Crawford Accountants News & Updates

April 2026 - Update

Tue, 21 Apr 2026 11:31:36 GMT

Hobby or Business?

You may not think you are running a business from your hobby or side hustle. However, if you start earning income from these activities regularly, you may be carrying on a business.

Generally, carrying on a business involves ongoing and repeated activities with the intention of making a profit. These activities can include:

regularly providing goods or services;
obtaining and maintaining any necessary licences or permits; and/or
keeping records of their work.

However, you may not be operating a business where:

Your transactions are one-off
You do not intend making a profit
You work as an employee rather than independently

FBT Changes for Hybrid cars

The ATO has updated its guidelines to include a new method to make it easier to calculate PHEV electricity costs when a vehicle is charged at an employee's home.

To use the shortcut home-charging rate, employers and other individual taxpayers must meet the relevant eligibility requirements or they can still choose to calculate the actual electricity costs instead of using this optional method.

Since 1 April 2025, PHEVs are not considered a zero or low emissions vehicle under FBT law and no longer qualify as exempt. Employers that provide PHEVs to their employees for private use, or that have PHEVs that are available for private use, may now have FBT obligations for the 2025/26 FBT year, subject to transitional arrangements.

Do you need a new Logbook?

You can keep the same logbook for your car for five years, but there are circumstances where you may need a new logbook.

Relying on a logbook that no longer represents your work-related travel may result in them claiming more, or less, than you are entitled to.
A new logbook may be required when a taxpayer:

moves to a new house or workplace
has changes to the pattern of use of the car for work purposes

Taxpayers using the logbook method for two or more cars need to keep a logbook for each car and make sure they cover the same period.

If you purchase a new car during the income year and want to continue relying on their previous car's logbook must make a nomination in writing. The nomination must be made before they lodge their tax return and state that you are replacing your original car with a new car; and that the date that nomination takes effect.

If your employer provides you with a car or you salary sacrifice a car using a novated lease, you are not entitled to claim work-related car expenses using the logbook or cents per kilometre method.

When claiming car expenses using the logbook method, you also need to keep various types of other records, including odometer records for the start and end of the period you own the car, proof of purchase price, decline in value calculations, and fuel and oil receipts.

Reminder for March 2026 Superannuation Obligations

Employers are reminded that employee super contributions for the quarter ending 31 March 2026 must be received by the relevant super funds by Tuesday, 28 April 2026.

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.

Reminder for Taxable payments annual report

Businesses who pay contractors 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 and certain other industries.

The ATO will apply penalties to businesses that have not lodged their TPAR from 2025 or previous years, and/or that have been issued three reminder letters about their overdue TPAR.

If you do not need to lodge a TPAR, you can submit a 'non-lodgment advice form'. Businesses that no longer pay contractors can also use this form to let the ATO know that they will not need to lodge a TPAR in the future.

Expenses incurred to obtain employment were non-deductible

The Administrative Review Tribunal recently held that medical expenses incurred by a taxpayer to obtain employment were not deductible as they were not incurred in gaining or producing his assessable income.

The taxpayer was an airplane pilot. In July 2021, the Civil Aviation Safety Authority advised the taxpayer of the steps that he needed to take to regain the medical certificates that were a prerequisite to him holding a licence to work as a pilot.

The taxpayer incurred expenses relating to this between July 2021 and May 2022, and he claimed a deduction for these expenses in his tax return for the 2022 income year.

The ATO disallowed these deductions, and the ART affirmed the ATO's decision.

The expenses were not deductible because they were incurred to put the taxpayer in a position to earn income i.e., to regain his certification, rather than in the course of earning that income, and they were therefore incurred too soon.

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.

March 2026 - Update

Wed, 04 Mar 2026 12:10:14 GMT

$20,000 instant asset write-off is extended

Small business instant asset write off is extend to 30 June 2026.

If a business has an aggregated annual turnover of less than $10 million, they may be able to use the instant asset write-off to immediately deduct the business portion of the cost of eligible assets that are $20,000.

Eligible assets must be first used between 1 July 2025 and 30 June 2026. The $20,000 limit is per asset.

Cash in hand sales

The ATO is cracking down on businesses that use cash to avoid paying tax, employer and business obligations. Some examples of such situations are:

Failure to report all sales
Failure to pay GST, income tax, PAYG withholding, super guarantee, insurance and work cover
Reporting income below $75,000 to avoid GST registration
Failure to meet employment awards and work cover

Workers who are paid cash-in-hand risk losing their entitlements and if they are injured at work, they may not be protected.

Contractors income

Data matching records indicate some contractors are incorrectly reporting or omitting income. Contractors need to report all their income in their tax return, including payments made by businesses for their contracting work.

Note that, as part of the taxable payments reporting system, businesses in some industries must lodge a Taxable payments annual report to report contractor payments for providing the following services:

Building and construction;
Courier;
Cleaning;
Information technology;
Road freight; and
Security, investigation or surveillance.

Contractors who provide the above services must note that the businesses they contract to report their payments to the ATO on their TPAR. Contractors must then report their income in their tax returns to avoid data matching discrepancies.

If the ATO suspects a contractor may have omitted TPRS income on their tax return, it may contact them to request they amend their tax return. If the contractor does not take action, the ATO may conduct a review and audit of their business, and penalties and interest may apply.

Government payments programs

The ATO is reminding taxpayers that receive government payments for delivering services under a Commonwealth program, such as healthcare, disability support or child care, that they have an obligation to:

Keep accurate records; and
Report any such income they receive in their tax return.

The ATO recently advised that it would be contacting taxpayers and tax agents in February by email to ensure that income received from government agencies such as the Aged Care Subsidy or under the National Disability Insurance Scheme is reported correctly in their tax returns.

The ATO has updated its Government Payments Program data-matching program protocol to better detect non-compliance, and work more effectively with other government entities.

Work-related expense claims rejected by ART

The Administrative Review Tribunal recently disallowed a taxpayer's claims for many different types of work-related expenses.

The taxpayer was employed full-time as an engineer, working from home two days a week. For the 2023 income year, he claimed deductions totalling over $61,000, in relation to car expenses, travel expenses, clothing expenses, and home office expenses, all of which he claimed were work-related.

The ATO largely disallowed these deductions, and the ART affirmed the ATO's decision, primarily due to problems with substantiating these claims.

For example, in relation to the car expenses, the ART noted that none of the log books were contemporaneous, and the log book entries were inconsistent with independent records.

In relation to travel expenses, the ART noted that the taxpayer did not provide evidence clearly identifying which travel expenses had been reimbursed by his employer, and the ride share documentation did not include the date, time or destination of travel.

In relation to home office utility expenses, the ART noted that the taxpayer only provided calculations estimating the business use proportion of those expenses, without providing any documentary evidence to substantiate the expenses.

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.

February 2026 - Update

Tue, 03 Feb 2026 00:51:37 GMT

Cash acceptance is mandated for essential purchases

From 1 January 2026, food and grocery retailers must accept cash for in-person transactions of $500 or less between 7am and 9pm.

Small businesses with aggregate annual turnover under $10 million are generally exempted from the mandate. However, this mandate still applies to small businesses that share a trademark with a large retailer.

The Government noted that, in addition to the cash mandate for fuel and groceries, consumers also already have the option to pay their bills, including utilities, phone bills and council rates, in cash at their local Australia Post outlet through Post Billpay.

The Government will review this mandate after three years, to ensure it is functioning as intended.

ATO child support data-matching program

ATO will acquire child support data from Services Australia for the 2025 to 2027 income years, including the following:

The ATO estimates that records relating to up to 300,000 individuals will be obtained each financial year, which will be matched against ATO records.
The objectives of this program are to:

allow Services Australia to more accurately assess child support obligations, and maximise opportunities to collect child support debts; and
identify and educate individuals who may be failing to meet their lodgment obligations and help them to finalise their lodgment obligations, or notify the ATO that an income tax return is not required.

Paying super guarantee

Employers need to pay a minimum of 12% of each employee's ordinary time earnings into a complying super fund on a quarterly basis (the due date for the March 2026 quarter is 28 April 2026).

In most cases, employees can choose the super fund.

Employers who do not pay in full, on time or to the correct super fund will have to pay the SG charge, which is made up of the super they owe, nominal interest on those amounts (currently 10%), and an administration fee of $20 per employee, per quarter.

These payments must be made through SuperStream.

Small Business Superannuation Clearing House service will be permanently closed from 1 July 2026. Existing users should switch to an alternative method to pay their employees' super guarantee.

When new employees start, employers must comply with the 'choice of fund rules' if the new employee does not choose a super fund. Employers may now need to request the new employee's 'stapled super fund' details from the ATO.

Time limits on GST and fuel tax credit claims

GST credits and fuel tax credits will expire if not claimed within the 4-year credit time limit (generally four years from the due date of the original BAS in which the taxpayer could have claimed them).

Once credits expire, the ATO has no discretion or ability to amend the assessment to include those credits.

There may be situations where the ATO is able to amend for overpaid or underpaid GST or overclaimed credits, but additional credits cannot be included in an amendment assessment.

If credits are near expiry, taxpayers should consider:

claiming the credits in their next BAS that is still within the 4-year credit time limit;
requesting the amendment by lodging a revised BAS for the tax period to which the credits are attributable; or
lodging a valid objection against their assessment for the period to which the GST credits are attributable before the end of the 4-year credit time limit.

Departure Prohibition Orders for overdue tax debts

The ATO is actively using departure prohibition orders as part of a broader shift towards debt collection. A DPO is an enforcement action available to the ATO to prevent certain persons with tax liabilities from leaving Australia without paying their outstanding tax.

Since July 2025, the ATO has issued 21 DPOs, more than the total number issued in the entire financial year ended 30 June 2025.

The ATO notes that a taxpayer was recently prevented from boarding a flight in the early hours of the morning due to a DPO imposed because of deliberate non-payment of a significant debt.

The dog breeding activities treated as an enterprise

The ART recently held that a taxpayer had carried on an enterprise of dog breeding for GST purposes.

He had lodged activity statements for the quarters ended 30 September 2018 to 31 December 2021 inclusive, claiming input tax credits for the dog breeding activities he carried on from his home.

The ATO disallowed the taxpayer's claims for the above periods, arguing that enterprises were not carried on, and that there was a lack of appropriate substantiation.

The ART however held that the taxpayer's dog breeding operation was an enterprise for GST purposes, noting that his activities had "the necessary commercial character." Therefore, the taxpayer was entitled to ITCs for that enterprise.

However, the ART affirmed the ATO's decision to reduce the taxpayer's other ITC claims, such as in relation to stamp duty on the acquisition of a property and for café and grocery expenses.

The ART also admonished the taxpayer for apparently using artificial intelligence in the presentation of his case, as he appeared to rely on cases and principles that did not exist.

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.

December 2025 - Update

Mon, 15 Dec 2025 02:50:35 GMT

December 2025 Superannuation Guarantee is due on 28 January 2026

Employee super contributions for the quarter ending 31 December 2025 must be received by the relevant super funds by 28 January 2026.
If the correct amount of SG is not paid by an employer on time, the employer must lodge a superannuation guarantee statement and pay the superannuation guarantee charge which includes admin fees and interest.

ATO Small Business Superannuation Clearing House is closing

ATO Small Business Superannuation Clearing House will close on 1 July 2026.

Employers must make arrangements to move to an alternative clearing house now to avoid any unexpected delays with superannuation payments.

Following are few key dates in relation to the clearing house.

10 December 2025 — Super payments, along with instructions, must be received by 5.30 pm AEDT on this date. Payments received after this time will be processed from 2 January 2026.
28 January 2026 — December SG due
February to March 2026 — Employers should move to an alternative clearing house
28 April 2026 — March SG due
30 June 2026 — Final day of the service. Make final payments.

Employers may already have other options readily available so they can exit from using the SBSCH ahead of time and your existing software and payroll packages may already include super functions they can use to pay SG. Popular software packagaes such as Xero contain their own clearing house.

 ATO's approach to holiday home expenses

ATO now takes the view that, if a taxpayer's rental property is also being used as a private holiday home, certain deductions relating to holding it will not be deductible in total as opposed to being apportioned.

Expenses relating to ownership and use of the holiday home such as interest, rates and maintenance will not be deductible, unless the holiday home is 'mainly' used to produce assessable income.

Whether a holiday home is used 'mainly' to produce assessable income will be determined based on a consideration of a number of factors.
However, this will generally not apply to expenses incurred in relation to holiday homes that are rental properties before 1 July 2026, if those expenses are incurred under an arrangement entered into prior to 12 November 2025.

ATO warns about barter credit tax scheme

The ATO is warning the community to steer clear of an emerging tax scheme involving barter credits — a type of alternative currency used in some business networks.

A tax scheme that involves artificially inflating deductions for donations of barter credits to deductible gift recipients is on the rise. While it may seem enticing, promoters and taxpayers could face potentially significant consequences if they are involved.

The ATO is concerned that such schemes are being enabled by several barter exchanges that are allowing participants to access barter credits with a nominal face value that is much more than any payments actually made to the exchange. Participants then donate these barter credits to a DGR and claim a larger tax deduction than they are entitled to.

Dental expenses are not deductible

ATO has noted a number of claims for dental expenses this tax time. Dental expenses, including preventative and necessary dental treatment, medical expenses and other costs relating to personal appearance are not deductible.

These expenses are generally private expenses, even if an employer expects an employee to maintain a certain appearance, or pays them an allowance to cover grooming expenses.

A deduction can only be claimed for an expense that directly relates to earning their income. Private expenses cannot be claimed as a deduction.
Taxpayers should have written evidence of all their expenses, and be able to show a direct connection with those expenses to their employment income.

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.

November 2025 - Update

Thu, 06 Nov 2025 04:07:36 GMT

ATO Focus on Small Business

The ATO is actively identifying and addressing errors among businesses with turnovers between $1 million and $10 million. Key industries under scrutiny include property and construction, as well as professional, scientific, and technical services such as engineering, IT, design, and consulting.
Common issues observed include:

Omitted income or sales in Business Activity Statements and tax returns, including income from related entities.
Overstated expenses or GST credits.
Private expenses incorrectly reported as business-related or not properly apportioned.
Failure to register for GST when required.
Incorrect R&D tax incentive claims for ineligible activities.
Lack of independent advice from registered tax agents, particularly in contractor arrangements.

By highlighting these issues, the ATO aims to help small business operators improve compliance and avoid common mistakes.

Dual Cab Utes and FBT

Dual cab utes are not automatically exempt from fringe benefits tax. If an employer provides a dual cab ute for work purposes and it is available for personal use, it may be subject to FBT.

To qualify for an exemption, the vehicle must:

Be an eligible vehicle , meaning it is designed to carry at least one tonne, more than eight passengers, or it is not primarily designed for passenger use.
Be used only for limited private purposes , such as minor, infrequent, or irregular trips.

If these conditions are not met, the employer may be liable for FBT. Employers should monitor employee vehicle use and maintain proper documentation to determine eligibility.

Claiming Business Expenses

Taxpayers can claim deductions for most business expenses if they comply with the ATO’s three key rules which are:

The expense must relate directly to business use.
If the expense has both business and private use, only the business portion can be claimed.
Taxpayers must keep records to substantiate their claims.

New ATO Data-Matching Programs

The ATO continues to enhance its data-matching programs to improve compliance, detect errors, and prevent fraud. Data is used to pre-fill returns, verify accuracy, and identify taxpayers who may need assistance.

When discrepancies arise, the ATO may contact tax agents or their clients to clarify the differences.

Rental Properties

ATO will issue letters to taxpayers where its data suggests that rent income was omitted or incorrect in previously lodged returns.
If you receive such a letter, please contact our office for assistance.

Offshore Merchant Data-Matching

The ATO will collect merchant transaction data from Australia’s major banks for the 2025–2027 financial years. Around 9,000 offshore merchant records will be acquired annually.

SMSF Compliance and Release Authorities

The ATO has noted an increase in self-managed super funds failing to comply with release authorities such as excess contributions or Division 293 tax.
Common issues include:

Failure to respond within the required 10 business days.
Incorrect responses, such as not releasing the full amount or not submitting a release authority statement.

Non-compliance can attract significant penalties. Trustees should ensure robust systems are in place to respond promptly and correctly to ATO release authorities.

The information in this publication is general in nature and should not be relied upon as professional advice. Individuals should seek specific guidance to ensure applicability to their personal circumstances.

October 2025 - Update

Tue, 07 Oct 2025 03:30:16 GMT

Reminder of September Quarter Superannuation Guarantee

Employee super contributions for the quarter ending 30 September 2025 must be received by the relevant super funds by Tuesday, 28 October 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.

Dealing with rental property repairs

Taxpayers who have had work done on their rental property should ensure the expense is categorised correctly to avoid errors when completing their tax return.

A deduction for repairs and maintenance expenses can be claimed for work done to remedy, or prevent defects, damage or deterioration from using the property to earn income. These expenses can be claimed in the year they were incurred.

However, some capital expenditure may not be immediately deductible, such as for initial repairs, capital works, improvements and depreciating assets.

Initial repairs include fixing any pre-existing damage or deterioration that existed at the time of purchasing the property, even if the damage or deterioration was unknown to the taxpayer at the time of purchase.

Initial repairs are treated as part of the acquisition cost and included in the cost base of the property for CGT purposes, unless they are capital works or depreciating assets.

Capital works are structural improvements, alterations and extensions to the property, and can generally be claimed at 2.5% over 40 years.

Capital works deductions can only be claimed after the work has been completed, regardless of when the taxpayer pays the deposit and instalments.

Improvements or renovations that are structural are also capital works. Work that goes beyond remedying defects, damage or deterioration that improves the function of the property is regarded as an improvement.

Repairs to an entirety are capital and cannot be claimed as repairs. Repairs to an entirety generally involve the replacement or reconstruction of something separately identifiable as a capital item.

ATO warns private use of work vehicles and FBT

Employers who provide vehicles to their employees need to check how the vehicles are used and whether any exemptions apply to determine if they attract fringe benefits tax.

FBT generally applies when a work vehicle is made available for private use, even if it is not actually used. Private use includes any travel not directly related to the employee's job.

Exemptions may apply depending on the vehicle's specifications and the nature of the private use.

