Posted on April 18, 2018 by Christabelle Harris
What is the GeersSullivan Audit Protection Service?
The GeersSullivan Audit Protection Service provides for the payment of the professional fees otherwise payable by you when incurred as a result of GeersSullivan being required to respond on your behalf, to an Audit, Review or investigation by the Australian Taxation Office (ATO) or the Office of State Revenue. The ATO now has unprecedented access to data matching that makes it simpler and far more likely that they will audit or review previously untargeted taxpayers
It provides our clients with a fixed, cost effective solution to guard against unbudgeted professional fees, which may be incurred as a result of such an audit review or investigation. The costs of these additional audit fees can be considerable depending on the time involved to properly attend to the matter ranging from several thousand dollars up to tens of thousands.
What is the benefit of the GeersSullivan Audit Protection Service?
The benefit to participate in the Audit Protection Service is that fees incurred by you which are directly related to us attending to an audit, review or investigation will be covered (up to the annual limit specified). The cost you pay for participation is tax deductible.
We have carefully designed our Audit Protection Service to provide the widest possible coverage for our clients however such items or circumstances as listed below are not covered:
- Audits, Reviews or Investigations where notification was given prior to the inception of cover;
- Punitive costs such as penalty tax, costs, interest or any fine if the ATO auditor imposes final culpability/shortfall penalties of 75% or more, and/or the return is deemed to have been fraudulently lodged;
- Costs for work incurred which should have been done prior to the Audit, Review or Investigation taken place;
- Marketed, mass Marketed, or Tax Exploitation Scheme or arrangements without a product ruling;
- Any matter in relation to Child Support or Child Support Agency;
- Actions in regards to letters from any authority that are educational or advisory in nature: or merely suggest, invite or propose actions to be taken by you; or act as a warning to you may be selected for an audit at a future time; or do not compel you to take any action.
Recently a small business client received an audit notice from the ATO regarding their 2016 Trust Income Tax Return and Business Activity Statements. This was a full audit which covered GST, income tax, salaries and PAYG withholding, superannuation and matters of trust law. The business owners have always maintained their own books but by their own admission were completely out of their depth in answering the auditor’s questions.
Our Audit Protection Service fully covered our clients’ costs incurred and our involvement ensured the client understood exactly what was being asked of them, what matters of law were involved and that all information provided to the auditor went in a concise and logical format.
Our Audit Protection Service starts on the 30th April each year and is valid for a year.
Please contact Andrew Sullivan, Chris Grieve or Ashley Dawson on 9316 7000 if you wish to discuss our Audit Protection Service.
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Posted on by Christabelle Harris
The definition of retirement for superannuation is important because it is one of the key events which allows people to access their super by entering pension phase.
The legal definition of retirement is found under reg 6.01 of the SISR, which provides that retirement can happen under either of the following two limbs:
Limb 1 — in the case of a person who has reached their preservation age* that is less than 60, they are taken to be retired if:
- an arrangement under which the person was gainfully employed has come to an end; and
- the trustee is reasonably satisfied that the person intends never to again become gainfully employed, either on a full-time or a part-time* basis (i.e. for more than 10 hours per week)
Limb 2 — in the case of a person who has reached the age of 60, they are taken to be retired if an arrangement under which the person was gainfully employed has come to an end, and either:
- the person attained 60 on or before the ending of the employment; or
- the trustee is reasonably satisfied that the person intends never to again become gainfully employed, either on a full-time or a part-time** basis (i.e. for more than 10 hours per week).
As you can see above, the definition of retirement is different for people who have reached preservation age but are less than 60 and for those who have attained the age of 60. The requirements under limb 1 require both criteria to be satisfied, whereas limb 2 only needs either of the listed criteria to be satisfied.
* Preservation age is the minimum age that a member must reach to access preserved superannuation benefits – this is age 55 for those born before 1 July 1960 increasing to age 60 for those born after 1 July 1964.
** Part-time is defined to mean gainfully employed for at least 10 hours, and less than 30 hours, each week (reg 1.03(1) of the SISR).
Working for 2 or more employers
Those over 60 have greater ability to meet the definition since limb 2 only requires that ‘an arrangement under which the member was gainfully employed has come to an end’ and that the person attained 60 before the ending of the employment. This will mean that a person over 60 could cease one of two genuine employment arrangements (further discussed below under ‘gainful employment’) and meet the definition of retirement, even though their other job continues.
Members can meet the definition of retirement when they cease one employment arrangement even if the remaining job had the greater number of hours and a higher remuneration. For example, for a person who is over 60 with a full-time job and a side job as a genuine self-employed Uber driver can meet the retirement definition by genuinely ceasing only the Uber job.
What is ‘gainful employment’?
It is not possible to meet the retirement definition by simply ceasing any job, work or task. Under both limbs, members must actually cease gainful employment.
The question then becomes, what does it mean to be gainfully employed? The SIS regulations define ‘gainfully employed’ to mean “employed or self-employed for gain or reward in any business, trade, profession, vocation, calling, occupation or employment.” This definition is broad enough to cover any activities undertaken by someone for which a payment is received however it is also narrower than many realise because the requirements of ‘employment or self-employment’ and ‘for gain or reward’ are always required.
To satisfy the definition, the test to determine whether or not there is employment is a multi-factor legal test based on things such as degree of control, who bears the risk of the venture, whether standard working hours exist, etc. Accordingly, not every job, work or task will be regarded as gainful employment. For example, a director of a small private company is unlikely to be gainfully employed by virtue of that role since a directorship is an office but not necessarily employment under any contract of service. On the other hand, a person who is genuinely driving for Uber as a paid form of self-employment, is likely to satisfy the retirement definition if they were to cease this role.
Please contact our Superannuation Manager Helen Cooper on 08 9316 7000 should you wish to discuss your specific circumstances in more detail.
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