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Y2KJ1 bug the new threat to traders

The Y2K computer bug will be just the start of problems for business in Year 2000 with the real day of reckoning to come on July 1.

And it could lead to a new term in our language...Y2KJ1, says Society of CPAs GST spokesman Tony Ince.

“The end of the world as we know it will not be brought about by double zero dates in computers, an asteroid strike or the Big Wave, but by an avalanche of paperwork on July 1, 2000,” Mr Ince said.

“If the government succeeds with its tax reform proposals and the Ralph Report proposals get off the ground, then July 1, 2000 will see an overwhelming coming together of new compliance rules, new taxes and new paperwork.”

Mr Ince said changes currently on track for Y2KJ1 include:

l New personal income tax rates: 0-$6,000, nil; 6001-20,000, 17 per cent; 20,001-50,000, 30 per cent; 50,001-75,000, 40 per cent; 75,001 plus, 47 per cent

• Start of GST and finish of wholesale sales tax

• Start of 25 per cent luxury tax on cars priced above a GST-included $60,000 threshold

• Start of Australian Tax Office electronic tax returns to monthly GST remitters

• Start of a new tax regime for companies, trusts, life insurers, limited partnerships and co-operatives

• Group certificate disclosure of employee’s fringe benefits in excess of $1000

• Start of new FBT gross-up rate to ensure neutrality of treatment between fringe benefits and cash salary

• Extending FBT to include benefits in excess of $1000 a year enjoyed by company shareholders and trust beneficiaries. For example, a shareholder in a private company being provided with a motor vehicle or a beneficiary living in a house owned by a trust

• A clampdown on concessional FBT treatment of benevolent institutions. Concessional value will be limited to $17,000, broadly equal to the grossed-up value of an average six cylinder car

• Start of the wine equalisation tax (WET) at such a rate that the price of a four litre cask of red wine need only increase by 1.9 per cent, the general price increase associated with tax reform

• Increase in excise on beer and other beverages with less than 10 per cent alcohol content to make up for the removal of wholesale sales tax. The retail price of a carton of full-strength beer should increase only by 1.9 per cent, the general price increase associated with tax reform

• Increase in the excise-free threshold for low alcohol beer from 1.15 per cent to 1.4 per cent resulting in either no price increase or a slight fall

• Rise in excise on beverages of more than 10 per cent alcoholic content, other than wine, to offset the removal of wholesale sales tax. Retail prices are not expected to change

• Retail cask wine tax concessions but cask wine will not be able to gain a further price advantage against beer

• Start of a single Australian Business Number for government identification purposes

• Start of a single Pay As You Go (PAYG) tax system

• End of five existing tax payment and reporting systems (PAYE, PPS, RPS, provisional tax and company tax instalments)

• Start of additional tax withholding and remittance arrangements to include labour hire and invoices that do not show an Australian Business Number.

“With just more than a year to go before these and other changes to business administration take place, managers should be taking steps now to ensure they will not go under in the flood of paperwork on Y2KJ1,” Mr Ince said.

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