ATO contact regarding business cars and Fringe Benefits Tax ('FBT')
The ATO has recently advised that it will be contacting taxpayers (and tax agents on behalf of their clients) that have been identified as having cars registered in their business name who have not lodged an FBT return.
The ATO has reminded businesses that:
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Christmas Parties & Gifts 2018
Year-end (and other) staff parties.
FBT and 'entertainment'
Under the FBT Act, employers must choose how they calculate their FBT meal entertainment liability, and most use either the 'actual method' or the '50/50 method'.
Under the actual method, entertainment costs are normally split up between employees (and their family) and non-employees (e.g., clients and suppliers).
Such expenditure on employees is deductible and liable to FBT. Expenditure on non-employees is not liable to FBT and not tax deductible.
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Company loans to shareholders under review!
The Government has released a consultation paper outlining proposed reforms to ‘simplify’ the loan agreements that are generally required when a shareholder (or their associate) borrows funds (or receives a payment) from a related company.
With this in mind, Treasury is currently looking at (amongst other things):
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ATO to send text messages if bank account details incorrect
The ATO has advised that it will send SMS text messages directly to taxpayers where incorrect bank account details were included in their tax returns and they were entitled to a refund.
The SMS will advise impacted taxpayers that:
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Christmas & New Year Office Closure 2018
We would like to advise that our office will be closed on Monday 24th December and re-open on Monday 7th January 2019.
We would like to take this opportunity to thank all of our wonderful clients for the continued support throughout 2018.
Best wishes to you and your family from the team at Parallax Accounting, we hope you have a Merry Christmas and a very prosperous New Year.
We look forward to seeing you all in 2019!
Personal Income Tax Cuts passed!
Parliament has passed the Government's Personal Income Tax plan, meaning that the first stage of the proposed income tax cuts will start to take effect from 1 July 2018.
According to the Prime Minister, taxes "will now be lower, fairer and simpler".
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ATO putting clothing claims through the wringer
A focus on work-related clothing and laundry expenses this Tax Time will see the ATO "more closely examine taxpayers whose clothing claims don’t suit them".
According to Assistant Commissioner Kath Anderson, around 6 million people claimed work-related clothing and laundry expenses last year, with total claims adding up to nearly $1.8 billion.
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Tax time tips for small business
The ATO claims that it is committed to supporting small businesses and making it as easy as possible for them to understand and meet their tax obligations at tax time.
Consequently, Assistant Commissioner Mathew Umina has some tips to help small business in the lead up to and during tax time, including:
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2018 Budget Update
The Government handed down the 2018/19 Federal Budget on Tuesday 8th May 2018. Some of the important proposals include:
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Superannuation guarantee amnesty introduced
The Government has introduced legislation to complement the superannuation guarantee ('SG') integrity package already before Parliament by introducing a one off, twelve month amnesty for historical underpayment of SG.
The Bill incentivises employers to come forward and "do the right thing by their employees" by paying any unpaid superannuation in full, as well as the high rate of nominal interest (but without the penalties for late payment that are normally paid to the Government by such employers).
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ATO scrutinising car claims this tax time
The ATO has announced that it will be closely examining claims for work-related car expenses this tax time as part of a broader focus on work related expenses.
Assistant Commissioner Kath Anderson said:
“We are particularly concerned about taxpayers claiming for things they are not entitled to, like private trips, trips they didn’t make, and car expenses that their employer paid for or reimbursed.”
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What the super housing measures mean for SMSFs
The ATO has reminded members of SMSFs that they will be able to use their voluntary super contributions to assist with buying their first home, or to make a contribution into their super from the proceeds of the sale of their main residence (under changes passed by Parliament in December 2017).
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Continued ATO focus on holiday home rentals
The ATO has recently advised that they are “setting their sights on the large number of mistakes, errors and false claims made by rental property owners who use their own property for personal holidays”.
