ATO issues alert on super, tax scams

Warning:  Identify theft scams 

The ATO expects to see another spike in scams this tax time, including those that aim to obtain personal data in order to access bank accounts and superannuation.

ATO assistant commissioner Kath Anderson said last year more than 37,000 scam attempts were reported to the ATO during tax time.

“While many people were alert and didn’t fall for the scams, hundreds handed over a total of more than $630,000 and thousands handed over their personal details,” said Ms Anderson.

Ms Anderson said organised crime groups use a range of tactics to trick taxpayers that include asking them to click on a link to divulge their login, personal or financial information or to download a file or open an attachment which enables them to access data.

“Once they have your data, they can either sell it or use it to impersonate you for financial gain,” she said.

“Besides selling it to organised crime groups, identity thieves can use your data to do things like getting a loan or commit fraud in your name, access your bank account and shop using your credit card, access your myGov account, steal your superannuation or sell your house.”

While the most common scam continues to be the ‘fake tax debt’ phone scam, she said, the ATO is seeing an increase in fake refund or refund-for-a-fee scams, and email and SMS scams enticing people to click a hyperlink, download a file or open an attachment.

“While handing over money is a concern, we are just as concerned about people handing over personal or financial information,” she said.

Miranda Brownlee
19 July 2018
www.smsfadviser.com

ATO dispels top tax time myths to clients as clampdown rolls out

Ahead of one of its biggest deductions crackdowns, the tax office has released a series of common mistakes and misunderstandings taxpayers make at tax time.

The ATO has identified the top 10 tax myths and misunderstandings it says are causing incorrect claims, off the back of its landmark individuals not in business tax gap report, which purported that 78 per cent of agent-prepared returns required adjustments, contributing to an $8.7-billion tax gap.

Accordingly, one of the myths encountered by the ATO is that tax agents will take responsibility for their clients’ claims.

“Whether you prepare your own return or you use an agent, you are ultimately responsible for ensuring your claims are correct,” ATO assistant commissioner Kath Anderson told taxpayers.

“Even if you use a tax agent, you are ultimately responsible for ensuring the information in your return, including the deductions you claim, is correct. You cannot transfer that responsibility to your agent so make sure you give them complete and accurate information.”

H&R Block director of tax communication Mark Chapman had earlier told Accountants Daily that the ATO needed to adjust its messaging to ensure they were not placing all tax agents in the same basket of ‘bad eggs’.

“The ATO knows the vast majority of tax agents are reliable and low risk and that has not come through in the messaging they’ve put out and I think that messaging needs to be rebalanced.”

Likewise, Change Accountants & Advisors managing director Timothy Munro believes the ATO should reconsider its approach before it risks damaging the reputation of the entire industry.

“Why would the ATO want to come out and denigrate a group of people that's working its hardest on its own behalf,” Mr Munro said.

“The ATO in doing that, will alienate accountants, make them upset and it goes towards ruining the trust that clients have with accountants.”

Top myths

Top of the list is the myth that everyone is entitled to claim a “standard deduction” of $150 for laundry, 5,000 kilometres for cars or $300 for work-related expenses.

“While you don’t need receipts for claims under $300 for work related expenses, $150 for laundry and 5000 kilometres, you still must have spent the money, it must be related to earning your income, and you must be able to explain how you calculated your claim,” said the ATO.

Another popular myth is that bank or credit card statements can be used in place of a receipt , but are unfortunately insufficient in providing enough detail to support the claim.

According to Ms Anderson, some items are claimable for a small number of taxpayers but it’s a myth that the majority can claim.

“There are only a handful of taxpayers with special circumstances who can claim things like gym memberships or makeup containing sunscreen. For most, there isn’t a link to earning their income,” she said.

With more people working from home, Ms Anderson says the ATO is becoming concerned about taxpayers claiming their entire Foxtel or Netflix subscriptions, or their whole phone bill, on the basis that some part relates to earning their income.

Other myths in the top 10 include believing you can claim normal home to work trips; that you can claim plain clothes you wear to work, or claiming hair, clothes and makeup because you have to look good at events; or claiming all holiday travel expenses when only a few days are in relation to a conference or work.

This time last year, mid-tiers like Moore Stephens and HLB Mann Judd shared common client misconceptions to watch out for. You can read more about them here.

