March 2021 – Update
Author na1616mewedewd
Changes to STP reporting concessions from 1 July 2021
Small employers (19 or fewer employees) are currently exempt from reporting ‘closely held’ payees through Single Touch Payroll ('STP'). Also, a quarterly STP reporting option applies to micro employers (four or fewer employees). These concessions will end on 30 June 2021.
The STP reporting changes that apply for these employers from 1 July 2021 are outlined below.
Closely held payees (small employers)
From 1 July 2021, small employers must report payments made to closely held payees through STP using any of the options below. Other employees must continue to be reported by each pay day.
A ‘closely held payee’ is an individual who is directly related to the entity from which they receive payments. For example, this could include family members of a family business, directors or shareholders of a company and beneficiaries of a trust.
Payments to such payees can be reported via STP (from 1 July 2021) using any of the following options:
1. Report actual payments on or before the date of payment.
2. Report actual payments quarterly on or before the due date for the employer’s quarterly activity statements.
3. Report a reasonable estimate quarterly on or before the due date for the employer’s quarterly activity statements. Note that consequences may apply for employers that under-estimate amounts reported for closely held payees.
Small employers with only closely held payees have up until the due date of the payee’s tax return to make a finalisation declaration. Employers will need to speak with these payees about when their individual income tax return is due.
Micro employers
From 1 July 2021, the quarterly reporting concession will only be considered for eligible micro employers experiencing ‘exceptional circumstances’.
Common examples of when the ATO would generally consider it to be fair and reasonable to grant a deferral due to exceptional or unforeseen circumstances include natural disasters, other disasters or events, serious illness or death.
Additionally, ‘exceptional circumstances’ for access to the STP quarterly reporting concession from 1 July 2021 may include where a micro employer has:
- seasonal or intermittent workers; or
- no or unreliable internet connection.
Finalisation declarations will need to be submitted by 14 July each year.
Paper PAYG and GST quarterly instalment notices
The ATO has previously advised that it will no longer issue paper activity statements after electronic lodgment. Instead, electronic activity statements will be available for access online, three to four days after the activity statement is generated.
As part of its digital improvement program, the ATO stopped issuing paper quarterly PAYG and GST instalment notices (forms R, S & T), where taxpayers had a digital preference on ATO systems. The September 2020 notice was the last one issued to these taxpayers.
However, the ATO has received feedback from tax professionals that issues have arisen for some of their clients as a result of this change. For example, some taxpayers who are self-lodgers rely on the receipt of the paper statements as a reminder that their instalments are due.
As an interim solution, the ATO said it will issue paper PAYG and GST quarterly instalment notices starting with the March 2021 quarterly notices.
Avoiding disqualification from SG amnesty
The superannuation guarantee amnesty ended on 7 September 2020. Employers who disclosed unpaid SG amounts and qualified for the amnesty are reminded that they must either pay in full any outstanding amounts they owe or set up a payment plan and meet each ongoing instalment amount so as to avoid being disqualified and losing the benefits of the amnesty.
Employers who continue to qualify for the SG amnesty are reminded that they can only claim a tax deduction for amounts paid on or before 7 September 2020 (i.e., the amnesty end date).
Victorian Circuit Breaker Action Business Support Package
The Victorian Government has announces a package to support eligible businesses impacted by the circuit breaker action to limit the spread of COVID-19. This package of cash grants include four initiatives to support small businesses, including sole traders.
- Business Costs Assistance Program
Grants of $ 2,000 for eligible businesses and sole traders in the most impacted sectors. Applications are open now and will close on Tuesday 16 March 2021. The following link directs to the list of eligible industries.
https://www.business.vic.gov.au/__data/assets/pdf_file/0011/1973927/List-of-Eligible-ANZSIC-Classes-Business-Costs-Assistance-Program.pdf - Licensed Hospitality Venue Fund
Previously eligible recipients of this grant will receive a further $ 3,000 one-off, per premises payment. - Victorian Accommodation Support Program
Accommodation providers that had bookings cancelled between Friday 12 February and Wednesday 17 February due to the circuit breaker action will receive support through this grant. Registrations of interest are now open
The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please
contact our office.
