Category: News

FBT

FBT Issues on ATO Radar

With the date for lodging and paying FBT approaching (21 May), on Wednesday 1st May, the ATO reminded employers that the following mistakes attract the ATO’s attention:

*         failing to report car fringe benefits, incorrectly applying exemptions for vehicles or incorrectly claiming reductions for these benefits

  *   mismatches between the amount reported as an employee contribution on an FBT return compared to the income amounts on an employer’s tax return

  *   claiming entertainment expenses as a deduction but not correctly reporting them as a fringe benefit, or incorrectly classifying entertainment expenses as sponsorship or advertising

  *   incorrectly calculating car parking fringe benefits

  *   not applying FBT to the personal use of an organisation’s assets provided for the personal enjoyment of employees or associates (e.g. spouses) and

  *   not lodging FBT returns (or lodging them late) to delay or avoid payment of tax.

Key Dates for May & June

Many lodgement and payment deadlines are looming for business including those relating to Activity Statments, Superannuation, and more….

MAY 2019

12 May – 3rd Quarter 2018/2019 Activity Staterments – due for lodgement and payment if lodging electronically

21 May – April 2018 monthly Activity Statements – due for lodgement and payment

21 May – FBT annual tax return – due for lodgement and payment for self-preparers

28 May – Due date for lodgement and payment of the Superannuation Guarantee Charge Statement if you failed to pay Superannuation Guarantee on time for the January-March quarter. Superannuation Guarantee Charge is not deductible

JUNE 2019

21 June – May monthly Activity Statements – due for lodgement and payment

25 June – 2019 FBT annual tax return – due date for lodgement and payment if using a Tax Agent who lodged electronically

30 June – Superannuation Guarantee payments must be received by Superannuation funds by this date in order to be deducted in 2018/2019

30 June – End of the 2018/2019 financial year

Where one of these dates falls on a weekend or a public holiday, the due date is extended to the next business day.

Key Dates For March & April

Many lodgement and payment dealines are looming for business including those relating to Activity Statements, Superannuation, and more….  

MARCH 2019 
21 March – February monthly Activity Statements – due for lodgement and payment

APRIL 2019 
21 April – March monthly Activity Statements – due for lodgement and payment 
21 April – Quarter 3 (January-March) PAYG instalment Activity Statements for head companies of consolidated groups – due for lodgement and payment 
28 April – Quarter 3 (January-March) Activity Statements – due for lodgement and payment (if lodging by paper) 
28 April – Quarter 3 (January-March) PAYG instalment notices (forms R and T) – final date for payment and, if varying the instalment amound, lodgement 
28 April – Quarter 3 (January-March) GST instalment notices (forms S and T) – final date for payment and, if varying the instalment amount, lodgement 
28 April – Quarter 3 (January-March) superannuation guarantee contributions to be made to a complying fund on behalf of your employees 
30 April – Quarter 3 (January-March) TFN Report for closely held trusts for TFNs quoted to a trustee by beneficiaries – final date for lodgement 

Where one of these dates falls on a weekend or a public holiday, the due date is extended to the next business day.

STP Rollout Now Law!

The Senate has now passed legislation to extend Single Touch Payroll (STP) to employers with 19 or less employees from 1 July 2019.

These businesses can also of course opt in early to STP.

The passage of legislation follows months of uncertainty for small business after STP was officially rolled out for employers with 20 or more employees from 1 July 2018.

The ATO still intends to allow micro-businesses (less than 5 employees) to adopt low-cost, alternative STP solutions.

 

 

Farm Management Deposits

Introduced in 1999, Farm Management Deposits are seen to be an important part of risk management for primary producers. What are they and do they work? This article takes a close look at the Farm Management Deposits Scheme, some of the commonly asked questions and works through a case study to determine the answers.

