual turnover of less than $2 million. 12 May 2015 Small business will be able to claim an immediate tax deduction for assets, which cost less than $20,000, if the assets are bought and made ready for use between 7.30pm (AEST) 12 May 2015 and 30 June 2017. This is an increase from the current $1,000 threshold.

09.01.2022 We are attuned to small businesses, and take an interest in assisting clients to become more profitable within the best business structure. Give us a call to discuss your business with us. Effective structuring and planning of your business will assist you in wealth generation and keeping that wealth. To assist you we offer the following services: Preparation of financial statements... Business reviews Business Plans/Growth Business restructuring We have associates that specialise in risk and insurance who are able to assess your goals, work out a plan and make sure it is tax effective. The type of insurance you require depends on your financial capacity and needs. We can assist you through the various phases from commencement through to succession planning by identifying the correct business structures and agreements to assist you in achieving your goals.

08.01.2022 Eligible employers Employers will be eligible for the JobKeeper payment if all of the following apply: On 1 March 2020, you carried on a business in Australia or were a not-for-profit organisation that pursued your objectives principally in Australia. You employed at least one eligible employee on 1 March 2020....Continue reading

06.01.2022 Tax tips for the new financial year STAFF REPORTER - Thursday, 06 July 2017 The new financial year is a great time for Australians to reassess their financial p...osition and look for any tax benefits they qualify for, according to HLB Mann Judd tax partner Peter Bembrick. Mr Bembrick said one of the first things that should be done is to review deductible and non-deductible debt. Having high levels of non-deductible debt such as a mortgage, a car loan or a credit card is a disadvantage as no tax deduction can be claimed on the interest payments, he said. Paying down this kind of debt should be a priority, Mr Bembrick said, and any spare funds should be used to do so as quickly as possible. Deductible debt, on the other hand such as the interest on a loan over an investment property or a share market portfolio can be claimed as a tax deduction, and should be paid off only after the non-deductible debt has been eliminated, he said. Those looking to maximise their cash flow should consider having an interest-only loan over all of their income-generating investments, all the while making principal repayments on non-deductible debts such as a home loan, Mr Bembrick said. However, he added, care must be taken when restructuring loans solely to avoid tax, as this can attract the attention of the Australian Taxation Office. The type of investments being held is also an important consideration for those concerned with their tax liabilities, Mr Bembrick said. Tax-advantaged investments should always be considered, Mr Bembrick said, so long as they meet an individuals long-term investment plan. No investment should be taken out purely because it receives favourable tax treatment, but by the same token, it is important to be aware of the taxation implications of the investment structure, he said. For instance, selecting an investment that returns discount capital gains or fully franked dividend income, is a better option than choosing an investment that may offer the same return, but doesnt have the same tax advantages. So for individuals, family trusts and super funds, listed investment company dividends are often an attractive, tax-effective option, as they are usually fully franked. They also come with the benefit of the CGT discount which shareholders can access if the company sells investment assets. Superannuation is another facet that warrants review, Mr Bembrick said, and super members should make sure their funds underlying investments and strategy are appropriate and overall performance will meet individual retirement goals and timelines. Undertaking a super fund review is a useful exercise, and people should look at the fees being charged, the type of investments the fund holds, and whether the level of investment risk taken is appropriate for their needs, Mr Bembrick said. Making voluntary contributions is one tax-effective technique fund members can use to improve their super savings, so long as these contributions remain within the mandated limits, Mr Bembrick said. It is always worth knowing what other funds are in the market, what they charge in fees and the type of investments they make, he added. As the superannuation balance grows, it may also be worthwhile to consider whether a self-managed superannuation fund is a good option. See more

06.01.2022 Practitioners cautioned on clients seeking revenge for CGT decisions MIRANDA BROWNLEE - Thursday, 16 March 20171 COMMENTS One SMSF industry lawyer has predicted that decisions made on CGT relief now could potentially lead to a significant number of litigation cases, and recommended that practitioners leave any final or critical judgements on the relief with clients. Speaking at a seminar in Sydney, DBA Lawyers director Daniel Butler said in order to make final decisions or ...judgements on the CGT relief for clients, practitioners will require an authorisation under a managed discretionary account services licence, which most SMSF practitioners will not have. Most [SMSF practitioners] probably dont have a managed discretionary account licence that allows them to advise on a discretionary basis, so youre really in this pickle where you can do a lot to lead the client there, but you cant actually make the call, Mr Butler explained. Youve got to put it to the client to make the call because these are critical judgements and a lot of things are going to go pear-shaped. Theres going to be a lot of litigation down the track about this. Mr Butler also noted that there are various scenarios or reasons why implementing the CGT relief could negatively impact clients in certain cases. An SMSF trustee may not want to implement the CGT relief for assets that have a capital loss if theyre planning to sell an asset within 12 months and if the asset will be in pension mode when its realised. If you get a capital loss, the client is not going to love you for electing [to apply the relief] because youve just taken the value down rather than up. So for a capital loss you dont want to elect, Mr Butler said. He also gave an example where applying the CGT relief could be the wrong decision due to one of the members entering the pension phase. What if today only dad is in pension and thats 50 per cent of the fund, and when you realise the asset down the track, mum is going to be in pension? Mr Butler said. Lets say theyve got a $150,000 cap gain unrealised on an asset, you take the one-third discount, so youre back to $100,000. So today you have elected at 50 per cent, so youre bringing into account $50,000 of taxable income and youve locked yourself in, this is irrevocable, youve locked in the $50,000. When you flip or realise that asset, you must bring that gain to account and you then pay tax on that, but lets say under these circumstances mum is now in pension. So you could have [alternatively] flipped it with no tax. In this circumstance, the client could come back pointing the finger because the tax outcome negatively impacted them, he said. They might come back saying, Im paying tax now of at least $7,500 and I want revenge. I want you to pay the tax because you put me into this, Mr butler