Jotham Lian
31 July 2018
www.accountantsdaily.com.au

Client Alert – August 2018

Government launches new service to simplify business registrations

The government has officially launched a new stand-alone Business Registration Service, providing a simpler and clearer way to register a business. The service is available at www.business.gov.au.

The service can be used for things such as applying for an Australian Business Number (ABN) or goods and services tax (GST) registration. It is for people starting a new business as a sole trader, company, partnership, trust or superannuation fund. Existing businesses with an ABN can also use the service to apply for tax registrations such as GST.

The Business Registration Service has reduced the average time taken to obtain a business and associated licences to under 15 minutes.

Illegal early access to super: ATO warning about scammers

The ATO has issued a warning to be aware of scammers who promise to organise access to people’s retirement savings for a fee. Unscrupulous promoters encourage people to illegally access their super early to help with expenses such as the purchase of a car, paying off debts, sending money to overseas relatives and taking a holiday. The ATO has seen promoters, mostly in western Sydney, targeting people with small to medium super balances, those involved in local community groups, and those who may not have engaged with their super before being approached.

ATO gives small businesses the chance to seek independent review of ATO audit position

From 1 July 2018, the ATO is running a 12-month pilot to extend its independent review service to certain small business taxpayers. This means those taxpayers can have the ATO’s audit position on their tax affairs independently reviewed.

The independent review is conducted by an officer from the ATO’s Review and Dispute Resolution business line. This officer will not have been involved in the audit and will bring an independent “fresh set of eyes” to the case. The independent reviewer will consider the documents setting out the taxpayer’s position and the ATO audit position. They will schedule a case conference with the taxpayer and the ATO audit officer, generally within one month of receiving the taxpayer’s review request.

The ATO audit team will finalise the audit in accordance with the independent reviewer’s recommendations. The pilot is currently limited to small business disputes involving income tax audits in Victoria and South Australia.

Transacting with cryptocurrency: updated ATO info

The ATO says a capital gains tax (CGT) event occurs when a person disposes of their cryptocurrency (eg Bitcoin). A disposal can occur when someone:

• sells or gifts cryptocurrency;
• trades or exchanges cryptocurrency (including the disposal of one cryptocurrency for another cryptocurrency) – if the cryptocurrency received cannot be valued, the capital proceeds from the disposal are worked out by using the market value of the cryptocurrency disposed of at the time of the transaction;
• converts cryptocurrency to fiat currency like Australian dollars; or
• uses cryptocurrency to obtain goods or services.

If you need assistance with the tax treatment of cryptocurrency, or the ATO’s record-keeping requirements for taxpayers who are involved in acquiring or disposing of cryptocurrency, please contact our office.

Tax gap for individuals is $8.8 billion, says ATO

The ATO has estimated that the net “tax gap” for individuals not in business in 2014–2015 is approximately 6.4%, or $8.8 billion. The gap is an estimate of the difference between the tax the ATO collects and the amount that would have been collected if every one of these taxpayers was fully compliant with the law.

In other words, the ATO estimates that individuals not in business paid over 93% of the total theoretical tax payable in 2014–2015.

ATO warns about scammers at tax time

The ATO has warned taxpayers to be on “high alert” for tax-related scams. ATO Assistant Commissioner Kath Anderson said the most common scam is still the “fake tax debt” phone scam, but the ATO is also seeing an increase in “fake refund” or “refund for a fee” scams, and email and SMS scams enticing people to click a hyperlink, download a file or open an attachment.

Scammers frequently claim to be from the ATO and taxpayers should be wary of any phone call, text message, email or letter about a tax refund or debt, especially if they were not expecting it.

Income tax residency rules for individuals: Board of Taxation recommends reform measures

The Board of Taxation has publicly released its initial report on its review of Australia’s income tax residency rules for individuals. The Revenue Minister said the Board found that the current individual tax residency rules require modernisation and simplification. The Board also identified opportunities for tax arbitrage, for example where individuals become “residents of nowhere” when they leave Australia and do not become tax residents of another jurisdiction.

The report considered whether the current rules (largely unchanged since 1930) are sufficiently robust to meet the requirements of the modern workforce, address the policy criteria of simplicity, efficiency, equity and integrity, and take into account a significant number of cases heard since 2009 relating to individual residency. The Revenue Minister has asked the Board to consult further on some key recommendations.

