August 2005
//////Areas 01, 02, 03, 04 & 05
//////(Updated 06.11.05)
> Employee
or Contractor?
> ATO Non-Profit Organisations
> Child Care Rebate
> Rental Properties
> GST Issues
> The Artist – Art Centre – Dealer/Gallery
– Buyer Relationship
> Comings and Goings
> Staffing Matters
2004 NEWSLETTER ARCHIVES
NOV 04 |
OCT 04 | SEPT
04 | AUG 04
| JULY 04
| JUNE 04 |
MAY 04 | MARCH
04
2005 NEWSLETTER ARCHIVES
JAN 05
August 05 UPDATE
The updates have been a bit patchy of late, mainly because we
haven’t been able to implode, explode, upload, whatever; fresh material,
until now. Now that those hiccups have been sorted, we’re back on track.
Employee or Contractor?
I know I commented on this in the last update but this is a question that continues
to vex employers and employees alike; well, that’s when either party is
aware that it is an issue. At a recent Transit Lounge advice session a young
freelance editor had come to find out how she should now set up her new business,
very excited, she was, until it turned out that she was contracted to one company,
that all of the work she did was for them, that she worked on their premises,
and so on. I reckon I get at least one call or visit a fortnight from people
who have been told they are contractors, will need to get an ABN, submit an
invoice each week, and take care of their own tax and superannuation. In many
cases the employer is just plain shirking their responsibilities, in other cases
they just don’t know.
The “employee” gets all excited because they get more cash in the
hand, and expect to be able to get stacks of deductions because they are now
freelance and running their own businesses. The trouble is, that if they are
earning more than eighty percent of their income from that source, then the
ATO is going to treat them as an employee, regardless of what they say. For
the employee, that means the only deductions they are going to be entitled to
are employee work-related expenses, that is, for example, no car expenses is
driving to and from work. For the employer, it means they should be deducting
PAYG tax, paying superannuation, and providing workcover. For employers, the
general rule is that if the person provides a service that is essentially labour,
works at your premises and is integrated into you business operations (although
maybe on a part-time or casual basis), is paid for the provision of services
rather than for the delivery of a result, then that person is an employee.
The ATO has published a web based tool to help businesses determine whether
their workers are employees or contractors. It is available at www.ato.gov.au
and they have also published a pamphlet. My advice is that if there is any doubt,
then employers should regard the workers as employees, and treat them accordingly.
What might have seemed an expedient by-passing of paperwork can turn awfully
ugly if the employee is injured on the job, or decides to seek back-pay of superannuation
entitlements.
ATO Non-Profit Organisations
The ATO has a section dedicated to the not for profit sector. This section provides
useful
(if sometimes impenetrable, but that’s improving) information on such matters
as GST on fundraising, Fringe Benefits Tax issues and Income Tax Issues for
non income tax exempt charities. A recent publication has been issued which
explains issues that non-profit organisations might have in their dealings with
volunteers. You can obtain this and other publications by phoning 1300 720 092
and quote NAT 13131 (Essential tax information for your non-profit organisation)
or NAT 4612 which deals with the volunteer issues. You can also go to the ATO
website and go to the Non-Profit Organisations Home Page.
Child Care Rebate
You may be eligible for a 30% rebate of out-of-pocket childcare expenses incurred
from 1st July 2004, up to a maximum of $4000 per child, if you receive Child
Care Benefit (CCB), and you used approved child care, and you meet the CCB work/study/training
test. The only difficulty is that the rebate will not become claimable until
you lodge the 2005/06 Income Tax Return (that’s right, a year down the
track), is based on expenses incurred in 2004/05 and you will need to have all
of your receipts for 2004/05 from the childcare provider. Fine, except the legislation
didn’t get off it’s arse until nearly the end of the 2004/05 year,
and who was thinking about keeping receipts up till then?