BASICS

In simple terms, the Farm Management Deposit (FMD) scheme is intended to allow Primary Producers the opportunity to shift “before-tax’ income to a later year where they may offset losses due to unfavourable climatic or market conditions. FMDs are considered an important risk management tool for the Primary Producer to ‘even out’ what could otherwise be extremely uneven income years.
The scheme works by allowing Primary Producers to claim an income tax deduction for an actual cash deposit into an FMD scheme in the year the deposit is made. As a result, this reduces the Primary Producer’s taxable income in the deposit year and hence any income tax payable on the deposit amount. In a later income year, when the Primary Producer’s income may be low due to a downturn in market or climatic conditions, the Primary Producer can apply to the FMD scheme for a withdrawal. The amount is then included in the Primary producer’s assessable income for that year and taxed accordingly.

The scheme is cash-flow driven; in a bountiful year, the surplus cash is deposited in a FMD held with a financial institution. In a lean year the cash is withdrawn from the FMD to assist the Primary Producer to pay for business expenses.

 ELIGIBILITY

THE OWNER

The owner of an FMD is a person on whose behalf the deposit is made. The owner must be a Primary Producer at the time the deposit is made. The owner cannot be a joint ownership or a Company but, rather, the scheme is restricted to ownership by individuals (including Partners in a Partnership). The only exception of this rule is where a Trustee is acting on behalf of a beneficiary who is presently entitled to a share of the income of a Trust estate, but is under legal disability (for example, a minor under the age of 18 years)

DEPOSIT-TAKING INSTITUTION

You must make your deposits with an FMD Provider that is an authorised deposit-taking institution or an entity that has a Commonwealth, State, Territory guarantee for deposits. This includes any bank, building society or credit union. You can make deposits with more than one of these institutions.

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Buying or Selling Property? Beware of the Capital Gains Tax Withholding Rules

If you are buying or selling real estate situated in Australia for $750,000 or more, it is important to be aware of the the Capital Gains Tax Withholding rules.


With effect from 1 July 2017, for any real estate transactions of $750,000 or above, the vendor must provide to the purchaser, prior to settlement, a  “clearance certificate” obtained from the ATO. Without this, the purchaser is required to withhold 12.5% of the price and pass this on to the ATO. The vendor would then need to wait until lodgement of their income tax return before they could recover the withheld amount.

The laws were introduced to tackle the problem of foreign residents selling real estate and avoiding their capital gains tax liabilities. In practice, however, it means that the vast majority of real estate transactions not involving foreign residents are also impacted. The ATO recommend applying for a clearance certificate at least 14 days before you require it.

The following tax changes commence 1 July 2017 and may impact you or your clients:

Happy New Financial Year!

Income Tax

Deficit Levy to be abolished – thus resulting in a 2% tax cut for individuals with taxable income in excess of $180 000.

Minimum Wage

On 6 June 2017, the Fair Work Commission handed down its annual wage review. The decision varied the following:

  • Minimum wage rates in Modern Awards – increased by 3.3% from first full pay period commencing on or after 1 July 2017 (rounded to the nearest 10 cents)
  • National minimum wage – increased by 3.3% to $694.90 per week, or $18.29 per hour
  • Wages for juniors, apprentices – most rates are expressed as a percentage of nominated adult rate so they receive a proportionate increase to the adult rate
  • Wages for trainees and piece workers – most trainees are covered by the National Training Wage system that is included as a schedule in most awards. National Training Wages will also be increased by 3.3% from the first pay period on or after 1 July 2017. Piece rates will increase in accordance with the relevant provisions in the modern award, pay scale or transitional award.
  • Supported wage system – employees with a disability: these employees are paid a percentage of the relevant adult wage, based on their assessed capacity. The 3.3% increase will also flow through to these employees.

GST

Rental Property Deduction Crackdown

First Home Saver Scheme to Commence

Voluntary super contributions made from 1 July 2017, will be able to be withdrawn as a deposit for a first home. More information.