The most common issues the ATO sees include:

incorrectly treating private use as business use;
assuming dual cab utes are exempt from FBT — exemptions only apply if the vehicle is eligible for the specific FBT exemption and private use is limited;
incorrectly classifying vehicles;
poor record keeping that does not support the claims or the FBT calculations made

Tips to help sole trader clients

The ATO is seeing sole traders make mistakes in the following areas:

not reporting all income — this includes income earned outside their business (like a 'side hustle'), cash jobs, or payments in-kind/barter deals;
overclaiming expenses — this includes claiming the portion of an expense related to personal use, or overstating the cost of goods sold and other business expenses;
calculating business losses;
incorrectly claiming and offsetting losses from non-commercial business activities against other income sources;
misreporting personal services income ('PSI') to gain tax benefits;
not registering for GST if they are in the taxi or ride-sourcing industry, or when they reach the GST threshold; and
not keeping accurate and complete records.

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.

September 2025 - Update

Mon, 08 Sep 2025 12:36:24 GMT

Are you covered in the event of an audit or a review?

With government revenue authorities increasingly using data matching, artificial intelligence, and even social media, they can compare disclosures made in your lodged tax returns to those of other taxpayers or benchmarks. If a data matching check escalates to an official audit, inquiry, investigation, or review, costs in defending your position can accumulate quickly, regardless of whether any adjustments are made to your returns

The Audit Shield service is designed to cover such unexpected costs in the event of an audit or a review, and the policy is underwritten by AAI Limited.

Benefits of our Audit Shield service:

Audits and reviews of Employer Obligations (PAYG/FBT/SG), Income Tax, and GST covered.
Previously lodged returns are covered automatically.
Fees of any other external specialist (e.g. taxation lawyers) or relevant consultant engaged or instructed by us to assist us in a response to audit activity are also covered.
Payment is tax deductible.

Please contact our office for more information.

Reducing student debt is now law

2026 Federal budget announcement of reducing student debt is now law.

A 20% reduction will apply to Higher Education Loan Program debts and other student loans that were incurred before 1 June 2025.

The minimum repayment threshold is also increased from $54,435 to $67,000 in 2026 financial year and a new marginal repayment system will apply to taxpayers with income above $ 67,000 for repayment calculations. Previously the repayments were based on a percentage of the repayment income.

Small Business Superannuation Clearing House is closing

The Small Business Superannuation Clearing House will close on 1 July 2026.

SBSCH is a free online service provided by the Australian Government through the ATO to enable superannuation payments.

New user registrations will close on 1 October 2025.

Existing users must now transition to alternative solutions such as Xero.

ATO will include on hold debts in account balances

From August 2025 ATO will be including debts on hold in taxpayer ATO account balances.

A debt on hold is an outstanding tax debt which ATO has previously put debt collection actions on hold.

ATO is currently offsetting such debts on hold against any refunds or credits the taxpayer may get, and ATO has not historically recorded these debts on taxpayer statements of account.

If you have debts on hold, more than $100, you will receive a letter before it is added to your ATO account balance.

If you have a debt on hold of less than $100, the debt will be included in their ATO account balance but will not receive a letter.

PAYGW reminders for activity statements

ATO will be sending employers a reminder to lodge their activity statements which include the amounts the ATO has on record for them such as PAYGW reported via STP, GST instalments and PAYG instalments.

The ATO's reminders are intended to provide a timeframe for employers to review the prefilled information before lodging activity statements.

If the employers do not lodge by the specified date, the ATO will lodge the activity statements based on the information they have, and the debt will be payable.

If employers do not make any changes to correct the data or lodge by the due date and the activity statement has been finalised by ATO, they will need to adjust these amounts by lodging a revised activity statement.

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.

August 2025 - Update

Tue, 05 Aug 2025 01:21:55 GMT

Taxpayers who need to lodge a TPAR

Taxpayers may need to lodge a Taxable payments annual report online by 28 August if they have paid contractors to provide any of the following services on their behalf:

building and construction;
cleaning;
courier and road freight;
information technology; or
security, investigation or surveillance.

If the ATO is expecting a TPAR from a taxpayer who does not need to lodge one, they can complete a 'TPAR non-lodgment advice form' by 28 August.

Taxpayers who no longer pay contractors can also use this form to tell the ATO they will not need to lodge a TPAR in the future

Please contact our office if you need assistance with completing and/or lodging a TPAR.

Note that paper lodgments of TPARs will no longer be accepted after 28 August 2025.

Changes to tax return amendment period for business

Businesses with an annual aggregated turnover of less than $50 million now have up to four years from the date of their tax return assessment to request amendments increased from two years. This applies to assessments for the 2024/25 and later income years.

If businesses make a mistake on a tax return and need to request an amendment, they should lodge their requests well before the end of the amendment period to make sure the ATO can process it within the time limit.

They should keep accurate and complete records to support their amendment request.

Paid parental leave changes have now commenced

As from 1 July 2025, the amount of Paid Parental Leave available to families increased to 24 weeks, and the amount of Paid Parental Leave that parents can take off at the same time has also increased from two weeks to four weeks.

Superannuation will now also be paid on Government Paid Parental Leave from 1 July 2025, at the new super guarantee rate of 12%, paid as a contribution to their nominated superannuation fund.

Parents will also benefit from an increase in the weekly payment rate of Paid Parental Leave, increasing from $915.80 to $948.10 (in line with the increase to the National Minimum wage). This means a total increase of $775.20 over the 24-week entitlement.

ASIC warning about pushy sales tactics urging quick super switches

ASIC is warning Australians to be on alert for high-pressure sales tactics, click bait advertising and promises of unrealistic returns which encourage people to switch superannuation into risky investments.

The warning comes amid increasing concerns from ASIC that people are being enticed to invest their retirement savings in complex and risky schemes.

These calls may not have the hallmarks of a typical scam. The caller will seemingly have your best interests at heart, and they say they want to help you find a better super product or locate lost super for free.

Consumers should always ask questions about salespeople's connections to funds, particularly in circumstances where a particular fund appears in the pitch, as there may be a commission arrangement.

Taxpayer's claim for travel expenses denied

In a recent decision, the Administrative Review Tribunal denied an offshore worker's claim for work-related travel expenses, although it did allow his claim for home office expenses.

During the relevant period, the taxpayer resided in Queensland with his family, while his employment as an engineer was primarily based at an offshore facility located off the coast of Western Australia.

In his tax return for the 2022 income year, the taxpayer claimed work-related expenses of over $30,000, relating to accommodation, meal and incidental expenses for stays in Perth, Darwin and Broome between rotations on the offshore facility.

The ART noted that the taxpayer's permanent work location was the offshore facility. It accordingly largely disallowed the work-related expenses on the basis that they were "either preliminary to the commencement of those duties, or occurred after employment duties had ceased, and the taxpayer was on leave."

The ART also did not accept the taxpayer's claim for travel-related expenses with reference to the substantiation exception, as the allowances he received were not 'travel allowances'.

However, the ART did accept the taxpayer's claim for home office expenses of $579, noting that "As an engineer, he is required to engage in continuing professional development and the Masters and other studies completed in the home office were for this purpose."

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.

July 2025 - Welcome to the New Financial Year

Mon, 07 Jul 2025 03:43:53 GMT

Welcome to the start of the new financial year, we sincerely thank you for your support and for partnering with us over the past 12 months.

Our team is up to date with the changes to tax rules this year, so it’s time to start thinking about completing your 2025 tax returns. If you have not yet organised your tax appointment, please book an appointment using the link below or get in touch with us asap.

We conduct appointments at the office, via Zoom or Phone.

Level 1, 86-88 Charles Street Kew VIC 3101
03 9853 1000

admin@crawfordaccountants.com.au

Are you Audit Safe?

The possibility of being selected for an audit or investigation is increasing each year as the Australian Taxation Office (ATO) and other government agencies widen the scope of their investigation activities utilising data collection/detection capacity, data matching and benchmarking/risk profiling. Even if you can substantiate your claim for an allowable deduction, if queried you must still go through the audit process.

To alleviate the cost and stress we have offered you to take out our audit protection and you should have received an offer letter from us few weeks ago. It is a cheap and efficient way of dealing with an ATO audit. For more information, please contact our office.

Tax Deductions

Tax deductions will help you minimise your tax, but there are three golden rules for tax deductions:

Expenses must be related to business/ work and not private. If a portion of the expense if private, the deduction must be apportioned.
You must have records to prove the deduction such as receipts
The expense must not be reimbursed

The super guarantee rate is increasing

Businesses that have employees, or hire eligible contractors, will need to ensure that their payroll and accounting systems are updated to reflect the new super guarantee rate of 12% for payments of salary and wages that are made from 1 July 2025.

Businesses need to calculate super contributions at 12% for their eligible workers for payments of salary and wages they make from this date.

Super contributions for the quarter ending 30 June (due by 28 July 2025) are still calculated at the 11.5% rate for payments of salary and wages made prior to 1 July.

Changes to car thresholds from 1 July

The car limit for the 2026 income year is $69,674. This is the highest value that a taxpayer can use to calculate depreciation on a car where they use the car for work or business purposes and they first use or lease the car in the 2026 income year.

If a taxpayer is buying a car and the price is more than the car limit, the highest input tax (GST) credit they can claim except in certain circumstances is one-eleventh of the car limit. For the 2026 income year, the highest input tax credit they can claim is $6,334.

The luxury car tax threshold for the 2026 income year is $91,387 for fuel-efficient vehicles, and $80,567 for all other luxury vehicles.

Input tax credits need to be claimed within the four year time limit. A taxpayer cannot claim an input tax credit for luxury car tax when they buy a luxury car, even if they use it for business purposes.

Taking charge of upcoming employer obligations

As the end of the financial year has just past, the ATO is reminding employers that they should check what they need to do and take note of the following upcoming key dates.

From 1 July 2025, some withholding schedules and tax tables will be updated. If you are using a software such as Xero, this will automatically be updated.

Employers should complete an STP finalisation declaration by 14 July 2025 and lodge a finalisation declaration for all employees they have paid and reported through STP, so they have the right information to lodge their income tax returns.

Employers should also 'finalise' all employees they have paid in the financial year, even those they have not paid for a while, such as terminated employees.

Finally, employers who change payroll software providers should finalise their records before they change, to ensure they and their employees have accurate information during tax time.

Notice of data exchange for skilled visa program compliance

The Department of Home Affairs will obtain data from the ATO to identify whether business sponsors are complying with their sponsorship obligations and whether temporary skilled visa holders are complying with their visa conditions.

The Department will provide to the ATO biographical details (including name, address and date of birth) of clients who are, or were in the three most recent financial years, holders of Skills in Demand or Temporary Skills Shortage (subclasses 457 and 482) primary visas.

These details will be electronically matched against ATO data holdings. Where there is an identity match, the ATO will return Single Touch Payroll employment data for the relevant individual to the Department.

It is estimated that records will be shared relating to around 58,000 individuals .

TBAR for June quarter due 28 July

All SMSFs must report relevant transfer balance account events using transfer balance account reporting. All events must be reported regardless of the member's total superannuation balance.

TBARs for the June quarter are due by 28 July 2025.

If an SMSF does not lodge a TBAR by the due date, it may result in compliance action and penalties and could also negatively impact a member's TBA.

Taxpayer's claim for home office and car expenses successful

The Administrative Review Tribunal recently held that a taxpayer was entitled to claim deductions for home office and car expenses incurred during the COVID-19 pandemic.

The taxpayer was employed full time by the ABC producing the ABC Sport Digital Radio station and producing ABC live sports broadcasts, mainly NRL football.

During the 2021 income year, due to the restrictions imposed in response to the COVID-19 pandemic, the taxpayer undertook all of his Digital Role from a second bedroom in his apartment which he was renting with his wife, and he undertook most of his Live Role from the ABC's Southbank Studios in Melbourne.

The taxpayer claimed deductions for occupation expenses being the proportion of rent for his apartment referable to the use of his home office in performing his Digital Role, and for car expenses incurred in driving between his home and the ABC studios at Southbank on days when he performed both roles.

The ART allowed the taxpayer's claims for occupation expenses in full, as the COVID-19 restrictions required him to earn most of his income at his home, and so a proportion of rent was incurred in gaining his assessable income.

The ART also allowed the car expenses in full on the basis that on the days when the taxpayer "closed his laptop at home, picked up his car keys and drove to the Southbank Studios . . . he was at work the entire time and his travel was therefore 'on work' . . ."

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.

For all of Crawford Accountants articles and news, visit our website https://www.crawfordaccountants.com.au/blog

June 2025 - Update

inzi@crawfordaccountants.com.au (Inzi Pethiyagoda) — Fri, 13 Jun 2025 13:05:19 GMT

Time for Tax Planning

The month of June is ideal for business owners and taxpayers to take some time to look at tax minimisation strategies, consider legislative changes and requirements, ensure compliance and review your financial position and aspirations.

With ever changing legislative requirements, take some time to make sure your compliance obligations are fulfilled. This will allow you to steer clear of expensive penalties and also put you in an optimum position if you need to borrow funds.
Reviewing your superannuation and making voluntary contributions, may achieve substantial tax savings, but you need a carefully prepared strategy.

Employers may pay superannuation guarantee obligations early to take advantage of the deduction during the current financial year.
Instant asset write-off may assist with business assets.

Key areas for small and medium entities are:

Trust distributions
Dividends from private companies
Super contributions
Tax governance
PAYG instalments
STP requirements
TPAR requirements
Pensions and TBAR events

A meeting with your accountant in June for a tax planning session may add value to your overall financial position and minimise tax. Please contact us if you wish to discuss this further.

Getting ready for business

These are the 'top 7 things' taxpayers need to know when starting a business.

Use digital tools and maintain accurate records to help them manage daily activities and cash flow.
There are some registrations you will need to complete when you start a business (for example, registering for an ABN or a business name).
You can claim a tax deduction for most business expenses if the expense is directly related to earning income. Remember to keep records and only claim the business portion of mixed-use expenses.
The type of business structure will affect the tax and registration requirements, so you need to choose the right business structure and understand its obligations.
If you are an employer, you have extra responsibilities and obligations (e.g., super guarantee and Single Touch Payroll).
You need to lodge and pay your taxes on time. You can prepay their estimated income tax liability through PAYG instalments.
Businesses that maintain accurate records, lodge and pay on time and avoid errors not only steer clear of penalties and general interest charges but also become more resilient when facing challenges.

Taxi service and ride-sourcing providers must be registered

Taxpayers that provide taxi, limousine or ride-sourcing services must register for GST regardless of their turnover.

They must collect and pay GST and income tax on all their rides and all other business income.

The ATO is advising drivers in this industry who do not have a TFN, ABN or GST registration that they need to register now and collect, report and pay GST on all their future rides. They also need to report all their income from their rides in their next tax return.

Penalties and interest may apply to drivers who do not register for GST.

Drivers who have not declared all their income for ride-sourcing in prior years can amend a previous tax return.

Partial release from tax debt on serious hardship grounds

In a recent decision, the Administrative Review Tribunal held that a taxpayer should be released from payment of part of his tax debt on the grounds of serious hardship.

As at the 2022 income year, the taxpayer had an accumulated tax debt of approximately $528,000, comprising income tax, late lodgment penalties, PAYG instalments, and the general interest charges on the PAYG and unpaid income tax.

Much of the taxpayer's tax debt had arisen as a result of the taxpayer deriving income protection insurance payments from his insurer. These payments had been made since around 2002, and arose from a serious injury the taxpayer had suffered in a fire at his restaurant business.

The ART noted that there were a number of factors which weighed against the taxpayer, including his failure to make payments to meet the tax debt and his 'extremely poor' tax compliance history.

However, the ART decided that some relief was justified, given the extent of hardship, concerns about the taxpayer's health, and recoverability time for the tax debt.

The ART accordingly reduced the total tax debt (including penalties) to $250,000.

$20,000 instant asset write-off for 2024/25

Taxpayers who have purchased or are purchasing a business asset this financial year should remember that the instant asset write-off limit is $20,000 for the 2025 income year.

If a taxpayer's business has an aggregated annual turnover of less than $10 million and they use the simplified depreciation rules, they may be able to use the instant asset write-off to immediately deduct the business part of the cost of eligible assets, as follows.

The full cost of eligible depreciating assets costing less than $20,000 that are first used or installed ready for use for a taxable purpose between 1 July 2024 and 30 June 2025.
New and second-hand assets can qualify, although some exclusions and limits apply.
If the taxpayer claimed an immediate deduction for an asset's cost under the simplified depreciation rules in an earlier income year, they can also immediately claim a deduction the first time they incur a cost to improve that asset if it is incurred between 1 July 2024 and 30 June 2025 and less than $20,000.
The $20,000 limit applies on a per-asset basis, so taxpayers can instantly write off multiple assets as long as the cost of each asset is less than the limit.

The usual rules for claiming deductions still apply. Taxpayers can only claim the business part of the expense, and they must have records to prove it.

The information provided in this update is general in nature, and if you have any queries or require further information or assistance with the above, please contact our office.

May 2025 - Update

Fri, 16 May 2025 02:26:50 GMT

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.

April 2025 - Update

Wed, 09 Apr 2025 12:17:06 GMT

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.

2025/26 Budget Update

Fri, 04 Apr 2025 12:04:44 GMT

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.

March 2025 - Update

Thu, 06 Mar 2025 23:53:49 GMT

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.

February 2025 - Update

Wed, 19 Feb 2025 12:10:10 GMT

CGT withholding measures now law

The Government recently passed legislation making changes to the foreign resident capital gains withholding laws (among other changes).

Foreign resident capital gains withholding is relevant for all vendors selling certain taxable real property (e.g., Australian land).

Even Australian residents can be caught by these laws because, if they do not have a valid 'clearance certificate' issued by the ATO at, or before settlement, tax must be withheld from the sale proceeds by the purchaser and paid to the ATO.

The new legislation increases the foreign resident capital gains withholding rate to 15% (from 12.5%), and completely removes the threshold (currently $750,000) before which withholding applies.

This means that all disposals of taxable real property are potentially subject to foreign residents' capital gains withholding requirements regardless of the market value of the CGT asset.

These amendments take effect from 1 January 2025.

ATO's notice of rental bond data-matching program

The ATO will acquire rental bond data from State and Territory rental bond regulators bi-annually for the 2024 to 2026 income years, including details of the landlord and tenant, managing agent identification details, and rental bond transaction details.

The objectives of this program are to identify and educate individuals and businesses who may be failing to meet their registration or lodgment obligations.

The ATO expects to collect data on approximately 2.2 million individuals each financial year.

Study/training loans — What's new

The indexation rate for study and training loans is now based on the Consumer Price Index or Wage Price Index — whichever is lower.

This change has been backdated to indexation applied from 1 June 2023 for all HELP, VET Student Loan, Australian Apprenticeship Support Loan, and other study or training support loan accounts.

Consequently, indexation rates for 2023 and 2024 have changed to:

3.2% for 1 June 2023 (reduced from 7.1%); and
4% for 1 June 2024 (reduced from 4.7%).

