‘Big awareness push’ underway as STP deadline approaches

Hundreds of thousands of businesses have been prompted by the ATO to get started with their Single Touch Payroll provisions, and its project lead at the tax office believes the business community is better prepared than it was for last year’s deadline.

Through email and national advertising campaigns, the ATO is drilling in the 1 July deadline for STP, which applies to businesses with 19 or fewer employees.

Assistant commissioner at the ATO John Shepherd thinks accountants, bookkeepers and their small business clients are better prepared for this deadline than they were for the first one in 2018, which applied to businesses with 20 or more employees.

“The knowledge levels have come up… bookkeepers are helping with that message and that preparation,” Mr Shepherd told Accountants Daily at the Accounting Business Expo on Wednesday.

Many software providers weren’t ready for last year’s deadline, which had a knock-on impact on the business community.

“Last year, a lot of the products were only just ready. This time, a lot more are ready, and they are ready with options for smaller employers,” Mr Shepherd said.

However, at this stage, there are more STP products in development and slated for release than there are products that are ready for implementation.

At the beginning of April, information for and access to deferrals for STP will be published on the ATO’s website. There are quarterly reporting options for micro-businesses as part of the transitional arrangements.

Katarina Taurian
21 March 2019
accountantsdaily.com.au

GST collection on overseas goods at 300% of forecasts

GST collection for low value imported goods is tracking at 300 per cent of forecasts, as overall GST collection continues to grow.

Since new laws kicked in on 1 July last year, GST will apply to sales of low-value, imported goods valued at $1,000 or less, to consumers in Australia, in a bid to ensure that such imported goods receive the same treatment as goods purchased domestically.

Deputy Commissioner Tim Dyce said latest revenue figures show that digital marketplaces and lower value international online sales were not an impossible nut to crack.

“The digital services measure has already achieved $272 million GST in the first year or 180 per cent ahead of forecast. We’ve collected $81 million from the low value imported goods measure in the first three months of operation, already above our full year revenue estimate of $70 million. We’re tracking at over 300 per cent of forecast,” said Mr Dyce.

“There was a lot of discussion prior to their introduction about whether these kinds of measures could possibly work, and in many ways it is the most significant change in the way we have collected GST since its inception almost exactly 20 years ago.

“Not only have we had high levels of registration for these measures and well above forecast revenue, we’ve even had feedback from some online sellers that the registration has improved their business processes and given them greater insight into their sales performance.”

The measure, first announced in the 2016–17 federal budget, was expected to raise $300 million over three years.

The ATO’s GST administration annual performance report for 2017–18 showed that the agency raised $63.1 billion in GST cash, 5.5 per cent higher than in 2016-17.

A further $3 billion in GST liabilities was raised through the ATO’s direct compliance activities – a 5.6 per cent increase on last year’s outcome. The Department of Home Affairs raised a further $31.1 million through its compliance activities.

Tax&Compliance Reporter
28 March 2019
accountantsdaily.com.au

Client Alert – March 2019

Single Touch Payroll reporting for small businesses: get ready!

Legislation has recently passed to bring in Single Touch Payroll (STP) reporting for all small employers (with fewer than 20 employees) from 1 July 2019.

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. For large employers (with 20 or more employees), STP reporting started gradually from 1 July 2018, and until now it has been optional for small employers.

ATO Commissioner Chris Gordon has said he wants to “reassure small business and give my personal guarantee that our approach to extending Single Touch Payroll will be flexible, reasonable and pragmatic”.

The basics of STP reporting

With STP reporting, employers no longer need to provide payment summaries to employees for payments reported through STP. Payments not reported through STP, like employee share scheme (ESS) amounts, still need to be reported on a payment summary.
Employers no longer need to provide payment summary annual report (PSARs) to the ATO at the end of the financial year for STP reported payments.
Employees can view their year-to-date payment information using the ATO’s online services, accessible through their myGov account, or can ask the ATO for a copy of this information.
Employers need to complete a finalisation declaration at the end of each financial year.
Employers need to report employees’ super liability information for the first time through STP. Super funds will then report to the ATO when the employer pays the super amounts to employees’ funds.
From 2020, the ATO will pre-fill some activity statement information for small to medium with holders with the information reported through STP. Employers that currently lodge an activity statement will continue to do so.