Rental Properties
The ATO is again (still) conducting reviews of taxpayers with deductions for
rental properties. Claims for repairs and maintenance are always a revenue raiser
for the ATO where claims are made in circumstances where (a) the “repairs”
improve the property, such as wholesale replacement of items (kitchens and bathrooms
a favourite “honestly, I really did have to rip out the old chipped and
cracked porcelain and the lino on the floor and the chipboard cupboards, and
replace them with marble and teak fittings and a slate floor”), fixing
up items that needed fixing six months before you bought the place, and putting
in a deck or adding an extension – all of these items are capital, and
not deductible, well not immediately anyway. The other area they look at is
where your rental property is in a holiday destination and you stay there yourself
for a few days a year, or where the place is part rental, part your place of
residence, or where you charge less than market rents – like, to your children.
In all these cases the expenses have to be apportioned to reflect that non-business
component.
Where the rental property loan has a redraw facility, try to avoid using the
redraw amount for anything other that rental property expenses. Going on a holiday,
courtesy of a draw on the rental loan, will muck up your interest deduction
from that point.
GST Issues
Some of the more common mistakes made in completing BAS:
Claiming GST on expenses which do not actually include GST, for example rents
on residential property and bank charges; claiming the full amount of GST where
only a percentage should be claimed, for example, motor vehicle running costs
and home telephone; claiming GST on costs which are not fully subject to GST,
for example motor vehicle registration and insurances – both these items
have a component that is GST free.
Do not forget that if you are registered for GST and you sell or trade in a
motor vehicle etc, the sale/trade in is subject to GST. So when the dealer offers
you a trade in of $4000, jump in quickly with “plus $400 GST” otherwise
the trade is effectively only $3636.36.
If you purchase a vehicle under a hire purchase contract, the GST is claimed
progressively with the payments, not upfront in the quarter you make the purchase.
Make sure you have a valid Tax Invoice for all purchases over $55, for items
under $55 a Tax Invoice is not essential (though desirable) but you must still
have evidence of purchase.
The Artist – Art Centre
– Dealer/Gallery – Buyer Relationship
There are more permutations in the above than in the re-inventions of Madonna,
but at the centre of it all it depends on who is actually selling to who, because
that will determine the nature of the paperwork supplied along the way, and
where GST is charged and claimed.
The artist is, of course, the beginning of the chain, and may sell to anyone
up the chain; the art centre, the dealer/gallery, or the ultimate consumer.
If the artist is GST registered, the work’s price will include GST, if
not, then no GST is charged. The artist may, or may not, have an ABN depending
on whether the activity is “a business” and does not satisfy the requirements
of the ABN moratorium for indigenous artists in remote communities, or whether
the artist does satisfy those requirements, or regards the painting activity
as a non-commercial one.
If the artist sells to the art centre, then it will be the art centre that makes
the subsequent sale, whether that is to a dealer/gallery, or to the consumer.
The work will almost always include GST, and the invoice will be issued by,
and for, the art centre. The art centre will record the sale value as income,
and the payment to the artist as an expense. The difference will be the art
centre’s profit.
If the artist sells to a dealer/gallery, and if that transaction is facilitated
by the art centre, then the art centre will charge the artist a commission for
facilitating that sale. The art centre’s income in this case is the commission
on the sale; the artist’s income is the price that the work was sold to
the dealer/gallery for, less the commission paid to the art centre. The dealer/gallery
then issues its invoice to the buyer, in its own name. The dealer/gallery income
is the ultimate sale price for the work, less the cost of the work paid to the
artist (net amount) and art centre (commission amount).
If the artist sells to the end buyer, and if that transaction is facilitated
by the art centre only, then again the art centre will charge the artist a commission
for facilitating that sale; the art centre’s income is the commission,
and the artist’s is the buyer’s cost, less the commission paid to
the art centre.
If the artist sells to the end buyer, and if that transaction is facilitated
by the art centre (firstly) and then by a dealer/gallery (secondly), then both
the art centre and the dealer will be charging the artist a commission. In that
case, the artist’s income is the retail price, less the commissions paid
to the art centre and the dealer/gallery. GST may not be charged to the end
buyer, but would be charged to the artist on both lots of commission. The income
of both the art centre and dealer/gallery will be the commission charged to
the artist.