Individuals who had a study loan that was indexed on 1 June 2023 or 1 June 2024 do not need to do anything.

Individuals whose study loan is in credit after the adjustment may receive a refund for the excess amount to their nominated bank account, if they have no outstanding tax or Commonwealth debts.

When to lodge SMSF annual returns

All trustees of SMSFs with assets as at 30 June 2024 need to lodge an SMSF annual return for the 2023/24 financial year.

The SAR is more than a tax return — it is required to report super regulatory information, member contributions, and pay the SMSF supervisory levy.

However, not all SMSFs have the same lodgment due date:

Newly registered SMSFs and SMSFs with overdue SARs for prior financial years (excluding deferrals) should have lodged their SAR by 31 October 2024.
All other self-preparing SMSFs need to lodge their SAR by 28 February 2025 (unless the ATO has asked them to lodge on a different date).
For SMSFs that lodge through a tax agent, the due date for lodgment of their SAR is generally 15 May or 6 June 2025.

SMSFs that have engaged a new tax agent need to nominate them to confirm they are the authorised representative for the fund.

SMSF trustees must appoint an approved SMSF auditor no later than 45 days before they need to lodge their SAR. Before they lodge, they must ensure that their SMSF's audit has been finalised and the SAR contains the correct auditor details.

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.

December 2024 - Update

Sat, 07 Dec 2024 12:06:44 GMT

Can staff celebrations attract FBT

With the holiday season coming up, employers may be planning to celebrate with their employees.

Before they hire a restaurant or book an event, employers should make sure to work out if the benefits they provide their employees are considered entertainment-related, and therefore subject to fringe benefits tax ('FBT'). This will depend on:

the amount they spend on each employee;
when and where the celebration is held;
who attends — is it just employees, or are partners, clients or suppliers also invited?
the value and type of gifts they provide.

Employers who do provide entertainment-related fringe benefits should keep records detailing all of this information so they can calculate their taxable value.

Reminder of December 2024 Quarter Superannuation Guarantee

Employers are reminded that employee superannuation contributions for the quarter ending 31 December 2024 must be received by the relevant super funds by 28 January 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.

SMSFs cannot be used for Christmas presents

There are very limited circumstances where taxpayers can legally access their super early.

Generally, taxayers can only access their super when they:

reach preservation age and 'retire or
turn 65 (even if they are still working)

To access their super legally before then, taxpayers must satisfy a 'condition of release'.

SMSF members who illegally access their benefits may be liable for additional income tax and administrative penalties, and they could be disqualified as a trustee.

For taxpayers who have illegally accessed their super, returning it to the fund may be considered a new contribution. Depending on their contribution caps, this may result in additional tax on excess contributions.

Taxpayer’s claims for various home business expenses rejected

In a recent decision, the AAT rejected in full a taxpayer's claims for "several classes or categories of deductions."

For the relevant period of 1 July 2021 to 30 June 2022, the taxpayer was (according to his employer) a 'technical architect'.

However, the taxpayer also claimed he worked from home 6 am to 11 pm seven days a week, 365 days of the year (as he was ‘always on call’), and his income tax return for the 2022 financial year claimed a wide range of deductions, totalling approximately $40,000.

The AAT separately considered each category of deductions claimed, and rejected each in turn.

In relation to his home office 'occupancy expenses' (e.g., for home insurance, council rates, waste disposal, water rates, and repairs), the AAT noted that the 'home office' rooms (comprising floorspace occupying 31% of the dwelling’s total floor area) were not physically separate from the remainder of the dwelling, which the taxpayer shared with four other members of his family.

Home office running expenses (e.g., gas, power and internet) were disallowed on the grounds that the taxpayer had "not properly established an entitlement to such deductions or otherwise appropriately apportioned them between private or work-related activities." The AAT found his 100% claim for the internet, on the basis that the other members of the household did not use the internet connection, "very difficult to accept".

In relation to plant and equipment expenses, the evidence was "largely non-existent."

In relation to consumable expenses, the AAT noted that they appeared to be for goods or services of a private or domestic nature (including medications, toilet paper, milk, tea, sugar and insect spray).

The AAT also rejected the taxpayer's claim for "payments made to his spouse for tax management, office cleaning and document management/storage", noting that the services provided were generally of a private or domestic nature, and that the rendering of invoices by the spouse "has a degree of artificiality to it".

ATO reminder about family trust elections

Making an FTE provides access to certain tax concessions (assuming the relevant tests and conditions are satisfied), although there are important things to consider.

In particular, once the election is in effect, family trust distribution tax ('FTDT') is imposed when distributions are made outside the family group of the 'specified individual'. FTDT is a 47% tax, payable by a trustee, director, or partner, as the case may be (depending on the entity).

Taxpayers should review FTEs and IEEs annually to ensure they remain appropriate. Taxpayers can only revoke or vary FTEs and IEEs in limited circumstances and subject to certain conditions.
Before making a distribution or annual trust resolutions, trustees should identify the members of the specified individual's family group. This will help avoid FTDT liabilities.

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.

November 2024 - Update

Fri, 08 Nov 2024 11:47:16 GMT

Hiring employees for the festive season

As the festive season approaches, employers that hire new employees to help with their business should remember the following when it comes to their employer tax and super obligations:

Employers should make sure they are withholding the right amount of tax from payments they make to their employees and other payees, especially as this will help their employees meet their end-of-year tax liabilities;
Employers must pay super guarantee (currently at 11.5%) to all eligible employee's super funds in full and on time to avoid paying the super guarantee charge; and
If employers are still not reporting through single touch payroll ('STP') and they do not have an approved exemption, deferral or concession in place, they should start reporting now. If they have just started a business or recently employed staff, they will need to report through STP from their first payday.

Lodging and paying business activity statements

The ATO is reminding taxpayers that it is important to lodge BASs and pay in full and on time to avoid penalties and interest charges.

The BAS for the first quarter of 2024/25 is generally due on 28 October, but taxpayers will receive an extra:

four weeks if they lodge through a registered tax or BAS agent; or
two weeks if they lodge online.

The cost of managing tax affairs is tax deductible for taxpayers, and a registered agent's help will allow them to focus on running their business.

Deductions for financial advice fees

The ATO has provided guidance about when an individual not carrying on an investment business may be entitled to a deduction for fees paid for financial advice.

An individual is entitled to a deduction for fees for financial advice to the extent that the loss or outgoing is incurred in gaining or producing assessable income, unless the loss or outgoing is of a capital, private or domestic nature.

Fees for financial advice an individual incurs may also be deductible to the extent that the advice relates to managing their 'tax affairs' (e.g., fees for advice in relation to salary sacrifice arrangements).

However, fees for financial advice on a proposed investment prior to the acquisition of an asset, or about how to invest additional funds to grow an investment portfolio, will not be deductible.

The individual must also have sufficient evidence of the expenditure to claim the expense as a deduction, such as a properly itemised invoice.

ATO's notice of government payments data-matching program

The ATO will acquire government payments data from government entities which administer government programs for the 2024 to 2026 income years, matching data on government payments made to service providers against ATO records, including service provider identification details and payment transaction details.

The ATO estimates that records relating to approximately 60,000 service providers will be obtained each financial year, including approximately 9,000 individuals, with the remainder consisting of companies, partnerships, trusts and government entities.

FBT on plug-in hybrid electric vehicles

From 1 April 2025, a plug-in hybrid electric vehicle will not be considered a zero or low emissions vehicle under fringe benefits tax law and will not be eligible for the electric car FBT exemption. However, an employer can continue to apply the electric car exemption if:

use of the PHEV was exempt from FBT before 1 April 2025; and
they have a financially binding commitment to continue providing private use of the vehicle to an employee or their associate on and after 1 April 2025 (note that any optional extension of the agreement is not considered binding).

If there is a change to a pre-existing commitment on or after 1 April 2025, the FBT exemption for the PHEV will no longer apply from the date of that new commitment.

An employer is not entitled to an exemption from FBT after 1 April 2025 if there was no binding financial commitment to provide the car to a particular employee in place before then.

Eligibility for compassionate release of superannuation

The ATO has been responsible for the administration of the early release of superannuation on compassionate grounds since 1 July 2018.

It will only approve a release of superannuation on compassionate grounds if the applicant meets all the conditions set out in the regulations, including that the applicant has no other means to pay the expenses.

The five main grounds of eligibility are:

medical treatment or transport (i.e., to treat a life-threatening illness or injury, or alleviate acute or chronic pain or mental illness) for the applicant or their dependant;
accommodating a disability for the applicant or their dependant;
palliative care for a terminal illness for the applicant or their dependant;
funeral expenses for a dependant of the applicant; or
preventing foreclosure or forced sale of the applicant's home.

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.

October 2024 - Update

Mon, 14 Oct 2024 00:09:56 GMT

Avoid a tax time shock

Individual taxpayers can take the following steps to ensure the correct amount of tax is being put aside throughout the year:

Let your employer know if you have a student loan, such as a HECS or HELP debt
Check you are only claiming the tax-free threshold from one employer
Consider whether the Medicare Levy Surcharge may affect you this financial year
Check your income tier is correct for your private health insurance rebate
Consider voluntarily entering PAYG instalments and pre-paying tax throughout the year to avoid a large tax bill at tax time for investment or business income

Reminder of September Quarter Superannuation Guarantee

Employers are reminded that employee super contributions for the 1 July 2024 to 30 September 2024 quarter must be received by the relevant super funds by 28 October 2024 in order to avoid being liable to pay the SG charge.

myGovId changing its name to myID

The digital identity app 'myGovID' will soon be changing its name to 'myID'. While the name is changing, the login and security will not change.

Taxpayers who have already set up their myGovID and use it to access government online services will not need to do anything when the app changes to myID. They will still have:

The same details — there is no need to set up a new myID. Your login details and identity strength remain the same
Continued use — once available your existing app should automatically update to myID or they can manually update it from the APP Store or Google Play
Access to services — You can still use the app to securely access government online services.

The new name aims to reduce the confusion between myGovID and myGov.

ATO security safeguards for victims of fraud recently enhanced

Where a taxpayer has been the victim of identity, tax or super fraud, the ATO may apply security safeguards to their account to prevent further harm. This may require the impacted taxpayer to contact the ATO each time they need to access their information and cause inconvenience for the taxpayer as well as their tax agents.

The ATO has recently enhanced processes to improve ongoing access to ATO online services. Impacted taxpayers must contact the ATO for initial access and then set a Strong online access strength.
To set a Strong online access strength, taxpayers need to:

Set up your myGovID to a Strong identity strength using their Australian passport;
Connect your myGovID to their myGov account;
Sign in to myGov with your myGovID; and
Go to ATO online services.

Once set, taxpayers no longer need to contact the ATO every time they access their information.

Impacted taxpayers must continue to use their Strong myGovID whenever they access ATO online services, or account access will be restricted to maintain ongoing protection of client information.

Valuing fund assets for SMSFs

One of the many responsibilities SMSF trustees have every income year is valuing their fund's assets at market value.

The market value of an asset is the amount that a willing buyer and seller would agree to in an arm's-length transaction. These valuations will be used when preparing the fund's accounts, statements and SMSF annual return.

Asset valuations will be reviewed by an approved SMSF auditor as part of the annual audit prior to lodgment of the SAR. The auditor will check that assets have been valued correctly and assess and document whether the basis for the valuations is appropriate given the nature of the asset. The auditor is not responsible for valuing fund assets.

Taxpayers should ensure that they have their valuations done before going to the auditor.

It is the responsibility of the SMSF trustee to provide objective and supportable evidence to their auditor for the valuation of the fund's assets, including all relevant documents requested to prevent delays in auditing the fund. Failure to do so could result in a potential late lodgment of their annual return or a contravention if mistakes have been made.

SMSF trustees should start researching now to find what type of evidence they need to support the valuation as this can take time. For some asset types valuations must be undertaken by a qualified independent valuer.

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.

September 2024 - Update

Wed, 18 Sep 2024 06:32:12 GMT

Pre filling information is now updated

With millions of pieces of information now pre-filled, including information from banks, employers, government agencies and private health insurers, the ATO has given the 'green light' to lodge your tax returns.

The ATO reminds taxpayers that the rules regarding how and when you can claim a deduction can change, including in relation to car expenses and working from home costs. Therefore, you should not just 'copy and paste' your deductions from last year, and speak with our accountants for your claims.

The ATO notes that taxpayers using a registered tax agent normally have the extended due dates.

Business self-review checklist: GST classification of products

GST classification errors can lead to significant under-reporting of GST for some taxpayers.

The ATO recently issued guidance for small to medium businesses on self-reviewing GST classification of food and health products.

The use of this guide is not mandatory, although the ATO encourages small to medium businesses to regularly self-review the GST classification of supplies, and adopt better practice processes and controls as listed in the accompanying checklist.
The checklist provides practical, step-by-step guidance for entities to:

self-review the GST classification of their supplies (products they import, purchase as stock or produce for sale); and
assess the robustness of their business systems, processes and controls that directly impact their GST classification systems.

Small business food retailers with turnover of $2 million or less may use one of the 'GST simplified accounting methods' to account for GST instead.

Receiving payments or assets from foreign trusts

Additional tax liabilities may arise when money or assets of a foreign trust are paid to a taxpayer or applied for their benefit, and they are a beneficiary of the foreign trust. These can include:

loans to them by the trustee directly or indirectly through another entity;
amounts paid by the trustee to a third party on their behalf;
amounts that are described as gifts from family members, but are sourced from the trust; and
distributions paid to them or trust assets transferred to them by the trustee.

Taxpayers who receive money from a foreign trust may need to ask further questions to determine whether the amount must be included in their assessable income, including:

whether they are a beneficiary of the foreign trust;
where the foreign trust obtained the money; and
why the money was paid to them, e.g., is it a payment for services, a gift, a distribution or a loan.

Record keeping for work-related expenses

Taxpayers need to consider what work-related expenses they will be looking to claim in the new financial year, and what records they will need to substantiate those deductions.
Records can be kept as a paper version, an electronic copy, or a 'true and clear' photo of an original record.

Working from home deductions
Taxpayers can use two different methods to calculate their working from home deductions, and they each have different requirements:

With the fixed rate method, taxpayers will need a record of the actual number of hours they worked from home for the whole financial year, and at least one record for each of the additional running expenses they incurred that the rate includes (e.g., an electricity bill).
To use the actual cost method, taxpayers must also keep records for any additional running expenses they incurred, and the depreciating assets they bought and used while working from home, and show how they apportioned work-related use for their expenses and depreciating assets.

Please contact our office if you need any assistance with your record keeping requirements, such as logbook requirements for car expenses.

Tax incentives for early stage investors

The ATO is reminding investors who purchased new shares in a qualifying 'early stage innovation company that they may be eligible for tax incentives.
These tax incentives provide eligible investors who purchase new shares in an ESIC with:

a non-refundable carry forward tax offset equal to 20% of the amount paid for their eligible investments – this is capped at a maximum tax offset amount of $200,000 for the investor and their affiliates combined in each income year; and
modified capital gains tax ('CGT') treatment, under which capital gains on qualifying shares that are continuously held for at least 12 months and less than 10 years may be disregarded – capital losses on shares held less than 10 years must be disregarded.

The maximum tax offset cap of $200,000 does not limit the shares that qualify for the modified CGT treatment.

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.

August 2024 - Update

Fri, 23 Aug 2024 12:34:49 GMT

Are you Audit Safe?

To alleviate the cost and stress we have offered you to take out our audit protection and you should have received an offer letter from us few weeks ago. It is a cheap and efficient way of dealing with an ATO audit. For more information, please contact our office.

Tips for correctly claiming deductions for rental properties

Taxpayers to consider the following factors in determining claims for rental deductions.

Repairs and general maintenance are expenses work done to remedy or prevent defects, damage or deterioration from using the property to earn income. These expenses can be claimed in the year the expense occurred.

Initial repairs include any work done to fix defects, damage or deterioration existing at the time of purchase. These are capital repair expenses and cannot be claimed as a deduction.

Capital works are structural improvements, alterations and extensions to the property, claimed at 2.5% over 40 years with some exceptions. Deductions for capital works can only be claimed afterthe work has been completed.

Improvements or renovations that are structural are also capital works. Work going beyond remedying defects, damage or deterioration which improves the function of the property are improvements.

Repairs to an 'entirety' are also capital and cannot be claimed as repairs. Repairs to an entirety generally involve the replacement or reconstruction of something separately identifiable as a capital item

Depreciating assets must be claimed over time according to their effective life.

Small business energy incentive

Businesses with an aggregated annual turnover of less than $50 million that had upgraded or purchased a new asset that helps improve energy efficiency during the 2024 income year should consider the small business energy incentive.

This new measure gives them the opportunity to claim a bonus deduction equal to 20% of the cost of eligible assets or improvements to existing assets that support more efficient use of energy.

This incentive applies to eligible assets that were first used or installed ready for use for a taxable purpose between 1 July 2023 and 30 June 2024.

Eligible improvement costs must have been incurred during this period to be eligible for the bonus deduction.

Up to $100,000 of total expenditure is eligible under this incentive, with the maximum bonus deduction being $20,000 per business.

This 20% bonus deduction is on top of other existing ones. Businesses can claim both the ordinary deduction for the expense as well as the bonus deduction.

Claiming work-related expenses

The ATO is advising taxpayers that having records to substantiate claims is essential to prove deductions can be claimed, having regard to the following in particular:

A bank or credit card statement on its own will generally not be enough evidence to support a work-related expense claim. Taxpayers instead need detailed written evidence such as a receipt.
If a taxpayer's total claim for deductible work expenses is $300 or less, they can claim a deduction without written evidence, but they must still be able to show that they spent the money and how they calculated the amount being claimed.
While some deduction types do not require receipts (e.g., laundry expenses), some kind of record may still be necessary. Taxpayers may also need a record that shows their private and work-related use (e.g., a diary), and how the amount claimed as a deduction was calculated.

Federal Court overturns AAT's tax resident decision

The Federal Court has recently overturned an Administrative Appeals Tribunal decision that a taxpayer was a resident of Australia for tax purposes even though he was mostly living and working overseas during the relevant period.

The taxpayer was a mechanical engineer who became an Australian citizen in 1978.

He lived and worked in Dubai, United Arab Emirates, from September 2015 until 2020, and he 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."

On appeal to the Federal Court, the taxpayer succeeded in having the AAT's decision overturned.

The Federal Court held, in considering whether the taxpayer was a resident of Australia according to 'ordinary concepts', that the AAT applied the wrong test, confusing it with the 'domicile test'.

