Super guarantee contribution due date for June 2021 quarter The due date for employers to make super guarantee contributions for their employees for the June 2021 quarter is 28 July 2021. Note that the super guarantee rate in relation to salary and wages paid on or before 30 June 2021 is 9.5%, but the super guarantee rate is 10% in relation to salary and wages paid from 1 July 2021 (even if they are paid in relation to work performed before that date). Also, contributions made (and received by the fund) after 30 June 2021 will not be deductible in the 2021 income year, even if they are made in relation to work performed during the 2021 income year. Extension of time to make repayments on Division 7A loans Editor: Under a complying Division 7A loan from a private company, the borrower must make minimum yearly repayments ('MYR') before the end of the lender’s income year to avoid the loan being treated as an assessable dividend. To offer more support due to the ongoing effects of COVID-19, an extension of the repayment period is now available for those who were unable to make their MYRs by the end of the lender’s 2020/21 income year (generally 30 June). The borrower can apply for this administrative relief using the ATO's streamlined online application. Note that they must still make up the shortfall of their 2020/21 MYR by 30 June 2022. A similar extension was also available for the MYR for the 2019/20 year, and borrowers who obtained this extension needed to have made up that shortfall by 30 June 2021. If they didn't meet this deadline, they will need to either obtain a further extension of time for the 2019/20 MYR outside the streamlined process, or amend their 2019/20 tax return to include a dividend. Rent or lease payment changes due to COVID-19 The ATO has provided updates regarding the tax implications when a landlord gives, or a tenant receives, rent concessions (such as waivers or deferrals of rent) as a result of COVID-19. For example, the ATO provides the following advice for tenants that have received a rent waiver. If the waived rent is related to a past period of occupancy that the tenant has already incurred and claimed a deduction for, they are still entitled to that deduction. However: if they have already paid the incurred rent and it has been waived and refunded to the tenant, they will need to include this amount in their assessable income when they receive it; or if they have not already paid the incurred rent and it has been waived, the rent waiver will be a debt forgiveness. When such a debt is forgiven, the tenant will make a gain. The amount isn't usually included in the business's assessable income — it is instead offset against amounts that could otherwise reduce the business's taxable income. If the waived rent is related to a future period of occupancy, they will not be entitled to a deduction for that amount. These types of rent concessions can give rise to various tax implications for both tenants and landlords (including GST implications), so please contact our office if you would like assistance in this regard. Lost, damaged or destroyed tax records The ATO knows that many taxpayers are facing lasting impacts left in the wake of natural disasters, so if they find their records have been lost or destroyed, whether in cyclones, floods or bushfires, the ATO can help. According to ATO Assistant Commissioner Tim Loh: “If you have a myGov account linked to the ATO, you’ll be able to view some of your records, including income tax returns, income statements and previous notices of assessments. If you lodge through a registered tax agent, they can also access these documents on your behalf.” Government agencies, private health funds, financial institutions and businesses provide information to the ATO which is available to tax agents and automatically included in returns by the end of July. If taxpayers have lost receipts due to a natural disaster, the ATO can accept reasonable claims without evidence, so long as it’s not reasonably possible to access the original documents (although the taxpayer may be required to tell the ATO how they calculated the claim). Introducing SMSF rollover alerts Since February 2020, the ATO has been issuing alerts via email and SMS when certain changes are made to a self-managed super fund ('SMSF'). With the inclusion of SMSF rollovers in SuperStream, the ATO will send the fund an email and/or text message alert when the fund uses the SMSF verification service ('SVS') to verify the SMSF's details before making a rollover. Note that funds may use this service multiple times when actioning a single rollover request, which may result in receiving multiple alerts. These alerts are being sent to help safeguard retirement savings and reduce the risk of fraud or misconduct. If a fund receives an alert and is already aware of the rollover request, there is nothing more that needs to be done. However, if a member didn't request a rollover to be made to an SMSF, or they want more information, they will need to contact their existing super fund(s) as a matter of priority, as rollovers through SuperStream may be processed in as little as 3 business days. SMSF limited recourse borrowing arrangements interest rates The ATO has confirmed that the following interest rates charged under a limited recourse borrowing arrangement ('LRBA') to an SMSF would be consistent with the safe harbour terms the ATO will accept for the 2021/22 financial year.
