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Topics for March 2021

Topics in our monthly newsletter for March include:

Update your ABN now!

You could be missing out on stimulus measures, grants and other government support if your ABN details are out of date. 

The ATO and the Australian Business Register are making efforts to remind businesses and relevant taxpayers that it is essential to ensure ABN registration details are accurate and completely up-to-date.

It is a business owner's responsibility to make sure this is done (contact the Australian Business Register, see www.abr.gov.au).

If you have an ABN you can update the company details or get us to do it for you. 

Director ID numbers

There could be just around the corner.  Under the scheme, directors will be required to have their identity verified and have a unique and permanent identifier issued to them.

Companies will need to put processes in place to ensure that all existing directors

apply for a DIN within the prescribed timeframe once the regime is implemented.

new directors will have 28 days after appointment as a director to apply for a DIN.

The procedures and documents required to obtain a DIN are not included in the legislation, and will probably be set out in a separate announcement in the coming months.

For more information on any of these topics, sign up to our newsletter or contact on mail@watsonerskine.com.au

 

ATO support measures

ATO support measures for those affected by Coronavirus outbreak, 18 March 2020
The ATO will implement a series of administrative measures to assist Australians experiencing financial difficulty as a result of the COVID-19 outbreak.
Businesses impacted by the coronavirus are encouraged to get in touch with the ATO to discuss relief options. Options available to assist impacted businesses include:
• deferring by up to four months the payment date of amounts due through the business activity statement (BAS, including PAYG instalments), income tax assessments, FBT assessments and excise
• allowing businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to
• allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero for the March 2020 quarter; businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters
• remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities, and
• working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low-interest payment plans.
Employers will still need to meet their ongoing super guarantee obligations for their employees.
To make it easier for people to apply for relief, the ATO will be increasing its presence in the areas of highest impact. A temporary shopfront with staff specialising in assisting small business will be established in Cairns within the next few weeks. It will also consider ways to enhance its presence in other significantly affected regions. Additional temporary shopfronts and face-to-face options are currently under consideration.
The ATO will also continue to work with the tax profession, other government agencies and local organisations to make sure other impacted communities are also supported.
Outside of business, the ATO will also work with individuals experiencing financial hardship, and their tax agents, and will apply appropriate tax relief measures for serious and exceptional circumstances, such as where people cannot pay for food or accommodation.
Unlike the bushfire relief measures, which applied automatically to particular geographic areas, assistance measures for those impacted by COVID-19 will not be automatically implemented.
Anyone impacted by COVID-19 is advised to contact the ATO to request assistance on their Emergency Support Infoline 1800 806 218. Alternatively ask us to contact the ATO on your behalf.

 

Superannuation Guarantee Amnesty Bill

The superannuation guarantee amnesty bill passed Parliament on 24 February and has now received Royal Assent and is law.

This law change provides a number of incentives for employers to pay any unpaid historical superannuation guarantee ("SG") amounts (the compulsory employer superannuation contribution for employees) relating to the period 1 July 1992 to 31 March 2018.

This is a one off opportunity.

Please read the newsletter HERE and get in touch if you would like to discuss in further detail.

ATO support

COVID-19

The ATO can provide relief for some tax obligations for people and businesses affected by the coronavirus outbreak on a case by case basis.

Businesses impacted by COVID-19 can phone the Emergency Support Infoline on 1800 806 218 for help tailored to your circumstances.

The ATO has translation and interpreting services available to help you with your call 13 14 50

Aboriginal and Torres Strait Islander peoples can phone the Indigenous helpline 13 10 30

If you have difficulty hearing or speaking to people who use a phone you can contact the National Relay Service External Links (NRS)

You can also talk to us so we can work with the ATO to support you to manage your tax affairs.

This LINK provides more information.

Travel Allowances

 

 

Travel Allowances

 

Travel allowance is a payment made to an employee to cover accommodation, food, drink or incidental expenses they incur when they travel away from their home overnight in the course of their duties.

 

In most circumstances, when claiming other deductions you will be expected to be able to substantiate the expense being claimed with documentary evidence and be able to produce that evidence if requested by the ATO.

 

Guidelines provided by the ATO are updated annually on exceptions to substantiate claims – if the ATO considers the total claimed to be 'reasonable'.

