Tax time changes
Posted by Anthony
The ATO will start processing 2018-19 tax returns on 5 July 2019 and are expected to start paying refunds from 16 July 2019, with the majority of electronically-lodged current year tax returns completed within 12 business days of receipt. There a few changes to tax returns that individuals should take note of going into this end of financial year. Private health insurance statements:From 1 July 2019, health insurers are no longer required to send private health insurance statements, it is now optional to send this information. Private health insurance information will be available in the pre-fill report, expected by mid-August. If it is not populated by then, taxpayers may need to request a statement from their health insurer. Low and middle-income tax offset:Taxpayers may be eligible for an income tax offset if they are an Australian resident for income tax purposes or their taxable income is in the appropriate income range. It is not compulsory to claim this offset, the ATO will work it out when their tax return is lodged. Income statement:Employers reporting through Single Touch Payroll are not required to provide a payment summary to their employees as income statements will replace them. Employees can access their income […]
How the ‘Protect Your Super’ changes will affect you
Posted by Anthony
A number of changes to superannuation will come into effect from 1 July 2019. The ‘Protect Your Superannuation’ Bill passed through Parliament in February and forms part of the Government’s package of reforms that were announced in the 2018-19 Federal Budget. The new legislation is designed to protect Australians’ superannuation savings by ensuring that their super balance isn’t negatively affected by unnecessary fees on insurance policies. Changes that may affect you are; Insurance:For those who do not act before 1 July, your insurance may be deemed inactive. Under the Protect Your Superannuation Bill, super accounts that have been inactive for 16 months will have their automatic insurance cancelled. Members will be able to ‘opt-in’ to protect their insurance cover and stop their account from being inactive, but this must be done before 30 June. Ban on exit fees:The new laws will remove the need to pay exit fees from all superannuation accounts. Trustees that are currently charging exit fees will need to review the current fee structure in order to implement any necessary disclosure and product changes. All superannuation trustees and members will need to review these changes to ensure they are meeting all necessary obligations. If further help is […]
What and when you need to report in your SMSF
Posted by Anthony
The event-based reporting (EBR) framework for self-managed super funds (SMSFs) commenced on 1 July 2018. This system allows the ATO to administer the transfer balance cap. Reporting under the EBR framework commences when your first member begins a retirement phase income stream. The transfer balance account report (TBAR) is then used to report certain events and is separate from the SMSF annual return. An SMSF must report events that affect a member’s transfer balance, these should include details of: Pre-existing income streams being received on 30 June 2017 that; continued to be paid to them on or after 1 July 2017. were in retirement phase on or after 1 July 2017. New retirement phase and death benefit income streams including value and type. Limited recourse borrowing arrangement (LRBA) payments, including the value and date of each relevant payment, if entered into on or after 1 July 2017. Compliance with a commutation authority issued by the ATO. Personal injury contributions. Commutations of retirement phase income streams that occur on or after 1 July 2017. All SMSFs must report events that affect their members’ transfer balances. If no event occurs, there is nothing to report. Timeframes for reporting are determined by the […]
Changes to the ABN application process
Posted by Anthony
The ATO has made recent changes to the application process for an Australian Business Number (ABN). The changes have been made as a measure to protect the process’ integrity and identify those who are attempting to misuse it. An ABN is a unique 11 digit number that identifies your business to the government and the wider community. The recent changes focus on: Ensuring that those who are entitled to an ABN are the only ones who will receive one. Identifying people going through the application process multiple times. Confirming entitlement and helping people to understand their obligations. You are only entitled to an ABN when carrying on or starting an enterprise in Australia. An enterprise includes activities done in the form of a business, including operating a charity, renting or leasing property, or acting as the trustee of a superannuation fund. It is compulsory for businesses with a GST turnover of $75,000 or more to have an ABN and be registered for GST. There is no single test to determine cases where you are carrying on a business. However, features of a functioning business include: An intention to make a profit from the activity that is demonstrated by a business […]
Reducing errors when claiming business expenses
Posted by Anthony
The ATO has identified particular areas relating to business expenses that are commonly entered incorrectly in tax returns. Owners should take the time to carefully review tax returns to ensure all information is correct. Individuals who use a motor vehicle entirely for their business can claim a deduction for the whole amount. However, if they use the vehicle for a mix of business and private use, they will need to divide the expense amount and only claim the business portion. Business expenses must be kept separate from an individual’s private expenses, such as personal rent, fines, travel, food and renovations of a private residence. Those who operate their small business as a company or trust need to be aware that paying private expenses from these accounts may have other tax implications such as fringe benefits tax and shareholder loans. In the event a business is upgrading its accounting software, remember to check that business and private expense codes are correct. The business expenses must be claimed at the GST exclusive rate if they are registered for GST, not the GST inclusive rate. Small businesses should note that falsely or incorrectly claiming expenses is not something the ATO takes lightly. Penalties […]
