Category: Featured Articles

Superannuation Amnesty – Now Law

This week the Parliament passed legislation to enact the Superannuation Amnesty. 

The Amnesty is designed to encourage employers to come forward and disclose past quarters (from 1 July 1992 to 24 May 2018) where they have not paid Superannuation Guarantee (SG) to employees in full (i.e. an SG shortfall still exists). 

The Amnesty period in which employers can come forward is from 24 May 2018 and ends six months after the date the legislation receives Royal Assent (therefore until at least late August 2020). 

Under the Amnesty, the employer in coming forward will enjoy the following benefits: 

  • Tax deductions for payments of the SG Charge (these would otherwise not be tax deductible) 
  • No administrative penalty of $20 per employee 
  • No Part 7 penalties (which could otherwise be 200% of the SG Charge owing). 

It is anticipated more than 7,000 additional employers will come forward now that the legislation has passed. 

Given that SG non-compliance can now be more easily detected by the ATO, non-complying employers should strongly consider their options. 

Employers who do wish to take advantage of the Amnesty should contact the ATO. 

 

New GST Law for Directors!

Last week the Government passed legislation which may make company directors personally liable for any unpaid/overdue GST of their business. 

21 Day GST Director Penalty Notices may be issued by the ATO to a director if their company fails to pay GST but lodges the relevant activity statements within three months of the due dates. To avoid personally liability, within the 21 day period of the notice being issued, directors can: 

  • Pay the GST from the company 
  • Place the company into liquidation or voluntary administration. 

Alternatively, the ATO can issue Lockdown GST Director Penalty Notices if a company fails to pay GST and also fails to lodge activity statements within three months of being due. In this case, personal liability cannot be avoided through bankruptcy, liquidation or voluntary administration. 

The take-home message is to keep your GST lodgements and payments up-to-date, moving forward. 

The new law applies to quarters commencing 1 April 2020, and is not retrospective. 

Single Touch Payroll – Not too Late

for Businesses with Less than 20 Employees….

The ATO advises that it’s not too late to join the other 550,000 employers who are reporting through Single Touch Payroll (STP), but time is running out. 

If you aren’t reporting through STP, you can start by: 

  • finding a software solution that’s right for you. 
  • asking for a concession. This could be reporting quarterly at the same time as your activity statement. Eligibility will depend on your circumstances. 
  • asking for more time if you’re not ready. 

The ATO understands that it takes time to transition to STP, but there are a range of options to assist your transition. 

Remember, registered bookkeepers and tax agents can help you with your transition. 

You have until 30 June before penalties are applied. 

ATO Bushfire Relief

If you or your business has been impacted by the recent bushfires, the ATO don’t want you to be concerned about your tax affairs.

The ATO will help you sort out your tax affairs later.

For identified impacted postcodes, the ATO will automatically grant deferrals for lodgements and payments due.

You, or your accountant, don’t need to apply for these deferrals.

The postcodes are broken down by State: 

Tough Time Strategies

With the economy slowing and growth stagnant, this article offers business owners and individuals some ideas for financial relief. 

ATO PAYMENT ARRANGEMENT 

From time-to-time, all businesses are in debt with the ATO. Consider entering into an ATO payment arrangement if your business is. The ATO offers flexible arrangements which allow you to pay off your debt in amounts that are affordable and won’t unduly impact your cash flow or cash reserves. Where you enter into such an arrangement, the general interest charge will still be levied on any amounts outstanding after the due date. To enter into an arrangement, you our your advisor can phone the ATO. 

INTEREST-ONLY 

Almost all business owners have outstanding loans. Some business loans and many home loans have an interest-only option which reduces your repayments as you only pay the interest portion of your loan for a set period. Revisit the terms of your loan agreement to see if you have this facility, some financiers will allow you to pay interest-only on application when you or your business is struggling financially. 

INSTALMENT VARIATIONS
 
If your business is less profitable this year than last year, then you should consider varying your PAYG instalments downwards. 