Comings and Goings
Early in June I travelled out to Central Australia for work. Leaving the Mutitjulu
Community at Uluru on a bright Monday morning I drove to Warakurna, three hundred
kilometres away in WA. Worked there on Monday and Tuesday morning then drove
down to Papulankutja (Blackstone). There’d been some rain overnight but
it was just enough to settle the dust really. The next day I headed back to
Amata in SA, and with the rain getting steadily heavier it made for some sloppiness
but not enough to cause any problems. I missed the turnoff (not hugely signposted,
naturally) to the SA communities so finished up at Wingellina but turned around
and got to Amata about lunch-time. The rest of the day I worked at Minymaku
Arts then headed down to Kaltjiti Arts at Fregon on Thursday morning. Rain continued.
On Friday I turned the troopie north to Ernabella and did some work there –
buying a few beanies before they headed up to Alice Springs for the Beanie Festival.
The trip back to the bitumen was wetter than I’d encountered but, again,
no worries about getting bogged.
The next week I worked at the Mutitjulu Community and the Cultural Centre at
Uluru, and then on the Sunday flew over to Alice Springs, picked up a 4WD and
headed north up the Tanami Road to Warlukurlangu Arts at Yuendumu. The road
had supposedly been closed by the police, due to heavy rain making it impassable,
but a call on the satellite phone to Yuendumu confirmed the road was okay; rough
and sloppy, but okay. On Tuesday it was back to Alice Springs for three days
work, then back to Brisbane.
In August I’ll be travelling back to Patjarr (in the Gibson Desert) to
Kayili Arts, to Warakurna, then up to Darwin, over to Ramingining, back to Darwin
then down to Kununurra and Turkey Creek.
Staffing Matters
When Rosena left to travel overseas we were in a bit of a state for a while
but eventually snared Brooke Sinclair who is studying Accounting at QUT and
is, like most of us here, a bit of an art fiend and a regular at exhibitions
in town. At the moment she is on maternity leave, having just given birth to
a baby girl. Michelle also left to pursue a different career and has been replaced
by Luke Tucker, yep, that’s right, there are now three Tuckers here and
now that means my elder daughter is the only Tucker child who has not been employed
here. Nepotism is rife! Coming soon – Section 01 BTA Staff will have pictures
and an updated staff list.
Brian Tucker
Office Hours
Our office hours are:
9:00am to 5:00pm
Monday to Friday
(excluding public holidays).
Email Address
All staff can be contacted via email, by adding their
first name to the website address.
e.g. matthew@briantuckercpa.org
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Help us Help you…
Be as organized as possible before you come in. Our fees are charged on a time
basis.
For example, if we have to spend a few hours or days sorting your receipts,
then you will be charged for that time. Telephone calls (not including quick
routine calls) are also charged where specific advice is requested and the call
is of longer duration.
| Our Hourly Rates | ||
| - | Sorting Receipts | $100 |
| - | Tax Preparation | $140 |
| - | Financial Account Preparation | $180 |
| - | Advice (Depends on Technicality) | $100 - $180 |
| - | BAS/ GST Returns | $140 |
| * Not Including GST | ||
| * The minimum fee for each Tax Return is $99.00 including GST. | ||
- Complete your Client Questionnaire with as much detail as possible.
If you have any queries, then please call us. The standard turnaround time for
tax work will vary from within a couple of weeks for early birds to four to
six weeks for information brought in later in the year – so long as we
have all of your information. To be fair to ALL clients, we work on a First
in, first out basis. Therefore, the sooner it is in, the sooner it will be done.
- Keep all necessary receipts, documents, log books and records.
- Phone the Tax Office directly where possible for administrative and general
queries. For the Tax Office numbers for different issues, look in the White
Pages, or log onto their website – www.ato.gov.au
- Sometimes it’s helpful to get someone in to help
you with your bookkeeping.
Contact us for further information on recommended freelance bookkeepers.