New ATO data-matching programs The ATO has advised that it will engage in two new data matching programs, as outlined below: the ATO will acquire novated lease data from McMillan Shakespeare Group, Smartgroup Corporation, SG Fleet Group, Eclipx Group, LeasePlan, Toyota Fleet Management, LeasePLUS and Orix Australia for the 2018/19 through to 2022/23 financial years (relating to approximately 260,000 individuals each financial year); and the ATO will acquire account identification and transaction data from cryptocurrency designated service providers for the 2021 financial year through to the 2023 financial year inclusively (relating to approximately 400,000 to 600,000 individuals each financial year). Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
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Many of our business clients like to review their tax position before the end of the income year and evaluate any strategies that may be available to legitimately reduce their tax. Traditionally, year-end tax planning for small businesses is based around accelerating deductions and deferring income. However, this year, consideration will also need to be given to the impact of the COVID-19 pandemic. Small Business Entities ('SBEs') – i.e., those with an aggregated turnover of less than $10 million – often have greater tax planning opportunities due to certain concessions only applying to them. Further, SBE taxpayers generally have the flexibility of being able to pick the concessions that suit their circumstances. The following are a number of areas that may be considered for all business taxpayers. Maximising deductions for non-SBE taxpayers Deductions can be maximised for non-SBE business taxpayers by prepaying expenses, accelerating expenditure and/or accruing expenses that have been incurred. Prepayment strategies (non-SBEs) Any part of an expense prepayment relating to the period up to 30 June is generally deductible. In addition, non-SBE taxpayers may generally claim prepayments in full for expenditure that is: – under $1,000; – made under a 'contract of service' (e.g., salary and wages); or – required to be incurred under law. Accelerating expenditure (non-SBEs) Accelerating expenditure involves bringing forward expenditure on regular, on-going deductible items. This is a useful strategy because business taxpayers can generally claim deductions for expenses they 'incurred' during 2020/21, even if the expenses have not actually been paid by 30 June 2021. The following may act as a checklist of possible accelerated expenditure for 2020/21: Depreciating assets - Non-SBEs with an aggregated turnover of (generally) less than $5 billion can fully expense eligible assets, regardless of cost, that were first acquired and used (or installed ready) for business use from 7:30pm (AEDT) on 6 October 2020 to 30 June 2021. Note: Non-SBEs may choose to opt out of full expensing on an asset-by-asset basis. If full expensing does not apply to a particular asset (or an opt-out choice is made), non-SBEs with an aggregated annual turnover of less than $500 million can generally claim: – an immediate deduction for eligible assets costing less than $150,000 that were acquired from 7:30pm (AEDT) on 2 April 2019 to 31 December 2020 and were first used (or installed ready) for business use from 12 March 2020 to 30 June 2021; or – for assets costing $150,000 or more, a 50% accelerated depreciation concession for eligible new assets first held and used (or installed ready) for business use from 12 March 2020 to 30 June 2021 (unless an opt-out choice is made for an asset). Additional possible accelerated expenditure could also include the following:
Accrued expenditure (for all business taxpayers - including SBE taxpayers) Business taxpayers (including SBE taxpayers) are entitled to a deduction for expenses incurred as at 30 June 2021, even if they have not yet been paid. Examples of expenses that may be accrued include: ~ salary or wages and bonuses – the accrued expense for the days that employees have worked but have not been paid as at 30 June 2021; ~ interest – any accrued interest outstanding on a business loan that has not been paid; ~ commissions – where commission payments are owed to employees or other external parties; ~ fringe benefits tax ('FBT') – for example, if an FBT instalment for the June 2021 quarter is due but is not payable until July, it can be accrued and claimed as a tax deduction in 2020/21; and ~ directors’ fees – where a company is definitively committed to the payment of a director’s fee as at 30 June 2021, it can be claimed as a tax deduction. Maximising deductions for SBE taxpayers Deductions can be maximised for SBE taxpayers by accelerating expenditure and/or prepaying deductible business expenses (and also by accruing expenditure - refer above). Accelerating depreciation expenditure (for SBE taxpayers) In addition to accelerating expenditure on various usiness items, SBE taxpayers that use the simplified SBE depreciation rules may claim the following 2021 deductions (if applicable) in relation to depreciating assets: A full deduction for the cost of eligible assets (i.e., regardless of cost) first acquired and first used (or installed ready for use) for business purposes from 7:30pm (AEDT) on 6 October 2020 to 30 June 2021. Note that, SBE taxpayers choosing to use the simplified SBE depreciation regime cannot directly opt out of temporary full expensing (i.e., if it applies). Where temporary full expensing does not apply: An SBE taxpayer may be entitled to claim an immediate deduction for eligible depreciating assets costing less than $150,000 that were first used or (installed ready for use) for business purposes by 30 June 2021 Alternatively, assets costing $150,000 or more are allocated to an SBE taxpayer's general small business pool. Note that, SBE taxpayers using the simplified SBE depreciation regime cannot opt out of temporary full expensing with regards to their general pool. As a result, the closing pool balance (before current year deductions) will be fully claimed in the 2021 income year. Therefore, if appropriate, SBE taxpayers should consider purchasing and using (or installing) these items by 30 June 2021. Prepayment strategies – SBE