Crawford News
Minimum pension drawdown reminder An SMSF must pay a minimum amount each year to a member who is receiving an account-based pension. This minimum amount is calculated by applying the relevant percentage factor based on the member's age by the member's pension account balance calculated as of 1 July 2024, or on a pro-rata basis if the pension commenced part way through the 2025 financial year. If the minimum payment is not made by 30 June, this could result in adverse taxation consequences for the member. How to avoid common CGT errors The ATO wants taxpayers to know that having a foreign resident capital gains withholding clearance certificate does not mean they do not have any further CGT obligations. If taxpayers have sold property, they still need to include capital gains, losses or an exemption or rollover code in their tax return. Keeping not-for-profit records up to date Taxpayers should remember that they are legally required to keep certain records for their not-for-profit. All organisations including NFPs are required to keep accurate and complete records of all transactions relating to their tax and superannuation affairs. Generally, for tax purposes, taxpayers must keep their records in an accessible form for five years . Records that NFP taxpayers are required to keep include: governing documents; financial reports; documentation relating to grants; and registrations and certificates. A good record-keeping system will help taxpayers run their NFP successfully and manage their tax and super obligations. If a taxpayer's NFP is endorsed as a deductible gift recipient, they must keep records that explain all transactions and other acts relevant to their organisation's status as a DGR. This requirement applies to both endorsed DGRs and listed by name DGRs. Increase to rate for working from home running expenses PCG 2023/1 outlines the ATO's new method ('the fixed-rate method') for calculating additional running expenses while working from home, which has applied from 1 July 2022. The fixed-rate method allows taxpayers to claim at a rate of 70 cents per hour for the following additional running expenses for working from home: energy expenses (electricity and gas) for lighting, heating, cooling, and electronic items used while working from home; internet expenses; mobile and home phone expenses; and stationery and computer consumables. However, PCG 2023/1 does not cover occupancy expenses relating to a home, such as rent, mortgage interest, property insurance and land tax. Taxpayers are not required to use the above fixed-rate method - as from 1 July 2022, they can instead continue to claim the actual expenses they incurred as a result of working from home and keep all records necessary to substantiate their claim. Truck driver entitled to claim meal expenses In a recent decision, the Administrative Review Tribunal upheld a truck driver's claim for meal expenses, notwithstanding that those expenses had not been fully substantiated. The taxpayer was employed as a long-haul truck driver in Western Australia. He was away from home for considerable periods each year. The taxpayer sought a deduction for meal expenses of $32,782 in the 2021 income year, apparently calculated by multiplying the number of days he was away from home (310) by the maximum reasonable daily allowance under Taxation Determination TD 2020/5 . The ATO only allowed the taxpayer a deduction for meal expenses of $5,890 based on a review of his logbook, fatigue diary and bank statements. This was an average of $19 per day multiplied by 310. The ART found on the balance of probabilities that the taxpayer incurred the claimed expenditure, and it found that the taxpayer had met his burden of proof. In this regard, the ART determined that the taxpayer incurred the disputed expenses in gaining or producing his assessable income, and it did not agree with the ATO that there was an insufficient linkage between the expenditure on bank statements and the taxpayer's work. The ART held that the exception to the substantiation provisions applied to the taxpayer, as: a travel allowance was paid by the taxpayer's employer which covered the expenses; the taxpayer incurred the expenditure in gaining or producing his assessable income; and the expenditure fell within the ATO's reasonable travel amounts set out in TD 2020/5. The ART accordingly allowed the taxpayer's claim for travel expenses in full. The information provided in this Newsletter is general in nature, and if you have any queries or require further information or assistance with the above, please contact our office.
