REGULATION, COMPLIANCE AND INTEGRITY
The Government will provide ATO funding of $42.1 million over four years to increase activities to recover unpaid tax and superannuation liabilities. These activities will focus on larger businesses and high wealth individuals to ensure on-time payment of their tax and superannuation liabilities. However, the measure will not extend to small businesses.
BUSINESS TAXATION
The Budget contains important changes to the instant asset write-off rules. These changes are in addition to the measures contained in a Bill currently before Parliament. The key changes will apply to small businesses, and has been extended to medium sized businesses.
PERSONAL TAXATION - Personal tax cuts: low–mid tax offset increase now; more rate changes from 2022
In the 2019–2020 Federal Budget, the Coalition Government announced its intention to provide further reductions in tax through the non-refundable low and middle income tax offset (LMITO). The Government says these changes will maintain a progressive tax system. For the 2018–2019 income year, the Medicare levy low-income threshold for singles will be increased, this will include single seniors and pensioners eligible for the seniors and pensioners tax offset. STP data will be expanded to include more information about gross pay amounts and other details. These changes will reduce the compliance burden for employers and individuals reporting information to multiple Government agencies.
Property used for storage an active asset for small business CGT concession purposes
The Administrative Appeals Tribunal (AAT) has decided that a property a small business owner used to store materials, tools and other equipment was an active asset for the purpose of the small business capital gains tax (CGT) concessions.
The taxpayer carried on a business of building, bricklaying and paving through a family trust. He owned a block of land used to store work tools, equipment and materials, and to park work vehicles and trailers. There was no business signage on the property.
After the property was sold in October 2016, the ATO issued a private ruling that the taxpayer was not entitled to apply the small business CGT concessions to the capital gain because the property was not an “active business asset”.
However, the AAT concluded that the business use of the land was far from minimal, and more than incidental to carrying on the business. This meant the CGT concessions could be applied.
ATO finds 90% error rate in sample of rental property claims
ATO Commissioner Chris Jordan has advised that as part of the ATO’s broad random enquiry program, its auditors have recently completed over 300 audits on rental property tax deduction claims and “found errors in almost nine out of 10 returns reviewed”.
The ATO is seeing incorrect interest claims for entire investment loans where the loan has been refinanced for private purposes, incorrect classification of capital works as repairs and maintenance, and taxpayers not apportioning deductions for holiday homes when they are not genuinely available for rent.
The ATO’s next area of focus will be rental income and related deductions, to help taxpayers report the right information, claim only the amounts they are entitled to, and “close the tax gap”.
Super guarantee amnesty not yet law: ATO will apply existing law
The ATO reminds businesses to be aware that under the current law, if they have missed a superannuation payment or haven’t paid employees’ super on time, they are required to lodge a superannuation guarantee (SG) charge statement.
Until law giving effect to the proposed superannuation guarantee amnesty is enacted, the ATO says it will continue to apply the existing law, including applying the mandatory administration component ($20 per employee per period) to SG charge statements lodged by employers.
The Bill containing the amnesty was still before the Senate when Parliament most recently concluded on 22 February 2019.
If it is eventually passed into law, the proposed amnesty will be a one-off opportunity for employers to self-correct their past SG non-compliance without penalty. It is intended to be available for 12 months from 24 May 2018 to 23 May 2019. The ATO will apply the new law (if it is passed) retrospectively to eligible voluntary disclosures made during this period.
Single Touch Payroll: low-cost solutions now available
Single Touch Payroll (STP) is a payday reporting arrangement where employers need to send tax and superannuation information to the ATO from their payroll or accounting software each time they pay their employees. STP reporting started gradually from 1 July 2018, and it will be required for all small employers (with fewer than 20 employees) from 1 July 2019.
A range of no-cost and low-cost STP solutions are now coming into the market. The solutions are required to be affordable (costing less than $10 per month), take only minutes to complete each pay period and not require the employer to maintain the software. They will best suit micro employers (with one to four employees) who need to report through STP but do not currently have payroll software.
Compensation for defective ATO administration: review announced
Mr Robert Cornall, a former Secretary of the Attorney-General’s Department, will lead a review of the Scheme for the Compensation for Detriment Caused by Defective Administration (the CDDA Scheme).