In’s and out’s of the super downsizer scheme
Posted by Anthony
Under the super downsizer scheme, eligible individuals that are 65 years and older may be able to make a contribution into their superannuation of up to $300,000 from the proceeds of selling their family home. This scheme came into effect on 1 July 2018 as one of several measures announced in the May 2017 Federal Budget. Benefits to downsizer contributions: It can provide a way to boost your super balance. For those who may not have saved enough to fund their retirement, tax-free downsizer contributions can be a good opportunity to top up their already existing savings. No work test applies. This test requires that taxpayers aged 65-74 who wish to make voluntary contributions must be employed for at least 40 hours within a 30-day period. By removing this requirement, older Australians who no longer work significant hours will still be able to add large sums to their super. There are no contribution caps, as concessional and non-concessional contribution caps do not apply. Downsizer contributions aren’t subject to the $1.6 million total super balance restriction. For couples, both spouses are able to take advantage of downsizer contribution. This means that up to $600,000 per couple may be contributed towards their […]
What disqualifies you from an SMSF
Posted by Anthony
SMSF’s are regulated by the ATO and have specific eligibility criteria that members and trustees must follow. While anyone 18 years old or over can be a trustee or director of an SMSF, they mustn’t be under a legal disability, such as mental incapacity, or a disqualified person. The ATO can render an SMSF trustee as a disqualified person if they see the need, particularly in relation to illegal early access breaches. There are other ways a person may become disqualified and some may not even realise they have been. Continuing to act as an SMSF trustee or director of the corporate trustee while disqualified is an offence, further penalties may apply. A person is disqualified if they: Have been convicted of an offence involving dishonesty. Are or have been subject to a civil penalty order under the super laws. Are insolvent under administration (including being an undischarged bankrupt). Have been disqualified by a court or regulator (for example, by the ATO or APRA). The ATO has a Disqualified trustees register to see if an individual has previously been disqualified. The register provides information and easy search options to help determine whether a potential trustee has been disqualified. It is […]
Tax incentives for start-up investors
Posted by Anthony
Tax incentives may be available to investors that are considering putting their money into qualifying start-up businesses. Eligible businesses are defined by the ATO as early-stage innovation companies (ESICs). The two key tax incentives for eligible early-stage investors, also known as ‘angel investors’, who purchase new shares in an ESIC are: Non-refundable carry forward tax offset that is equal to 20% of the amount paid for their qualifying investments. This offset is capped at a maximum amount of $200,000 for the investor and their affiliates combined in each income year. Modified capital gains tax (CGT) treatment, where capital gains on qualifying shares that have been continuously held for at least one year may be disregarded. Capital losses on shares that have been held for less than ten years must be disregarded. Note that the maximum tax offset of $200,000 does not limit the shares that qualify for the modified CGT treatment. The early-stage investor tax incentives are available to both Australian resident and non-resident investors. To qualify for the tax incentives, investors must have purchased the shares in a company that meets the requirements of an ESIC immediately after the shares are issued. They must be issued on or after […]
ATO impersonation scam report
Posted by Anthony
The ATO has released an Impersonation Scam Report for the month of February 2019. Highlighted are the various ways in which scammers have attempted to contact people, posing as the ATO. The most common method of contact was by phone calls or messages, accounting for 97% of reported scams over the month. Reports of 9,342 phone scams were officially recorded, decreasing significantly from 13,800 reports in January 2019. Emails accounted for 2% of scamming methods. The remaining 1% reported was scam by text message. According to the ATO, the amount collected by scammers was approximately $256,635, over $240,000 less than January 2019. Payments to these scams by bank transfers significantly increased in February, accounting for 47% overall. Although trends are down in the last month, the ATO is working to create better public awareness of these scams. The ATO has launched a new scam warning video across their various social media platforms, including Facebook, Twitter and LinkedIn.
ATO warns of TBAR lodgement errors
Posted by Anthony
With upcoming annual lodgement dates for Transfer Balance Account Reporting (TBAR), the ATO is alerting funds of common lodgement mistakes that could lead to delays and additional processing time. The Transfer Balance Cap (TBC) is a $1.6 million cap on the total amount of superannuation benefits that a member can transfer into a tax-free retirement phase income stream. TBAR is used by SMSF trustees to report to the ATO any events that affect a member’s transfer balance. The information is used to record and track the member’s TBC and apply provisions if the member were to breach the cap. Reports can be lodged both online or by paper forms. The electronic method is recommended by the ATO as human errors are common when using the paper form to report. These issues are often a failure to provide the fund’s ABN and failing to report the event type. When these errors occur, the form will be suspended for manual review and the ATO may need to contact funds in some cases to resolve any issues. A TBAR must be lodged for the 2018-19 financial year if any member had a transfer balance account event occur in the last year, and if […]