SBE taxpayers making prepayments before 1 July 2021 can choose to claim a full deduction in the year of payment where they cover a period of no more than 12 months (ending before 1 July 2022). Otherwise, the prepayment rules are the same as for non-SBE taxpayers. The kinds of expenses that may be prepaid include: Rent on business premises or equipment. Lease payments on business items such as cars and office equipment. Interest – check with your financier to determine if it’s possible to prepay up to 12 months interest in advance. Business trips. Training courses that run from 1 July 2021. Business subscriptions. Information Required This is some of the information we will need you to bring to help us prepare your income tax return: Stock-take details as at 30 June 2021. Debtors listing (including a list of bad debts written off) as at 30 June 2021. Note: In order to claim a deduction, the debt must be written off on or before 30 June. Creditors listing as at 30 June 2021. Tax saving strategies prior to 1 July 2021 A strategy often used to reduce taxable income (and, in turn, tax payable) in an income year is to bring forward any expected or planned deductible expenditure from a later income year. However, in light of the continued impact of the COVID-19 pandemic, any tax planning for individuals with potentially reduced income for the 2021 tax season may require consideration of deferring any deductible expenditure (if possible). Common claims made by individuals The following outlines common types of deductible expenses claimed by individual taxpayers, such as employees and rental property owners, and some strategies for increasing their deductions for the 2021 income year. 1. Depreciating assets costing $300 or less Salary and wage earners and rental property owners will generally be entitled to an immediate deduction for certain income-producing assets costing $300 or less that are purchased before 1 July 2021. Some purchases you may consider include: tools of trade; electronic tablets; calculators or electronic organisers; software; books and trade journals; stationary; and briefcases/luggage or suitcases. 2. Clothing expenses Individuals may pay for work-related clothing expenses before 1 July 2021, such as: ~ compulsory (or non-compulsory and registered) uniforms, and occupation specific and protective clothing; and ~ other associated expenses such as drycleaning, laundry and repair expenses. 3. Self-education expenses Employees may prepay self-education items before 1 July 2021, such as: ~ course fees (but not HELP repayments), student union fees, and tutorial fees; and ~interest on borrowings used to pay for any deductible self-education expenses. Also they may bring forward purchases of stationery and text books (i.e., those that are not required to be depreciated). 4. Other work-related expenses Employees may also prepay any of the following expenses before 1 July 2021: ~ Union fees. ~Subscriptions to trade, professional or business associations. ~ Seminars and conferences. ~ Income protection insurance (excluding death and total/permanent disability). ~ Magazine and professional journal subscriptions. Note: If prepaying any of the above expenses before 1 July 2021, ensure that any services being paid for will be provided within a 12-month period that ends before 1 July 2022. Otherwise, the deductions will generally need to be claimed proportionately over the period of the prepayment Information Required You will need to provide us with information to assist in preparing your income tax return. Please check the following and provide any relevant statements, accounts, receipts, etc., to help us prepare your return. Income/Receipts:
Expenses/Deductions (in addition to those mentioned above):
~ cooling and heating; ~ depreciation of office furniture; ~ lighting; and ~ telephone and internet. Interest and dividend deductions, such as: account keeping fees; ongoing management fees; interest on borrowings to buy shares; and advice relating to changing investments (but not setting them up). Interest on loans to purchase equipment or income-earning investments. ~ Motor vehicle expenses (if work-related). ~ Overtime meal expenses. ~ Rental property expenses, including:
~ Sun protection items. ~ Tax agent fees. ~ Telephone expenses (if work-related). ~ Tools of trade. Cryptocurrency under the microscope this tax time The ATO is concerned that many taxpayers believe their cryptocurrency gains are tax-free, or only taxable when the holdings are cashed back into Australian dollars. ATO data analysis shows a dramatic increase in trading since the beginning of 2020, and has estimated that there are over 600,000 taxpayers that have invested in crypto-assets in recent years. This year, the ATO will be writing to around 100,000 taxpayers with cryptocurrency assets explaining their tax obligations and urging them to review their previously lodged returns. The ATO also expects to prompt almost 300,000 taxpayers as they lodge their 2021 tax return to report their cryptocurrency capital gains or losses. Gains from cryptocurrency are similar to gains from other investments, such as shares. CGT also applies to the disposal of non-fungible tokens ('NFTs'). The ATO matches data from cryptocurrency designated service providers to individuals’ tax returns, helping it to ensure investors are paying the right amount of tax. “The best tip to nail your cryptocurrency gains and losses is to keep accurate records including dates of transactions, the value in Australian dollars at the time of the transactions, what the transactions were for, and who the other party was, even if it’s just their wallet address,” Assistant Commissioner Tim Loh said. Businesses or sole traders that are paid cryptocurrency for goods or services will have these payments taxed as income based on the value of the cryptocurrency in Australian dollars. Holding a cryptocurrency for at least 12 months as an investment may mean the holder is entitled to a CGT discount if they have made a capital gain. Temporary reduction in pension minimum drawdown rates extended The Government has announced an extension of the temporary reduction in superannuation minimum drawdown rates for a further year to 30 June 2022. As part of the response to the coronavirus pandemic (and the negative effect on the account balance of superannuation pensions), the Government reduced the superannuation minimum drawdown rates by 50% for the 2019/20 and 2020/21 income years. This 50% reduction will now be extended to the 2021/22 income year. Super Guarantee rate rising from 1 July 2021 The super guarantee rate will rise from 9.5% to 10% on 1 July 2021, so businesses with employees will need to ensure their payroll and accounting systems are updated to incorporate the increase to the super rate. ATO warns on ‘copy/pasting’ claims The ATO is alerting taxpayers that its sights are set on work-related expenses like car and travel claims that are predicted to decrease in this year’s tax returns. Assistant Commissioner Tim Loh noted that COVID-19 has changed people’s work habits, so the ATO expects their work-related expenses will reflect this. “We know many people started working from home during COVID-19, so a jump in these claims is expected,” Mr Loh said. “But, if you are working at home, we would not expect to see claims for travelling between worksites, laundering uniforms or business trips.” The ATO will also look closely at anyone with significant working from home expenses, that maintains or increases their claims for things like car, travel or clothing expenses: “You can’t simply copy and paste previous year’s claims without evidence.” “But we know some of these unusual claims may be legitimate. So, if you explain your claim with evidence, you have nothing to fear.” Family assistance payments The ATO has reminded individuals receiving Child Care Subsidy and Family Tax Benefit payments from Services Australia that they and their partners