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. The proposed covenant will require trustees of superannuation funds (including self managed superannuation funds) to formulate a retirement income strategy for fund members. This requirement is aimed at supporting the government’s development of a comprehensive income products for retirement (CIPR) framework.

Illegal phoenix activity costs billions; new Phoenix Hotline

The ATO has released a new report on the economic impacts of potential illegal phoenix activity. It estimates that the annual direct impact of illegal phoenix activity on businesses, employees and the government was between $2.85 billion and $5.13 billion for the 2015–2016 financial year.

The government has also established a new Phoenix Hotline to combat phoenixing activity and to protect compliant Australian workers and businesses. Employees, creditors, competing businesses and the general public can confidentially provide information about possible phoenix behaviour via the hotline on 1800 807 875 or the ATO website. Disclosures will be protected.

Super funds deliver healthy returns for 2017–2018

The median “growth” superannuation fund delivered a healthy investment return of 9.2% for 2017–2018, with the top spot going to Hostplus with a return of 12.5%, according to superannuation ratings firm Chant West. Growth super funds are those with a 61–80% allocation to growth assets.

Every fund in the growth category had positive returns, with even the lowest performer delivering a 6.5% return. Growth funds have delivered nine consecutive years of positive returns, averaging about 9% a year, said Chant West senior investment manager Mano Mohankumar.

GST exemption for offshore sellers of hotel bookings to be removed: draft legislation released

The Treasurer has released draft legislation to ensure offshore sellers of hotel accommodation in Australia calculate their GST turnover in the same way as local sellers from 1 July 2019.

Under the proposed changes, offshore suppliers of rights to use commercial accommodation (eg hotels) in the indirect tax zone (broadly, Australia) will be required to include these supplies in working out their GST turnover. If the supplier’s GST turnover equals or exceeds the registration turnover threshold, GST must be remitted for supplies that are taxable supplies.

Client Alert – July 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.

SMEs are an important sector of the economy – over two million SMEs account for more than 65% of private sector employment. The Royal Commission considered issues with SME lending practices by reference to case studies involving ANZ, Bank of Queensland, CBA, Westpac and Suncorp.

The next round of the Royal Commission’s public hearings focuses on issues affecting people in remote and regional communities, including farming finance, natural disaster insurance, and interactions between Aboriginal and Torres Strait Islander people and financial services entities.

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.

Under the plan, a new non-refundable Low and Middle-Income Tax Offset (LMITO) will be available from 2018–2019 to 2021–2022, providing tax relief of up to $530 to low-income individuals for each of those years. The new offset will be in addition to the existing low-income tax offset (LITO). The top threshold of the 32.5% tax bracket will increase from $87,000 to $90,000 from 1 July 2018.

In 2022–2023, the top threshold of the 19% bracket will increase from $37,000 to $41,000 and the LITO will also increase.

The top threshold of the 32.5% bracket will then increase from $90,000 to $120,000 from 1 July 2022.

The legislation passed without amendments, although some had been raised in the Senate that would have prevented increasing the top threshold of the 32.5% bracket from $120,000 to $200,000 from 1 July 2024, removing the 37% tax bracket completely. This third step of the seven-year plan will now go ahead under the new tax law. And finally, taxpayers will pay the top marginal tax rate of 45% for taxable income exceeding $200,000.

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.

The ATO says property transactions of new residential premises or potential residential land that involve GST to be paid directly to the ATO on or before settlement will require purchasers or their representatives to use the following online forms:

• Form one, GST property settlement withholding notification, is used to advise the ATO that a contract has been entered into for new residential premises or potential residential land that requires a withholding amount. This form can be submitted any time after a contract has been entered into and prior to the settlement date.
• Form two, GST property settlement date confirmation, is used to confirm the settlement date and can be submitted at the time of settlement and when the payment has been made to the ATO.

Depending on which state or territory the property is acquired in, the purchaser’s representative can include a conveyancer or a solicitor.

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. Clothing claims are up nearly 20% over the last five years and the ATO believes many taxpayers are making mistakes or deliberately over-claiming. Around a quarter of all clothing and laundry claims in recent years were exactly $150 – the amount claimable without a specific requirement to keep detailed records about the work-related clothing expenses.