The CDDA Scheme allows Commonwealth Government agencies (including the ATO) to pay discretionary compensation when a person or an organisation suffers as a result of defective administration but there is no legal requirement to make a payment.
Mr Cornall’s review will consider the consistency of the ATO’s CDDA Scheme processes for small businesses, the timeliness of decisions, how effectively findings are communicated, how independent decision-making can be best achieved in future, and the adequacy of compensation for small businesses that have suffered an economic and/or personal loss as a consequence of the ATO’s actions.
Early recovery of small business tax debts: ATO to be scrutinised
Minister for Small and Family Business Michaelia Cash has asked Australian Small Business and Family Enterprise Ombudsman Kate Carnell to look into the ATO’s practices in pursuing early recovery of tax debts from small businesses who are in dispute with the ATO.
The Minister said she was determined to make sure the ATO treats small businesses fairly.
“Early recovery can be devastating for a small business, and is particularly damaging when the small business disputes the recovery and then goes on to win the case,” she said.
The Ombudsman will look into the extent of the problem to gather a holistic picture of how current systems impact people running small businesses. The scrutiny will focus on historical cases and will not include live cases currently before the Administrative Appeals Tribunal.
ATO small business benchmarks updated
The ATO has released its latest small business benchmarks, providing over 100 different industries with average cost of sales and average total expenses. Businesses can see clearly what the relevant benchmarks are for their industry. The benchmark data is drawn from over 1.5 million small businesses around Australia.
Business owners can use the benchmarks to gauge the strength of their business and keep an eye on their competition.
The benchmarks also help the ATO identify small businesses that may be doing the wrong thing and not properly reporting some or all of their income.
TIP: Using the business performance check tool in the ATO app is the quickest and easiest way to work out how your small business compares to the benchmarks. Search for “Australian Taxation Office” on the App Store or Google Play.
Tax concierge service available to small businesses
The Small Business Ombudsman, Kate Carnell, has announced that taxpayers wanting an external review of an adverse tax decision by the ATO through the Administrative Appeals Tribunal (AAT) can now contact the office of the Australian Small Business and Family Enterprise Ombudsman for assistance.
From 1 March 2019, small business owners without legal representation can access an hour with an experienced small business tax lawyer at a significantly reduced cost, subsidised by the office of the Ombudsman. Lawyers can review relevant documents and provide advice on the viability of an appeal. And should an appeal progress, the Ombudsman’s case managers will help the small business owner through the process.
Small business taxation decisions will be finalised within 28 days from the date of a hearing at the AAT.
Things to get right this FBT season
Fringe benefits tax (FBT) returns will soon be due and as always, it’s vital to make sure you use the latest rates and rely on the correct information.
FBT rates have recently been updated for the year, and a range of other factors may be need to be considered, including using the best car parking valuations, correctly identifying which travel expenses are deductible, considering how FBT applies to your arrangements with employees and independent contractors, and making sure you keep within the entertainment benefits rules. Another issue to keep an eye on is employees’ private use of work vehicles.
TIP: We can provide advice on these matters and more, and help get your FBT return lodged on time.
Company losses “similar business test” Bill passes
A more relaxed “similar business test” will be available to work out whether a former company's tax losses and net capital losses can be used as a tax deduction for a new business.
Extra 44,000 taxpayers face Div 293 superannuation tax
Individuals with income and super contributions above $250,000 are subject to an additional 15% tax on their concessional contributions.
Government consultation on sharing economy reporting
The ATO and other government agencies currently have limited information about the income of “gig workers” in the sharing economy.
ATO refers overdue lodgments to external collection agencies
External collection agencies will focus on income tax and activity statement lodgments.
ATO warns about new scams in 2019
While the ATO regularly contacts people by phone, email and SMS, there are some tell-tale signs that you’re being contacted by someone who isn’t with the ATO.
Proposed increase for small business instant asset write-off
Prime Minister Scott Morrison recently announced the intention to increase the instant asset write-off for small businesses from $20,000 to $25,000.
Super guarantee compliance: time to take action
The government’s latest initiatives targeting non-compliance with SG obligations give businesses plenty to think about.
Single Touch Payroll reporting for small businesses: get ready!
Legislation has recently passed to bring in STP reporting for all small employers from 1 July 2019.