TIP: Contact us today for more information about STP for your business.

Super guarantee compliance:
time to take action

The government’s latest initiatives targeting non-compliance with superannuation guarantee (SG) obligations give businesses plenty to think about. With Single Touch Payroll on the way for small businesses, all employers should take time to review their arrangements for paying employees’ super.

The government is proposing a 12-month “amnesty” for employers to voluntarily disclose and correct any historical underpayments of SG contributions for any period up to 31 March 2018 without incurring penalties or the usual administration fee. This is provided the ATO hasn’t already commenced a compliance audit of that employer. Additionally, employers will be entitled to claim deductions for the catch-up payments they make under the amnesty.

Tip: It’s an important time for businesses to get their SG affairs in order. If you’re an employer with outstanding underpayments of SG contributions, we can assist with the process of making a voluntary disclosure to the ATO.

Proposed increase for small business instant asset write-off

Prime Minister Scott Morrison recently announced the government’s intention to increase the instant asset write-off already available for small businesses from $20,000 to $25,000. Mr Morrison also said that the instant write-off would be extended by another 12 months to 30 June 2020. These measures are expected to benefit more than three million eligible small businesses to access the expanded accelerated depreciation rules for assets costing less than $25,000.

Labor has previously proposed an “investment guarantee” giving all businesses an immediate 20% tax deduction from 1 July 2020 for any new eligible asset worth more than $20,000. This would be a permanent accelerated depreciation measure so that businesses could continue to take advantage of an immediate 20% tax deduction when investing in an eligible asset.

ATO warns about new scams
in 2019

The ATO is warning taxpayers to be alert for scammers impersonating the ATO, using a range of new ways to get taxpayers’ money and personal information.

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. The ATO will never:

send you an email or SMS asking you to click on a link to provide login, personal or financial information, or to download a file or open an attachment;
use aggressive or rude behaviour, or threaten you with arrest, jail or deportation;
request payment of a debt using iTunes or Google Play cards, pre-paid Visa cards, cryptocurrency or direct credit to a personal bank account; or
ask you to pay a fee in order to release a refund owed to you.

ATO refers overdue lodgements to external collection agencies

The ATO has recently started referring taxpayers with overdue lodgement obligations to an external collection agency to obtain lodgements on the ATO’s behalf. External collection agencies will focus on income tax and activity statement lodgements, and referral to an external collection agency doesn’t affect a taxpayer’s credit rating.

If your case is referred to a collection agency, the ATO will notify you in writing before phoning you or your authorised contact to negotiate lodgement of the overdue documents and request payment of any debt.

Tip: If your tax return or other ATO paperwork is overdue, don’t panic! We can help work out what you need to do next, and even make arrangements with the ATO on your behalf.

Government consultation on sharing economy reporting

The government has released a consultation paper seeking views on a possible reporting regime to provide information on Australians who receive income from sharing economy websites like Uber, Airtasker, Menulog and Deliveroo.

The ATO and other government agencies currently have limited information about the income of “gig workers” in the sharing economy, and the government’s Black Economy Taskforce recently recommended designing and implementing a compulsory reporting regime. Although there are a lot of issues still to consider, including costs and data privacy, a new regime could mean gig platforms, payment processors or even banks may soon need to report to the ATO and other agencies on gig workers’ income.

Extra 44,000 taxpayers face Div 293 superannuation tax

An extra 44,000 taxpayers have been hit with the additional 15% Division 293 tax for the first time on their superannuation contributions for 2017–2018. This is because the Div 293 income threshold was reduced to $250,000 for 2017–2018 (it was previously $300,000).

Individual taxpayers with income and super contributions above $250,000 are subject to an additional 15% Div 293 tax on their concessional contributions.

Taxpayers have the option of paying the Div 293 tax liability using their own money, or electing to release an amount from an existing super balance, which means completing a Div 293 election form.