ATO's new focus for small business The ATO is currently focusing on the following 'specific risk areas', where it is concerned "small businesses are getting it wrong": Contractors omitting income — with a focus on data matching to ensure all income is reported. Quarterly to monthly BAS reporting for GST purposes — The ATO will move around 3,500 small businesses with a history of non-compliance to monthly reporting from 1 April 2025. The ATO will also continue its focus on non-commercial business losses, small business CGT concessions, business income that is not personal income, incorrect claims for 'small business boosts', GST registration and income of taxi, limousine and ride-sourcing services. Reminder of March 2025 Quarter Superannuation Guarantee Employers are reminded that employee super contributions for the quarter ending 31 March 2025 must be received by the relevant super funds by Monday, 28 April 2025. If the correct amount of SG is not paid by an employer on time, they will be liable to pay the SG charge, which includes a penalty and interest component. The SG rate is 11.5% for the 2025 income year. FBT record keeping and plug-in hybrid exemption changes With the 2025 FBT year having just ended on 31 March, the ATO is reminding employers of some changes that might impact their FBT obligations. Alternative record keeping changes For the 2025 and succeeding FBT years, employers can use existing records instead of travel diaries and declarations for some fringe benefits. If using existing corporate records, employers need to meet the minimum required information at the time of lodging the FBT return. Keeping the right records ensures employers can correctly calculate the taxable value of the benefit and support their FBT position. Plug-in hybrid electric vehicle changes The FBT exemption for plug-in hybrid electric vehicles ('PHEVs') broadly ended on 31 March 2025, so the 2025 FBT year may be the last year that employers can claim the exemption. However, an employer can continue to apply the exemption if that PHEV was used, or available for use, before 1 April 2025 (and that use was exempt), and they have a financially binding commitment to continue providing private use of the vehicle on and after 1 April 2025. Taxable payments annual report lodgment reminder Businesses that pay contractors for Taxable payments reporting system services may need to lodge a Taxable payments annual report by 28 August each year. This includes businesses paying contractors in the building and construction, cleaning and IT industries. From 22 March, the ATO will apply penalties to businesses that have not lodged their TPAR from 2024 or previous years. General transfer balance cap will be indexed on 1 July 2025 The transfer balance cap will increase from $1.9 million to $2 million on 1 July 2025. The general TBC amount is used for a number of purposes, including to determine the total capital amount that can be transferred to the pension phase, and to determine eligibility for making non-concessional contributions. This increase has flow through impacts for individuals who have started a retirement phase pension, as they will be entitled to an increase to their personal TBC if they have not previously been at, or exceeded, their cap. The ATO will calculate an individual's personal TBC based on the information reported to and processed by the ATO. To help individuals have a clear understanding of their position, the ATO encourages funds to report all 'TBC events' when they occur and as early as possible before the 1 July 2025 indexation start date. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.
New tax cuts for individual taxpayers in 2027 and 2028 The individual tax rates will reduce effective 1 July 2026. The current 16% tax rate will be reduced to 15% from 1 July 2026 and will be further reduced to 14% from 1 July 2027. The personal income tax rates (excluding the Medicare levy) for the 2025 and 2026 income years are in the following table, along with the proposed changes to the tax rates for the 2027 and 2028 income years: Australian resident individual tax rates Income threshold Tax Rate 2025 & 2026 2027 2028 $ 0 - $ 18,200 0% 0% 0% $ 18,201 - $ 45,000 16% 15% 14% $ 45,001 - $ 135,000 30% 30% 30% $ 135,001 - $ 190,000 37% 37% 37% $ 190,001+ 45% 45% 45% A taxpayer earning between $18,201 and $45,000 will get a tax cut of up to $268 in the 2027 income year and up to $536 from the 2028 income year. I ncreased Medicare levy thresholds The Medicare levy thresholds were increased from 1 July 2024 per below: No Medicare levy payable below 2024 2025 Individuals $ 26,000 $ 27,222 Families not eligible for SAPTO $ 43,846 $ 45,907 Single individuals eligible for SAPTO $ 41,089 $ 43,020 Families eligible for SAPTO $ 57,198 $ 59,886 For each dependent child or student, the family income thresholds will increase by a further $4,216 up from $4,027. Student loan amendments The government will reduce all outstanding Higher Education Loan Program and other student debts by 20%, subject to the passage of legislation. The 20% reduction is in addition to the recent indexation reforms. The repayment threshold will be increased from $54,435 in the 2025 to $67,000 in the 2026. Energy bill relief Eligible households and small businesses will receive two $75 bill rebates directly off their electricity bills until 31 December 2025. Expansion to Help to Buy scheme for first home buyers Under the Help to Buy scheme, the Government will provide an equity contribution of up to 40% to support eligible home buyers to purchase a home with a lower deposit and a smaller mortgage. The income caps for the scheme will be increased from $90,000 to $100,000 for individuals and from $120,000 to $160,000 for joint applicants and single parents. Small Business and Franchisee Support and Protection The ACCC and ASIC will be funded to: Strengthen regulatory oversight of the Franchising Code of Conduct. Improve its data analytics capability to better target enforcement activities to deter illegal phoenixing activities, particularly in the construction sector. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.