Also, in relation to the 'domicile test', the Federal Court noted that the AAT further misunderstood how to establish that a person had a 'permanent place of abode' outside of Australia.
The Federal Court accordingly held that the taxpayer's appeal be allowed, and the matter be remitted to the AAT for determination according to law.

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.

July 2024 - Welcome to the New Financial Year

Thu, 11 Jul 2024 00:51:44 GMT

Welcome to the start of the new financial year, we sincerely thank you for your support and for partnering with us over the past 12 months.

Our team is up to date with the changes to tax rules this year, so it’s time to start thinking about completing your 2024 tax returns. If you have not yet organised your tax appointment, please book an appointment using the link below or get in touch with us asap.

We conduct appointments at the office, via Zoom or Phone.

Level 1, 86-88 Charles Street Kew VIC 3101
03 9853 1000
admin@crawfordaccountants.com.au Book Now

Are you Audit Safe?

Tax Deductions

Tax deductions will help you minimise your tax, but there are three golden rules for tax deductions:

Expenses must be related to business/ work and not private. If a portion of the expense if private, the deduction must be apportioned.
You must have records to prove the deduction such as receipts
The expense must not be reimbursed

The super guarantee rate is increasing

Businesses that have employees, or hire eligible contractors, will need to ensure that their payroll and accounting systems are updated to reflect the new super guarantee rate of 11.5% for payments of salary and wages that are made from 1 July 2024.

Businesses need to calculate super contributions at 11.5% for their eligible workers for payments of salary and wages they make from this date.

Super contributions for the quarter ending 30 June (due by 28 July 2024) are still calculated at the 11% rate for payments of salary and wages made prior to 1 July.

ATO's main residence exemption tips

The main residence exemption needs to be considered in a variety of situations when a taxpayer sells a property they have lived in. Following are the tips to consider.

Taxpayers should consider if they have started earning income from their home (in which case they may need to get a market valuation for CGT purposes).
When renting out a property that was their main residence, taxpayers need to consider whether to use the 6-year absence rule when they sell their property.
Taxpayers can only have one property as their main residence at a time. The only exception is the 6-month period when they move from one home to another.
Has the taxpayer's residency changed? If so, this may affect eligibility for the exemption.

Family trust elections and interposed entity elections

Family trust distribution tax ('FTDT') is a special, 47%, tax sometimes payable by a trustee, director or partner. It applies when a trust has made a family trust election ('FTE'), or an entity has made an interposed entity election ('IEE'),and makes a distribution outside the 'family group' of the specified individual in the election.

Where such an election has been made by a trustee or another entity, it is important that the original election is retained in the approved form. FTEs and IEEs can be lodged with the ATO.
Where elections are involved, taxpayers should consider the following on an annual basis:

if the election is needed and whether it can, and should be, revoked;
whether the specified individual remains the most suitable person and, if not, whether the specified individual can and should be varied; and
the timeframes to vary or revoke elections (noting these are limited and that, outside these periods, the elections and the specified individuals cannot be changed).

It is important to recognise who the members of the specified individual's family group are when making annual trustee resolutions, as distributions outside the family group will result in FTDT of 47%.

ATO may cancel inactive ABNs

The ATO regularly reviews, and sometimes cancels, inactive Australian Business Numbers. The ATO may review a taxpayer's ABN if the taxpayer has not reported business activity in their tax return, or there are no signs of business activity in other lodgments or third-party information.

If the ATO thinks a taxpayer is no longer using their ABN, it will contact them by email, letter or SMS.

If the taxpayer is still running a business, the ATO will tell them what they need to do to keep their ABN. If they are no longer in business, they do not need to do anything -— the ATO will cancel their ABN.

Taxpayers who think they are still entitled to an ABN that has been cancelled need to reapply for it. If they restart their business activities, they should be able to reapply for the same ABN, provided that their business structure is not changing.

New lodgment obligation for income tax exempt organisations

Non-charitable not-for-profits with an active ABN, including community service organisations, need to lodge an annual NFP self-review return to notify their eligibility for income tax exemption.

To be eligible to self-assess as income tax exempt, the organisation's main purpose must be a community service purpose. Any other purpose must be incidental, ancillary or secondary.

Community service purposes are altruistic, which means the organisation must be established and operated for the wellbeing and benefit of others, and not for political or lobbying purposes.

For example, a club or association that has been set up principally to improve the welfare of the community would be regarded as a community service organisation. This would not be the case, however, if its main purpose was to advance the professional interests of its members.

Taxpayers able to apply CGT small business concessions

The Administrative Appeals Tribunal ('AAT') recently held that a trust was entitled to apply the CGT small business concessions and, therefore, it could reduce a capital gain it made down to nil.

In March 2015, a family trust entered into an agreement for the sale of its shares in a company for $3,500,000. In June 2015, the trustees of the trust passed a resolution apportioning the trust's income for that year between the four taxpayers (two brothers and their wives), and also distributing the capital gain made on the sale equally between those four taxpayers.

The determination of the trust's net income for distribution to the beneficiaries took into account the 50% CGT discount and CGT small business concessions, relying on a valuation of the shares and underlying business being $3,500,000.

The ATO, however, deemed the shares sold by the trust to have been disposed of for a market value of $10,640,000, based on an updated valuation report. This also meant that the trust was not entitled to the CGT small business concessions, as this valuation meant that it did not satisfy the CGT maximum net asset value.

The ATO relied on the 'market value substitution' rule to substitute the value of $10,640,000 in place of the sale price of the shares. This meant that each taxpayer's share of the 2015 trust distribution was increased from $321,989 to $1,194,174.

In relation to the MNAV test, the AAT needed to determine whether the net value of the CGT assets of the trust and its connected entities exceeded $6,000,000.

The AAT preferred the approach taken by the valuers for the taxpayers, partly because they had given "more attention and consideration to this particular business and the circumstances and location in which it operates."

The AAT accordingly concluded that the total net value of the CGT assets of the trust and connected entities was below $6,000,000, and so the MNAV test was satisfied, and the taxpayers' objections to the amended assessments should be allowed.

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.
For all of Crawford Accountants articles and news, visit our website https://www.crawfordaccountants.com.au/blog

June 2024 - Update

Mon, 17 Jun 2024 11:32:33 GMT

Have you optimised your superannuation contributions this year?

This is the best time to check your concessional and non-concessional superannuation contributions to ensure that you are within the caps and have maximised your tax savings. The contribution caps for 2024 were:

Concesisonal $ 27,500
Non-Concesisonal $ 110,000

You should also consider strategies such as contribution splitting with your spouse, the spouse offset, the government co contribution and most importantly if you are eligible to take advantage of your carry forward unused contributions cap.

It is also important to not leave any contributions until the last minute as 30 June 2024 is a weekend.

If you wish to discuss any tax planning opportunities available to you this financial year and discuss a contributions strategy, please book a session with one of our accountants.

ATO's focus areas this tax time

ATO will be taking a close look this tax time at the following common errors made by taxpayers:

Work related expenses: Taxpayers using the revised fixed rate method of calculating a working from home deduction must have comprehensive records to substantiate their claims, including records that show the actual number of hours they worked from home, and the additional running costs they incurred to claim a deduction.
Rental properties: Performing general repairs and maintenance on a rental property can be claimed as an immediate deduction. However, expenses which are capital in nature are not deductible as repairs or maintenance.

Failing to include all income in tax return: The ATO warns taxpayers against rushing to lodge their tax return on 1 July. If they have received income from multiple sources, they need to wait until this is pre-filled in their tax return before lodging.

End of financial year obligations for employers

The ATO reminds employers they need to keep on top of their payroll governance. This includes:

using their tax and super software to record the amounts they pay;
withholding the right amount of tax; and
calculating superannuation guarantee correctly.

As 30 June gets closer, employers should check their reporting obligations, along with any upcoming key dates, including for:

PAYG withholding - From 1 July, the individual income tax rate thresholds and tax tables will change, which will impact their PAYG withholding for the 2025 tax year;
SG rate change - From 1 July, the SG rate will increase to 11.5%. Employers must pay their SG contributions by 28 July in full, on time and to the right fund; and
Single touch payroll STP reporting - Employers should remember to make STP finalisation declarations by 14 July for all employees the employer has paid during the financial year, and also check their employees' year-to-date amounts are correct.

Getting trust distributions right

As trustees prepare for year-end distributions, they should do the following:

review the relevant trust deed to ensure they are making decisions consistent with the terms of the deed;
consider who the intended beneficiaries are and their entitlement to income and capital under the trust deed;
notify beneficiaries of their entitlements, so that the beneficiaries can correctly report distributions in their tax returns;
consider whether the trust has any capital gains or franked distributions they would like to stream to beneficiaries; and
check any requirements under the trust deed governing the making of trustee resolutions. Resolutions regarding distributions need to be made by the end of the income year.

Support available for businesses experiencing difficulties

By paying the tax bill in full and on time, taxpayers can avoid paying the general interest charge, which is currently 11.34%, and which accrues daily for any overdue debts.
The ATO advises taxpayers that, if their business is dealing with financial difficulties, there are some options to help.
Taxpayers who are struggling to pay in full or on time may be eligible to set up a payment plan. If they owe $200,000 or less, they may be able to do this themselves using online services. If they cannot do so, or they owe more than $200,000, they can contact the ATO to discuss their options.
Taxpayers can ask the ATO to remit their GIC. The ATO will then consider whether the tax bill was paid late because of circumstances that were:

beyond the taxpayer's control, and what steps the taxpayer took to relieve the effects of those circumstances; or
within the taxpayer's control, but led to results that the taxpayer could not foresee.

Minimum yearly repayments on Division 7A loans

To avoid an unfranked dividend under the Division 7A rules, loans from a private company to its shareholders or their associates must be either repaid in full or be covered by a 'Division 7A complying loan agreement' before the company's lodgment day.

Complying loan agreements require minimum yearly repayments comprising of interest and principal to be made each year, starting from the income year after the loan is made.
Taxpayers must ensure they can meet the required MYRs on complying loans.

If they miss the MYR or do not pay enough in an income year, the shortfall may be treated as an unfranked dividend.

Note also that borrowing additional amounts from the same company, directly or indirectly, to make repayments on complying loans may result in the repayment not being taken into account in working out if the MYR has been made.

When making MYRs, borrowers need to:

start repayments in the income year after the complying loan was made;
use the correct benchmark interest rate (8.27% for the 2024 income year) to calculate the MYR for the current year; and
make the required payments on the loan by the due date — the end of the income year (i.e., usually by 30 June).

ATO issues notice of crypto assets data-matching program

The ATO has advised that it will acquire account identification and transaction data from crypto designated service providers for the 2024 to 2026 income years.
This data will include the following:

client identification details (names, addresses, dates of birth, phone numbers, social media accounts and email addresses); and
transaction details (bank account details, wallet addresses, transaction dates, transaction times, transaction types, deposits, withdrawals, transaction quantities and coin types).

The ATO estimates that records relating to approximately 700,000 to 1,200,000 individuals and entities will be obtained each financial year.
The data will be acquired and matched to ATO systems to identify and treat clients who failed to report a disposal of crypto assets in their income tax return.

Is your SMSF ready for the new financial year?

Key reminders and considerations for SMSF’s at the end of financial year are listed below:

Have you paid the minimum pension?
If you SMSF is in pension phase, ensure you have met the minimum pension requirements by 30 June 2024. If the minimum pension is not withdrawn before 30 June 2024, the fund may have to pay up to 15% tax on income generated from pension assets.

The minimum pension is calculated by multiplying your pension account balance as of 30 June 2023 by the percentage applicable based on your age as of 30 June 2023.

Under 65 4%
65-74 5%
75-79 6%
80-84 7%
85-89 9%
90-94 11%
Above 95 14%
Review your investment strategy
See above for optimising contributions
Check your deed is up to date. We recommend a deed update every 4 years to accommodate the changes in legislation and new rules.

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.

May 2024 - Update

Wed, 22 May 2024 12:29:00 GMT

Government warns of 'malicious' myGov scammers

The Government has urged Australians to be vigilant regarding scammers who target ATO log-in details to commit tax fraud.

The ATO has received a large number of reports of scammers using fake myGov sites to steal myGov sign-in details, which can be used to commit tax and refund fraud in other people's names.

These criminals will often use text message or email to lure people into clicking a link using phrases such as 'You are due to receive an ATO Direct refund' or 'You have a new message in your myGov inbox - click here to view'.

The Government says the ATO or myGov will never send an email or text message with a link to sign in to myGov.

Last year, the ATO introduced new fraud controls to help protect Australians from online identity theft. This included using myGovID to strengthen security during the sign-in processes on myGov accounts, making it more difficult for criminals to gain access.

What to know about disaster relief payments

Taxpayers should be aware that some natural disaster relief payments are not taxable.

Businesses that have received a government support payment because of a natural disaster should check if they need to include this as assessable income in their tax return before they lodge.

Provided that they meet the criteria, taxpayers can treat some support payments as 'non-assessable, non-exempt income', which means they do not need to include them in their tax return.

Taxpayers can refer to the ATO's website or check with us for more information in this regard, including in relation to the criteria that needs to be satisfied.

Illegal early access to super

Faced with tough times, some people may be thinking about accessing their super early.

Taxpayers may have been approached by someone claiming that members of super funds can withdraw their super or use an SMSF to pay off debts, buy a car, or pay for a holiday.

The ATO warns taxpayers that this is illegal. Super funds should remind members that super is for retirement. Members need to meet very strict conditions to access their super early, and acccessing their super outside of these strict conditions is illegal.

Illegal early access to super can have a significant impact on members' retirement savings, result in additional tax, penalties and interest, and lead to members being disqualified from ever being able to be an SMSF trustee again. When a trustee is disqualified, their name is published and this can affect their personal and professional reputation.

If a promoter gets a member to provide them with enough personal information, they may also steal their identity and use it to access their super for themselves.

NFPs need to get ready for new return

From 1 July 2024, non-charitable not-for-profits with an active Australian Business Number will be required to lodge a new annual NFP self-review return with the ATO to confirm their income tax exemption status.

This will include sporting, community and cultural clubs, among other organisations.

Non-charitable NFPs that have an active ABN can get ready now by:

conducting an early review of their eligibility by using the 'ATO's guide' on the ATO's website;
checking all their details are up to date, including authorised associates, contacts and their addresses;
reviewing their purpose and governing documents to understand the type of NFP they are; and
setting up myGovID and linking it to the organisation's ABN using 'Relationship Authorisation Manager'.

When it comes time to lodge, NFPs can use Online services for business which lets organisations manage their reporting at a time that is convenient for them. If an NFP has engaged a registered tax agent, their agent can also lodge on their behalf through Online services for agents.

The first return is for the 2023/24 tax year and NFPs will need to prepare and submit their annual self-review between July and October 2024.

As an interim arrangement for the 2023/24 transitional year, eligible NFPs unable to lodge online will be able to submit their NFP self-review return using an interactive voice response phone service.

Taxpayer unsuccessful in having excess contributions reallocated

The Administrative Appeals Tribunal recently held that a taxpayer was liable to pay excess concessional contributions tax in relation to contributions made on his behalf by his employer.

In the 2021 income year, the taxpayer's employer made concessional super contributions to his super fund totalling $31,737, which resulted in the taxpayer exceeding his concessional contributions cap for the 2021 year by $6,737.

The AAT upheld the ATO's decision not to exercise its discretion to reallocate the excess contributions to another year, on the basis that there were no 'special circumstances' under the relevant legislation that would allow the ATO to do so.

The AAT noted that "The difficulty for the (taxpayer) is that he accepts that there was never any certainty around when his employer would pay contributions into his super fund and that there was no written agreement or even a verbal agreement that set out the timing of the payments into his super fund. As such it was not unusual for his employer to pay the (taxpayer's) concessional contributions into his super fund at differing times."

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.

2024/25 Budget Update

Fri, 17 May 2024 12:18:11 GMT

Stage 3 personal tax cuts

The Government has revised stage three personal tax cuts that were announced previously.

The following tables outline the marginal income tax rates and thresholds that apply for resident and foreign resident individuals from 1 July 2024.

Australian resident individual income tax rates
Income threshold Tax Rate

$ 0 - $ 18,000 0%

$ 18,001 - $ 45,000 16%

$ 45,001 - $ 135,000 30%

$ 135,001 - $ 190,000 37%

$ 190,000 > 45%

Foreign resident individual income tax rates

Income threshold Tax Rate

$ 0 - $ 135,000 30%

$ 135,001 - $ 190,000 27%

$ 190,000 > 45%

The Medicare levy low income thresholds were increased as of 1 July 2023. The Medicare Levy low income thresholds are:

No Medicare levy payable below Reduced Medicare levy payable between Full Medicare levy payable above

Individuals $ 26,000 $ 26,001 - $ 32,500 $ 32,501

Individuals eligible for
SAPTO $ 41,089 $ 41,090 - $ 51,361 $ 51,362

Families eligible for

SAPTO $ 57,198 $ 57,199 - $ 71,497 $ 71,498

Families not eligible for

SAPTO without Children $ 43,846 $ 43,847 - $ 54,807 $ 54,808

Increase to instant asset write off

Small businesses with an aggregated annual turnover of less than $10 million will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use by 30 June 2025.

From 1 July 2025 the instant asset write-off threshold will revert back to $1,000.

Energy Bill Relief

All households will be provided with a $ 300 energy bill rebate and small businesses will receive a $ 325 energy bill rebate.

Superannuation on paid parental leave

The government will pay superannuation on Commonwealth government-funded Paid Parental Leave for births and adoptions on or after 1 July 2025. Eligible parents will receive the Superannuation Guarantee - 12% of Paid Parental Leave payments as a superannuation contribution.

Tertiary education system reforms

The Government will provide funding:

to limit the indexation of the Higher Education Loan Program debt to the lower of either the Consumer Price Index or the Wage Price Index, effective from 1 June 2023
to establish a new ‘Commonwealth Prac Payment’ of $319.50 per week from 1 July 2025 for tertiary students undertaking supervised mandatory placements as part of their nursing and midwifery teaching or social work studies.

The above is subject to passage of legislation.

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.

April 2024 - Update

Thu, 11 Apr 2024 03:31:59 GMT

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.

March 2024 - Update

Wed, 06 Mar 2024 10:11:57 GMT

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.

February 2024 - Update

Tue, 06 Feb 2024 11:49:50 GMT

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.

December 2023 - Update

Fri, 15 Dec 2023 03:44:28 GMT

ATO's lodgment penalty amnesty is about to end

The ATO is remitting failure to lodge penalties for eligible small businesses. Businesses which have not yet taken advantage of the ATO's lodgment penalty amnesty only have until 31 December 2023 to do so.