Superannuation

Single Touch Payroll

Available for some employers

Payment Summaries Due 14 July 2017

With the end of financial year fast approaching, be mindful that Payment Summaries must be provided to employees by 14 July for 2016/2017. This date is not just a guideline but is actually stipulated by law (Section 16- 155 of the Tax Administration Act). Two of the most common errors made in preparing the Individual Non-Business Payment Summary for employees are:

 

  • Misstating reportable employer superannuation contributions – ensure that you exclude Superannuation Guarantee amounts from this label. Salary sacrificed superannuation amounts must however be included.

 

 

This year there are special rules for Working Holiday Makers. A reduced tax rate applies for employers who registered with the ATO from 1 January 2017 — 15% up to $37,000 and 32.5% from $37,001. For registered Working Holiday Makers who worked both before and after 1 January 2017, two Payment Summaries must be issued, with the two different tax rates applying to the gross payments, depending upon the time of payment.

 

On the other hand, employers who did not register with the ATO for the reduced tax rate and continued to withhold at the foreign resident rate of 32.5% are required to issue the standard single Payment Summary per employee.

 

The Payment Summary for 2016/2017 includes a new section for overseas workers. In the Gross Payments Type box you must now indicate a type – this will be either S (salary), or H (registered Working Holiday Makers).

 

 

 

Engaging a Tax Agent

If like many taxpayers you intend on using the services of a Tax Agent to prepare your upcoming 2016/2017 Income Tax Return, you should ensure you are on their lodgement list by 31 October 2017. If you are not on a Tax Agent’s Lodgement List, your tax return will be due on this date, and you will not enjoy the extended due date that you usually would when you lodge with a Tax Agent. Other points to be mindful of when using a Tax Agent include:

 

  • Ensure they are registered with the Tax Practitioners Board (go to //www.tpb.gov.au/search-register)
  • Ensure that you provide the Tax Agent with all of your relevant tax records for 2016/2017 (receipts etc.). Failure to do may result in delays in lodging your return, and you possibly paying more tax than you are liable for. Ask your Tax Agent for a checklist of the records that you need to provide.
  • Tax return preparation fees are tax deductible, so ensure that you retain evidence of payment.

 

 

 

RIDE-SOURCING IS TAXI TRAVEL

The Federal Court last month dismissed and appeal from Uber, and confirmed the ATO view that ride-sourcing (ride-sharing) does constitute ‘tax travel’ for GST purposes. Consequently, the ATO has advised that unless Uber appeals this decision, it will continue to administer the law in accordance with its published guidance. We now detail what this treatment is from a driver’s and passenger’s perspective.

DRIVER

Ride-sourcing drivers have a range of tax obligations as follows:
  • As ride-sourcing constitutes taxi travel, they must register for GST from when they sign up as a driver. The normal $75,000 GST registration threshold does not apply.
  • They must keep records of their expenses and income.
  • They must have an ABN.
  • They must pay GST to the ATO on the full fare (including any commission they pay to the facilitator e.g. Uber) for each trip they provide.
  • They must lodge Business Activity Statements
  • They or the facilitator must provide passengers with a tax invoice when they request it and where the fare exceeds $82.50 (GST-inclusive).
  • They must include the fares as income on their tax returns.

On the plus side, drivers are able to claim the GST and income tax deductions on expenses that they incur in driving such as insurance, petrol, registration, the facilitator’s commission, and also depreciation of the motor vehicle. However, these claims must be apportioned to take account of any private use of the vehicle.

PASSENGER

From a GST perspective if the fare is work-related, GST registered taxpayers can claim this component of the fare back on their Business Activity Statement. If the amount of the fare is under $82.50 (GST-inclusive) you will not need a tax invoice to do so. If the fare is over this amount, you should request a tax invoice in order to claim the GST.

From an income tax perspective, passengers can claim a tax deduction if the fare is work-related and would be deductible if you were driving that route yourself.