PAYG instalments are effectively prepayments towards your expected end of year tax liability. The amount of instalments you are required to pay is generally based on your income from the prvious year. The instalment amounts are provided to you by the ATO as either an instament rate (which you then multiply by your income) or a fixed dollar amount. Because the amounts and rates are based on your income from a prior year, you should consider varying the PAYG instalment dollar amount downwards if your current year turnover is trending less than last year. By doing so, it may provide your business with significant short-term relief.

In making a downwards variation, be aware that penalties may apply if your variation resutls in you paying an amount that is less than 85% of the actual tax payable on your business and investment income for the financial year. Therefore, before you make a variation, consult your advisor. 

To continue to read this article for more strategies  – you need to be a subscriber – login to your members area and see the latest January/February 2020 Newsletter, page 15. 

Not a member? Phone today to talk to one of our friendly customer service reps or email info@mytaxsavers.com.au for more information. 

Key Dates for Summer 2019/2020

Many key dates are looming for business including those relating to Activity Statements, superannuation, and more…. 

DECEMBER 2019 

1 December – Due date for income tax payments for companies that were required to lodge by 31 Oct.  
21 December – November monthly Activity Statments – due for lodgement and payment . 

JANUARY 2020 

15 January – Due date for lodgement of income tax returns for companies and trusts that were taxable medium to large businesses in the prior year and are not required to lodge earlier. If you fail to lodge by the due date, your 2019/2020 income tax return will be due on 31 October 2020. 
21 January – Due date for lodgement and payment of December 2019 monthly Activity Statements. 
28 January – Due date for October-December 2019 Superannuation Guarantee contributions to be made to a complying fund on behalf of your employees. 
31 January – Final date for lodgement of October-December 2019 TFN report for closely held trusts for TFNs quoted to a trustee by beneficiaries. 

FEBRUARY 2020

21 February – Due date for lodgement and payment of January monthly Activity Statements. 
28 February – Due date for lodgement and payment of October-December 2019 quarterly Activity Statements, including electronic lodgements. 
28 February – Due date for lodgement and payment of Annual GST returns or Annual GST information reports – if you do not have an income tax return lodgement obligation. 
28 February – Due date for lodgement and payment of income tax returns for self-preparing entities that were not due at an earlier date. If you fail to lodge by the due date, your 2019/2020 return will be due on 31 October 2020. 
28 February – Due date for lodgement and payment of income tax returns for medium to large businesses (taxable and non-taxable that are new registrants). 
28 February – Due date for lodgement and payment of Superannuation Guarantee Charge Statement if you failed to pay Superannuation Guarantee charge on time for the October-December 2019 quarter. Superannuation Guarantee Charge is not deductible. 

Where one of these dates falls on a weekend or a public holiday, the due date is extended to the next business day except in the case of Superannuation Guarantee contributions. 

Superannuation Amnesty is back on the table!

The Government’s superannuation amnesty for employers is now back on the table! 

The Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019 was introduced into the House of Representatives on 18 September 2019. It seeks to legislate the super guarantee amnesty that the Government failed to pass into law before the Federal Election. The legislation provides for a one-off amnesty to encourage employers to self-correct historical SG non-compliance. 

Specifically, an employer that qualifies for the amnesty in relation to their SG shortfall for a quarter: 

  • Will have the administrative penalty waived ($20 per employee, per quarter) 
  • Will have Part 7 penalties waived (this can be an additional penalty of up to 200% of the shortfall owed) 
  • Will be able to deduct the late shortfall contribution (under current law, late payments cannot be deducted). 

The beneficial treatment provided by the amnesty is available for a quarter that ends at least 28 days before the start of the amnesty period. This means that the beneficial treatment provided by the amnesty is available in relation to the quarter starting on 1 July 1992 (which is the day that Superannuation Guarantee commenced) and all subsequent quarters until and including the quarter starting on 1 January 2018. An employer will not be able to benefit from the amnesty for SG shortfalls relating to the quarter starting on 1 April 2018 or subsequent quarters. 

To qualify for the amnesty, a disclosure must be made by an employer during the amnesty period. The amnesty period is the period that started on 24 May 2018 and ends 6 months after the day the legislation is passed (therefore, at least until March next year if the legislation passes next month). 

On releasing the legislation, the Assistant Treasurer said.   