Businesses must meet the following criteria in order to be eligible for the amnesty:

had an annual turnover under $10 million when the original lodgment was due;
have overdue income tax returns, business activity statements or FBT returns that were due between 1 December 2019 and 28 February 2022; and
lodge between 1 June and 31 December 2023.

Directors who bring their company lodgments up to date can also have penalties remitted and, if they are reliant on company lodgments to finalise their own tax affairs, any failure to lodge penalties will be remitted. This also applies to eligible lodgments made between 1 June and 31 December 2023.

The amnesty does not apply to privately owned groups or individuals controlling over $5 million of net wealth.

When taxpayers lodge their eligible income tax returns, business activity statements and FBT returns, failure to lodge penalties will be remitted without the need to apply.

Notice of officeholder data-matching program

The ATO will acquire officeholder data from ASIC, the Office of the Registrar of Indigenous Corporations and the Australian Charities and Not-for-profits Commission for the 2024 and 2025 income years, including details such as:

their name, address and date of birth;
email address and contact phone number;
organisation class, type and status, and state of incorporation; and
officeholder type, role type, and officeholder role start and end dates.

The ATO estimates that records relating to approximately 11 million individuals will be obtained.

This program aims to (among other things) enable the Australian Business Registry Services to increase uptake of the director ID, and better utilise registry data to combat unlawful activity.

ATO warning regarding prohibited SMSF loans

If a trustee has made a prohibited loan from their SMSF, the loan must be repaid as soon as possible.

If the SMSF's in-house assets exceed 5% of the total value of its assets at the end of the financial year, the trustee must prepare a plan to reduce their in-house assets to less than 5%, which must be implemented by the end of the following financial year.

SMSF trustees also cannot loan money to a related party, such as a business, where the value of the loan exceeds 5% of the value of the fund's total assets, as this is a prohibited 'in-house asset' investment.

SMSF trustees should remember that they cannot loan money or provide other forms of financial assistance to a member or relative, and if they do, they can incur a penalty of up to $18,780. They may also be disqualified as a trustee.

Loans to members continue to be the highest reported contravention of the superannuation laws that the ATO sees in auditor contravention reports.

Two further boosts

Although the Technology Investment Boost has ended on 30 June 2023, there are two further boosts available for small businesses, and both apply to eligible expenditure incurred up until 30 June 2024.

The Skills and Training Boost provides small or medium businesses with a bonus 20% deduction for eligible expenditure incurred on external training for employees, to support such businesses to train and upskill their employees.

This boost applies to eligible expenditure incurred from 29 March 2022 until 30 June 2024.

The Small Business Energy Incentive Boost is designed to support small business electrification and more efficient energy use, and will apply to eligible expenditure incurred between 1 July 2023 and 30 June 2024.

This boost provides small or medium businesses with a bonus 20% deduction for the cost of:

eligible depreciating assets; and/or
eligible improvements incurred in relation to existing depreciating assets, that support electrification or energy efficiency.

To be eligible for either of the above 'boosts', a business taxpayer must satisfy a number of conditions.

Claiming deductions in relation to a holiday home

Taxpayers can only claim deductions for holiday home expenses to the extent they are incurred for the purpose of gaining or producing rental income.

They need to consider the following in determining whether the deductions they wish to claim are valid rental deductions:

How many days during the income year did they use or block out the property for their own use? Taxpayers cannot claim deductions for the periods the property was used or blocked out by them.
How and where did they advertise the property for rent, and is the rent in line with market values? If they only used obscure means of advertising, or put unreasonable restrictions or conditions in the advertisement, they may not be entitled to claim deductions.
Will any restrictions, or the general condition of the property, reduce interest from potential holiday makers? If their property is not in a tenantable condition, they may not be entitled to claim deductions.
Has the taxpayer or their family or friends used the property? Taxpayers cannot claim for periods of private use or when the property is kept vacant for personal reasons.
Is any part of the property off limits to tenants? When taxpayers claim deductions, they should ensure they calculate and apportion deductions in relation to the part of the property that is available for rent.

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.

November 2023 - Update

Sat, 18 Nov 2023 11:34:33 GMT

Tax issues for businesses that have received a support payment

Taxpayers who have received a government support grant or payment recently to help their business recover from COVID-19 or a natural disaster should check if they need to include the payment in their assessable income.

Grants are generally treated as assessable income, and taxpayers may be able to claim deductions if they use these payments to:

purchase replacement trading stock or new assets;
repair their business premises and fit out; or
pay for other business expenses.

However, some grants are declared non-assessable, non-exempt ('NANE') income. This means taxpayers don't need to include them in their tax return if they meet certain eligibility requirements.

NANE grants include but are not limited to:

COVID-19 business support payments;
natural disaster grants; and
water infrastructure payments.

Taxpayers can only claim deductions for expenses associated with NANE grants if they relate directly to earning their assessable income, including wages, dividends, interest and rent.

Paying super benefits

Generally, before SMSF trustees pay a member's super benefits, they need to ensure that:

the member has reached their preservation age;
the member has met one of the conditions of release; and
the governing rules of the fund (e.g., the trust deed) allow it.

Benefit payments to members who have not met a condition of release are not treated as super benefits. Instead, they will be taxed as ordinary income at the member's marginal tax rate.

If a benefit is unlawfully released, the ATO may apply significant penalties to:

the SMSF trustee;
the SMSF; and
the recipient of the early release.

The ATO may also disqualify the trustee(s) involved.

Investment restrictions and other rules that apply to SMSFs in the accumulation phase continue to apply when members begin receiving a pension from the SMSF.

Where a member has met a condition of release, the trustee can either pay the benefit as a lump sum or super income stream (i.e., a pension). If a member has died, the trustee will generally pay a death benefit to a dependant or other beneficiary of the deceased, subject to the applicable rules.

Notice of visa data-matching program

The ATO will acquire visa data from the Department of Home Affairs for the 2024 to 2026 income years, including the following:

address history and contact history for visa applicants, sponsors, and migration agents;
active visas meeting the relevant criteria, and all visa grants;
visa grant status by point in time;
migration agents who assisted the processing of the visa;
all international travel movements undertaken by visa holders; and
sponsor details, and visa subclass name.

The ATO estimates that records relating to approximately nine million individuals will be obtained each financial year.

The objectives of this program are to (among other things) help ensure that individuals and businesses are fulfilling their tax and super reporting obligations, and identify potentially new or emergent approaches to fraud and those entities controlling or exploiting the visa framework.

Be cyber wise, don't compromise

Throughout the 2022 income year, one cybercrime was reported every seven minutes. The ATO encourages taxpayers to implement the following four quick steps to protect themselves.

Step 1: Install updates for your devices and software
Regular updates ensure taxpayers have the latest security in place which can help prevent cyber criminals from hacking their devices. They should also make sure they are downloading authorised and legitimate programs.

Step 2: Implement multi-factor authentication
Multi-factor authentication ('MFA') is a security measure that requires at least two proofs of identity to grant access. Businesses as well as individuals should implement MFA wherever possible. MFA options can include a physical token, authenticator app, email or SMS.

Step 3: Regularly back up your files
Backing up copies of files to an external device or the 'cloud' means taxpayers can restore their files if something goes wrong.
It is a precautionary measure that can help avoid costly data recovery.

Step 4: Change your passwords to passphrases
By using passphrases, taxpayers can boost the security of their accounts and make it harder for cyber criminals to access their information.

Passphrases use four or more random words and can include symbols, capitals and numbers. A password manager can help generate or store passphrases.

Losses in crypto investments for SMSFs

Over the last few income years, the ATO has seen some instances of SMSF trustees losing their crypto asset investments.
These losses have been caused by:

crypto scams, where trustees were conned into investing their superannuation benefits in a fake crypto exchange;
theft, where fraudsters would hack into trustees' crypto accounts and steal all their crypto;
collapsed crypto trading platforms, many of which were based overseas; and
lost passwords, resulting in trustees being locked out of their crypto account and being unable to access their crypto.

Trustees thinking of investing in crypto need to be aware of the ways that crypto can be lost, including through scams, and how these scams can be avoided.

Many crypto assets are not commonly considered to be financial products, which means the platform where crypto is bought and sold may not be regulated by ASIC.

Therefore, trustees may not be protected if the platform fails or is hacked. When a crypto platform fails they will most likely lose all of their crypto.

Investing in crypto can be complex and risky, and so the ATO recommends that trustees seek financial advice before investing.

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.

October 2023 - Update

Thu, 12 Oct 2023 11:43:34 GMT

Reporting rentals correctly

When preparing tax returns, taxpayers should make sure all rental income is included, including income from short-term rental arrangements, renting part of a home, and other rental-related income.

Rental income must be reported in the year the tenant pays, rather than when the taxpayer’s agent transfers it to them, and it must be reported as the gross amount received (i.e., before the property managers fees and other expenses they pay on the taxpayer’s behalf are taken out).

There are three categories of rental expenses, as follows:

Expenses where taxpayers cannot claim deductions – e.g., expenses arising from a taxpayer’s personal use of their property and capital expenses;
Expenses where taxpayers can claim an immediate deduction in the income year they incur the expense – e.g., interest on loans, council rates, general repairs and maintenance, and depreciating assets costing $300 or less; and
Expenses where taxpayers can claim deductions over a number of income years – e.g., 'capital works' deductions and borrowing expenses incurred when setting up a loan.

The ATO is particularly focused on interest expenses and ensuring rental property owners understand how to correctly apportion loan interest expenses where part of the loan was used for private purposes, or the loan was re-financed for some private purpose.

Taxpayers should ensure they have the records to demonstrate they incurred expenses for their rental property and the extent to which the expenses relate to producing rental income.

Choosing the right PAYG instalment method

Pay as you go (‘PAYG’) instalments are calculated using either the instalment amount method or the instalment rate method.
Following two case studies illustrate the two methods:

Case study 1: Kelly the DJ

Kelly is a DJ, working at festivals from November to January. She chooses to use the instalment rate method, as it suits her seasonal business income.

Using this method means she needs to work out her business income each period.

It helps her manage cash flow because the amounts she pays will vary in line with her income.

When Kelly receives her BAS or instalment notice, she calculates the instalment based on her income for that period, multiplied by the rate provided.

Case study 2: David the plumber

David is a plumber with regular monthly business income, so he chooses the instalment amountmethod. He won’t need to work out his business income each period to use this method. David pays the instalment shown on his BAS. The amount is calculated from information in his last tax return.

If Kelly or David think the instalments they pay will add up to be more or less than their tax liability for the year, they can vary their instalments.

Remember the unused concessional contributions cap concession

As from 1 July 2018, individuals with a total superannuation balance of less than $500,000 as at 30 June of the previous income year may be entitled to contribute more than the general concessional contributions cap (i.e., and make additional concessional contributions to utilise any unused cap amounts).

For example, an individual who did not make any concessional contributions in the 2019 income year (and whose total superannuation balance was less than $500,000) would have been able to make up to $50,000 of concessional contributions in the 2020 income year.

Unused concessional contributions are available on a rolling basis and can be carried forward for up to five years, after which they will expire. The 2024 income year is the first year in which unused caps from all five previous years are potentially available to carry forward.

Please contact our office if you require assistance in relation to the above measure.

Deduction for contributions denied due to issues in notice of intent to claim a deduction

The Administrative Appeals Tribunal (‘AAT’) recently held that a claim for a deduction for personal super contributions should not be allowed, as the relevant 'notice requirements' were not satisfied.

In order to claim a deduction for personal super contributions, an individual must both notify the super fund of their intention to claim a deduction, and receive an acknowledgment from the fund that it received the notice.

During the 2021 income year, the taxpayer made a number of personal superannuation contributions to his super fund totalling $6,550, with the last of those contributions made on 30 June 2021.

Sometime before 9 June 2021, the taxpayer submitted to his fund a notice advising the fund that he intended to claim a personal contribution deduction for $6,550 for the 2021 income year.

However, on 9 June 2021, the fund advised that it was unable to accept the notice because the fund's records indicated that the amount of contributions listed in the notice was different to the amount of contributions received. This was because the fund received the notice before the taxpayer made his final contribution of $550 on 30 June 2021.

Sometime between 9 June 2021 and 16 July 2021 the taxpayer resubmitted a notice to the fund via post that he intended to claim a deduction for the amended amount of $6,000 (although the fund subsequently advised that it had not received this notice).

On 14 July 2021, the taxpayer lodged his 2021 income tax return, claiming a deduction for $6,000 of personal contributions.

On 22 August 2021, the ATO notified the taxpayer that his claim for a personal contribution deduction had been disallowed, on the basis that the fund had not reported an acknowledged notice that matched his claimed deduction.

The AAT held that, when the taxpayer completed the first notice, he had not made personal contributions of $6,550 (as referred to in the notice), but rather had made contributions of $6,000.
Therefore, the first notice could not be valid as it was not in respect of the contributions that the taxpayer had made.

The AAT also noted that the fund did not provide an acknowledgment of the taxpayer's second notice, as it had not received it.

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.

September 2023 - Update

Tue, 05 Sep 2023 13:46:22 GMT

SMSF Audits

An SMSF’s audit must be finalised before the trustees lodge their SMSF annual return, as the trustees will need some information from the audit report to complete the annual return.

An SMSF’s auditor is to perform a financial and compliance audit of the SMSF’s operations before lodging.

An audit is required even if no contributions or payments are made in the financial year.

An approved SMSF auditor must be independent, which means that an auditor should not audit a fund where they hold any financial interest in the fund, or have a close personal or business relationship with members or trustees.

If a fund doesn’t meet the rules for operating an SMSF, the auditor may be required to report any contraventions to the ATO.

ATO gives 'green light' to lodge

The ATO is giving taxpayers with simple affairs the ‘green light’ to lodge their annual income tax returns.

ATO Assistant Commissioner Tim Loh said that most taxpayers with simple affairs will find the information they need to lodge has now been pre-filled in their tax return.

Mr Loh also reminded taxpayers that some income may need to be manually added – for example, income from rental properties, some government payments or income from ‘side hustles’.

As taxpayers prepare to lodge, they should keep ‘Tim’s tax time tips’ in mind:

Include all income: If a taxpayer picked up some extra work, e.g., through online activities, the sharing economy, interest from investments, etc, they will need to include this in their tax return;
Assess circumstances that occurred this year: If a taxpayer’s job or circumstances have changed this year, it is important they reflect this in their claims;
Records, records, records: To claim a deduction for a work-related expense, taxpayers must have a record to prove it.
Wait for notice of assessment: Taxpayers should wait for their notice of assessment before making plans for how they will use any expected tax refund this year;
Stay alert to scams: The ATO would never send taxpayers a link to log into the ATO’s online services or ask them to send personal information via social media, email or SMS.

The ATO advises that, when taxpayers lodge their own return, the due date for payment is 21 November, regardless of when they lodge, but If they use a registered agent, their due date can be much later.

Different meanings of 'dependant' for superannuation and tax purposes

On a person’s death, their superannuation benefits can only be paid directly to one or more ‘dependants’ as defined for superannuation purposes, unless they are paid to the deceased’s legal personal representative to be distributed in accordance with the deceased’s Will.

Super death benefits can be tax-free to the extent that they are paid (either directly or indirectly) to persons who are ‘dependants’ for tax purposes.

However, the meaning of ‘dependant’ differs slightly for superannuation and tax purposes. For superannuation purposes, a ‘dependant’ of the deceased comprises:

their spouse (including de facto spouse);
their child (of any age);
a person in an ‘interdependency relationship’ as defined with the deceased; and
a person who was financially dependent on the deceased.

However, for tax purposes, a ‘dependant’ (or ‘death benefits dependant’) of the deceased includes their spouse or former spouse (including de facto spouse) and only children under the age of 18.

Therefore, super death benefits generally cannot be paid directly to a former spouse, as they are not a dependant for super purposes.

Also, while a child of any age is a dependant for super purposes, only children under the age of 18 are dependants for tax purposes. This means that, while a child of any age may receive super death benefits directly, those benefits will generally only be tax-free if the child is under 18.

If you are thinking about estate planning with your superannuation, please contact our office.

NALI provisions did not apply to loan structure

The Administrative Appeals Tribunal (‘AAT’) has held that interest income derived by a self-managed superannuation fund (‘SMSF’) as the sole beneficiary of a unit trust was not non-arm’s length income (‘NALI’), and so this income could still be treated as exempt current pension income.

During the 2015, 2016 and 2017 financial years, the unit trust lent money through two related entities to independent third parties who undertook development activities, through a series of loan arrangements.

The interest income derived by the unit trust through these loan arrangements was distributed to the SMSF as sole unitholder and was treated as exempt current pension income.

Following an audit, the ATO determined that the income was NALI, and therefore should not have been included as exempt current pension income.

The ATO then issued amended assessments for the relevant financial years, along with penalties.

While the AAT found that the parties were not dealing with each other at arm’s length, it also concluded that the income that the unit trust derived was not more than the amount it might have been expected to derive if the parties had been dealing at arm’s length.

Accordingly, the relevant interest income received by the SMSF was not NALI, and so the taxpayer’s objections to the amended tax assessments and penalties were allowed.

Luxury car tax: determining a vehicle's principal purpose

The ATO recently explained how to determine the principal purpose of a car for ‘luxury car tax’ (‘LCT’) purposes (since LCT is not payable on the supply or importation of cars whose principal purpose is the carriage of goods rather than passengers).

Broadly, a luxury car (i.e., a car subject to LCT) is a car whose LCT value exceeds the LCT threshold. However, a commercial vehicle that is not designed for the principal purpose of carrying passengers is specifically excluded as a luxury car.

The ATO’s new determination sets out various factors to be considered in determining the principal purpose of a car, as well as factors to consider when assessing a car’s modifications.

The determination states that commercial vehicles are unlikely to have the body types of station wagons, off-road passenger wagons, passenger sedans, people movers or sports utility vehicles, and the supply of these vehicles for an amount above the LCT threshold without LCT being paid may well attract the ATO’s scrutiny.

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.

August 2023 - Update

Thu, 17 Aug 2023 12:54:19 GMT

Taxable Payment Annual Reports

If you are in any of the following industries, and made payments to contractors you need to lodge a Taxable payments annual report (‘TPAR’) for payments made to contractors.

Building and construction;
Cleaning;
Courier and road freight;
Information technology; and
Security, investigation or surveillance.

TPARs are due on 28 August each year and penalties may apply if they are not lodged on time. Taxpayers that do not need to lodge a TPAR this year can submit a TPAR non-lodgment advice form to let the ATO know and avoid unnecessary follow-up.

Changes to deductions this tax time

Taxpayers who are small business owners operating from home, or who use a vehicle for business purposes, need to be aware of some changes when claiming deductions this tax time, including the following.