must lodge their 2019/20 Individual tax returns by 30 June 2021. Lodgment deferrals with the ATO do not alter this requirement. Services Australia needs such individuals' income details to balance payments for Child Care Subsidy and Family Tax Benefit. If tax return lodgment is not made by 30 June 2021: clients receiving Child Care Subsidy may lose their ongoing entitlement and/or receive a debt from Services Australia and have to repay the amount received in the 2019/20 financial year; and clients receiving Family Tax Benefit may miss out on additional payments, may also receive a debt from Services Australia and/or may have their fortnightly payments stopped. Do you use the Small Business Superannuation Clearing House? The ATO has advised employers intending to claim a tax deduction for super payments that they make for employees in the 2020/21 income year that any such payments must be accepted by the Small Business Superannuation Clearing House ('SBSCH') on or before 23 June 2021. This allows processing time for the payments to be received by their employees' super funds before the end of the 2020/21 income year. Car parking threshold for 2022 FBT year The car parking threshold for the FBT year commencing on 1 April 2021 is $9.25. This replaces the amount of $9.15 that applied in the previous FBT year commencing 1 April 2020. Luxury car tax thresholds The ATO has updated the luxury car tax ('LCT') thresholds for the 2021/22 financial year. The LCT threshold for fuel efficient vehicles in 2021/22 is $79,659 (up from $77,565 in 2020/21) and the LCT threshold for other vehicles in 2021/22 is $69,152 (up from $68,740 in 2020/21). Note that these thresholds determine whether LCT is payable, and are different from the luxury car depreciation limit of $60,733 for 2021/22. New ATO data-matching programs involving property The ATO has advised that it will engage in two new data matching programs dealing with property transactions, as outlined below: The ATO will acquire property management data from property management software providers for the 2018/19 through to 2022/23 financial years (relating to approximately 1.6 million individuals); and The ATO will acquire rental bond data relating to approximately 350,000 individuals from state and territory rental bond regulators bi-annually through to 30 June 2023. Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances
Get ready for the new financial year The countdown to 30 June has begun. The Federal Government confirmed that the $1,080 low and middle income tax offset will be extended to the year ending 30 June 2021. Eligible taxpayers must lodge their 2021 return to claim the rebate. You can lodge your 2021 tax return after 1 July 2021. As usual, the new financial year brings new tax rules. Some of the big changes that take place on 1 July include: 1. Increase to the superannuation guarantee contribution rate. The minimum super contribution rate will increase from 9.5% to 10%. Clients who charge out labour should review their rates and factor this increase into their rates going forward. 2. Increase to the concessional and non-concessional superannuation caps. The annual concessional or tax deductible cap goes from $25,000 to $27,500. Depending on your total superannuation balance your non-concessional annual cap may increase from $100,000 to $110,000. 3. Single touch payroll (STP) reporting Most businesses have been reporting their wages through STP for two years. The exemptions for micro and family employers run out on 30 June and from 1 July all employers will need to report wages through STP. Government proposal to modernise business communications The Government has committed to modernising certain laws so that they are 'technology neutral', to enable easier communication between businesses, individuals and regulators. The first phase of legislative reform will focus on key areas raised by stakeholders which are implementation-ready (ideally by the end of 2021), including: expanding the range of documents that can be validly signed electronically; increasing the range of documents that can be sent electronically to shareholders and amending requirements to contact lost shareholders; improving flexibility for customers when changing address and consenting to electronic communication with credit providers; removing prescriptive requirements for notices to be published in newspapers, where suitable alternatives have been identified; and addressing provisions in Treasury legislation where only non-electronic payment options are in place. Subsequent phases will consider reforms in additional areas that could benefit from greater technology neutrality, including communication with regulators, and product disclosure and recordkeeping requirements. ATO "keeping JobKeeper payment fair" The ATO is using its compliance resources to maintain the integrity of the JobKeeper measure. While most businesses and employees have done the right thing, the ATO has identified concerning and fraudulent behaviour as well as claims by a small number of organisations and employees, and will actively pursue these claims. Some of the concerning behaviours the ATO is currently examining include: businesses that have: – made claims for employees without a nomination notice, or have not paid their employees the correct JobKeeper mount (before tax); – made claims for employees where there is no history of an employment relationship; – amended their prior business activity statements to increase sales in order to meet the turnover test; or – recorded an unexplained decline in turnover, followed by a significant increase; and individuals who have knowingly: – made multiple claims for themselves as employees or as 'eligible business participants'; or – made claims both as an employee and an 'eligible business participant'. The ATO encourages all JobKeeper applicants to review their applications and contact the ATO if they have made mistakes (and the ATO may not pursue repayment of an overpayment in certain circumstances, such as for honest mistakes). If anyone is concerned that someone is doing the wrong thing in relation to the JobKeeper payment, they are encouraged to tell the ATO about it. The ATO will be examining JobKeeper Tip-Offs and contacting businesses where it has concerns and needs more information. Independent review service for small businesses made permanent Following a successful multi-year pilot, the ATO’s small business independent review service will be offered permanently as a dispute resolution option for eligible small businesses. ATO Deputy Commissioner Jeremy Geale said the service is all about ensuring small businesses are given the opportunity to achieve an independent, fast, free, and fair resolution when they disagree with the ATO’s audit position: “Independence is critical when handling a dispute, so we ensure each and every independent review is done by an officer from a different part of the ATO who was not involved in the original audit”. The ATO’s small business independent review service is available to eligible small businesses with an annual turnover of less