 

For more information on travel allowances, keeping travel expense records, visit the ATO website

 

If you would like to discuss this or any topic further, please email:  mail@watsonerskine.com.au

 

Read our newsletters at www.watsonerskine.com.au and find current and archived information under client tools, newsletter and report.

 

!Scam Alert!

Watch out Scammers about!

The ATO has warned of a current scam involving pre- recorded robocalls impersonating the ATO and threatening immediate arrest for an unpaid tax debt.  The number shows in caller ID as a genuine ATO number.

If you receive one of these calls or a voice mail HANG UP or DELETE it.  If you have shared any personal information, please call us immediately.

As always, if you have any concerns with your tax affairs please call us.

For more information from the ATO on scammers follow this link – FAKE

Or email mail@watsonerskine.com.au

 

Single Touch Payroll

Single Touch Payroll

Single Touch Payroll (STP) is coming – are you ready?

 

What is STP?

It is the new ATO requirement that will change the way tax and super reporting is managed.  It means that employers will report payments such as salaries, wages, PAYG withholding and Super information DIRECTLY from their payroll solution at the same time as paying their employees.

 

Does it affect me?

Eventually, all employers will be required to comply. Currently it only affects businesses employing more than 20 people.  This started on 1 July 2018.

 

From 1 July 2019 it will include smaller business with less than 19 employees. Transition provisions will be available.

 

What do I need to do?

Check out the ATO information on Single Touch Payroll

 

If you would like to discuss this or any topic further, please email:  mail@watsonerskine.com.au

Employers - Changes to deductions for non-compliant payments to workers

From 1 July 2019 the rules for claiming deductions for payments to workers are changing. 

 

Deductions can only be claimed for payments made to workers where the employer has met the pay as you go (PAYG) withholding obligation for that payment.

 

Where the PAYG withholding rules require an amount to be withheld, you must:

  • withhold the amount from payment before you pay the worker
  • report that amount to the ATO

 

The deduction won't be lost if the following is withheld:

  • An incorrect amount by mistake – to minimise any penalties the mistake can be corrected by lodging a voluntary disclosure in the approved form from the ATO.
  • The correct amount but make a mistake when reporting

 

The deduction will only be lost if there is a withholding or reporting requirement and no amount is withheld or reported to the ATO unless a voluntary disclosure in the approved form is made before the ATO has begun an examination of your affairs.

 

The change is part of the government response to recommendations from the Black Economy Taskforce.

 

From the ATO website:  changes to deductions for non compliant payments to workers.

Fringe Benefits Tax and Christmas Parties

Fringe benefits tax and Christmas parties

 

Christmas parties

There is no separate fringe benefits tax (FBT) category for Christmas parties and you may encounter many different circumstances when providing these events to your staff. Fringe benefits provided by you, an associate, or under an arrangement with a third party to any current employees, past and future employees and their associates (spouses and children), may attract FBT.

 

Implications for taxpaying body

If you are not a tax-exempt organisation and do not use the 50-50 split method for meal entertainment, the following explanations may help you determine whether there are FBT implications arising from a Christmas party.

 

Exempt property benefits

The costs (such as food and drink) associated with Christmas parties are exempt from FBT if they are provided on a working day on your business premises and consumed by current employees. The property benefit exemption is only available for employees, not associates.

 

Exempt benefits – minor benefits

The provision of a Christmas party to an employee may be a minor benefit and exempt if the cost of the party is less than $300 per employee and certain conditions are met. The benefit provided to an associate of the employee may also be a minor benefit and exempt if the cost of the party for each associate of an employee is less than $300.The threshold of less than $300 applies to each benefit provided, not to the total value of all associated benefits.

 

Gifts provided to employees at a Christmas party

The provision of a gift to an employee at Christmas time may be a minor benefit that is an exempt benefit where the value of the gift is less than $300.

 

Where a Christmas gift is provided to an employee at a Christmas party that is also provided by the employer, the benefits are associated benefits, but each benefit needs to be considered separately to determine if they are less than $300 in value. If both the Christmas party and the gift are less than $300 in value and the other conditions of a minor benefit are met, they will both be exempt benefits.