Company losses “similar business test” Bill passes

Legislation originally introduced in March 2017 to supplement the “same business test” with a more relaxed “similar business test” has finally been passed. The test will be used to work out whether a former company’s tax losses and net capital losses from previous income years can be used as a tax deduction for a new business in a current income year. It also is relevant to whether a company joining a consolidated group can transfer its losses to the head company of the consolidated group.

FBT Checklist

Single Touch Payroll Update

Australia – facts & figures March 2019

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An up-to-date snapshot of Australia's vital statistics.

Please click on the following link to see all this interesting information. The areas covered are:

Overview
Markets
GDP
Labour
Prices
Money
Trade
Government
Business
Consumer
Housing
Taxes
Climate

Access all this data here.

tradingeconomics.com

ATO identifies SMSF contravention red flags

The ATO has identified certain red flags and problem areas with SMSFs that will attract its attention, ahead of tax time 2019.

ATO assistant commissioner Dana Fleming said that the ATO received a total of 16,909 regulatory contraventions for 8,215 SMSFs in the 2018 financial year.

This financial year so far, there have been 8,412 regulatory contraventions for 3,549 SMSFs.

“The most common contraventions are related-party loans, loans to members, in-house assets, investing in related-party assets and separation of assets where members are not keeping their personal assets separate from the assets of the SMSF,” Ms Fleming said.

“Together, these top three account for more than 50 per cent of the contraventions reported to us and are the common repeated contraventions that we see.”

Contraventions relating to loans accounted for 21.1 per cent, in-house assets accounted for 18.7 per cent and failure to keep assets separate represented 12.8 per cent.

While the highest number of contraventions were for related-party loans, the contraventions relating to in-house assets and separation of assets represented the greatest value, she said.

“Contraventions also revolved around growing wealth in the SMSF environment and trying to access the low tax rate. Poor record-keeping is often a culprit here,” she said.

Some of the other contravention categories listed by the ATO related to administrative errors, sole purpose breaches, borrowings, operating standards and acquisitions of assets from related parties.

The main drivers of these contraventions, she said, tend to be financial stress and the ease of accessibility with SMSFs in terms of accessing assets and dollars and poor record-keeping to substantiate transactions.

In the 2017–18 financial year, there were a total of 257 trustees disqualified, Ms Fleming said. Enforcement actions including direction to rectify, enforceable undertakings and notice of non-compliance were taken for 180 trustees.

In this financial year so far, 75 trustees have been disqualified, she said.

Miranda Brownlee
01 March 2019
accountantsdaily.com.au

Who wins dispute about taxable income?

The Administrative Appeals Tribunal (AAT) has affirmed the ATO’s decision, based on the taxpayers modest income when compared with a high volume of money passing through various accounts.

The taxpayer was employed as a beauty technician.

Her pay varied every week to reflect her working hours and she was always paid in cash without receiving pay slips.

While the Commissioners’ analysis of bank accounts, records of international money transfers and casino data suggested the applicant spent 44% in one year and 73% in another year more than the declared income.

In cases like this, the Commissioner is effectively making an informed guess as to the taxpayers income.

Provided there is a rational basis for the estate, the Commissioners assessment will stand, unless the taxpayer is able to:

demonstrate the assessment was excessive; and
establish what the correct (or more nearly) correct figure is.

In examples like this, the Commissioner nearly always wins.

AcctWeb

Tax payable on expenditure recoupments

A Full Federal Court decision has confirmed a mismatch between capital expenditure and government grants.

A windfarm operator incurred significant expenditure which was depreciated.

Upon proving the expenditure, it received a substantial government grant.

The court decided this was an assessable recoupment which mean that the grant was assessable income in full in the receipt year, whilst the expenditure remained depreciable.

It therefore had to pay income tax up front when it was already cash flow deficient.

This is not a new interpretation, but seems as a reminder to take nothing for granted when it comes to tax.

AcctWeb

Extra website resources and tools is one way we offer you and your family more.

The following are available via our website and are not often available in the one place. All can save you time and effort. *

24/7 access to website-based tools and resources you, your family, your friends, colleagues and associates can all benefit from.