than $10 million in relation to disputes about income tax, GST, excise, luxury car tax, wine equalisation tax, and fuel tax credits, and is in addition to other dispute options. Disputes about employer obligations like superannuation and FBT are not eligible for the independent review service. More information about the ATO’s independent review service, including how to request a review and eligibility criteria, is available on the ATO’s website. ATO asks businesses to check if they are still using their ABNs The ATO has advised that, if a business hasn’t used its ABN for a while, the ATO may contact them about cancelling their ABN. The ATO may also contact them about their ABN if their business situation has changed. To ensure businesses don’t miss out on Government support, including during unfortunate events, it’s essential that they regularly review their ABN details and keep them up to date (or cancel their ABN if the business is no longer operating, so that Government agencies can tailor their support to those that need it). It’s also important to check that the business has listed the physical address of the business, as otherwise it can be difficult for emergency services and Government agencies to make contact. A business' mailing address and physical location address can be listed separately on its ABN data, and these (and other ABN details) can be checked and updated online at any time. Passenger movement data matching program The ATO will access data from the Department of Home Affairs on passenger movements during the 2016/17 to 2022/23 financial years, and match it with certain sections of ATO data holdings to identify taxpayers that can be provided with tailored information to help them meet their tax and superannuation obligations, or to ensure compliance with taxation and superannuation laws. Data items include names, dates of birth, arrival and departure dates, passport Information, and status types (visa status, residency, lawful, Australian citizen). The ATO estimates that records relating to approximately 670,000 individuals will be obtained each financial year. Super contribution caps will increase from 1 July 2021 The ATO has confirmed that, from 1 July 2021, the superannuation concessional and nonconcessional contribution caps will be indexed. The new caps for the 2021/22 year will be: Concessional Cap: $27,500 Non-Concessional cap: $110,000 (or $330,000 over 3 years) The total superannuation balance limit that determines if an individual has a nonconcessional contributions cap of nil will also increase from $1.6 to $1.7 million, effective from 1 July 2021. Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
JobKeeper comes to an end The ATO has advised that the final JobKeeper payment will be processed in April 2021. Enrolled businesses do not have to do anything when the program closes, although they will need to complete their final March monthly business declaration by 14 April 2021. Also, once a business is no longer claiming JobKeeper Payments, it may start to be eligible to receive the JobMaker Hiring Credit for any additional employees that started employment on or after 7 October 2020. ATO loses case on JobKeeper and backdated ABNs On 24 March 2021, the Full Federal Court handed down its decision in a case concerned with the requirement that an entity claiming JobKeeper must have had an ABN on 12 March 2020, or a later time allowed by the ATO. The Registrar of the Australian Business Register had reactivated the relevant entity's previously cancelled ABN after 12 March 2020, but with a backdated effective date on or before 12 March 2020. The Court held that backdating an ABN to have an effective date on or before 12 March 2020 did not satisfy the requirement for the entity to have had an ABN on 12 March 2020. However, the Court also held that the ATO's decision not to allow the entity a "later time" to have an ABN was a "reviewable decision", and that the Commissioner's discretion should be exercised in these circumstances (i.e., the Court held that the entity should be entitled to JobKeeper). The Court's decision does not change the need to satisfy all of the other eligibility requirements. Where the ATO has postponed finalising a decision regarding a taxpayer's eligibility for JobKeeper (and/or the cash flow boost) pending the Court's decision, the ATO will contact the affected taxpayer shortly to provide them with an update. First criminal conviction for JobKeeper fraud A person claiming to be a sole trader was convicted of three counts of making a false and misleading statement to the Commissioner of Taxation, in order to receive $6,000 in JobKeeper payments to which he was not entitled, as he was not operating a genuine business and he had already agreed to be nominated by his full-time employer for the allowance. The ATO has a dedicated integrity strategy that supports the administration of the Government’s stimulus packages, with robust and efficient compliance systems that make it very easy to identify fraudulent behaviour and stop it. ATO Deputy Commissioner Will Day said “Since the first payments were made in April, the ATO has monitored every payment, every day, every month, and will continue to do so until the last payment is made." ATO's taxable payments reporting system update The ATO has confirmed that more than 60,000 businesses have not yet complied with lodgment requirements under the taxable payments reporting system ('TPRS') for 2019/20. The TPRS is a black economy measure designed to assist the ATO to identify contractors who don’t report or under-report their income. The ATO estimates that around 280,000 businesses need to lodge a Taxable payments annual report ('TPAR') for the 2020 financial year. Importantly, 2020 was the first year that businesses that pay contractors to provide road freight, information technology, security, investigation, or surveillance services may need to lodge a TPAR with the ATO (in addition to those businesses providing building and construction, cleaning, or courier services). Businesses who have not yet lodged need to lodge as soon as possible to avoid penalties. ATO Assistant Commissioner Peter Holt added that some businesses may not realise they need to lodge a TPAR, but may be required to, depending on the percentage of payments received for deliveries or courier services. “Many restaurants, cafés, grocery stores, pharmacies and retailers have started paying contractors to deliver their goods to their customers. These businesses may not have previously needed to lodge a TPAR. However, if the total payments received for these deliveries or courier services are 10% or more of the total annual business income, you’ll need to lodge,” Mr Holt said. FBT rates and thresholds for the 2021/22 FBT year The ATO has updated its webpage containing the fringe benefits tax ('FBT') rates and thresholds for the 2017/18 to 2021/22 FBT years. Two amounts that were not previously announced for the 2021/22 FBT year are: the FBT record keeping exemption is $8,923 (up from $8,853 for the 2020/21 FBT year); and the statutory or benchmark interest