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Reminder of March 2024 Quarter Superannuation Guarantee Employers are reminded that employee super contributions for the 1 January 2024 to 31 March 2024 quarter must be received by the relevant super funds by 28 April 2024, in order to avoid being liable to pay the SG charge. ATO's small business benchmarks The ATO has updated its small business benchmarks for 2021-22. These benchmarks help taxpayers compare their business turnover and expenses with other small businesses in the same industry. Taxpayers can access the benchmarks on the ATO's website, and then calculate their benchmark using the ATO app 'Business performance check' tool. Quarterly TBAR lodgment reminder SMSFs must report certain events that affect any member's transfer balance account ('TBA') quarterly using transfer balance account reporting ('TBAR'). These events must be reported even if the member's total superannuation balance is less than $1 million. SMSF trustees must report and lodge within 28 days after the end of the quarter in which the event occurs, although they are not required to lodge if no TBA event occurred during the quarter. For example, if an SMSF had a TBA event in the quarter ending 31 March 2024, the trustee of the SMSF must lodge a TBAR by 28 April 2024. If an SMSF does not lodge a TBAR by the required date, the member's TBA may be adversely affected. The member may need to commute any amounts in excess of their transfer balance cap and pay more in excess transfer balance tax. Taxpayer who lived and worked overseas found to be tax resident The Administrative Appeals Tribunal recently held that a taxpayer was a tax resident of Australia, even though he was mostly living and working overseas during the relevant period. The taxpayer was born in Vietnam and obtained Australian citizenship in 1978. He was living and working in Dubai, United Arab Emirates from 2015 until 2020. The taxpayer spent less than two months in Australia for each of the 2017 to 2020 income years visiting his family. The AAT nevertheless held that he was a tax resident of Australia for each of the 2016 to 2020 income years, as he "maintained an intention to return to Australia and an attitude that Australia remained his home". The AAT noted in this regard that the taxpayer: left his wife and three daughters in the family home in Australia while he worked in Dubai, continued to fully support his family financially, and chose to spend each of his leave periods with his family in Australia; maintained his vehicle registrations and Australian drivers licence so he could use the vehicles upon his return to Australia; intended to retire in Australia; failed to demonstrate any connection with Dubai outside of his employment; and maintained his private health insurance. Earning income for personal effort Taxpayers should remember that, if over half their income is from a contract for their personal effort or skills, then their income is classified as personal services income ('PSI'). Taxpayers can receive PSI in almost any industry, trade or profession, e.g., as a financial professional, IT consultant, construction worker or medical practitioner. Taxpayers who earn PSI while running a business (e.g., as a contractor) need to work out if they were a personal services business ('PSB') in the year that they received the PSI, as this will affect the deductions they can claim. Taxpayers can self-assess as being a PSB if they: meet the 'results test' for at least 75% of their PSI, or meet one of the other PSB tests (i.e., the unrelated clients test, the employment test, or the business premises test), and less than 80% of their PSI is from the same entity and its associates. Taxpayers who self-assess as a PSB still need to report their PSI in their income tax return and keep certain records. The information provided in this update is general in nature and if you have any queries of require further information or assistance with the above, please contact our office.

Super contribution caps increase Superannuation contribution caps are set to increase from the 2025 income year. The concessional contribution cap will increase from $27,500 to $30,000. This 'CC' cap is broadly applicable to employer super guarantee contributions, personal deductible contributions and salary sacrificed contributions. The non-concessional contribution cap will increase from $110,000 to $120,000. This 'NCC' cap is generally applicable to personal non-deductible contributions. The increase in the NCC cap also means that the maximum available under the three-year bring forward provisions will increase from $330,000 to $360,000. This is provided that the 'bring forward' is triggered on or after 1 July 2024. The 'total superannuation balance' threshold for being able to make non-concessional contributions (and the pension general transfer balance cap) will remain at $1.9 million. Small business concessions The ATO has recently issued a reminder that small business owners may be eligible for concessions on the amount of tax they ultimately pay. This depends on their business structure, their industry and their aggregated annual turnover. Small business owners who have an aggregated annual turnover of less than: $2 million can access the small business CGT concessions; $5 million can access the small business income tax offset; and $10 million can access the small business restructure roll-over. The ATO expects small business owners to check their eligibility each year before they apply for any of these concessions. Furthermore, taxpayers generally need to keep records for five years to prove any claims they make. We are always on the look-out for what tax concessions may be of use to our clients based on their individual circumstances. These small business concessions in particular, can be very beneficial when applicable. FBT time is fast approaching! 'FBT time' is just around the corner. Employers need to attend to the following matters this FBT time: Identify if you have an FBT liability regarding fringe benefits they have provided to their employees or their associates between 1 April 2023 and 31 March 2024. Identify if you have an FBT liability as they will need to lodge an FBT return and pay the amount due by 21 May. Identify if you are currently registered for FBT and let the ATO know if they do not need to lodge an FBT return by asking us to lodge an FBT non-lodgment notice to prevent the ATO seeking a return from them at a later date. Employers should also remember that when the new FBT year starts on 1 April, they can choose to use existing records instead of travel diaries and declarations for some fringe benefits. Furthermore, the ATO has released PCG 2024/2 which provides a short cut method to help work out the cost of charging electric vehicles ('EV') at an employee's home for FBT purposes. Eligible employers can choose to use either the EV home charging rate of 4.2 cents per kilometre or the actual cost. Ultimately, all employers need to make sure they understand their FBT obligations and the records they need to keep to avoid an FBT liability. Penalties soon to apply for overdue TPARs Businesses that pay contractors to provide certain services may need to lodge a Taxable Payments Annual Report (TPAR) by 28 August each year. From 22 March, the ATO will apply penalties to businesses that: have not lodged their TPAR from 2023 or previous income years; have received three reminder letters about their overdue TPAR. Taxpayers that do not need to lodge a TPAR can submit a 'non-lodgment advice form'. Taxpayers that no longer pay contractors can also use this form to indicate that they will not need to lodge a TPAR in the future. Avoiding common Division 7A errors Private company clients who receive payments, benefits or loans from their private companies need to ensure compliance with their additional tax obligations which are often referred to as their 'Division 7A' obligations. There are multiple ways in which business owners may access private company money, such as through salary and wages, dividends, or what are known as complying Division 7A loans. Division 7A is an area where the ATO sees many errors and the ATO is currently focused on assisting taxpayers in managing their obligations when receiving payments and benefits from their private companies. In this regard, the ATO has recommended that business owners do the following: keep adequate records; properly account for and report payments and use of company assets by shareholders and associates; and comply with rules around Division 7A loans. Understanding these Division 7A obligations is essential in order to: make informed decisions when receiving private company money and using private company assets; and avoid unexpected and undesirable tax consequences. The information provided in this update is general in nature and if you have any queries of require further information or assistance with the above, please contact our office.