Since the one-off amnesty was announced, over 7,000 employers have come forward to voluntarily disclose historical unpaid super. The ATO estimates an additional 7,000 employers will come forward due to the extension of the amnesty. This means around $160 million of superannuation will be paid to employees who would otherwise have missed out. 

The amnesty reinforces recent changes to the superannuation system to improve the visibility employees have over their superannuation. We have given the ATO greater powers to ensure employers meet their obligations, and to help ensure employees receive their superannuation entitlements. The Government’s legislated package of integrity measures – part of the Treasury Laws Amendment (2018 Measures No. 4) Act 2019 – includes up to 12 months jail for employers who continue to do the wrong thing by their workers, and gives the ATO near real-time visibility of how much SG employees are owed and the contributions they actually receive. 

This is a practical measure that is all about reuniting hardworking Australians with their super. My message to employers who owe super is: come forward now. Do not delay. This is a one-off opportunity to set things right, and going forward the ATO has the tools to spot unpaid super. 

Irrespective of whether the amnesty passes into law, all employers should strongly consider getting their superannuation affairs in order. There is now real time, and more granular reporting of superannuation liabilities and payments – down to the employee level. The ATO will now know in close to real time if an employer is not paying superannuation in respect of any employee. Therefore, it will be in a position to immediately follow up late payers. 

 

Members Only Tax Helpline

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Simply email MTS Helpline team at info@mytaxsavers.com.au they are ready to assist you.

Can You Claim GST Credits?

To claim GST credits on your purchases, you must be able to demonstrate you’re in business through activities such as: 

  • aiming to make a profit 
  • keeping records and account books 
  • making commercial sales of a product or service 
  • marketing and advertising to attract clients 
  • drafting a business plan. 

It’s more likely you’re not in business and your activities are a hobby if they’re: 

  • not aimed at making a profit 
  • not carried out in a businesslike manner 
  • irregular 
  • done mostly for your own enjoyment and satisfaction. 

If your activities are a hobby rather than a business you can’t claim GST credits on purchases associated with your hobby. You should consider if you have to cancel your ABN and GST registrations. You may also need to amend past activity statements if you have claimed GST credits for purchases associated with your hobby.  

Characteristics of a Business 

There is no single factor that determines if you are in business, but some of the factors you need to consider include: 

  • You’ve made a decision to start a business and have done something about it to operate in a businesslike manner, such as  
    • registered a business name, or 
    • obtained an ABN. 
  • You intend to make a profit – or genuinely believe you will make a profit from the activity – even if you are unlikely to do so in the short term. 
  • You repeat similar types of activities. 
  • The size or scale of your activity is consistent with other businesses in your industry. 
  • Your activity is planned, organised and carried out in a businesslike manner. This may include    
    • keeping business records and account books 
    • having a separate business bank account 
    • operating from business premises 
    • having licenses or qualifications 
    • having a registered business name. 

If you aren’t in business yet, it is important to keep these factors in mind as your activities change or grow, so you’ll know when you need to register for tax and other business responsibilities. 

Hobby 

If you determine your activities are a hobby then you do not have any additional tax or reporting obligations. 

If your activities are a hobby but you supply goods or services to businesses, they may request your ABN when they pay you. 

Because you do not have an ABN and your activity is done as a hobby, you should use the ‘Statement by a supplier’ form. This will avoid the business you are supplying having to withhold an amount from their payment to you. 


Members read all about GST in our Special GST publication, available in your members area.

Single Touch Payroll (STP) Have you missed the deadline?

If you missed the 30 September Single Touch Payroll (STP) reporting date, it’s not too late! Make the move and get started by following one of three pathways: 

Start reporting now  
If you already use accounting or payroll software, you need to check whether it offers STP reporting. If it does, you need to enable the STP function and start reporting straight away. If you’re looking for software or need to upgrade, we have a list of providers that offer STP reporting products. 

Apply for a reporting concession  
Depending on your circumstances you may be eligible for a reporting concession. This means you may be able to report less often (usually quarterly) if you meet certain criteria. 

Ask for more time  
If you’re not ready to report through STP, or you can’t because of your location and access to services, you can ask us for more time by applying for a deferral or exemption. 
 
Whichever option you choose will depend on your circumstances but it’s important to engage with the ATO as soon as possible.