Thoughts for the year ahead – Tax + Wealth in 2019
There are a huge number of tax laws that may change this year as a result of the upcoming 2019 Federal Election.
GST on Property Developments involving Government
The ATO is reviewing GST payments for arrangements where property developers acquire land from government entities.
Genuine Redundancy Payments
The Federal Government intends to align genuine redundancy and early retirement scheme payments with the Age Pension qualifying age.
Home office running expenses and Electronic Device expenses
The ATO has released updated guidance on tax-deductible home office and electronic device expenses.
Small business tax offset: Avoiding Errors when claiming
The ATO has issued tips for avoiding common errors when reporting net small business income and claiming the small business income tax offset for unincorporated small businesses.
Resolving tax disputes: Government to Help Small Businesses
The Federal Government intends to make it easier, cheaper and quicker for small businesses to resolve tax disputes with the ATO.
Reviewing the tax treatment of Granny Flats
Homeowners may have to pay CGT where there is a formal agreement for a family member to reside in their home; the Board of Taxation will review this treatment.
ATO issuing excess Super Contributions Determinations
The ATO has begun issuing determinations for individuals’ excess concessional contributions to super for the 2017–2018 financial year.
New “work test” exemption for recent retirees
From 1 July, a new 12-month exemption from the work test for new retirees aged 65–74 with total super below $300,000 will give many older Australians extra time to boost their super.
Tax clinic trial to reduce tax regulatory burden
The Federal Government has allocated $1 million to set up 10 tax clinics at Australian universities under a trial program.
ATO Information Sharing of Super Assets in Family Law Proceeding
An electronic information-sharing mechanism to allow super assets to be more swiftly and accurately identified during family law proceedings.
Government to Establish $2 Billion fund for Small Business Lending
The Government has announced it will establish new funds to provide longer-term equity funding for small businesses.
ATO SCAM ALERT: Fake Demands for Tax Payments!
The ATO has warned taxpayers and their agents to be on high alert for tax scams.
First Home Super Saver scheme and Downsizer Super Contributions: ATO guidance
The ATO has issued guidance to provide information about how the First Home Super Saver and downsizer contribution schemes work.
CGT on Grant of Easement or Licence
Taxation Determination TD 2018/15 considers the CGT consequences of granting an easement, profit à prendre or licence over an asset.
Government announces Super Refinements
The Government will amend the super tax laws to to address some minor but important issues, as part of the ongoing super reforms.
GST reporting: Common Errors and how to Correct them
Some businesses are making simple mistakes reporting their GST.
Small business corporate tax rates Bill is now Law
Eligible corporate taxpayers will pay 25% in 2021–2022, rather than from 2026–2027.
Work-related Deductions Down for 2018
The ATO has reported a decline in the overall value of work-related deductions for tax time 2018.
ATO Set to Issue Excess Super Contribution Determinations
The ATO has started issuing excess concessional contributions determinations for 2017–2018.
Taxing Compensation Received for Inappropriate Advice
The ATO has published information about how tax applies for people who receive compensation from financial institutions.
Residential Rental Property Travel Expenses
Non-business travel costs connected to residential rental properties are not deductible; the ATO has released new guidance.
Bringing Forward Business Tax Cuts and Small Business Offset
The Government and Labor have agreed to bring forward planned small business tax cuts; reductions in the corporate tax rate and small business offset have also been accelerated.
Black economy: Electronic Sales Suppression tools now Banned
Electronic sales suppression tools that misrepresent or hide business income are now banned.
ATO Expects 200,000 to Miss Out on Refunds by Failing to Lodge
The ATO expects that 200,000 people could miss out on a tax refund this year because they haven’t lodged a tax return.
Australian Small Business White Paper: Tax Reform a Key
The Institute of Public Accountants (IPA) and the IPA Deakin SME Research Centre have recommended a range of tax reforms
Transfer balance cap: ATO highlights admin issues
ATO Assistant Commissioner Superannuation Tara McLachlan has given a speech on “Administration issues under the transfer balance cap”.
Banking Royal Commission: Possible Super Contraventions
Closing submissions on super entities set out the relevant evidence in relation to the 17 entities examined
ATO Data Analytics and Prefilling
A closer look at the methods that help to process tax returns and correct mistakes.