Our postal address is changing! PO BOX 3135, COTHAM VIC 3101 The Australia Post Kew branch are closing their doors, therefore effective immediately our postal address has changed to the above. Please note for recent mail, our old PO Box will be redirected to the new PO Box. Changes to proposed 'Stage 3' tax cuts Despite previous assurances, and after much speculation, the Government has announced tweaks to the 'Stage 3' tax cuts that will apply from 1 July 2024. The Government proposes to: reduce the 19% tax rate to 16%; reduce the 32.5% tax rate to 30% for incomes between $45,000 and a new $135,000 threshold; increase the threshold at which the 37% tax rate applies from $120,000 to $135,000; and increase the threshold at which the 45% tax rate applies from $180,000 to $190,000. The Medicare levy low-income thresholds for the 2024 income year will also be increased. Changes in reporting requirements for sporting clubs Not-for-profits including sporting clubs, societies and associations with an active ABN, need to lodge an annual NFP self-review return to continue accessing their income tax exemption. The main purpose of a sporting organisation must be the encouragement of a game, sport or animal racing. Any other purpose of the organisation must be incidental, ancillary or secondary. The organisation's governing documents will help identify the purpose for which it was set up, and the organisation's activities in the year of income must then demonstrate that the main purpose is the encouragement of its game, sport or animal racing. NFP organisations need to lodge their first NFP self-review return for the 2024 income year between 1 July and 31 October 2024. NFP organisations with their own ABN need to complete their own NFP self-review return even if they are affiliated with a broader sporting group. If an NFP organisation does not lodge the return, they may become ineligible for an income tax exemption and penalties may apply. Deductions denied for work-related expenses The Administrative Appeals Tribunal recently held that a taxpayer should not be allowed deductions for various work-related expenses, largely because the substantiation requirements had not been satisfied. The taxpayer, a real estate salesperson, claimed tax deductions for the 2018 to 2020 income years, during which time he derived income from his employment with a real estate company. However, the ATO disallowed the taxpayer's claims for various work-related expenses, including car expenses, and gifts and donations. The AAT agreed with the ATO, and held that the expenses claimed were not deductible and that the taxpayer had failed to substantiate his claims. The taxpayer had claimed deductions for car expenses using the logbook method, but the AAT noted that the car was owned by a company and was not leased to the taxpayer. Therefore, the car was not 'held' by the taxpayer, as required by the logbook method. The taxpayer's logbook also lacked "sufficient specificity" for this method. While the taxpayer produced credit card statements and telephone tax invoices (in relation to credit card interest and telephone expenses), it was not clear from these documents whether the costs claimed related to work expenses. The taxpayer sought to rely on bank transaction statements in relation to other expenses, but they were considered to be insufficient, as it was unclear from these statements what the relevant expense was, how the expense was incurred in earning the taxpayer's assessable income, and any apportionment between business and personal use. There were also no receipts or tax invoices for any of the claimed donations. Sale of land subject to GST The AAT recently held that the sale of land by a taxpayer was subject to GST, as it was a supply made in the course of an enterprise being carried on by the taxpayer. The taxpayer purchased a single parcel of land in 2013 for $1.6 million, and he subsequently took steps for the land to be subdivided and rezoned. He then sold the land in 2021 for $4.25 million before the subdivision was completed. The ATO advised the taxpayer that the sale of the land was subject to GST as a taxable supply under the GST Act. The taxpayer objected to the GST assessment on the following grounds: the sale of the property was not made by him in the course of his enterprise; and as the property was the taxpayer's residential premises, it was an input taxed supply, so no GST should apply anyway. However, the AAT agreed with the ATO that the sale of the property was subject to GST as a supply made in the course of the taxpayer's enterprise. The AAT first noted that the sale of the property was not an input taxed supply of residential premises because the buildings on the property were uninhabitable, and so the property did not meet the definition of 'residential premises' in the GST Act. The AAT also held that the taxpayer's development works were in "the form of a business", even if he was not in the business of being a property developer. Relevant factors included the scale of the operations that the taxpayer was involved in (including rezoning and subdividing the property), as well as the amount of capital invested by him in the purchase of the property and development works. The taxpayer's "series of activities" throughout his ownership of the property therefore amounted to the carrying on of an enterprise, and the taxpayer was liable to pay GST on the sale of the property. The information provided in this update is general in nature and if you have any queries of require further information or assistance with the above, please contact our office.