Employer obligations in 2025 Taxpayers who employ staff should remember the following important dates and obligations: Fringe benefits tax 31 March 2025 marks the end of the 2024/25 FBT year. Employers should remember the following regarding their FBT tax time obligations. They should identify if they have provided a fringe benefit. If they have, they should determine the taxable value to work out if they have an FBT liability. They should lodge an FBT return and pay any FBT owed by 21 May 2025. If their registered tax agent lodges electronically for them, they have until 25 June 2025. They should keep the right records to support their FBT position. PAYG withholding Taxpayers need to withhold the right amount of tax from payments they make to their employees and other payees, and pay those amounts to the ATO. Single touch payroll Employers should finalise their STP data by 14 July 2025 for the 2024/25 financial year (there may be a later due date for any closely held payees). Super guarantee 28 January, 28 April, 28 July and 28 October are the quarterly due dates for making SG payments; The SG rate is currently 11.5% of an employee's ordinary time earnings. From 1 July 2025, it will increase to 12% Taxpayers should ensure SG for their eligible employees is paid in full, on time and to the right super fund, otherwise they will be liable for the SG charge. ATO's tips to help taxpayers stay on top of their BAS If lodging online, or through a registered tax or BAS agent, you may be able to get an extra 2 or 4 weeks to lodge and pay. If you have nothing to report for the period, you must lodge a nil BAS. If you made a mistake on your last BAS, instead of lodging a revision, you may be able to use your current BAS to fix it. You can also use their BAS to vary an instalment amount. Claiming fuel tax credits when rates change Fuel tax credits changed on 3 February, and taxpayers could receive more savings for fuel they have acquired on and from this date. Different rates apply based on the type of fuel, when it was acquired and what activity it is used for. The ATO has the following tips for taxpayers to ensure they are claiming correctly. You can use the ATO's 'eligibility tool' on its website to find out if they can claim fuel tax credits for fuel they have acquired and used. You can use the ATO's online fuel tax credit calculator to work out their claim. ATO "busts" NFP myths As the Not-for-profit self-review return is due in March, the ATO has recently published a document 'busting' various NFP 'myths'. Myth 1: All NFPs are income tax exempt ATO response: This is not true. Some NFPs are income tax exempt and some are taxable. Myth 2: There is only one way to lodge the NFP self-review return ATO response: There are three ways, as follows: A 'principal authority' may be able to lodge using 'Online services for business'; It may be possible for the return to be lodged by phoning the ATO's automated self-help phone service on 13 72 26; and A registered tax agent can lodge the return through Online services for agents. Myth 3: Anyone can lodge the NFP self-review return online ATO response: If lodging via Online services for business, anyone authorised to access the return in Online Services can lodge. If a registered tax agent has been engaged, they can also prepare and lodge the return in Online services for agents. Myth 4: If a person is unsure whether their NFP has charitable purposes, then they do not need to lodge ATO response: The self-review return still needs to be lodged, even if it is not certain whether the NFP is charitable. Taxpayer's claim for input tax credits unsuccessful In a recent decision, the Administrative Review Tribunal rejected a taxpayer's claim for input tax credits on the basis that all the relevant GST returns (i.e., BASs) were lodged out of time. For the GST periods from 1 October 2015 to 31 March 2017, the taxpayer filed each of her GST returns more than four years after they were due. The taxpayer still claimed input tax credits totalling over $10,000 for this period. The ATO disallowed this claim, on the basis that none of the input tax credits were claimed within the four year period, as required by the GST Act. The ART upheld the ATO's decision, noting that, as the taxpayer did not file the GST returns within the four year period. ATO's appeal against decision that UPEs are not "loans" The Full Federal Court recently dismissed the ATO's appeal against an AAT decision that unpaid present entitlements ('UPEs') owing by a trust to a corporate beneficiary were not "loans" for Division 7A purposes. A corporate beneficiary had become entitled to a share of the income of a trust for the 2013 to 2017 income years. Parts of these entitlements remained outstanding, resulting in UPEs. The ATO treated these UPEs as loans from the corporate beneficiary back to the trust and, in consequence, as "deemed dividends" made to the trust. The AAT held at first instance that a loan had not been made in this case. The Full Federal Court upheld the AAT's decision, noting that a loan for Division 7A purposes requires an obligation to repay an amount, not merely the creation of an obligation to pay an amount such as when a trust distributes income to a beneficiary. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.