TIP: The ATO has issued a stern reminder that the $150 threshold is not a “safe amount” that everyone can claim. We can help make sure your tax return claims are done right – contact us to find out more.

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.

The term “black economy” refers to people and businesses who operate outside the tax and regulatory systems, or who are known to the authorities but do not correctly report their tax obligations.

The Advisory Board will include members of the private and public sector who will provide strategic advice and contribute to a report every five years about new threats emerging in the black economy.

The Government’s related actions to date have included a $10,000 limit on cash transactions, a comprehensive strategy to combat illicit tobacco, reforms to the ABN system, restricting government procurement to businesses that have acceptable tax records, and $315 million in additional funding to the ATO to increase its enforcement activity against black economy behaviour.

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.

With default funds being tied to the employer and not the employee, many people end up with another super account every time they change jobs. Currently, a third of accounts (about 10 million) are unintended multiples, meaning that Australians pay excess fees and insurance premiums totalling $2.6 billion every year. According to the Commission, fixing these problems would lift retirement balances for members across the board – for example, a new workforce entrant today could earn around $407,000 more by the time they retire in 2064.

Tip: The end of the financial year is a good time to take a closer look at your super arrangements. Do you need to roll together accounts or change funds? Could you make salary sacrifices to reduce your tax payments and boost your retirement balance? Let us know if you’re considering these super questions.

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 lodgment.

The major super changes from 1 July 2017 mean that SMSFs members with a pension balance of more than $1.6 million may need to consider reducing any excess, resetting CGT cost bases and getting actuarial certificates. This is in addition to the usual issues such as calculating taxable income and what expenses are deductible for the SMSF.

With all of these changes to be considered, the ATO has allowed an extension to lodge returns by 2 July.

Recordkeeping reminders

Good SMSF compliance hinges substantially on good recordkeeping. Some SMSFs have resolutions and minutes for every investment transaction while others don’t go into much detail at all. But what level of detail is really necessary? The answer lies in the fund’s trust deed, investment strategy and what is required by the tax and superannuation legislation.

For example, a fund with a single balanced option is unlikely to have to meet each time a contribution is made to decide where the money should go. In contrast, if the fund’s investment strategy is couched in broad terms and a member wishes to select specific investments as permitted by the fund’s trust deed, then documents indicating whether the selection is consistent with the overall investment strategy of the fund are likely to be worthwhile.

The superannuation law requires that some records must be retained for various periods. For example, the fund’s accounting records, annual returns and other statements must be kept for at least five years. Minutes of meetings for purposes such as reviewing the fund’s investment strategy, changes of trustees, member reports and storage of collectables and personal use assets need to be kept for at least
10 years. The fund’s trust deed and other essential documents should be retained if the trustees consider the fund may be subject to challenge.

Keeping records for an SMSF serves many purposes to provide a “corporate memory” for the fund, which may be required for compliance purposes as well as to protect trustees from any unfounded challenges.

Client Alert – June 2018

Tax planning

With the end of the 2018 income tax year rapidly approaching, this issue draws attention to year-end tax planning strategies and compliance matters that you need to consider to ensure good tax health. It focuses on the most important issues for small to medium businesses and individuals to consider.

Tip: This is general information, but we’ll take your particular circumstances into account to help you achieve good tax health. Contact us to find out more.

Deferring derivation of income

If your business recognises income on an accruals basis (when an invoice is raised) and your cash flow allows, you may consider delaying raising some invoices until after 30 June, meaning the assessable income will be derived after the 2018 income tax year.

For business income derived on a cash basis (interest, royalties, rent and dividends), you may consider deferring the receipt of certain payments until after 30 June 2018. For example, setting term deposits to mature after 30 June 2018 rather than before.

Bringing forward tax-deductible expenses

To qualify for deductions in the 2018 income tax year, you may be able to bring forward upcoming expenses so that you incur them before 30 June 2018. Small businesses and individual non-business taxpayers may prepay some expenses (such as insurances and professional subscriptions) up to 12 months ahead. This should only be done subject to available cash flow and where the prepayment makes commercial sense.