Cents-per-kilometre method – The cents-per-kilometre method for claiming car expenses increased from 72 cents to 78 cents per kilometre in the 2023 income year. For taxpayers using this method, the 78 cents per kilometre rate covers all their vehicle running expenses, including registration, fuel, servicing, insurance, and depreciation. Taxpayers using this method cannot claim these costs separately.

Car limit for business owners – The car limit has also increased to $64,741 for the 2023 income year. The car limit is the maximum value taxpayers can use to work out the depreciation of passenger vehicles (excluding motorcycles or similar vehicles) designed to carry a load of less than one tonne and fewer than nine passengers.

Work from home business expenses – For the 2023 income year, the 'fixed rate method' (for taxpayers operating their business from home) increased from 52 cents to 67 cents per hour worked from home, and taxpayers are no longer required to have a dedicated home office space.

The fixed rate method covers electricity, gas, stationery, computer consumables, internet, and phone usage.

Taxpayers can also claim separate deductions for expenses not included in the hourly rate, such as the decline in value of depreciating assets, e.g., laptops or office furniture.

Claiming GST credits for employee expense reimbursements

Employers may be entitled to claim GST input tax credits for payments they have made to reimburse employees for expenses that are directly related to their business activities.

A 'reimbursement' is provided when a taxpayer pays their employee the amount, or part of the amount, of a particular work-related purchase they make.

Employers are not entitled to a GST input tax credit if they pay their employee an allowance, or make a payment based on a notional expense, such as a cents-per-kilometre payment, travel or meal allowance.

An 'allowance' is provided when a taxpayer pays their employee an amount for an estimated expense without requiring them to repay any excess.

Taxpayers are expected to hold sufficient evidence to substantiate their claim, such as a tax invoice for the purchase that is being reimbursed.

Downsizer contribution measure eligibility has been extended

The downsizer contribution concession was introduced to allow older Australians selling an eligible dwelling to make additional contributions into their superannuation fund.

Broadly, the downsizer contribution concession allows eligible individuals to make non-deductible contributions of up to $300,000 (or up to $600,000 per couple) from the sale of an eligible dwelling that was used as their main residence.

The downsizer contribution concession is an attractive option for eligible individuals to boost their superannuation entitlements, as it is not counted towards an individual's standard contribution caps.

Also, the total superannuation balance restriction does not apply in respect of a downsizer contribution (so an eligible individual can make a downsizer contribution into their super fund, regardless of their total superannuation balance), and it is not included in the assessable income of the receiving fund.

However, there are various eligibility requirements that need to be satisfied in order for a downsizer contribution to be made, and professional advice should be sought in this regard as required.

Importantly, as from 1 January 2023, the Government has broadened access to the downsizer contribution concession by reducing the minimum age requirement for accessing this concession from age 60 to age 55. This means that individuals aged 55 to 59 years who were not previously eligible to make downsizer contributions due to their age are now eligible to make downsizer contributions if they satisfy all the eligibility requirements.

Reallocation of excess concessional contributions denied

The Administrative Appeals Tribunal (‘AAT’) has held that there were no special circumstances in relation to a taxpayer who made excess concessional contributions in a financial year, such that the ATO could allocate some of those contributions to the previous financial year.

On Wednesday, 26 June 2019, the taxpayer arranged for contributions totalling just under $25,000 to be made to his superannuation fund, via a direct debit from his bank account to a clearing house used by his fund.

However, the relevant contribution was received by the superannuation fund on Monday 1 July 2019. The taxpayer then made further contributions totalling just under $25,000 to his superannuation fund on 5 August 2019, which meant that he had made excess concessional contributions for the 2020 financial year.

The AAT confirmed the ATO’s decision that the circumstances did not justify some or all of the contributions made by the taxpayer on 26 June 2019 being reallocated to the 2019 financial year. That is, there were no ‘special circumstances’ (as required by the relevant legislation) that would justify the exercise of the ATO’s discretion to allocate the contributions to the previous financial year.

While the AAT accepted that the taxpayer genuinely intended that his contribution would be received by his superannuation fund by 30 June 2019, he should not have waited until 26 June 2019 to make the contribution, as “there was nothing unusual about the time taken to process the ... payment made on 26 June 2019.”

Also, in relation to various events and actions of other parties that the taxpayer submitted constituted ‘special circumstances’, the AAT noted that “an error on the part of a third party will not on its own amount to special circumstances.”

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.

What is Negative Gearing?

Tue, 18 Jul 2023 12:01:51 GMT

If you are planning to become a property investor, it is important to understand what negative gearing is and how it affects your tax.

An investment property is negatively geared when your rental income is less than the rental expenses. Your rental expenses will include expenditure such as mortgage interest, council rates, water rates, land taxes, management fees, repairs, depreciation etc. Not all rental deductions have to be cash outgoings and not all cash outgoings are rental deductions. For example:

- While your mortgage repayments may include principal and interest, you can only claim a deduction for interest.

- While repairs done to the property are tax deductible capital improvements will need to be claimed over the life of the asset.

- Depreciation (particularly on newly constructed dwellings) may have significant tax savings, while they are not cash outgoings.

The key benefit of negative gearing is that the net rental loss can be deducted from your income earned from other sources such as salary, interest, dividends, business income etc. This will result in a reduction of taxable income and the amount of tax you need to pay.

The tax savings are based on your taxable income and the marginal tax rates are listed below.

1 July 2023 – 30 June 2024

Taxable income Tax on this income

0 – $18,200 Nil

$18,201 – $45,000 19c for each $1 over $18,200

$45,001 – $120,000 $5,092 plus 32.5c for each $1 over $45,000

$120,001 – $180,000 $29,467 plus 37c for each $1 over $120,000

$180,001 and over $51,667 plus 45c for each $1 over $180,000

The above rates do not include the Medicare levy of 2%.

Let’s look at an example of a negatively geared property in Australia.

John’s taxable income for 2024 financial year is $ 90,000. John has recently purchased an investment property that earns $ 30,000 of rental income per annum, and he has incurred the following expenses during the year.

Management Fees $ 1,500

Council Rates $ 2,000

Water Rates $ 1,000

Repairs $ 500

Mortgage Interest $ 35,000

Depreciation $ 8,000

Insurance $ 500

In this example, John’s investment property has resulted in a net loss of $ 18,500 which can be deducted from his taxable income for tax purposes. As John’s marginal tax rate is 32.5% + 2% (Medicare levy), John’s net tax saving will be $ 6,382.50.

It is important to note that the tax laws are complex and the information provided in this document is only general. This document does not take into account your personal financial situation, your objectives or needs. It is also important to note that this information is based on current taxation laws which may be subject to change in the future. You must always seek independent professional tax advice before making any decisions based on this information.

Crawford Accountants are a registered tax agent and would be available to assist you with your taxation requirements and explain how this information applies to your individual circumstances.

Please contact our office or book a meeting via our website for more information and further assistance.

CRAWFORD ACCOUNTANTS

Level 1, 88 Charles Street Kew VIC 3101

03 9853 1000

admin@crawfordaccountants.com.au

www.crawfordaccountants.com.au

July 2023 - Welcome to the New Financial Year

Tue, 04 Jul 2023 06:08:34 GMT

Welcome to the start of the new financial year, we sincerely thank you for your support and for partnering with us over the past 12 months.

Our team is up to date with the changes to tax rules this year, so it’s time to start thinking about completing your 2023 tax returns. If you have not yet organised your tax appointment, please get in touch with us asap.

We conduct appointments at the office, via Zoom or Phone.

03 9853 1000
Level 1, 86-88 Charles Street Kew VIC 3101
admin@crawfordaccountants.com.au
www.crawfordaccountants.com.au

Are you Audit Safe?

The possibility of being selected for an audit or investigation is increasing each year as the Australian Taxation Office (ATO) and other government agencies widen the scope of their investigation activities utilising data collection/detection capacity, data matching and benchmarking/risk profiling. Even if you can substantiate your claim for an allowable deduction, if queried you must still go through the audit process.

To alleviate the cost and stress we have offered you to take out our audit protection and you should have received an offer letter from us two weeks ago. It is a cheap and efficient way of dealing with an ATO audit. For more information, please contact our office.

Tax Deductions

Tax deductions will help you minimise your tax, but there are three golden rules for tax deductions:

Expenses must be related to business/ work and not private. If a portion of the expense if private, the deduction must be apportioned.
You must have records to prove the deduction such as receipts
The expense must not be reimbursed

There are significant changes to how home office expenses are calculated this year.

You may also be eligible to claim the business/ work related use of PPE related to COVID 19 safety.

Small business entities will be able to take advantage of full expensing for assets delivered/ installed before 30 June 2023.

The super guarantee rate is increasing

Businesses that have employees, or hire eligible contractors, will need to ensure that their payroll and accounting systems are updated to reflect the new super guarantee rate of 11% for payments of salary and wages that are made from 1 July 2023.

Businesses need to calculate super contributions at 11% for their eligible workers for payments of salary and wages they make from this date.

Super contributions for the quarter ending 30 June (due by 28 July 2023) are still calculated at the 10.5% rate for payments of salary and wages made prior to 1 July.

Minimum annual payments for super income streams

An SMSF must pay a minimum amount each year to a member who is receiving a pension that commenced on or after 20 September 2007. If the minimum payment is not made by 30 June, this can result in adverse taxation consequences for the member.

In response to COVID-19, the government temporarily reduced superannuation minimum drawdown requirements for account-based pensions and similar products by 50% for the 2020, 2021, 2022 and 2023 financial years.

However, the 50% reduction in the minimum pension drawdown rate will not apply from 1 July 2023 onwards.

Know your private company loan arrangements before you lodge

If a tax payer or an associate take a loan from their private company, they should not forget the requirements of repaying a private company loan for income tax purposes. Otherwise, they could find the loan treated as a Division 7A deemed dividend and included in their, or their associates', assessable income.

Taxpayers should consider the following in particular before lodging their private company tax return:

Ensure their loan is a Division 7A complying loan and make minimum yearly repayments; and
They can’t borrow further money or assets from the same company, directly or indirectly, to make minimum yearly repayments or repay the loan – if they do, these payments may not be taken into account and could result in an assessable deemed dividend.

Please contact our office if you require assistance in relation to your loan arrangements.

Proportional indexation of transfer balance caps from 1 July 2023

On 1 July 2023, the general transfer balance cap will be indexed. Individuals will have a personal transfer balance cap between $1.6 and $1.9 million, based on the highest ever balance of their transfer balance account between 1 July 2017 and 30 June 2023.

While indexation will occur on 1 July 2023, the ATO won't be displaying member’s updated personal transfer balance caps until 11 July 2023.

The ATO encourages all SMSFs to report any events that occurred prior to 1 July 2023 by 30 June 2023, to ensure member’s personal transfer balance cap calculations are based on correct and up to date information.

From 11 July, both members will be able to view the member’s personal transfer balance cap on the ATO’s website.
After 11 July 2023, a member's personal transfer balance cap will be recalculated if the ATO receives reporting of events effective prior to 1 July 2023.

Individuals can continue to report transfer balance cap information to the ATO between 1 July 2023 and 11 July 2023, however these will not be processed until after this period.

This means the ATO won't be able to issue or revoke excess transfer balance determinations it has sent to a member, or commutation authorities it has sent to a fund.

Processing of any reported events will continue as normal after 11 July 2023.

Masters course fees not deductible as self-education expenses

The Administrative Appeals Tribunal has held that tuition fees for a public policy Masters course were not deductible, on the basis that the course did not relate to the taxpayer's work as a music teacher.

The taxpayer was a qualified teacher who specialised in teaching music. He had commenced a Masters Course at the University of Melbourne (the Masters course), and subsequently claimed a deduction for work-related education expenses in relation to the subject tuition fees. The taxpayer submitted that the Masters course would expand the breadth of subjects he could teach and therefore help him secure management positions.

However, the ATO disallowed the deduction as it was not satisfied that a real and direct connection existed between the study and the taxpayer's work.

The AAT confirmed the ATO’s decision that the fees were not deductible as self-education expenses, as the tuition fees were not incurred in gaining or producing the taxpayer's assessable income. The subjects undertaken by the taxpayer in the 2021 year, for which he was seeking to claim a deduction, "did not maintain or improve his skills or knowledge as either a music teacher or relief teacher".

The AAT also noted that, in incurring the claimed self-education expenses, the taxpayer’s intention “of being able to expand his ability to teach in subjects outside of music and to gain leadership positions relate to new employment or new income-earning activities and as such is not sufficient basis for those expenses to be deductible”.

STP Finalisation

If your business has employees, the Single Touch Payroll information for 2023 must be finalised by 14 July.

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.

Is your SMSF compliant and ready for 2024?

Thu, 22 Jun 2023 06:19:44 GMT

June is a good time to review your SMSF, complete year-end planning and get ready for the new financial year. Below are some important considerations.

Lodge Tax Returns on time

If you fail to lodge your SMSF tax returns on time, you risk the compliance status of your superfund.

Your fund status can be found on https://superfundlookup.gov.au/

If your fund status is “regulation details removed” you may have overdue tax returns and you risk failure to lodge penalties and your fund will not be able to receive contributions until the compliance status is updated.

Contribution Caps

It is important not to exceed contribution caps to avoid any additional charges and taxes. The contribution caps for 2023 are:

Concessional $ 27,500

Non-Concessional $ 110,000

If your total superannuation balance is less than $ 500,000 as of 30 June of the previous financial year, and you have not contributed the maximum concessional limits since 1 July 2018, you may be able to make catch up contributions before 30 June 2023. This is referred to as the “carry-forward rule” and is a fantastic opportunity to maximise your superannuation tax savings.

If you are under 75 and your total superannuation balance is less than 1.7 million as of 30 June 2022, you are able to bring forward your non concessions contribution caps from future years and contribute up to $ 330,000.

If you would like to find out your eligibility to make catch-up contributions, bring forward rule or would like to find out more, please contact our office.

Work-test

Work test required individuals to be gainfully employed for a minimum of 40 hours in a period of 30 consecutive days.

Since 1 July 2022, individuals below the age of 75 do not need to meet the work-test to make non-concessional super contributions.

Individuals between the ages of 67 -74 will still need to meet the work-test to be able to claim a tax deduction for a personal super contribution.

Low-income Superannuation Offset

Taxpayers with adjusted taxable income below $ 37,000 will be entitled to a 15% offset on concessional contributions to a maximum of $ 500. If eligible, this offset will be received by the superfund.

Government Co-contribution

Subject to eligibility, you may be able to receive a maximum government co-contribution of $ 500 for non-concessional contributions of $ 1,000. For non-concessional contributions less than $ 1,000, the co-contribution will be 50% of the non-concessional contribution.

Spouse Offset

If you make a $ 3,000 non-concessional superannuation contribution on behalf of your spouse, you may be entitled to a tax offset of $ 540. In order to be eligible, your spouse’s income should be below $ 37,000, total superannuation balance be less than 1.7 million (Transfer Balance Cap) and must not have exceeded the non-concessional contributions cap of $ 110,000.

Contributions Splitting

You may be eligible to split up to 85% of your concessional contributions with your spouse. This will be a valuable strategy if your total superannuation balance is closer to or above the transfer balance cap and your spouse has a lower superannuation balance.

Please contact our office to determine if you are eligible for contributions splitting.

Minimum pensions

If you are in pension phase, you need to withdraw your minimum pension before 30 June 2023. Failure to meet the minimum pension requirements may mean that your SMSF needs to pay 15% tax on pension assets.

Your minimum pension is calculated by multiplying your pension balance as of 30 June 2022 by the minimum pension rate listed below. Note the reduced rates introduced as part of COVID 19 relief will come to an end as of 30 June 2023.

Age - 1 July 2022 Minimum Percentage Reduced Percentage 2020 - 2023

Under 65 4% 2%

65-74 5% 2.5%

75-79 6% 3%

80-84 7% 3.5%

85-89 9% 4.5%

90-94 11% 5.5%

95 + 14% 7%

Investment Strategy

SIS Act requires all self-managed superannuation funds to have a current investment strategy. This document is a plan for purchasing, selling, holding assets within the SMSF in line with your retirement goals. This document must be reviewed regularly and updated if required.

Binding Death Nomination Forms

Your super is probably one of your most significant assets. Therefore it is important to consider what will happen to it after you are gone.

A binding death nomination is one way to make sure your super goes to the people you want to benefit when you pass away. You can replace or cancel your existing nomination at any time.

Please get in touch with our office if you would like to find out more about binding death nomination forms.

Disclaimer:

Laws and regulations related to superannuation and self-managed superannuation funds are complex and often requires professional advice. The information provided above are general in nature and limited to the current laws and regulations which may change in the future. This information does not take into account your personal circumstances and does not constitute financial or professional advice.

Please contact our office to discuss the applicability of above information to your personal circumstances.

June 2023 - Update

Thu, 08 Jun 2023 00:57:03 GMT

2023/24 Budget Update

On 9 May 2023, Treasurer Jim Chalmers handed down the 2023/24 Federal Budget.
Some of the measures announced by the Government, include:

from 1 July 2026, employers will be required to pay their employees’ superannuation at the same time as their salary and wages;
providing businesses with annual turnover of less than $50 million with an additional 20% deduction on spending that supports electrification and more efficient use of energy (the 'Small Business Energy Incentive'); and
increasing the capital works tax deduction depreciation rate for eligible new build-to-rent projects from 2.5% to 4% per year.

In addition to these, one of the most important aspects of this Budget was that the Government has provided some further depreciation relief for small businesses once temporary full expensing comes to an end on 30 June 2023.

Specifically, from 1 July 2023 until 30 June 2024, the Government will temporarily increase the instant asset write-off threshold for small businesses (with an aggregated annual turnover of less than $10 million) from $1,000 to $20,000. Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool.

Also, the provisions that prevent small businesses from re-entering the simplified depreciation regime for five years if they opt-out will continue to be suspended until 30 June 2024.

Other important measures the Government announced include:

amending (and limiting) the non-arm’s length income (‘NALI’) provisions which apply to expenditure incurred by superannuation funds;
reducing the tax concessions available to individuals with a total superannuation balance exceeding $3 million; and
exempting lump sum payments in arrears from the Medicare levy.

In the ATO's sights this Tax Time

The ATO has announced its three key focus areas for this Tax Time:

rental property deductions
work-related expenses
capital gains tax.

ATO Assistant Commissioner Tim Loh said the ATO is continuing to prioritise areas where they often see mistakes being made.

The ATO also recommends that any taxpayers feeling overwhelmed, or getting behind with their tax, should let the ATO know as early as possible or "have a chat with your registered tax agent so we can work with you to find a solution.

