Category: Featured Articles

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

Do you have a tax-related question that you need guidance on? Send us an email.  
Your MTS Members Helpline is staffed by Qualified Accountants who have answered 1000’s of question over time from subscribers on everything from GST, CGT, Superannuation, FBT, Income tax and more.  

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.

ATO Announces Motor Vehicles Data Matching Program

 

One of the largest claims made by business and by employees for that matter is the use of a vehicle for business or work related purposes.  Much of the claim relates to depreciation on the cost of the vehicle.  As technology continues to advance and with data sharing amongst authorities becoming more prevalent, the ATO together with each of the State motor vehicle registry departments have announced that they have developed a data matching program to assess the overall taxation compliance of individuals and businesses when buying or selling vehicles.

 

Details will be requested by the ATO from the States when a vehicle has been transferred or has been newly registered and where the purchase or transfer price exceeds $10,000.

This data is going to allow the ATO to do a range of compliance audits on taxpayers in relation to Fringe Benefits Tax, fuel scheme claims as well as legal ownership of vehicles impacting the entitlement to make a claim for a tax deduction or under declaring income if a vehicle is sold.  The ATO advised in their press release that they anticipate this will impact around 2 Million taxpayers per year that acquire or transfer vehicles.

The takeaway this week is to ensure that if you are purchasing, selling or having a vehicle transferred for business or work related purposes that you ensure the correct entity is the registered owner of the vehicle and that any cost base used for making a claim uses the true cost of the vehicle adjusted for the luxury car tax limit or that the selling price is accurately recorded with any GST correctly accounted for. 

Does Your SMSF Investment Strategy Meet Diversification Requirements?

On the 9th August, the ATO announced it will contact, at the end of August, about 17,700 self-managed super fund (SMSF) trustees and their auditors where their records indicate the SMSF may be holding 90% or more of its funds in one asset or a single asset class.  

They are concerned some trustees haven’t given due consideration to diversifying their fund’s investments; this can put the fund’s assets at risk.  

Lack of diversification or concentration risk, can expose the SMSF and its members to unnecessary risk if a significant investment fails.  

They will ask trustees to review their investment strategy and clearly document the reasons behind the investment decisions.  

They will also ask trustees to have their documentation ready for their SMSF’s approved auditor for their next audit to help the auditor form an opinion on the fund’s compliance with these requirements

Record Keeping is King

From an income tax standpoint, it’s in your interests to keep good records of your transactions and activities. Keeping good records is not only required by law, but it makes your accountant’s job easier – this can result in both decreased fees (an accountant will take less time in preparing returns etc.) and increased deductions (claims cannot be made without having the required records). Aside from this, by keeping good income tax records: 

*                     You can demonstrate your financial position – this is particularly important where a business wishes to obtain finance from banks, or the business is being sold 

*                     You can better monitor the overall health of your business, especially its true cash position, and 

*                     You can more easily complete paperwork, including Activity Statements. 

The ATO last year issued contemporary guidance – in the form of Taxation Ruling TR 2018/2<//www.ato.gov.au/law/view/document?docid=TXR/TR20182/NAT/ATO/00001> – which deals with electronic records. This is welcome, as the ATO’s previous ruling was issued some 23 years ago and carries reference to cheque butts and receipt books! 

You should also utilize the ATO’s Record Keeping Evaluation Tool.<//www.ato.gov.au/Calculators-and-tools/Record-keeping-evaluation/> After asking you a series of questions, the tool culminates in a report which details to you how well your business is keeping records. Suggestions for improvement are also made if appropriate. 

 

Low and Middle Income Tax Offset Now Law

The Federal Government’s Personal Income Tax Plan is now officially law. For 2018/2019 (the financial year just gone) the centrepiece of this plan was an increase to the low and middle income tax offset (LMITO) from a maximum $530 to $1,060. 

Taxpayers with a taxable income:  

  *   of $37,000 or below can now receive a LMITO of up to $255  

  *   above $37,000 and below $48,000 can now receive $255, plus an amount equal to 7.5% to the maximum offset of $1,080  

  *   above $48,000 and below $90,000 are now eligible for the maximum LMITO of $1,080  

  *   above $90,000 but is no more than $126,000 are now eligible for a LMITO of $1,080, less an amount equal to three per cent of the excess.  