Latest News. 6-8 new articles every month and chosen from over 25 for their relevance. This means our website is a great place to stay informed.
Videos that are relevant, interesting, educational and interesting to watch. Videos that are regularly changed for another collection to ensure you’re able to lean about a significant number of related issues throughout the year.
Ask a question at any time. If you have a question on any related topic then don’t hesitate to use a form on our site to ask.
Comprehensive financial tools and calculators to help you better understand your personal or family Cash Flow position or simply complete a Budget or work on some Superannuation scenarios.
Research your questions. Use eWombat for doing this research by simply typing in keywords or phrases. Great and quick for searching sites like the ATO, Centrelink and ASIC.
Your information is private and confidential and should be treated that way. Using Secure File transfer or a Secure Client Portal means your information and plans are encrypted when sent in either direction over the Internet.
ASX Prices and Charts. Many sites will have these resources to allow you to quickly see how the market is going and check any stocks you’d like a price on. All such information is, though, delayed by 10 minutes.
Many sites also have a message window feature that displays messages of interest or that cover topics and deadlines you should be aware of.

* Not all are on every site.

Your Financial Planner

FBT Exemption for Various Work Vehicles

If an employer allows an employee private use of a vehicle, FBT generally applies.

There is an exemption from FBT for panel vans, utilities and other commercial vehicles, but only if the employees private use of these vehicles is limited to:

Travel between home and work
Travel that is incidental to travel in the course of duties of employment
Non-work-related use that is minor, infrequent and irregular
The employee uses the vehicle to travel between their home and their place of work and any diversion adds no more than two kilometres to the ordinary lengthy of that trip
For journeys undertaken for a wholly private purpose, the employee does not use the vehicle to travel more than 1,000 kilometres in total per year and no return journey exceeds 200 kilometres.

You may be familiar with the exemption for “minor, in frequent and irregular”, but these guidelines quantify what the Commissioner of Taxation expects – quite limiting!

AcctWeb

Big fines, prison on the cards as new SG penalties introduced

New laws introducing penalties, including imprisonment up to 12 months, for non-compliance of superannuation guarantee obligations have since passed, with accountants urged to bring clients up to speed.

Earlier this month, new legislation was passed, allowing the commissioner to issue a direction to an employer to pay an outstanding super guarantee liability, with failure to comply possibly resulting in criminal penalties.

Employers who receive direction from the commissioner must also complete an approved education course.

The maximum penalty for the offence is 50 penalty units, imprisonment for 12 months, or both.

Speaking to Accountants Daily, RSM senior manager Tracey Dunn said the new law might catch out small to medium-sized family businesses where a spouse or family member may be appointed as director without fully understanding their obligations regarding super payments.

“Obviously the criminal penalties will only apply to serious cases but unfortunately in a lot of small businesses, super guarantee payment are the first thing that goes and they are quite often behind because of cashflow issues so there will be a higher risk,” said Ms Dunn.

“For example, a husband runs a business and he is the brains of the business but the wife will be put in a position where she is a director. The accountant may discuss the director obligations with the husband but then rely on the husband to relay that to the wife and she may not ever fully understand what her risk is.

“They now face a criminal penalty if within a business, those compulsory superannuation guarantee payments aren’t made on time.”

Ms Dunn believes accountants will need to be on the front foot to help their clients understand the new risks.

“Accountants and advisers really need to ensure that when their clients employ staff, they are fully aware of the risk of non-compliance with super guarantee obligations,” she said.

“There is a real onus now on accountants and tax advisers to ensure their clients really fully understand what the risk is when they take a role as either an individual employer, the director of a trustee company, or a director of a company that is employing staff.”

Latest data from the ATO place estimates for the super guarantee net gap at $2.79 billion, with Ms Dunn believing that the new measure, along with the introduction of single touch payroll to all businesses, will see the gap shrink in the near future,

“With the measures in place now, it is a clear indication now that the government is extremely serious about ensuring that employees receive their compulsory super,” she added.

The new legislation is awaiting Royal Assent, with the legislation to take effect from 1 April 2019, but will apply to SGC obligations arising from 1 July 2018.

Jotham Lian
01 March 2019
accountantsdaily.com.au