rate is 4.52% (down from 4.80% for the 2020/21 FBT year). The ATO also separately released two taxation determinations setting out further rates and thresholds for the FBT year commencing on 1 April 2021, being: Motor vehicle (other than a car) — cents per kilometre rate; and Reasonable food and drink amounts for employees living away from home. Please contact our office if you need more information about these rates or FBT in general. Warning regarding new illegal retirement planning scheme The ATO has recently identified a new scheme where SMSF trustees were informed that they could set up a new SMSF to roll-over the fund balance from the old SMSF and then liquidate their old SMSF, in an attempt to avoid paying potential tax liabilities. The ATO warns that taking part in this arrangement and others like it can result in civil and criminal actions and could ultimately put the members' retirement savings at risk. If a trustee of an SMSF believes they have been approached by a promoter of a retirement planning scheme, the ATO recommends they seek a second opinion from a registered tax agent or appropriately qualified financial adviser, and also report the promoter to the ATO. New succession planning guide for family businesses The Australian Small Business and Family Enterprise Ombudsman, in conjunction with Family Business Australia, has released a new online guide to succession planning — the “Introductory Guide to Family Business Succession Planning” — which provides a stepby- step guide to passing the family business on to the next generation. A recent report revealing that 54% of family businesses have no documented succession plan in place and no retirement plan for the current CEO. The easy-to-read guide offers tips on how to handle tense conversations that can arise between family members throughout the transition phase. The guide is free and available on both the Family Business Australia and the ASBFEO’s websites. Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the
information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances. Changes to STP reporting concessions from 1 July 2021 Small employers (19 or fewer employees) are currently exempt from reporting ‘closely held’ payees through Single Touch Payroll ('STP'). Also, a quarterly STP reporting option applies to micro employers (four or fewer employees). These concessions will end on 30 June 2021. The STP reporting changes that apply for these employers from 1 July 2021 are outlined below. Closely held payees (small employers) From 1 July 2021, small employers must report payments made to closely held payees through STP using any of the options below. Other employees must continue to be reported by each pay day. A ‘closely held payee’ is an individual who is directly related to the entity from which they receive payments. For example, this could include family members of a family business, directors or shareholders of a company and beneficiaries of a trust. Payments to such payees can be reported via STP (from 1 July 2021) using any of the following options: 1. Report actual payments on or before the date of payment. 2. Report actual payments quarterly on or before the due date for the employer’s quarterly activity statements. 3. Report a reasonable estimate quarterly on or before the due date for the employer’s quarterly activity statements. Note that consequences may apply for employers that under-estimate amounts reported for closely held payees. Small employers with only closely held payees have up until the due date of the payee’s tax return to make a finalisation declaration. Employers will need to speak with these payees about when their individual income tax return is due. Micro employers From 1 July 2021, the quarterly reporting concession will only be considered for eligible micro employers experiencing ‘exceptional circumstances’. Common examples of when the ATO would generally consider it to be fair and reasonable to grant a deferral due to exceptional or unforeseen circumstances include natural disasters, other disasters or events, serious illness or death. Additionally, ‘exceptional circumstances’ for access to the STP quarterly reporting concession from 1 July 2021 may include where a micro employer has: seasonal or intermittent workers; or no or unreliable internet connection. The ATO says it will consider any other unique circumstances on a case-by-case basis. It should be noted that registered agents must apply for this concession and lodge STP reports, quarterly, on behalf of their eligible micro employer clients. The STP reports are due the same day as the employer’s quarterly activity statements. If an employer prefers to report monthly, the STP reports must be lodged on or before the 21st day of the following month. Finalisation declarations will need to be submitted by 14 July each year. Please contact our office if you require more information or assistance with these STP reporting options. Paper PAYG and GST quarterly instalment notices The ATO has previously advised that it will no longer issue paper activity statements after electronic lodgment. Instead, electronic activity statements will be available for access online, three to four days after the activity statement is generated. As part of its digital improvement program, the ATO stopped issuing paper quarterly PAYG and GST instalment notices (forms R, S & T), where taxpayers had a digital preference on ATO systems. The September 2020 notice was the last one issued to these taxpayers. However, the ATO has received feedback from tax professionals that issues have arisen for some of their clients as a result of this change. For example, some taxpayers who are self-lodgers rely on the receipt of the paper statements as a reminder that their instalments are due. As an interim solution, the ATO said it will issue paper PAYG and GST quarterly instalment notices starting with the March 2021 quarterly notices. For taxpayers impacted by this change, the ATO will work with their registered agents to take their circumstances into account. The ATO has a range of practical support options available, including lodgment deferrals and payment plans that agents can access online, on behalf of their clients. For self-lodgers, the ATO has issued an email notification reminding them that their December 2020 PAYG and GST instalment notices are due for payment soon (by 2 March 2021). The ATO said it will continue to work with the tax profession to develop a digital solution for the PAYG and GST instalment notices that is workable for registered agents and their clients. Please contact our office if you require more information about paper PAYG or GST quarterly instalment notices. Avoiding disqualification from SG amnesty