Claiming work-related expenses
ATO education campaign to help correctly claim work-related expenses using its guides and tool kits.
$20,000 instant asset write-off for SBEs extended by 12 months
The Government will extend the current instant asset write-off ($20,000 threshold) for small business entities (SBEs) by 12 months to 30 June 2019. This applies to businesses with aggregated annual turnover less than $10 million.
Due Diligence Checklist: Purchasing a Business
Buying a business requires careful consideration of various choices. This checklist highlights common areas that must be considered when buying a business. A business can be purchased by purchasing either the business’s assets or the shares in the company or interests in the trust.
It is important to conduct a thorough due diligence review before making a decision to buy. The review should find out as much information about the business as possible, which you can then discuss with your adviser. You should also consider how embarking on a business venture would fit with your personal circumstances.
The ATO as SMSF Regulator: Observations
Observations from the ATO Deputy Commissioner, Superannuation, at the National SMSF Conference in Melbourne.
Cryptocurrency and Tax: Updated Guidelines
The ATO has updated its tax guidelines for cryptocurrency transactions.
12-month extension of $20,000 instant asset write-off
A Bill has been passed to extend the small business $20,000 instant asset write-off threshold for another 12 months.
Parliamentary committee recommends standard tax deduction, “push return” system
The Parliamentary Standing Committee on Tax and Revenue’s report on taxpayer engagement with the tax system recommends transitioning towards a standard tax deduction and a “push return” tax system.
SMSF Association Technical Day Speech
ATO Assistant Commissioners’ update on SMSF issues and practical considerations
Illegal phoenix activity: public examinations in Federal Court matter
Public examinations of more than 45 entities have commenced in the Federal Court.
GST exemption for offshore sellers of hotel bookings to be removed: draft legislation released
The proposed new rules will ensure offshore sellers of hotel accommodation in Australia calculate their GST turnover in the same way as local sellers.
Super funds deliver healthy returns for 2017–2018
Funds in the “growth” category continue to provide strong positive returns.
Illegal phoenix activity costs billions; new Phoenix Hotline
The ATO estimates the annual direct impact of illegal phoenix activity and establishes a hotline for reporting phoenix behaviour.
Retirement income covenant needs more flexibility: KPMG
KPMG has released a submission in response to the Treasury position paper on the proposed retirement income covenant announced as part of the 2018–2019 Budget.
Income tax residency rules for individuals: Board of Taxation recommends reform measures
The Board of Taxation’s recently published report makes recommendations to modernise and simplify the rules.
ATO warns about scammers at tax time
Taxpayers should be on “high alert” for tax-related scams at tax time.
Tax gap for individuals is $8.8 billion, says ATO
The ATO has estimated the size of the “tax gap” between the tax the ATO collects and the amount it would collect if all taxpayers fully complied with the law.
Transacting with Cryptocurrency: updated ATO info
The ATO has updated the information on its website dealing with capital gains tax and cryptocurrency.
ATO gives small businesses the chance to seek independent review of ATO audit position
The ATO is running a 12-month pilot to extend its independent review service to certain small business taxpayers.
Illegal early access to super: ATO warning about scammers
Taxpayers are urged to be aware of scammers who promise to organise access to retirement savings for a fee.
Government launches new service to simplify business registrations
The new stand-alone service provides a simpler and clearer way to register a business.
Superannuation system: Productivity Commission draft report
The Productivity Commission has released a draft report that recommends a range of changes to improve Australia’s superannuation system.
SMSF compliance: don’t slip up
With the self managed superannuation fund (SMSF) annual return lodgment deadline upon us, minds should have already turned to meeting compliance requirements. The 2016–2017 financial year includes a few twists and turns which trustees should factor in to avoid late lodgement.
Advisory Board to help clamp down on the black economy
The Government is establishing a new Advisory Board to support its reform agenda to disrupt the black economy.
Major ATO focus on work-related clothing and laundry this tax time
This tax time, the ATO will be closely examining claims for work-related clothing and laundry expenses.
GST property settlement online forms available
From 1 July 2018, purchasers of newly constructed residential properties or new subdivisions must pay the related GST directly to the ATO as part of the settlement.
Personal tax cuts now law
The legislation to enact the Government’s seven-year personal income tax reform plan, as announced in the 2018 Federal Budget, passed Parliament on 21 June 2018.