ATO advice regarding year-end trustee resolutions

The ATO has advised that, in the lead up to 30 June, trustee clients who wish to make beneficiaries presently entitled to trust income for the 2023 income year should ensure their trustee resolutions are effective.

This includes where trustees may want to make beneficiaries 'specifically entitled' to franked dividends and capital gains included in that income i.e., where trustees want to 'stream' those classes of income to certain beneficiaries.

It is important that trustees:

check their trust deed to ensure that the intended beneficiaries are within the class of persons entitled to trust income (or of trust capital, if they intend to stream a capital gain that is not income of their trust) and are not excluded from being beneficiaries
comply with any requirements in the trust deed that concern how to validly 'appoint' (or distribute) trust income to beneficiaries
recognise that, for tax law purposes, beneficiaries need to be made presently entitled to trust income by 30 June of the relevant year
are aware that, if they fail to do what is required in a trust deed, or fail to appoint income by 30 June, this may cause outcomes to arise that differ to what they intended. This could include other beneficiaries being assessed on the relevant share of the trust's net (taxable) income (or the trustee being assessed at the top rate of tax); and
ensure that resolutions are unambiguous.

'Side hustles' in the ATO's sights

‘Side hustles’ have really grown over the past few years — everything from the gig economy and drop shippers, to content creators and influencers.

The ATO recognises that it can be hard to know how to treat income when earning money from side hustles, especially when an individual has several, so the ATO has prepared some tips.

First, the individual needs to know if they are 'in business'. If so, they may need to think about registration and tax obligations. If they are not in business, but are looking to start one, they should know how to "set themselves up for success".

Also, if a side hustle means the individual is now a director of a company, they must make sure they apply for a director ID.

ATO ride sourcing data-matching program

The ATO will acquire ride sourcing data relating to approximately 200,000 individuals to identify individuals that may be engaged in providing ride sourcing services during the 2022/23 financial year.

The data items include:

identification details (driver identifier, ABN, driver name, birth date, mobile phone number, email address and address); and
transaction details (bank account details, aggregated payment details, gross fares, net amount paid to driver, and all other income to which GST may or may not apply) of all payments received in the relevant period.

The data will be used to identify and inform ride sourcing providers of their tax obligations as part of information and education campaigns.

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.

May 2023 - Update

Fri, 19 May 2023 12:21:51 GMT

Last chance to claim deductions under temporary full expensing

Deductions under ‘temporary full expensing’ are expected to come to an end on 30 June 2023.

Under te mporary full expensing, businesses with an aggregated turnover of less than $5 billion can generally claim a deduction for the full cost of eligible new assets first held, used or installed ready for use between 6 October 2020 and 30 June 2023, as well as (in some circumstances) costs of improvements to those assets and also the cost of eligible second-hand assets.

Taxpayers can choose to opt out of temporary full expensing for an income year for some or all of their assets, and claim a deduction using other depreciation rules, by notifying the ATO in their tax return that they have chosen not to apply temporary full expensing to those assets.

Please contact our office if you require any assistance in relation to temporary full expensing.

Residential investment property loan data-matching program

The ATO has advised that it will acquire residential investment property loan data from authorised financial institutions for the 2021/22 through to 2025/26 financial years, including:

client identification details (names, addresses, phone numbers, dates of birth, etc);
account details (account numbers, BSBs, balances, commencement and end dates, etc);
transaction details (transaction date, transaction amount, etc); and
property details (addresses, etc).

The ATO estimates that records relating to approximately 1.7 million individuals will be obtained each financial year.

Electric vehicle home charging rates: cents per km

The ATO recently released draft guidelines setting out a methodology for calculating the cost of electricity when an electric vehicle ('EV') is charged at an employee's or individual's home.

The draft guidelines may be relied on by employers and individuals who satisfy the required criteria for FBT and income tax purposes respectively, as set out in the draft guidelines.

The employer or individual can choose if they want to use the methodology outlined in the draft guidelines, or if they would like to determine the cost of the electricity by determining its actual cost.

The choice is per vehicle and applies for the whole income or FBT year. However, it can be changed by the employer or individual from year to year.

Ce nts-per-kilometre rate

The rate for the FBT tax year or income year commencing on or after 1 April 2022 is 4.2 cents per km (the "EV home charging rate"), which is multiplied by the total number of relevant kilometres travelled by the electric vehicle in the relevant income year or FBT year.

However, if electric vehicle charging costs are incurred at a commercial charging station, a choice has to be made:

The EV home charging rate can be used, but only if the commercial charging station cost is disregarded.
If the commercial charging station cost is used, the EV home charging methodology cannot be applied.

Further, all necessary records (such as receipts) must be kept to substantiate the claim, as per normal record-keeping rules.

Record keeping
If a taxpayer wishes to rely on the EV home charging rate to calculate their electricity charging expenses, they will need to keep a record of the distance travelled by the car (i.e., generally odometer records) in either the applicable FBT year to 31 March or the income year to 30 June.

Also, if an employer chooses to apply the draft guidelines and the EV home charging rate for FBT purposes, a valid logbook must be maintained if the operating cost method is used.

If an individual chooses to apply the draft guidelines and the EV home charging rate for income tax purposes, to satisfy the record-keeping requirements, they must have:

a valid logbook to use the logbook method of calculating work-related car expenses (and it is recommended that a logbook is maintained to demonstrate work-related use of vehicles, regardless); and
one electricity bill for the residential premises in the applicable income year to show that electricity costs have been incurred.

Application

It should be noted that the draft guidelines can only be relied on in relation to zero emissions vehicles.

The draft guidelines cannot be relied on, and the EV home charging rate cannot be used, if, for example, the vehicle is a plug-in hybrid which has an internal combustion engine.

Once finalised, the draft guidelines will apply from:

1 April 2022 for FBT purposes; or
1 July 2022 for income tax purposes.

Ti ps to reduce study and training loan balances

If you have a study and training loan balance (e.g., a HELP debt), it may be worthwhile to consider methods of reducing the balance to ensure you are not left with a large tax bill when your 2023 income tax return is lodged.

While there is no interest charged on study and training loans, indexation is added to these debts on 1 June each year, based upon the consumer price index (‘CPI’). Given the current rate of inflation, individuals with study and training loan balances should expect a larger than normal adjustment this year.

If you have a study and training loan balance, it is worth checking your loan balance and considering the following tips:

Let your employer know if you have started studying or have a study loan.
Check the amount your employer is withholding. If there has not been enough withheld to cover your compulsory repayment, you can ask your employer to increase the withholding amount.
Make a voluntary repayment to reduce your total loan amount. Indexation on the loan is applied on 1 June, so a voluntary repayment prior to this date will reduce the balance that indexation is applied to. Note that it may take a few business days for the ATO to receive and process the payment.

The compulsory repayment threshold for the 2023 financial year is $48,361. If you earn over this amount, the compulsory repayment is worked out when your tax return is lodged, and it will be included on your notice of assessment.

Indexation will not apply to a study and training loan on 1 June if the balance is nil. Any loan debt over 11 months old will be subject to indexation.

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.

April 2023 - Update

Sun, 23 Apr 2023 12:27:36 GMT

New 15% super tax to apply from 1 July 2025

The Government recently announced it will be imposing a 15% additional tax on individuals that have more than $3 million in superannuation. The new measure is expected to commence from 1 July 2025 (i.e. the start of the 2026 income year).

The main takeaways from the information provided thus far include the following:

The additional 15% tax will broadly apply to the annual movement in the value of an individual’s superannuation balance, adjusted for withdrawals and contributions. These ‘earnings’ are further adjusted to ensure only the proportion corresponding to the balance above $3 million will be subject to the new tax.
There will be no limit imposed on the size of superannuation account balances.
Individuals will have the choice of paying the tax liability personally or from their super fund.

In current terms, the Government expects that the new tax will apply to 0.5% of people with money in superannuation (around 80,000 people). However, the proposal does not currently allow for indexation of the $3 million threshold, so more individuals may be impacted in the future.

Start thinking about your FBT obligations

The 2023 FBT year ended on 31 March, so it is now time for employers to get ready to lodge their 2023 FBT returns, where they have provided benefits to their employees (or their associates) between 1 April 2022 and 31 March 2023.

If you have provided fringe benefits to employees during the year, we are able to assist you with satisfying the following requirements:

self-assessing your FBT liability for the FBT year;
lodge an FBT return (if you have an FBT liability or paid FBT instalments through your activity statements);
pay the FBT you owe by the due date; and
calculate the reportable fringe benefits amount to be included on each employee’s income statement or payment summary (if the total taxable value is more than $2,000).

Employers that have an FBT liability for the year ended 31 March 2023 are generally required to lodge their FBT return and pay their FBT liability by 26 June 2023, where they lodge their FBT return electronically through a registered tax agent.

Employers that are not included on a registered tax agent’s FBT client list must generally lodge an FBT return by 22 May 2023.

Employers do not need to lodge an FBT return if they are not liable to pay FBT for the year and have not paid FBT instalments during the year. If you are registered for FBT but do not think you need to lodge a 2023 FBT return, please contact our office so that we can confirm and let the ATO know before the due date, to ensure the ATO will not seek a return at a later date.

Please contact our office to ensure you are ready for FBT season and confirm what information we will need from you to lodge your 2023 FBT return by the due date.

F BT exemption for electric cars

Until recently, the FBT consequences for providing electric cars to employees were effectively the same as any other car. However, from 1 July 2022, FBT is no longer payable on benefits provided for eligible electric cars and associated expenses. Practically, this exemption will be relevant for the first time in the 2023 FBT year.

Broadly, benefits provided for electric cars will be exempt from FBT where the following criteria are met:

the car is a zero- or low-emissions vehicle;
the first time the car is both held and used is on or after 1 July 2022;
the car is used by a current employee or their associate(s) (e.g., a family member); and
luxury car tax has never been payable on the importation or sale of the car.

Registration, insurance, repairs, maintenance and fuel expenses provided for eligible electric cars are also exempt from FBT.

Note that, while the benefit is exempt from FBT, the taxable value of the benefit must still be determined when working out whether an employee has a reportable fringe benefits amount to be included on their income statement or payment summary.

Tips to reduce study and training loan balances

While there is no interest charged on study and training loans, indexation is added to these debts on 1 June each year, based upon the consumer price index (‘CPI’). Given the current rate of inflation, individuals with study and training loan balances should expect a larger than normal adjustment this year.

If you have a study and training loan balance, it is worth checking your loan balance and considering the following tips:

Let your employer know if you have started studying or have a study loan.
Check the amount your employer is withholding. If there has not been enough withheld to cover your compulsory repayment, you can ask your employer to increase the withholding amount.
Make a voluntary repayment to reduce your total loan amount. Indexation on the loan is applied on 1 June, so a voluntary repayment prior to this date will reduce the balance that indexation is applied to. Note that it may take a few business days for the ATO to receive and process the payment.

Indexation will not apply to a study and training loan on 1 June if the balance is nil. Any loan debt over 11 months old will be subject to indexation.

The compulsory repayment threshold for the 2023 financial year is $48,361. If you earn over this amount, the compulsory repayment is worked out when your tax return is lodged, and it will be included on your notice of assessment.

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.

March 2023 - Update

Fri, 10 Mar 2023 12:09:27 GMT

$ 3 Million Superannuation Cap

The government has announced its plans to introduce a new cap for superannuation to tax the earnings on member balances in excess of $ 3 million at 30% instead of the current 15% rate.

The change is set to take effect on 1 July 2025.

There are no plans at this stage for the $ 3 million cap to be subject to indexation.

Sign ificant change to claiming working from home expenses

Before 1 July 2022, individuals had a choice of three methods to claim home-office expenses.

These choices were:

The shortcut method – which was available from 1 March 2020 to 30 June 2022;
The fixed-rate method – which was available from 1 July 1998 to 30 June 2022; or
Actual expenses, that is calculating the actual expenses incurred as a result of working from home

From 1 July 2022, as a result of the release of PCG 2023/1 by the ATO, the shortcut method and the fixed-rate method have been abolished.

A replacement method that can be used instead of the actual expenses method (which has not been abolished) is the revised fixed-rate method.

Under the revised fixed-rate method, a deduction can be claimed of 67 cents per hour for energy expenses (electricity and gas), internet expenses, mobile and home phone expenses, and stationery and computer consumables.

Other expenses associated with working from home, such as depreciation of home office furniture and a personally owned computer used at home for work purposes, will need to be calculated on an actual basis when using the revised fixed-rate method.

To claim a deduction under the new fixed-rate method, an individual needs to meet three criteria, which are:

The individual is working from home while carrying out their employment duties or carrying on their business on or after 1 July 2022;
They are incurring additional running expenses of the kind outlined in the above discussion as to what the 67 cents per hour amount reflects, as a result of working from home;
They keep and retain relevant records in respect of the time they spend working from home and for the additional running expenses (covered by the rate per hour) they are incurring.

There are strict record keeping requirements associated with this new method.

For the year ending 30 June 2023, a taxpayer using this new method will need to keep a record which is representative of the total number of hours worked from home during the period from 1 July 2022 to 28 February 2023.

The taxpayer will also need to keep a record of the total number of actual hours they worked from home for the period 1 March 2023 to 30 June 2023.

The record of the actual hours worked from home could be maintained by timesheets, rosters, time-tracking apps, logs of time spent accessing employer systems or online business systems, or a diary kept contemporaneously.

For the year ending 30 June 2024 and later income years, a taxpayer using this method must also keep a record of actual hours worked from home for the entire year.

Under both the short-cut method and the previous fixed-rate method, there was no need for detailed record keeping of the actual hours worked from home. Estimates were acceptable. This is a significant change and increases the record keeping burden on taxpayers.

Another significant change, which results in an increase in record keeping obligations under the revised fixed-rate method, is that in relation to running costs such as energy costs, phone and internet costs, a taxpayer needs to maintain at least one monthly or quarterly bill.

This is because the ATO now requires proof that the individual has incurred the running costs represented by the 67 cents per hour deduction.

Transfer balance cap indexation

An individual’s transfer balance cap determines the maximum amount they can commit to a retirement phase interest in their super fund, such as an account-based pension, without being subject to penal taxation.

When the TBC concept was introduced with effect from 1 July 2017, it was initially $1,600,000. It was increased by $100,000 as of 1 July 2021 to $1,700,000.

The TBC increases in $100,000 increments in line with the Consumer Price Index (‘CPI’).

As a result of a substantial increase in the CPI, the TBC is due to increase on 1 July 2023 by $200,000.

Accordingly, an increase in the TBC is seen as a good thing, as it potentially means an individual can have more of their superannuation interest supporting a tax-free pension.

Individuals who start their first retirement phase income stream on or after 1 July 2023 will have a TBC of $1.9 million.

From 1 July 2023 individuals will have a TBC between $1.6 million and $1.9 million.

An individual who already had a transfer balance account and at any time met or exceeded their personal TBC will not be entitled to indexation, and their personal TBC will remain the same.

For example, an individual who started their first retirement phase income stream, an account based pension, on 1 January 2022 with a value of $1,700,000 at the time of commencement, would have fully utilised their then TBC of $1,700,000.

Such an individual, having already fully utilised their TBC, will not gain any benefit from the increase in the TBC due to indexation.

Where an individual has partially utilised their TBC before 1 July 2023, instead of benefiting from the full $200,000 increase in the TBC, they will have access to a proportional indexation of their TBC based on the unused cap percentage of their transfer balance account.

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.

February 2023 - Update

Thu, 09 Feb 2023 00:31:02 GMT

Electric vehicle FBT exemption legislation is now law

Legislation to make certain electric vehicles exempt from Fringe Benefits Tax (‘FBT’) has now been enacted into law.

Certain zero or low emissions vehicles provided as a car benefit on or after 1 July 2022, can be exempt from FBT.

For this exemption to apply various criteria need to be satisfied.

The car needs to have been both held and used for the first time by the employer on or after 1 July 2022 and it cannot have been subject to the luxury car tax.

For the 2023 income year, to qualify for this exemption, the car needs to cost less than the luxury car tax threshold for fuel efficient vehicles of $84,916.

A vehicle is a zero or low emissions vehicle if it satisfies both of these conditions:

It is a:
- battery electric vehicle; or
- hydrogen fuel cell electric vehicle; or
- plug-in hybrid electric vehicle.
It is a car designed to carry a load of less than 1 tonne and fewer than 9 passengers (including the driver).

Motorcycles and scooters are not cars for FBT purposes and do not qualify for the exemption, even if they are electric.

Please note that in relation to plug-in hybrid electric vehicles, there is a specific limitation on the FBT exemption.

From 1 April 2025, a plug-in hybrid electric vehicle will not be considered a zero or low emissions vehicle under FBT law.

There are special provisions allowing the exemption to continue when a plug-in vehicle was provided as an exempt benefit under an agreement entered into before 1 April 2025 that continues after this date.

Although the private use of an eligible electric car is exempt from FBT, an employer still needs to include the notional value of the benefit when working out whether an employee has a reportable fringe benefits amount (‘RFBA’).

An employee has an RFBA if the total taxable value of certain fringe benefits provided to them (or their associate) is more than $2,000 in an FBT year. The RFBA must be reported through Single Touch Payroll or on the employee's payment summary.

The amount of an RFBA reported for an employee is not added to an employee’s taxable income for determining income tax and Medicare Levy liabilities.

However, it is added to an employee’s taxable income for calculating Medicare Levy Surcharge liability, and is included in income tests for family assistance, child support assessments, and some other government benefits and obligations.

Further eligibility age change for downsizer contributions

In another recent legislative change, the eligibility age to make a downsizer contribution into superannuation has been reduced to 55 from 1 January 2023.

This further reduces the downsizer eligibility age, which changed from 65 to 60 from 1 July 2022.

From 1 January 2023, eligible individuals aged 55 years or older can choose to make a downsizer contribution into their super fund of up to $300,000 per person ($600,000 per couple) from the proceeds of selling their home that has been held for at least 10 years and qualifies for at least a partial main residence exemption.

There are no changes to the remaining eligibility criteria.

Key dates for downsizer contributions:

Eligible individuals aged 55 years or older can make a downsizer contribution from 1 January 2023.
For any downsizer contributions made between 1 July 2022 and 31 December 2022, eligible individuals must be aged 60 years or older at the time of making their contribution.
Prior to 1 July 2022, the eligibility age was 65 years and over.