 

Tax deductibility of a Christmas party

The cost of providing a Christmas party is income tax deductible only to the extent that it is subject to FBT. Therefore, any costs that are exempt from FBT (that is, exempt minor benefits and exempt property benefits) cannot be claimed as an income tax deduction.

 

The costs of entertaining clients are not subject to FBT and are not income tax deductible.

 

Christmas party held on the business premises

A Christmas party provided to current employees on your business premises or worksite on a working day may be an exempt benefit. The cost of associates attending the Christmas party is not exempt, unless it is a minor benefit.

 

Be Aware!

Be Aware!

 

From time to time, the ATO may contact you by phone – but you should be wary of unsolicited phone calls claiming to be from the ATO and offering you a refund, or demanding payment.

 

Never give out your bank account details or your tax file number.

 

The calls - demanding payment - can be upsetting and threatening.

 

You should contact the ATO or your tax agent if you have any concerns.

 

Follow this link for some useful information:  www.scamwatch.gov.au and click here for information from the ATO.

 

If you would like to discuss this or any topic further, please email:  mail@watsonerskine.com.au

 

Read our newsletters at www.watsonerskine.com.au and find current and archived information under client tools, newsletter and report.

Claiming deductions for your holiday home?

Claiming deductions for your holiday home?

As a rental property owner, you probably know that you can claim deductions on expenses for your investment property when it's rented out. But what happens when your property isn't rented out? You can claim a deduction if your property is genuinely available for rent; ask yourself the following four questions to help you determine this:

 

How do you advertise your rental property?

You need to advertise in a way that maximises exposure to potential tenants such as an online site. Advertising in ways that limits exposure to potential tenants, such as by word of mouth, means your property may not be genuinely available for rent.

 

What location and condition is your rental property in?

It's important that your rental property is in a location and condition that tenants will want to rent it in. If your property is poorly cared for, or in a remote area, it is unlikely to be tenanted, and may not be classed as genuinely available for rent.

 

Do you have reasonable conditions for renting the property and charge market rate?

If you place unreasonable conditions that reduce the likelihood of your property being rented out, such as setting the rent above market rate, your property may not be considered genuinely available for rent. Likewise, if you, your family or your friends stay for free, your property will not meet the criteria during that time period. If the property is being tenanted at a discounted rate ('mates' rates') then the allowable deductions are limited to the amount of rent charged, not market rates.

 

Do you accept interested tenants, unless you have a good reason not to?

If you refuse to rent out your property to interested potential tenants without a good reason, this indicates that you may not have a genuine intention to make income from the property and could be reserving it for private use. In this case, your property wouldn't meet the criteria for being genuinely available for rent.

 

Different rules apply if you're renting out your private residence – check out the ATO information on the sharing economy and tax

 

If you would like to discuss this or any topic further, please email:  mail@watsonerskine.com.au

 

Read our newsletters at www.watsonerskine.com.au and find current and archived information under client tools, newsletter and report.



Single Touch Payroll - coming soon

 

    As an employer, what you need to know about Single Touch Payroll (STP)

Key Dates:

1 April 2018 – Employers will need to do a head count of their employees.  If there are more than 20 employees on this date, they will need to make sure the payroll software is STP enabled from 1 July 2018.

1 July 2018 – The official start date for STP

 

What is STP?

This is a new way that employers will report salary and wage payments to the ATO and will be in effect from 1 July 2018.

 It is a government initiative to simplify business reporting obligations.  Single Touch Payroll is a reporting change for employers with 20 or more employees.

Employers will need to report payments such as salaries, wages, PAYG withholding and super information electronically to the ATO directly from their payroll solutions at the same time they pay their employees.

This means that the payroll summaries for employees won't need to be completed at the end of the financial year as the payroll information is reported directly to the ATO in real time throughout the year.

 

Check out the ATO information on Single Touch Payroll

If you would like to discuss this or any topic further, please email:  mail@watsonerskine.com.au

Read our newsletters at www.watsonerskine.com.au and find current and archived information under client tools, newsletter and report.

 

The Sharing Economy

What is the sharing economy?

 The sharing economy connects buyers (users) and sellers (providers) through a facilitator who usually operates an app or a website.