Business lending practices in spotlight at Royal Commission
Bank lending practices for small and medium enterprises (SMEs) were in the spotlight when the Financial Services Royal Commission (FSRC) held its third round of public hearings in late May. These hearings focused on the conduct of financial services entities providing credit to SMEs.
Government announces introduction of one-off 12 month amnesty for super guarantee underpayment
The government has announced that it is introducing a one-off, 12 month amnesty for historical underpayment of the super guarantee.
ATO assessments issued for excess super pension balances
The ATO has started issuing excess transfer balance (ETB) tax assessments to self managed super fund (SMSF) members, or their agents, who had previously received an ETB determination and rectified the excess.
Businesses, get ready: GST on low value goods
From 1 July 2018, GST will be imposed on the supply low value goods from outside of Australia to Australian consumers. Businesses need to be ready for this change.
Banking Royal Commission wraps up evidence on financial advice
The Banking Royal Commission has wrapped up its two weeks of hearings focused on financial advice.
Financial Complaints Authority takes shape
Minister for Revenue and Financial Services Kelly O’Dwyer has announced the authorisation of the new financial dispute resolution scheme, the Australian Financial Complaints Authority (AFCA), which will start accepting complaints from 1 November 2018
Government to increase civil penalties for white-collar crime
In response to recent Senate Economics References Committee and Australian Securities and Investments Commission (ASIC) Enforcement Review Taskforce reports, the Federal Government has agreed to increase the civil penalties for corporate and financial misconduct (white-collar crime), for both individuals and bodies corporate.
Residential rental property travel expense deduction changes
Recent changes to Australian tax law mean that individuals, self managed superannuation funds (SMSFs) and “private” trusts and partnerships can longer claim tax deductions for non-business travel costs related to their residential rental properties
CGT main residence exemption to disappear for non-residents
A person’s Australian tax residency status may be about to assume a whole new meaning.
Data matching finds taxpayers with unnamed Swiss bank accounts
More than 100 Australians have been identified as “high risk” and will be subject to ATO investigation because they have links to Swiss banking relationship managers who are alleged to have actively promoted and facilitated tax evasion schemes.
ATO closely examines work-related car expenses
The ATO is concerned about taxpayers making mistakes or deliberately lodging false claims for work-related car expenses, and has announced it will be closely examining claims for these expenses in 2018 tax returns.
2018 Budget - Tax compliance and integrity
Important announcements regarding Tax Compliance and Integrity from the 2018 Budget which may affect you.
2018 Budget - Business Taxation
Important annoucements relating to business taxation from the 2018 Budget announcement which may affect you.
2018 Budget - Superannuation
Important announcements from the 2018 budget regarding superannuation which may affect you.
Personal tax rates: staged seven-year reform plan starting from 2018–2019
In the 2018–2019 Budget, the Government announced a raft of new measures relating to personal taxation, please find the important announcements below which may affect you.
Single Touch Payroll reporting: ATO urges employers to get ready
The ATO is urging employers with 20 or more employees to start preparing now for the Single Touch Payroll (STP) reporting regime, which will be mandatory from 1 July 2018
Super guarantee: ATO compliance approach to non-payment
The ATO has released a fact sheet explaining its compliance approach to employers who fail to meet their superannuation guarantee (SG) obligations.
Superannuation rates and thresholds for 2018–2019
We summarise some of the key superannuation rates and thresholds for the upcoming financial year:
Goods and services tax on low-value imported goods
From 1 July 2018, goods and services tax (GST) will apply to some offshore supplies of goods valued at $1,000 or less that are purchased by consumers and brought into Australia.
Capital gains tax withholding: updated information for trustees
The foreign resident capital gains tax (CGT) withholding regime requires purchasers of Australian property to withhold an amount from the purchase price (for remission to the ATO) if the vendor is a foreign resident.
ATO releases latest small business benchmarks
The ATO has released its latest small business benchmarks, providing over 100 different industries with average cost of sales and average total expenses.
"Transition to retirement" pensions to become simpler
In welcome news for superannuation members, the government has announced plans to simplify the payment of transition to retirement income streams (TRISs) so that they will always be permitted to automatically revert to a dependant upon the death of the original pensioner