Businesses

Lower company tax rates and imputation

Company tax rates are falling in Australia. Companies carrying on a business with turnover of less than $25 million will pay a rate of 27.5% in 2018 – the rate of 30% only applies if turnover is $25 million or more, or the company is not carrying on a business.

By 2027, the tax rate will reach a low of 25% for companies carrying on a business with turnover up to $50 million.

Tip: The dividend franking rate for 2018 may be different from a company’s tax rate, depending on whether turnover in 2017 was more than the current year’s turnover benchmark ($25 million for 2018).

Deductions for small business entities

Small business entities (companies, trusts, partnerships or sole traders with total turnover of less than $10 million) will qualify for a raft of tax concessions in the 2018 income tax year:

• the $20,000 instant asset write-off – an immediate deduction when buying and installing depreciating assets that cost less than $20,000.
• the simplified depreciation rules – accelerated depreciation rates of 15% or 30% for depreciable assets that cost $20,000 or more;
• the small business restructure rollover;
• an immediate deduction for start-up costs;
• an immediate deduction for certain prepaid expenses;
• the simplified trading stock rules – removing the need to do an end-of-year stocktake if stock value has changed by less than $5,000;
• the simplified PAYG rules – the ATO will calculate PAYG instalments;
• cash basis accounting for GST – the ATO will calculate the GST instalment payable and annual apportionment for input tax credits for acquisitions that are partly creditable;
• the FBT car parking exemption (from 1 April 2017); and
• the ability for employees to salary-sacrifice two identical portable electronic devices (from 1 April 2016).

These concessions are very powerful for small businesses and can lead to substantial tax savings.

Small business CGT concessions

If you’re selling a business that has an aggregated turnover of less than $2 million (a “CGT small business entity”) or the value of its net CGT assets is $6 million or less (it satisfies the $6 million “net asset value” test), you may be able to access the small business CGT concessions.

These concessions include:

• a 15-year exemption – no CGT is payable;
• a 50% active asset reduction – a 50% CGT discount in addition to the 50% general discount;
• the retirement exemption – up to $500,000 lifetime tax-free limit; and
• the active asset rollover – minimum two years’ deferral.

Individuals

No more Budget repair levy

The Budget repair levy (2% of the part of your taxable income over $180,000) no longer applies in 2018. This means that the top marginal rate for 2018 (including the 2% Medicare levy) is 47%, as opposed to 49% in 2017. The FBT rate is also 47% for the 2018 FBT year.

Deduct work-related expenses

People overclaiming deductions for work-related expenses like vehicles, travel, internet and mobile phones and self-education are on the ATO’s hitlist this year. There are three main rules when it comes to work-related claims:

• You can only claim a deduction for money you have actually spent (and that your employer hasn’t reimbursed).
• The expense must be directly related to earning your work income.
• You must have a record to prove the expense.

Deductions are not allowed for private expenses (e.g. travel from home to work that’s not required to transport bulky equipment) or reimbursed expenses (e.g. for the cost of meals, accommodation and travel). And although you don’t need to include records like receipts with your tax return, the ATO can deny your claim – and penalties may apply – if you can’t produce the evidence when asked.

Tip: The ATO now uses real-time data to compare deductions across similar occupations and income brackets, so it can quickly identify higher-than-expected or unusual claims.

Superannuation contributions and changes

There have been a number of fundamental changes to the superannuation landscape for the 2018 income tax year, including changes to the caps for concessional contributions (now $25,000 for all taxpayers) and non-concessional contributions ($100,000, or $300,000 under the three-year bring forward rule) and the introduction of the general transfer balance cap and total super balance threshold (each currently $1.6 million).

Also, from 2018, both employees and self-employed individuals can claim a tax deduction annually (maximum $25,000) for personal superannuation contributions, provided the superannuation fund has physically received the contribution by 30 June 2018 and the individual provides their superannuation fund with a “notice of intention to claim” document.

Property owners

There have been recent changes to:

• the tax treatment associated with residential rental properties (e.g. travel deduction and depreciation changes);
• CGT and GST withholding tax obligations for purchasers of property;
• superannuation measures impacting home ownership (e.g. the first home super saver scheme and the superannuation downsizer incentive); and
• stamp duty and land tax, which varies from state to state.

