Friday 20 February 2015

Not for Profit - Should you be getting an Audit?

Not-for-profit Associations are viewed in three tiers for the purposes of determining audit requirements:
  • Tier 1 - Revenue less than $250,000. No audit or review required, unless specifically requested by the members or regulator;
  • Tier 2 - Revenue from $250,000 to $1 million. A review by an independent accountant is required as a minimum;
  • Tier 3 - Revenue more than $1 million. An audit is required.
Even if an audit is not legally required, you may want to because:
  • Associations need to have an appropriately drafted set of Financial Statements for presentation at the Annual General Meeting and an audit may assist with this;
  • Review/audit provides peace of mind to honorary committee members and may assist in attracting new committee members;
  • The ability to apply for grant income from government or other agencies may have audit as a
    requirement;
  • If revenue levels are close to a threshold you should consider the requirement of the upper level as it may impact you in the near future.
If you have questions please feel free to contact Bryan McKimmie or Sandra Rowley at Langley McKimmie Chartered Accountants on 03 5427 8100 for an initial consultation.

We service clients in the Woodend and Macedon Ranges region within Victoria Australia.

Friday 6 February 2015

Considering Divorce? Consider this…

As confirmed by recent taxation pronouncements, money or other assets transferred out of a company as part of a divorce settlement are treated as a dividend and will have tax consequences to the recipient.

Case Study

Jack and Jill are divorcing and run a company worth $2 million. This is their only matrimonial asset. Jack is the sole director and shareholder. The Family Court Order requires Jill to be paid $1 million from the company.

The company raises $1 million in cash through borrowing and pays it to Jill. Jack retains control of
the company as part of the settlement.

Jill is deemed to have received a dividend of $1 million and tax is payable at marginal rates. Franking credits may be attached at the discretion of the director.

Had the settlement been by way of transferring property to Jill this would still represent a dividend to Jill. There would also be Capital Gains Tax (CGT) consequences.

This is one of the many financial issues to consider during a divorce. Be sure you get appropriate advice when considering any settlement.

If you have questions please contact Andrew Marshall or Janine Orpwood at Langley McKimmie Chartered Accountants on (03) 5427 8100 for an initial consultation.

We service clients in the Woodend and Macedon Ranges region within Victoria Australia.