Circumstances will sometimes get in the way of your ability to pay a personal or business tax debt on time.
If this is the case, it is vital to go on the front foot and put a payment arrangement in place with the ATO. For larger business debts, this is now more important than ever with new legislation allowing the ATO to disclose the business tax debt information of a taxpayer to credit reporting bureaus in certain circumstances. […]
Do you run a business and have or are thinking about hiring workers? If so, it’s important to understand the difference between contractors and employees, as you have different tax and superannuation responsibilities depending on the status of the worker.
What’s the difference between contractors and employees?
Generally speaking, an employee works in your business and is part of your business. A contractor is a person who is typically running their own business and the business engaging their services has little direction or control in respect of how that service is supplied. […]
Did you know that lower-income earning individuals who earn less than $450 per month are currently not eligible for superannuation guarantee (SG) contributions from their employer?
The $450 per month threshold also applies if an employee has more than one part-time or casual job and they earn more than $450 per month from all jobs combined. It simply comes down to the amount earned per job which can disadvantage many younger or lower-income workers.
But not for long …
The good news is that the $450 threshold will be abolished from 1 July 2022 due to recent legislative changes. This means that all employers will have to pay SG contributions for all employees, regardless of how much they earn per month.
The removal of the $450 per month threshold will benefit an estimated 300,000 people or 3% of employees[1], who are mainly young and/or lower-income and part-time workers, approximately 63% of whom are female[2]. These changes will help these workers start accumulating super earlier as well as help address the gap in super savings between women and men. […]
Thinking about setting up an SMSF? Or do you already have an SMSF with an individual trustee structure? If so, now might be the time to consider adopting a corporate trustee structure for your fund.
With over 60% of all SMSFs having a corporate trustee structure, there are many benefits in setting up a company to be the trustee of your SMSF.
For background, each member of an SMSF is required to be a trustee of the fund. Alternatively, you can choose a corporate trustee model (ie, a company to act as the trustee of the fund), which means each SMSF member must also be a director of the trustee company. […]
From 1 April 2021, the ATO’s independent review service has been made permanently available for eligible small businesses with a turnover less than $10 million. The service provides an additional option to achieve early and fair resolution of an audit dispute. […]
The ATO has stated that eligible businesses that received JobKeeper payments do not need to repay those amounts. However, some businesses may choose to voluntarily repay an amount. This amount can be equivalent to some or all the JobKeeper payments received.
The ATO says that voluntary repayments do not reduce the amount of JobKeeper a business received, and these payments must be included in a business’s assessable income.
A voluntary repayment of JobKeeper may be deductible only in limited circumstances and only if the voluntary payment is clearly appropriate to achieve, or directed at achieving, the business objectives of the business. […]
The pandemic period under which we labour continues to have outcomes that may at first have not been obvious, but as time and lodgement considerations come to pass, more taxation consequences edge their way out of the woodwork.
One such outcome is where employees have been garaging work cars at their homes due to COVID-19, and the affects this will have on employer fringe benefits tax (FBT) obligations. […]
Increasing maximum SMSF members to six is still official policy
The SMSF Association held its annual conference recently, which was addressed by Assistant Minister for Superannaution, Senator Jane Hume, who stated that it remains government policy to see an increase in the maximum number of SMSF members from four to six. Implementation of the Hayne banking commission recommendations was however a priority, she said. (See full speech here.)
“This proposed change is significant,” Hume said, “because it increases the flexibility of our self-managed superannuation sector. It will allow situations such as families with up to four children to be part of a single family superannuation fund.” […]
The ATO has in place a ruling that can allow a superannuation contribution to an accumulation account made in one financial year to be deemed to “take effect” (that is, allocated to a particular year’s contribution total) in the financial year that follows.
Importantly, the ATO requires a form to be lodged, which serves to notify it that a member of a self-managed superannuation fund (SMSF) has made a concessional contribution in one financial year (year 1) but the SMSF did not allocate this to the member until the next financial year (year 2).
Most SMSFs use provisions in their trust deeds concerning contribution reserves to enable this strategy, commonly referred to as a “contribution reserving strategy”. Typically, SMSF members will have made these arrangements to allow contributions to be recognised for income tax deductibility and other purposes in year 1 while not being counted towards their concessional contributions cap until year 2. […]
You are allowed to take issue with the ATO if it disagrees with your self-assessment of your tax position.
If you believe the ATO’s assessment is incorrect, the first step is straight forward and fairly informal. You contact us and we start making inquiries. If it still seems the assessment is wrong, or if you can provide us with extra information that may change it, we can lodge an amendment with the ATO.