The government has also proposed to abolish the main residence CGT exemption for taxpayers who are no longer Australian tax residents at the time they sign a contract to sell their home, regardless of how long the home has actually been used as a main residence.

Tax compliance and developments

Single Touch Payroll

From 1 July 2018, employers with 20 or more employees will have to run their payroll and pay their employees through accounting and payroll software that is Single Touch Payroll (STP) ready. This is a major reporting change, as employers will report payments such as salaries and wages and allowances, PAYG withholding and super information to the ATO directly from their payroll solution at the same time employees are paid.

GST on low value imported goods

From 1 July 2018, overseas vendors with GST turnover of AUD$75,000 or more in Australian sales will have to account for GST on sales of imported goods costing AUD$1,000 or less to consumers in Australia.

Payments to contractors in building and construction

Businesses in the building and construction industry must report to the ATO about their total annual payments to contractors by 28 August 2018. The government has proposed to extend this reporting regime to cleaners and couriers (from 1 July 2018) and to security providers, road transport and computer design services (from 1 July 2019).

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Super savings gap for women stuck at 30%

While the gender gap in superannuation is improving, an economic index indicates women are still retiring with superannuation balances 30 per cent lower than men.

While the gender gap in superannuation is improving, an economic index indicates women are still retiring with superannuation balances 30 per cent lower than men.

The Financy Women’s Index for the June quarter indicates that women are still facing a gender pay gap of 15.3 per cent and a superannuation savings gap of 30 per cent at retirement age.

Financy Women’s Index is based on data from over 700 annual company reports (as well as monthly, quarterly, biannually, and biennially) and methodology from the Australian Bureau of Statistics, the Australian Securities Exchange, the ATO and the Australian Government Department of Education and Training.

Australian Super group executive Rose Kerlin said further work is still needed in the areas of equal pay, equality of opportunity and more equal sharing of family responsibilities to close the gap which results in too many women having insufficient savings to fund a comfortable retirement.

Dianne Charman, chair of AFA Inspire, said that the fact that many women work part-time is having a long term impact on their superannuation.

“The Financy Women’s Index importantly reminds us to work with women to raise awareness about how even a small contribution to superannuation will, over the long term, put women in a better position.”

Association of Financial Advisers chief executive Phillip Kewin said the latest Financy Women’s Index results indicate that progress towards creating positive and meaningful cultural change in the financial wellbeing of women in Australia is happening slowly.

“It is disappointing to see that, at 26.1 per cent, the financial and insurance services industry has the highest pay disparity of all industries,” said Mr Kewin.

www.smsfadviser.com
Miranda Brownlee
27 June 2018

‘Wipe the slate clean’: Clients, accountants urged to use new amnesty period

Businesses look set to be granted a 12-month window to address historic under-payment of superannuation, against a backdrop of ongoing warning shots being fired by the government and regulators.

The federal government’s proposed one‑off, 12-month amnesty for historical underpayment of superannuation guarantee (SG) obligations is currently before the Senate, after passing through the lower house.

Institute of Public Accountants (IPA) chief executive, Andrew Conway, sees this as an opportunity for businesses and clients alike to “wipe the slate clean.” 

“Any non-payment of this worker entitlement represents wage theft; a practice never to be condoned,” Mr Conway said in a statement earlier this week. 

“However, we acknowledge that small businesses can sometimes experience cash flow issues, making them vulnerable when it comes to meeting their SG obligations by the required due date,” he said. 

“The IPA supports this amnesty period as it incentivises employers to come forward and do the right thing by their employees by paying any unpaid superannuation in full,” he said.

Non-payment of SG obligations has been a highly-publicised focus of the federal government’s broader package of integrity measures aimed at ensuring on-time payment and regular reporting by super funds.

As part of the measures, the ATO will also have the power to apply for court-ordered penalties which include up to 12 months’ imprisonment.

Single Touch Payroll (STP) will be central to ATO surveillance, and this plus other incoming reporting laws give the ATO access to current information about the amounts of superannuation that employers owe their employees.

This follows warning shots fired in 2017, when the ATO said it was looking to up its SG casework by one-third.