While it confirms that the private use of holiday homes by friends and family is entirely legitimate, the ATO states that such use reduces a taxpayer’s ability to earn income from the property, and therefore impacts on (i.e., reduces) the amount of claimable deductions.
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Get ready for Single Touch Payroll
Single Touch Payroll (or 'STP') is mandatory for 'substantial employers' (being those with 20 or more employees) from 1 July 2018.
All employers are required to count the number of employees on their payroll on 1 April 2018 to find out if they are a substantial employer (note that this can be done after 1 April, but they need to count the employees who were on their payroll on 1 April).
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Employee denied deductions for work-related expenses
An employee photographer has been denied deductions for travel expenses (when travelling with his family), and other purported work related expenses.
The AAT held that the travel expenses were primarily incurred for the purposes of a family trip or holiday and were therefore non-deductible, as they were private and domestic in nature.
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Commissioner’s speech highlights ATO’s focus areas
Recently, the Commissioner of Taxation highlighted the areas in which the ATO has recently increased its focus.
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No need to actually 'downsize' for ‘downsizer contributions’
From 1 July 2018, individuals aged 65 or over may use the proceeds from the sale of an eligible dwelling that was their main residence to make superannuation contributions (referred to as ‘downsizer contributions’), up to a maximum of $300,000 per person (i.e., up to $600,000 per couple), without having to satisfy the age or gainful employment tests that usually apply.
This measure was announced in the 2017/18 Federal Budget, and aims to provide an incentive for older Australians to ‘downsize’ their home.
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Inactive ABNs will be cancelled by the ATO
The ATO has recently advised that, in an effort to maintain accurate data, the Australian Business Register (or ‘ABR’) periodically checks its records for Australian Business Numbers (‘ABNs’) and automatically cancels those that appear inactive.
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Wishing you all a Crackin' Easter!!!
Please note that our office will be closed on Friday 30 March 2018 and re-open on Tuesday 3 April 2018.
We would like to wish you and your family a safe and happy Easter.
From all the team at Parallax Accounting.
Big changes proposed to eligibility for the CGT SBCs
The Treasurer has released draft legislation containing new "integrity improvements" to the CGT small business concessions ('SBCs') (i.e., including the 15-year exemption, the retirement exemption, the 50% active asset reduction and the small business roll-over).
Due to the government's "continued support for genuine small business taxpayers", it proposes making amendments so that the CGT SBCs can only be accessed in relation to assets used in a small business or ownership interests in a small business.
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Taxpayer can't explain where she got the money to pay her expenses
The Administrative Appeals Tribunal has upheld amended assessments issued by the ATO to a beauty technician, based on the high volume of money passing through the taxpayer's various accounts when compared with the modest income she had included in her tax returns.
For example, in the 2015 income year, the taxpayer had declared income of $61,842, but the ATO’s analysis of her bank accounts, records of international money transfers, and casino data suggested she had spent $107,328.
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ATO's focus on work-related expenses
This year, the ATO is paying close attention to what people are claiming as 'other' work-related expense deductions.
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Consultation on 'protecting superannuation entitlements'
Following the recommendations of the Superannuation Guarantee Cross‑Agency Working Group, the Government has released draft legislation "to protect workers’ superannuation entitlements and modernise the enforcement of the superannuation guarantee".
The draft laws extend Single Touch Payroll to all employers from 1 July 2019, and will require superannuation funds to commence ‘event-based’ reporting to the ATO of payments they receive for employees from their employer from 1 July 2018.
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ATO warning regarding small business record-keeping
According to the ATO, of all of the things that can cause small businesses to fold, "high on that list is poor record keeping".
More than half of the businesses they visited in their Protecting honest business campaign needed to improve their record keeping.
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ATO data matching program – Visa Holders
The ATO will acquire information on holders of a Visa from the Department of Immigration and Border Protection for the 2017/18, 2018/19 and 2019/20 financial years.
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