Popular sharing economy services include:

·         renting out a room or a whole house or unit for a short-time basis, for example Airbnb and Stayz

·         providing 'ride-sourcing' services for a fare (considered to be taxi travel) such as Uber and GoCatch

·         providing personal services, including creative or professional services like graphic design, creating websites, or odd jobs like deliveries and furniture assembly, like Airtasker and Mad Paws

·         renting out a car parking space, for example Parkhound and Spacer.

 For information from the ATO on tax obligations from providing services through ride-sourcing, click here

 If you would like to discuss this or any topic further, please email: mail@watsonerskine.com.au

 

 

Taxation ruling on commercial website deductibility

Taxation ruling on commercial website deductibility

A new taxation ruling from the ATO sets out the tax deductibility of expenditure incurred in acquiring, developing, maintaining or modifying a commercial website for use in carrying on a business.

Broadly, the ruling explains that acquiring or developing a commercial website for a new or existing business is considered to be a capital expense, and is therefore not deductible. On the other hand, maintaining a website, including remedying software faults, is generally a revenue expense, so may be deductible.

Deductions you can claim

Deductions you can claim

 

When completing your tax return, you are entitled to claim deductions for some expenses, most of which are directly related to earning your income.

 

To claim a work related deduction: 

  •     You must have spent the money yourself and were not reimbursed
  •     Related to your job
  •     Provide a record to prove it (there are some limited exceptions)

If the expenses were for both work and private purposes, you can only claim a deduction for the work related portion.

 

For more information from the ATO on deductions you can claim such as vehicle and travel expenses, clothing, laundry, gifts and donations, tools and equipment, click here and follow the links.

 

If you would like to discuss this or any topic further, please email:  mail@watsonerskine.com.au

 

Read our newsletters at www.watsonerskine.com.au and find current and archived information under client tools, newsletter and report.

 

Hobby or Business?

Hobby or Business?

 A hobby is a spare time activity or pastime pursued for pleasure or recreation.  Unlike a hobby, a business is run with the intention of making a profit and has basic reporting requirements such as declaring income and claiming expenses. 

 If you determine your activities are a hobby, you don't have any additional tax or reporting obligations. You should check regularly to make sure your activities still qualify as a hobby.

If your activities are a hobby but you supply goods or services to businesses, they may request your ABN when they pay you. As you don't need an ABN, you can use the Statement by a supplier form to avoid the business withholding an amount from their payment to you for not having an ABN.

See the ATO information on this topic here

If you would like to discuss this or any topic further please email:  mail@watsonerskine.com.au

 

ATO sounds warning on illegal tax schemes

ATO sounds warning on illegal tax schemes

SMSF practitioners have been cautioned by the ATO on the dangers of promoting illegal tax schemes, after some advisers putting themselves at risk of prosecution by inadvertently recommending these schemes to clients.

 

The ATO announced yesterday there has been a recent increase in the number of illegal tax schemes, particularly those targeting individuals approaching retirement. It said it has launched an initiative aimed at identifying promoters of these schemes.  

The ATO has advised that some of these arrangements may appear to comply with the law at an initial glance when they are in fact illegal.

 

"We recognise that the vast majority of advisers provide excellent service to protect their clients' interests and we don't want to see them inadvertently advising their clients to enter into these schemes and putting their [client's] retirement nest eggs at risks," the spokesperson said.

"We want to ensure that SMSF advisers and accountants are aware of the dangers of these schemes and are in the best position to prevent their clients from making ill-informed decisions that will adversely impact their future."

 

According to the ATO, dividend stripping arrangements are one of the main schemes being operated.

 

This involves shareholders in a private company transferring ownership of their shares to an SMSF, so that the company pays dividends to the SMSF, with the purpose of stripping profits from the company in a tax-free form.

 

The ATO said it is also concerned about non-arm's length limited recourse borrowing arrangements where an SMSF trustee undertakes a borrowing arrangement with terms that are not consistent with an arm's length dealing.

 

Personal services income schemes are another worrying example, where individuals divert income earned from personal services to an SMSF where it is concessionally taxed or treated as exempt from tax.

 

ATO deputy commissioner Michael Cranston reminded practitioners on the consequences of recommending any of these schemes to SMSF clients.

 

"Promoters of retirement planning schemes may incur significant punishment including prosecution, and where intermediaries are found to have been encouraging clients to adopt these arrangements, the ATO will consider the application of the promoter penalty laws. The ATO may also consider referring the matter to the Tax Practitioners Board," Mr Cranston said.