By: Katarina Taurian
​26 JUNE 2018
www.accountantsdaily.com.au

ATO reveals top tax time mistakes, set to contact 1 million taxpayers

The ATO will be contacting over one million taxpayers either directly or through their tax agent in the coming months as part of its compliance activity, and have revealed the most common trouble spots for taxpayers at tax time. 

With tax time 2018 beginning this weekend, the ATO has continued its ongoing education campaign by publishing the five most common mistakes seen from its audits and reviews from previous years.

According to the tax office, the top five mistakes include taxpayers who are leaving out some of their income, those who claim deductions for personal expenses, those who fail to keep receipts or records, those who claim for something they never paid for, and those who claimed personal expenses for rental properties.

ATO assistant commissioner Kath Anderson said the tax office would be taking a more proactive approach this year in a bid to clamp down on agents and taxpayers who “push the boundaries”.

“We are increasing our investment in education and assistance, as well as reviews and audits. This year we are expecting to make contact with more than 1 million taxpayers either directly or through their agents,” Ms Anderson said.

“This tax time we will be paying close attention to claims for private expenses like home to work travel, plain clothes, and private phone calls. We will also be paying attention to people who are claiming standard deductions for expenses they never paid for.

“Around half of the adjustments we make are because the taxpayer had no records, or they were poor quality. Yet it’s so easy to keep your records, using the myDeductions tool in the ATO app. Just take a photo, record a few details and then at the end of the year upload the information to your agent or to myTax.”

Further, Ms Anderson said the ATO would be taking a close look at income, including capital gains on cryptocurrency.

“A temp job, cash jobs, capital gains on cryptocurrency, or money earned from the sharing economy is all income that must be declared. We are constantly improving our data matching tools and even a one-off payment may be enough to raise a red flag,” she said.

The ATO’s latest warning comes off the back of several public notices, including a case study of incorrect claims in relation to work-related clothing and laundry claims.

Work-related car expenses have also been put on notice, with the ATO’s focus coming as part of a large-scale education campaign in the build up to tax time 2018.

By: Jotham Lian
​28 JUNE 2018
www.accountantsdaily.com.au

Watch out for charges with incoming GST laws.

Accountants and their clients have been advised to pay close attention to the commencement of GST on low value imported goods that could see Australian retailers incorrectly charged by overseas suppliers.

From 1 July 2018, 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.

Speaking to Accountants Daily, Crowe Horwath partner, Mark Reynolds, said the implications for Australian businesses would be mainly two-fold, namely for retailers who use drop shipping, and registered retailers who may be incorrectly charged GST by their overseas suppliers. 

As the changes are meant to target consumers, Australian retailers registered for GST should not be charged GST on low value goods imported for use in their business, and will need to provide their ABN and state they are registered for GST to their supplier.

“As an Australian business, one of the issues will be making sure you don't get charged GST incorrectly and the reason for that is the overseas suppliers, if they have to register for GST, can get what is called a simplified GST registration and that means they don't have to get an ABN and they can't claim input tax credits but they don't have to issue a tax invoice,” said Mr Reynolds.

“So if I’m dealing with an overseas supplier who is charging GST but they don't have an ABN and they don't give you a tax invoice, I can't claim any input tax credits. As an Australian business, I need to be advising the offshore supplier that I'm registered and have an ABN — don't charge me GST because there is a risk there if I don't get a tax invoice, I can't claim a credit.

“If they charge GST by mistake, our clients in Australia can't get it back and they can't claim a refund in their BAS, they have to go to the guys overseas and say, ‘you made a mistake, can you please adjust the price’, and if you are not dealing with them on a regular basis, it is going to be very difficult.”

According to the ATO, drop shipping refers to goods sold to Australian consumers by Australian retailers who house these goods overseas at the time of sale, and these transactions are currently not subject to GST.

“It's not uncommon to warehouse stock in China, Singapore, or somewhere in Asia, and then sell it to a client but because it is mailed to a client through the post, it was not subject to GST but now of course that will be so you've got an issue with Australia suppliers who might be delivering goods from overseas into Australia and they will have a GST implication,” said Mr Reynolds.

“From an Australian advisers perspective we have to make sure our clients here know what the law is and making sure they are not registering when they don't have to, and registering when you need to and obviously making sure they are not getting charged GST when they shouldn't be.”

By: Jotham Lian
​18 JUNE 2018
www.accountantsdaily.com.au