With Tax Time 2019 just over a week old, 810,000 individual tax returns have now been lodged, an 88% increase from the same time last year – an increase largely attributable to anticipated refund as a result of the increased LMITO. 

Despite the increase, ATO commissioner Chris Jordan has sought to reassure taxpayers that returns will begin flowing through from the end of this week. 

“We were able to work over the weekend to make changes to our systems once the legislation was passed last week,” Mr Jordan said on Tuesday. 

“All safety nets have been lifted from our processing, so our processing is now working absolutely full bore, 100%.” 

“People do not need to do anything special; they just put their return in, and we will calculate their offsets and money will be hitting people’s bank accounts by Friday this week.” 

Now the law has been passed, you may wish to get your 2018/2019 records to your Tax Agent and instruct them to lodge early rather than in the first part of next year (which is the normal lodgement time if lodging with a Tax Agent). By doing so, all other things being equal, you will bring forward your LMITO entitlement with a potential additional refund of up to $1,080 (subject to the above income limits, and subject to not otherwise having underpaid tax during the year). 

If you lodge your own tax return, then remember you do not need to claim the LMITO separately – rather the ATO will process your claim automatically upon lodgement. 

Single Touch Payroll for Micro Employers

If as an employer you are not ready for Single Touch Payroll (STP) don’t panic!   Although 1 July has rolled around, smaller employers (those with less than 19 employees) have three months from this date (until 1 October 2019) to be STP-compliant. Furthermore, no penalties will be imposed during the initial 12 months of STP, therefore there is no need to be worried. 

While for many employers, their STP solution will be to adopt STP-compliant software or outsource their payroll to their registered Accountant or Bookkeeper, many very small employers may be eligible for the micro-employer concessions including: 

  • Reporting quarterly through their registered accountant or bookkeeper for two-years until 30 June 2021 (instead of reporting each time you pay your employees) 
  •  Adopting a free or low-cost, simplified STP solution (as opposed to payroll software). 

Micro employers are those with less than five employees at the time of application. Virtually all employees are counted (including casuals, those on leave, and employees working overseas), however closely-held payees are excluded – namely, family members of a family business, directors or shareholders of a company, and beneficiaries of a trust. 

In the event that a business is currently a micro employer but later no longer qualifies as it puts on extra staff, the ATO adopts a different approach in respect continued eligibility for the above concessions. While eligibility for quarterly reporting will be unaffected by an increase in staff above four, the ATO expects employers to cease using the simplified, low cost STP reporting solutions if they later cease to qualify as a micro employer. This would then generally mean adopting STP-compliant software, or lodging via your registered accountant or bookkeeper. 

In respect of the low-cost, simplified STP solutions, an updated list of products now available and currently in development is maintained on the ATO website.  <//www.ato.gov.au/business/single-touch-payroll/in-detail/low-cost-single-touch-payroll-solutions/> There are a wide range of products available including free solutions such as apps to install on your phone that allow employers to simply key in employee payroll information (gross amounts per pay, and tax withheld etc.) and send it to the ATO (and thereby maintain your manual payroll systems if you so choose). 

Of course, micro employers can opt to disregard these free or low-cost solutions and instead adopt STP-compliant software and, in doing so, enjoy the advantages of computerizing your payroll processes. 

 

 

 

SINGLE TOUCH PAYROLL

1 July Employers with less than 20 employees should start transition to Single Touch Payroll (STP)

Single Touch Payroll (STP) is a new way of reporting tax and super information to the ATO.

If you are using a solution that offers STP reporting, such as payroll or accounting software, you will send your employees’ tax and super information to the ATO each time you run your payroll and pay your employees.

The information is sent to the ATO either directly from your software, or through a third party – such as a sending service provider.

If you have a software provider, they can tell you more about the type of STP solution they offer. For a list of available STP solutions visit the //api.gov.au/productregister/

There will also be a number of options available for employers who do not use payroll software, such as //No-cost and low-cost Single Touch Payroll solutions.

Options will depend on your number of employees:

  • Large employers with 20 or more employees should now be reporting through STP, or have applied to the ATO for a later start date.
  • Small employers with 19 or less employees will need to report through STP from 1 July 2019. This is a gradual transition, and the ATO is providing flexible options.
    • If you’re an employer with four or less employees you will have additional options.