The superannuation guarantee (‘SG’) amnesty ended on 7 September 2020. Employers who disclosed unpaid SG amounts and qualified for the amnesty are reminded that they must either pay in full any outstanding amounts they owe, or set up a payment plan and meet each ongoing instalment amount so as to avoid being disqualified and losing the benefits of the amnesty. The ATO will be sending employers reminders to pay disclosed amounts, if they have not previously engaged with the ATO. Employers will have 21 days to avoid being disqualified from the amnesty. Registered agents can assist their employer clients who qualified for the SG amnesty avoid disqualification. In particular, if a client needs to set up a payment plan, agents can do this (online) on their behalf, if the employer: has an existing debit amount under $100,000 (total balance or overdue amounts); does not already have a payment plan for that debit amount; and has not defaulted on a payment plan for the relevant account more than twice in the past two years. The ATO has advised that employers who are disqualified from the amnesty will: be notified in writing of the quarter they are disqualified for; be charged an administration component of $20 per employee for each disqualified quarter; have their circumstances considered when deciding a Part 7 penalty remission (this is an additional penalty of up to 200% of the unpaid SG amount that may be imposed under the SG laws); and be issued with a notice of amended assessment. Employers who continue to qualify for the SG amnesty are reminded that they can only claim a tax deduction for amounts paid on or before 7 September 2020 (i.e., the amnesty end date). Please contact our office if you require more information or would like us to set up a payment plan for SG amnesty amounts on your behalf. New measures applying from 1 January 2021 The Government has provided an update of a number of new measures which came into effect from 1 January 2021, including (among others): The most significant changes to Australia’s insolvency framework in 30 years, which are intended to reduce costs, cut red tape and help more small businesses recover from the pandemic. The reforms introduce a new, simplified debt restructuring process. These measures apply to incorporated businesses with liabilities of less than $1 million — covering around 76% of businesses subject to insolvencies today, 98% of which have less than 20 employees. Australians will have more power to choose their own superannuation fund: ‘Your Superannuation, Your Choice’ allows around 800,000 Australians to decide where their retirement savings are invested, representing around 40% of all employees covered by a current enterprise agreement. The Government’s HomeBuilder program has been extended to 31 March 2021. The scheme is expected to support the construction or major rebuild of an additional 15,000 homes. Major reforms to Australia’s foreign investment framework take effect, with new requirements for foreign investors. Shortcut rate for claiming home office expenses extended The ATO has extended (again) the ability to utilise the "shortcut rate" for claiming home office running expenses to 30 June 2021 (it previously only applied until 31 December 2020). The ATO's guideline allows certain taxpayers to claim a fixed rate per hour (80 cents per hour) for most additional running expenses incurred when working from home by keeping a record of the number of hours they have worked from home, rather than needing to calculate specific running expenses. The expenses included in the shortcut rate include lighting, heating, cooling and cleaning costs, the decline in value and repair of home office items (such as furniture and furnishings in the area used for work, computers and laptops, etc.), and phone and internet expenses. However, the guideline does not cover "occupancy expenses", such as rent, mortgage interest, property insurance and land taxes. AAT decision on JobKeeper and backdated ABNs On 21 December 2020, the AAT handed down its decision in a case relating to a taxpayer's eligibility for JobKeeper payments, in circumstances where the Registrar of the Australian Business Register decided to reactivate a previously cancelled ABN after 12 March 2020, with a backdated effective date on or before 12 March 2020. The AAT held that the taxpayer met the JobKeeper requirement to have an ABN on 12 March 2020. However, the ATO disagrees with this decision and has lodged an appeal in the Federal Court. While the appeal outcome is pending, the ATO will postpone finalising decisions regarding an entity’s eligibility for JobKeeper where the entity has backdated its registration in order to qualify. The ATO is taking a similar position in regard to eligibility for the Cash Flow Boost. Note that the AAT's decision has not changed the need to satisfy all other eligibility conditions. SMSF related party rental income deferrals due to COVID‑19 The ATO has made a determination to ensure that trustees of SMSFs do not inadvertently breach the "in-house asset rules" where the fund allows a related party to defer the payment of rent under a lease agreement (on arm’s length terms) because of the financial impact of COVID‑19. Where the requirements of the determination are met, the deferral of rent will not be treated as a "loan" or "financial accommodation" to the related party in either or both of the 2019/20 or 2020/21 income years. The determination also applies where an SMSF owns interests in a "non-geared" company or unit trust that allows a tenant to defer the payment of rent under a lease (on arm’s length terms) because of the financial impact of COVID‑19. ATO data-matching programs The ATO has announced it will engage in the following data-matching programs: it will acquire motor vehicle registry data from state and territory motor vehicle registry authorities for 2019/20 through to 2021/22, with records relating to approximately 1.5 million individuals to be obtained each financial year; and it will acquire data on Australian sales made through online selling platforms for the 2018/19 through to 2022/23 financial years, collecting 20,000 to 30,000 account records each financial year (with around half of the matched accounts relating to individuals). These records will be electronically matched with ATO data holdings to identify non-compliance with registration, lodgment, reporting and payment obligations under taxation laws. JobMaker Hiring Credit scheme: Claims open from 1 February 2021 The JobMaker Hiring Credit is being administered by the ATO and provides a wage subsidy payment directly to employers as an incentive to employ additional job seekers aged 16 to 35 years. Registrations for the JobMaker Hiring Credit scheme opened on 7 December 2020, and claims for the first JobMaker period can be made from 1 February 2021, provided employers are registered and meet all eligibility requirements. Employer eligibility requirements include thatapplicants: are up to date with their tax and GST lodgment obligations for the last 2 years; have not claimed JobKeeper payments for a fortnight that started during the JobMaker period; and are reporting through Single Touch Payroll. The ATO will be writing to employers who have registered for the JobMaker Hiring Credit from 15 January 2021, encouraging them to check that they meet all JobMaker Hiring Credit eligibility criteria before they claim, to ensure that registrants can make a claim from 1 February 2021 and there are no delays in them receiving their payments. Cash payment limit Bill shelved