But if the ATO disagrees, we can lodge an objection on your behalf (in other words, we can disagree with the disagreement). We can also object if the ATO amends an assessment and has taken a different stance to us on particular things (for example, we thought you were eligible to claim a deduction but were allowed only part of it). […]
The Treasurer Josh Frydenberg’s first budget has lots of goodies with few “baddies”. This was to be expected with the next federal election only weeks away and the Coalition Government trying to make up ground in the polls.
The Treasurer’s “wow” factor was a return to a budget surplus of $7.1 billion for the 2019-20 fiscal year.
Without increasing taxes, the Coalition Government, if re-elected, promises to deliver on a mix of benefits for a majority of taxpayers in Australia. These include:
Personal income tax cuts through adjusting upwards the thresholds at which the current tax rates apply (from 1 July 2022 to 30 June 2024) and then, finally, in the income year ending 30 June 2025, having only three rates of tax, with the highest marginal rate (45%) commencing at $200,000.
Increasing the Low and middle income tax offset to a maximum offset of $1,080 for the years ending 30 June 2019, 2020, 2021 and 2022.
Increasing the instant asset write-off threshold from $25,000 to $30,000 and extending this so that businesses with a turnover of between $50 million and $10 million can also access the concession. This will apply from Budget night until 30 June 2020.
Apart from the above, the budget was quite “light” on tax and superannuation changes. The government, no doubt, is trying to make itself a small target in relation to the coming election.
Also note that proposed changes to Division 7A will be deferred from 1 July 2019 to 1 July 2020, and that there are some useful changes to superannuation that will benefit older pre-retirees.
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Small business concessions under the spotlight
The CGT concessions for small business are important for qualifying businesses in that they can defer, reduce or remove liability to CGT.
The government announced last year that it intended to tighten the eligibility factors for the CGT concessions that are generally available to small businesses, and it has just initiated the formal review of the concessions.
Chaired by Dr Mark Pizzacalla from the Board of Taxation, the review is being conducted independently and is “self-initiated”. Dubbed a “consultation guide”, the Board of Taxation says it will draw on previous work it has undertaken into small business tax, other similar work undertaken by Treasury, as well as international experiences. (Get a copy of the guide here.)
In addition, a reference group of small business, professional and academic stakeholders have also generously volunteered their time and expertise to assist Dr Pizzacalla with his review. The results of the consultation process should be available by the end of October this year. […]
Taxing digital products and low value goods to change
When the GST Act and Regulations were drafted in 1999, e-commerce was in its infancy – it was not fully envisaged that people would prefer to shop from the comfort of their computer, and now even their mobile devices, rather than visiting a bricks and mortar shop. Over the years however, Australian internet sales have grown rapidly and are now in excess of $20 billion a year.
This has caused dismay from Australian businesses that have increasingly complained about an unequal playing field, since Australian consumers are often able to avoid incurring GST on their internet purchases from non-resident businesses. Online video-on-demand provider Netflix is a prime example where a subscription to its services is not subject to GST under existing laws.
In response to these concerns, the government has introduced amendments that extend GST to supplies of digital products, certain services and low value goods imported by consumers.
As a result of these amendments, Australian consumers will soon find themselves paying 10% more for many online purchases. In addition, many overseas suppliers will be required to register and pay GST, though in some cases the GST liability may be shifted to an electronic distribution platform or goods forwarder. To ease the administrative burden, the ATO will permit some foreign businesses affected by the amendments to hold a limited GST registration. […]
Require specific ATO advice on your SMSF? There’s a form for that
The ATO says it can provide tailored technical assistance for SMSF trustees in some circumstances, orally or in writing, depending on the nature and complexity of their query.
For example, you may need to seek tailored technical assistance if:
you are not able to find the ATO’s view of how the law applies to a particular technical issue
you’re not certain how the ATO view of the law applies to your circumstances
you are seeking greater certainty (protection) than the ATO’s published products provide.
If the contentious issue at hand is about how the Superannuation Industry (Supervision) Act 1993 and Superannuation Industry (Supervision) Regulations 1994 apply to a specific transaction or arrangement for an existing SMSF, you can apply to the ATO for advice to deal with that specific issue. […]
Deduction for association subscriptions — eligibility can endure into retirement
Many professional, business or trades people are members of an association, and during their working life subscribe to an appropriate organisation. Deduction for association subscriptions
In most cases the membership of a trade union for example, or professional association relevant to workers in a particular occupation, would qualify for deduction under the general deduction provisions of the tax laws. See taxation ruling TR 2000/7 for details.
What is the test for deductibility?
Broadly, the test for deductibility under the rules is whether the payment is an outgoing that is relevant and incidental to the derivation of assessable income. In most cases, where the taxpayer is in receipt of a salary or contractor fees, the membership of a relevant association would qualify under this section of the regulations and the entire amount of the subscription can be claimed as a deduction.
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