 

What is a Novated Lease?

What is a Novated Lease?

A novated lease is a type of motor vehicle lease that allows a business to lease a motor vehicle on behalf of an employee, with the responsibility for the lease lying with the employee and the lease payments being made from the employee's re-tax income.

 

It is a three-way agreement between the employer, employee and the finance company.

 

There are two main types of novation arrangement:

 

     A full or split full novation

     A partial novation

 

Follow the link below for more information and find out about:

 

Vehicles purchased under novated leases

 

Or please email us if you need any further information:  mail@watsonerskine.com.au

 

Data Matching

Data Matching to uncover wealth

Matching external data with the ATO data helps the ATO to ensure that people and businesses comply with their tax and super tax obligations. It also helps the ATO to detect fraud against the Commonwealth.  The ATO is now working with insurance provers to identify Australians with policies covering an expanded range of luxury assets.

 

Starting from the beginning of 2016, the ATO has commenced issuing formal notices to insurers to provide policy details, based on specific criteria, it expects to receive 100,000 records that may require further examination.

 

Please check your policies to make sure that you are insured via the correct entity, especially if you are a small business.

 

The ATO is required to comply with strict laws to protect your privacy when they collect data from other agencies and organisations for the data matching programs. These laws include the Privacy Act 1988, the secrecy provisions of the Income Tax Assessment Act 1936, the Taxation Administration Act 1953 and other tax laws.

 

The ATO also adheres to the Privacy Commissioner's Guidelines on Data Matching in Australian Government Administration by preparing and publishing a protocol for each of the data matching programs. In broad terms, each protocol explains the purpose of the program, what data is collected, which agencies or organisations will be providing the data and how the data will be used.

 

Current data matching protocols

 

The ATO prepares and publishes a protocol for each of the data matching programs to explain the program's purpose, what data is collected and how the data will be used.

Please email us if you need any further information:  mail@watsonerskine.com.au

 

 

What is salary packaging?

What is salary packaging?

An employee agrees with their employer to forego part of their future salary or wages in return for the employer providing benefits of a similar value.  By paying for items out of pre-tax salary the employee can reduce taxable income.  Benefits typically provided include cars by way of novated lease, provision of property (such as a computer) or payment or reimbursement of expenses.

As an employee, you need to be aware of how entering into a salary sacrifice arrangement with your employer can affect you:

·         you pay income tax on the reduced salary or wages

·         your employer may be liable to pay FBT on the non-cash benefits provided

·         salary sacrificed superannuation contributions are classified as employer superannuation contributions (rather than employee contributions) and are taxed in the superannuation fund under tax laws dealing specifically with this subject

·         your employer may be required to report certain benefits on your payment summary

For the employer, salary packaging has some advantages, such as the ability to attract employees and may act as an incentive to reward employees.  Benefits that employees can package can be dependent on the type of organisation as well as the items the employer is willing to consider.

There can be additional administration costs to the employer in making sure that it is all processed correctly.

Follow the links below for more information and find out about:

Salary sacrifice and salary packaging

If you would like more information, please contact:

mail@watsonerskine.com.au

Personal Services Income 2016

What is Personal services income?

PSI – Under the Income Tax Assessment Act Personal services income is income produced mainly from your personal skills or efforts as an individual. It doesn't matter whether you are a sole trader or operating through a company, trust or other structure. If the PSI rules apply to you there are restrictions on the types of expenses that are tax deductible for you or your business structure.

You can receive PSI in almost any industry, trade or profession, however, some common examples include financial professionals, information technology consultants, engineers, construction workers and medical practitioners. PSI does not affect you if you are and employee receiving only salaries and wages.

Income is classified as PSI when more than 50% of the amount you received for a contract was for your labour, skills or expertise.

The first thing you need to do is work out if any of your income is classified as PSI. If it is, you then need to work out if special tax rules (the PSI rules) apply to that income.

Follow the links below for more information and find out about:

o    Working out if the PSI rules apply

o    What to do when the PSI rules apply

o    What to do if the PSI rules don't apply

o    Record keeping for PSI

o    Seek further advice

If you would like more information, please contact:

mail@watsonerskine.com.au