It appears that the Government has decided not to proceed with its proposal to limit cash payments in Australia to $10,000. This measure was originally raised as part of the 2018/19 Budget, and the Government subsequently introduced a Bill to the House of Representatives, proposing to make it an offence for entities to make or accept cash payments of $10,000 or more. That Bill passed the House and was then introduced to the Senate on 11 November 2019, but proceeded no further, and the Government withdrew the Bill from the Senate on 3 December 2020. Improvements to be made to full expensing measure The government will expand eligibility for the temporary 'full expensing measure', which temporarily allows certain businesses to deduct the full cost of eligible depreciable assets in the year they are first used or installed. The government initially announced in the 2020/21 Budget that businesses with a turnover of up to $5 billion would be able to immediately deduct the full cost of eligible depreciable assets as long as they are first used or installed by 30 June 2022. The government will also allow businesses to opt out of temporary full expensing and the backing business investment incentive on an asset‑by‑asset basis. This change will provide businesses with more flexibility in respect of these measures, removing a potential disincentive for them to take advantage of these incentives (Editor: For example, where the automatic application of full expensing might cause the entity to make a loss). JobMaker Hiring Credit passed The government has passed legislation to establish the JobMaker Hiring Credit, which is part of the government’s economic response to the COVID-19 pandemic. The JobMaker Hiring Credit is specifically designed to encourage businesses to take on additional young employees and increase employment. It does this by providing employers with a fixed amount of $200 per week for an eligible employee aged 16 to 29 years and $100 per week for an eligible employee aged 30 to 35 years, paid quarterly in arrears by the ATO. To be eligible, the employee must have been receiving JobSeeker Payment, Youth Allowance (Other) or Parenting Payment for at least one of the previous three months, assessed on the date of employment. Employees also need to have worked for a minimum of 20 hours per week of paid work to be eligible, averaged over a quarter, and can only be eligible with one employer at a time. The hiring credit is not available to an employer who does not increase their headcount and payroll. Employers and employees will be prohibited from entering into contrived schemes in order to gain access to or increase the amount payable. Existing rights and safeguards for employees under the Fair Work Act will continue to apply, including protection from unfair dismissal and the full range of general protections. ATO Visa Data Matching Program The ATO will acquire visa data from the Department of Home Affairs for 2020/21 through to 2022/23, relating to approximately 10 million individuals for each financial year. The data will be used to identify non-compliance with obligations under taxation and superannuation laws, including registration, lodgment, reporting and payment responsibilities. How to avoid getting dodgy advice The ATO is warning taxpayers who may be thinking about pausing, changing or closing their business, due to the current economic conditions, to be wary of untrustworthy advisers who may recommend inappropriate or illegal behaviour. This could include illegal phoenix activity, where businesses intentionally remove their assets prior to winding up so that they can be used in a copy of the original business. Red flags include: people the taxpayer doesn't know cold calling with advice; unsolicited letters, emails or phone calls after the taxpayer has been through court action with a creditor; advice to transfer assets to a third party without payment; refusal to provide advice in writing; advice suggesting they have a sympathetic liquidator who will protect the taxpayer's personal interests and assets; advice to withhold certain records from the bankruptcy trustee or liquidator, or provide incorrect information to authorities; and advice to deal with the liquidator or trustee on the taxpayer's behalf. The ATO instead recommends anyone thinking of pausing, changing or closing their business to contact a qualified professional, such as an accountant, lawyer, or registered liquidator. STP data-sharing with Services Australia Single Touch Payroll ('STP') allows the ATO to share data in real-time with other government agencies, to "help them deliver government services to the Australian community". As part of the ATO's data-matching program, it has a STP data-sharing arrangement with Services Australia to help them administer Australia's welfare system. This means that people who are on an income support payment from Services Australia and need to report their employment income fortnightly to Centrelink will now see their employer details are pre-filled. Proposed FBT exemption — retraining and reskilling The government has announced it will introduce an exemption from FBT for retraining and reskilling benefits provided by employers to redundant, or soon to be redundant, employees where the benefits may not be related to their current employment. It is proposed that this exemption will not apply to: retraining provided under a salary packaging arrangement; training provided through Commonwealth supported places at universities; or repayments towards Commonwealth student loans. If enacted, this proposed measure is intended to apply from the day it was announced (i.e., 2 October 2020). Getting the margin scheme right The margin scheme may allow a property owner to pay less GST when they sell the property — paying GST of 1/11th of their margin on the sale, rather than 1/11th of the total sale price. If a property owner wants to use the margin scheme when selling property, they must be eligible before the property is offered for sale. This may be where they're selling new property as part of their business and they're registered for GST. Importantly, among other criteria, there must be a written agreement before settlement between the supplier and purchaser to use the margin scheme — this could be part of the contract. To avoid the common errors suppliers make when selling property using the margin scheme, the ATO is reminding suppliers that they must also: calculate the margin correctly; and report the amount of the margin on the sale on their BAS — not the full amount of payment received. We can help determine your eligibility and also calculate the margin. Also remember that, when someone purchases property using the margin scheme, they: can't claim GST credits for the sale; and don't report it on their activity statement. Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the
information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances. |
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