Other important information to consider for 55-59 year olds:

Individuals have 90 days from receiving the sale proceeds of their home to make a downsizer contribution.
This means if an individual receives the proceeds of sale prior to 1 January 2023, they can make their contribution after 1 January 2023, so long as they are still making it within 90 days of receiving the proceeds.
If 1 January 2023 falls outside of their 90 day window to make a downsizer contribution, they will not be eligible. It is unlikely the ATO would grant an extension of time in these circumstances.

Unlike most other contributions into superannuation, there is no upper age limit for being eligible to make a downsizer contribution. Even a 95 year could make a downsizer contribution, and there is no need to satisfy the work test!

Builder unable to obtain refund of incorrectly charged GST

The Administrative Appeals Tribunal has held that a builder was unable to receive a refund of GST incorrectly charged on the sale of a residential premises that had been rented for just over five years since construction was complete.

The taxpayer claimed the GST charged on a unit was charged in error, on the basis that the sale was actually an input taxed supply. Accordingly, the taxpayer sought a refund of the GST previously remitted to the ATO on the unit.

For residential premises to fall outside the definition of ‘new residential premises’ and therefore be input taxed rather than a taxable supply, it needs to meet the requirements of S.40-75(2)(a) of the GST Act.

Broadly, to meet the requirements of this section there needs to have been a continuous five-year period since the premises first become residential premises, during which the premises have “only been used for making supplies that are input taxed” (i.e., being used as a rental property).

Unfortunately for the builder, this requirement was not satisfied because the unit was also marketed for sale a few months before the completion of the five-year period since the issue of the certificate of occupancy.

A lesson to be learnt here is that any time a residential premises is both rented and on the market for sale it does not meet the requirements to count towards the five-year continuous period that it has “only been used for making supplies that are input taxed.”

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.

December 2022 - Update

Thu, 22 Dec 2022 05:05:26 GMT

On behalf of the team at Crawford Accountants we thank you for your support during the past year and we wish you and your family a safe and happy Christmas and New Year!

Our office will be closed on Friday the 23rd of December at 12:00pm and will reopen on Monday the 9th of January 2023 at 9am.

Merry Christmas!

ATO's record-keeping tips

The ATO has reminded taxpayers the record-keeping requirements for businesses and individuals.

The following are some of the ATO's top tips to help businesses get it right and avoid record-keeping errors (based on common record-keeping errors the ATO sees):

Keep accurate records of all cash and electronic transactions.
Reconcile cash and EFTPOS sales regularly (by ensuring payments recorded internally match external records) and enter the amounts into the main business accounting software system.
Check for mistakes if things don't add up.
For expenses that are for both business and private use, work out and record the business portion accurately.
If the taxpayer has used trading stock for private purposes, remember to account for the stock as if the business sold it, and include the value in the business’s assessable income.
Don't use estimates to prepare tax returns and business activity statements ('BASs').
If claiming credits for GST, set aside the GST in a separate ledger account to make record-keeping and calculations easier.
Most records must generally be kept for at least 5 years — from when the record was prepared or obtained, or the transaction or related acts were completed, whichever is later. Records relating to the calculation of losses may need to be kept longer, depending on when that loss is deducted (or offset against a capital gain).
Accurate and detailed records must also be kept when paying contractors to provide certain services on behalf of the business (so the business can easily complete its taxable payments annual report at the end of each year).
Use the ATO's Record-keeping evaluation tool to find out how well the business is currently keeping its records.

Input tax credits denied due to lodging BASs late

The Administrative Appeal Tribunal ('AAT') has held that a taxpayer could not claim $91,239 of input tax credits ('ITCs') at least partly because it lodged the relevant BASs more than 4 years too late.

Specifically, the GST Act operates such that, if an extension of time to lodge a BAS has not been granted prior to the expiry of 4 years after the day on which it was required to be given to the ATO, the entitlement to ITCs immediately ceases.

The AAT also noted that there is no discretion to circumvent this part of the GST Act, and the ATO cannot provide further time to lodge a BAS retrospectively outside of the relevant 4 year period.

It did not matter that the taxpayer was (for example) involved in a dispute with a franchisor nor that they were impacted by lockdown restrictions.

Therefore, the taxpayer was no longer entitled to claim ITCs in relation to the BASs lodged by the taxpayer 4 years after they were required to have been given (and was also denied other ITCs for BASs that were lodged within the required 4 year period, as a substantial amount of the ITCs claimed remained unsubstantiated by a valid tax invoice).

Chef spending most of a year on cruise ships still a 'resident'

The AAT has also held that a taxpayer, an Australian chef with over 20 years’ experience both in Australia and overseas, was an Australian resident for taxation purposes in the 2016 income year.

During that year, he spent only 86 days in Australia, being the period prior to him leaving Australia to commence employment with a cruise ship company, and a period during which he visited his family between deployments.

However, the AAT noted that he had no intention that any new place of residence be indefinite, and he did not become a resident of a new place.

Importantly, his 'domicile' for tax purposes (being Australia) did not change (and the AAT stated that "a ship cannot be a domicile").

Requesting stapled super fund details for new employees

The ATO is reminding employers that, when they have new employees that have not provided them with their choice of super fund, super contributions should be made into:

the employee's stapled super fund; or
the employer's nominated account (but only if the ATO advises that the employee does not have a stapled super fund).

A stapled super fund is an employee's existing super account which is linked, or 'stapled', to them and follows them as they change jobs.

In December 2022, the ATO is releasing a solution that enables employer software and payroll products to request stapled super funds. That is, stapled super enabled software will allow the employer to request stapled super details from within their business software, so they will no longer have to request them separately via ATO online services.

Employers should contact their software provider to find out if their software solution will incorporate the stapled super functionality.

The ATO also encourages employers using the 'bulk request process' to begin discussions with their software providers, as the ATO's current bulk request process will be decommissioned from mid-2023.

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.

November 2022 - Update

Thu, 10 Nov 2022 04:42:46 GMT

Director ID deadline is approaching

A director ID is a unique 15‑digit identifier that a company director will apply for once and keep forever. Director IDs are administered by the Australian Business Registry Services ('ABRS').

All directors of companies registered with ASIC will need a director ID and must apply by the 30 November deadline (although directors of Aboriginal and Torres Strait Islander corporations may have additional time to apply).

The fastest way to apply is online at abrs.gov.au, and the director ID will be issued instantly once the application is complete. It is free to apply and directors must apply themselves, as they are required to verify their identity (and it is this "robust identification process" that will help prevent the use of false and fraudulent director identities).

More information about director IDs, including who must apply, is available on the ABRS website.

Feel free to contact our office if you need more information about this but, as noted above, we cannot actually make the application for you.

Why are credits and refunds being offset?

The ATO has reached out to small businesses who may have recently received a letter advising that they have a debt on hold and any credits or refunds would be offset against this debt.

As a result, such a small business may find that their refund or credit is less than expected.

The ATO has advised that this process of offsetting refunds or credits temporarily paused due to the pandemic and its financial impact on taxpayers. However, the ATO has restarted offsetting refunds and credits to pay off debts on hold since June 2022.

The ATO also sent out 'awareness letters' to some not-for-profits and individuals in September 2022, similarly advising them they had a debt on hold and any credits or refunds would be offset against this debt.

Taxpayers can use Online services for business to search for debts that were previously put on hold and not included in their account balance.

A debt on hold remains payable and collection action may recommence if:

the taxpayer's circumstances change, and the ATO has reason to believe they are now able to pay the debt;
the taxpayer agrees to pay their debt; or
the taxpayer has a refund or credit balance which will automatically be offset to their debt on hold.

ATO advice for SMSFs thinking about investing in crypto assets

The ATO recommends that trustees of self-managed super funds ('SMSFs') thinking about investing in crypto assets should seek professional advice from a licensed financial adviser.

There are organisations who offer trustees help to set up a fund or use their existing fund to invest in crypto assets. However, the ATO notes that some of these organisations are not licensed to provide financial advice, which means the usual consumer protections and access to the Australian Financial Complaints Authority ('AFCA') are not available for using these services.

There are many things to consider before deciding to invest in crypto assets, so it's important to get it right, especially since trustees are ultimately responsible for ensuring the investment complies with the super and tax laws.

When investing in crypto assets, trustees must ensure it is allowed under the fund’s trust deed, is made in accordance with the fund’s investment strategy, and the trustee has considered the level of investment risk given the highly volatile nature of the investment.

From a regulatory perspective it's important that:

The crypto assets are owned by the fund and are held separately from the trustee's own personal or business assets. This means the fund must have its own digital wallet, separate to any used by the trustee for personal or business purposes.
The investment is valued at market value in line with the ATO's valuation guidelines.
Any crypto assets that a member or related party hold personally are not sold to the fund or transferred to the fund as a contribution.
The investment is consistent with the sole purpose test, and does not involve the giving of financial assistance to a member.

Check that holiday employees get the right super

The ATO recommends that employers check their payroll and accounting systems are up to date so they are correctly calculating their employees' SG payments, and that registered tax agents and BAS agents can help with their tax and other obligations.

As Anish worked more than 30 hours in one week at the hotel, his employer will need to pay him super on the $800 earned. However, as Anish works less than 30 hours a week at the café and is under 18, he is not entitled to super from this employer.

For example, Anish is a 17-year-old employee working a job at a hotel over the holiday season. Anish works 32 hours in a week at the hotel and earns $800 before tax. He also works 5 hours at his local café, earning $150.

This change doesn’t affect other eligibility requirements for SG. In particular, workers who are under 18 still need to work more than 30 hours in a week to be eligible.

From 1 July 2022, employers need to pay super for employees at a rate of 10.5%, regardless of how much they are paid, because the $450-per-month threshold for super guarantee ('SG') eligibility has been removed.

The ATO is reminding employers that the holiday season is fast approaching, and that their holiday casuals may now be eligible for super.

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.

2022/23 October Federal Budget Update

Sun, 06 Nov 2022 11:55:19 GMT

On 25 October 2022, Treasurer Jim Chalmers handed down an updated 2022/23 Federal Budget with following summary updates.

FBT exemption on electric cars

From 1 July 2022, the measure will exempt battery, hydrogen fuel cell and plug-in hybrid electric cars from fringe benefits tax and import tariffs if they have a first retail price below the luxury car tax threshold for fuel-efficient cars. The car must not have been held or used before 1 July 2022. Employers will need to include exempt electric car fringe benefits in an employee’s reportable fringe benefits amount.

COVID-19 business grants are non-assessable non-exempt

The following state and territory COVID-19 grant programs are non-assessable non-exempt for income tax.

Victoria Business Costs Assistance Program Four – Construction
Victoria Licenced Hospitality Venue Fund 2021 – July Extension
Victoria Licenced Hospitality Venue Fund 2021 – Top Up Payments
Victoria Business Costs Assistance Program (Round Two Top Up, Round Three, Round Four, Round Five)
Victoria Impacted Public Events Support Program Round Two
Victoria Live Performance Support Program (Presenters) Round Two
Victoria Live Performance Support Program (Suppliers) Round Two
Victoria Commercial Landlord Hardship Fund 3
Australian Capital Territory HOMEFRONT 3
Australian Capital Territory Small Business Hardship Scheme

Changes to unlegislated taxation and superannuation measures introduced by previous government

Certain tax and super measures that were announced but not legislated by the previous Government will not be proceeded, including:

The previous Government announced it would change the annual audit requirement to a three-yearly requirement for SMSFs with a history of good record-keeping and compliance.
The 2018/19 Budget proposed introducing a limit of $10,000 for cash payments made to businesses for goods and services.

Certain tax and superannuation measures will be deferred to allow more time for policies to be legislated and implemented including:

Introducing a sharing economy reporting regime for transactions relating to the supply of ride sourcing and short-term accommodation from 1 July 2022 will be deferred to 1 July 2023.
Other reportable transactions including asset sharing, food delivery and tasking-based services will be deferred from 1 July 2023 to 1 July 2024.
Relaxing residency requirements for SMSFs, from 1 July 2022 to the income year commencing on or after the date of Royal Assent of the enabling legislation. The previous Government announced that it would relax residency requirements for SMSFs by extending the ‘central control and management test’ safe harbour from two years to five years and removing the ‘active member test’. This measure is intended to allow SMSF members to continue to contribute to their superannuation fund whilst temporarily overseas.

E xpanding the eligibility for downsizer contributions

The minimum eligibility age for the downsizer contribution will be reduced from 60 to 55 years from the start of the first quarter after Royal Assent of the enabling legislation. The downsizer contribution allows people to make a one-off post-tax contribution to their superannuation of up to $300,000 per person from the proceeds of selling their home.

The Government has also announced further measures to reduce the financial impact on pensioners looking to downsize their homes as:

Extending the assets test exemption for principal home sale proceeds from 12 months to 24 months for income support recipients.
Changing the income test to apply only the lower deeming rate (0.25%) to principal home sale proceeds when calculating deemed income for 24 months after the sale of the principal home.

Boosti ng Paid Parental Leave

Reforms will be introduced from 1 July 2023 so that either parent is able to claim the payment and birth parents and non-birth parents are allowed to receive the payment if they meet the eligibility criteria.

From 1 July 2024, the scheme will be expanded by two additional weeks a year until it reaches a full 26 weeks from 1 July 2026. Both parents will be able to share the leave entitlement, with a proportion maintained on a ‘use it or lose it’ basis. Sole parents will be able to access the full 26 weeks.

Digital currencies are not taxed as fo reign currency

The Government will introduce legislation to confirm that digital currencies such as Bitcoin will continue to be excluded from the Australian income tax treatment of foreign currency. This maintains the current tax treatment of digital currencies where they are held as an investment. This measure removes uncertainty following the decision of the Government of El Salvador to adopt Bitcoin as legal tender and will be backdated to income years that include 1 July 2021.

The exclusion does not apply to digital currencies issued by, or under the authority of, a government agency, which continue to be taxed as foreign currency.

Reverse self-assessment of the effect ive life of intangible assets

The previous Government ann ounced it would allow taxpayers to self-assess the tax effective lives of eligible intangible depreciating assets, such as patents, registered designs, copyrights and inhouse software.

This measure will not be proceeded.

Incr ease in Commonwealth penalty unit

The Commonwealth penalty unit will be increased from $222 to $275, from 1 January 2023. The amount will be indexed every three years in line with the CPI with the next indexation occurring on 1 July 2023.

ATO Compliance Programs

The Government has announced it will extend the following ATO complia nce programs:

Personal Income Taxation Compliance Program
The Government will provide funding to the ATO to extend its Personal Income Taxation Compliance Program for two years from 1 July 2023. This extension will enable the ATO to continue to deliver a combination of proactive, preventative and corrective activities in key areas of non-compliance, including overclaiming deductions and incorrect reporting of income.
Shadow Economy Program
The Government will extend the existing ATO Shadow Economy Program for a further three years from 1 July 2023. The extension of the Shadow Economy Program will enable the ATO to continue a strong and co-ordinated response to target shadow economy activity, protect revenue and level the playing field for those businesses that are following the rules.
Tax Avoidance Taskforce
The Government has boosted funding for the ATO Tax Avoidance Taskforce by around $200 million per year over four years from 1 July 2022, in addition to extending this Taskforce for a further year from 1 July 2025. The boosting and extension of the Tax Avoidance Taskforce will support the ATO to pursue new priority areas of observed business tax risks, complementing the ongoing focus on multinational enterprises and large public and private businesses.

Multinational Tax Integrity Package

The Government has announced the following changes in relation to its Multinational Tax Integrity Package:

From 1 July 2023 the following changes will be made in relation to Thin capitalisation rules:
The safe harbour and worldwide gearing tests will be replaced with earnings based tests to limit debt deductions in line with an entity’s profits. The changes will apply to multinational entities operating in Australia and any inward or outward investor. Financial entities will continue to be subject to the existing thin capitalisation rules.
The Government will introduce rules to prevent significant global entities from claiming tax deductions for payments made to related parties in relation to intangibles held in ‘low-or no-tax’ jurisdictions from 1 July 2023.
The Government will require large multinationals to release tax information to public on a country-by-country basis and a statement on their approach to taxation and Australian public companies to disclose information on the number of subsidiaries and their country of tax domicile; and tenderers for Australian Government contracts worth more than $200,000 to disclose their country of tax domicile.

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.

October 2022 - Update

Thu, 13 Oct 2022 11:22:39 GMT

Director ID Requirement

Australian company directors are required to verify their identity with the Australian Business Registry Service and obtain a Director ID by 30 November 2022.

If you are a director of an Australian company and have not yet obtained a director ID, please complete the identification requirements through MyGovID or over the Phone.

MyGovID is an application designed to allow users to authenticate with the Australian Government websites and services and was developed by the Australian Tax Office (ATO) and the Digital Transformation Agency (DTA).

The identification process requires you to verify your identity using a combination of identification documents and existing ATO held information.

Phone - If you are unable to obtain a MyGovID, you can complete your Director ID application over the phone by calling the Australian Business Registry Services on 13 62 50.

Once you have completed your Director ID process, and you have been issued with a Director ID, please provide the ID to us by replying to this email or by emailing admin@crawfordaccountants.com.au .

'Talking tax' with new workers

New employees can complete a TFN declaration through ATO online services, and this is an easy way for them to provide both their employer and the ATO with the information needed.

If a new employee has a myGov account linked to the ATO, they can:

access ATO online services;
go to the ‘Employment’ menu; and
select ‘New employment’ and complete the form.

This sends the TFN declaration details straight to the ATO, so the employer doesn't have to.

Employees will need their employer's ABN to complete the form and, once they’ve submitted it, they need to print it and give their employer the summary of their tax details so the employer can input the data into their system.

If an employer's payroll software can link to the online commencement forms, it will automatically receive any new employees' information from the ATO, saving them time spent otherwise entering the information manually.

Employers can also use the New employment form to collect a range of information contained in other forms, and employees can use it to authorise variations to the amount to be withheld from their pay for tax or the Medicare levy, or to advise of their choice of super fund.

They can also use it to update their tax circumstances with their employer; for example, if their residency status has changed or they are claiming the tax-free threshold from a different employer.

However, employers can continue to use their current processes when preferred, including providing a paper TFN declaration where employees can't create a myGov account or don’t have access to the internet.

How the myGov update affects taxpayers

When signed in to myGov, you might receive notifications through ‘Payments and claims’ from other government services, such as Centrelink.

However, the ATO has stated that they will not communicate using this feature. Instead, the ATO will continue to send messages to the myGov Inbox, and to tax agents on behalf of the clients, if that’s their communication preference.

Therefore, you don’t need to do anything different, and can still:

find myGov at the same website address (i.e., my.gov.au );
sign in using their current sign-in details; and
have access to all their linked services, including the ATO.

Input tax credits denied due to lodging BASs late

The AAT has held that a partnership’s entitlement to $16,361 of input tax credits claimed for the quarterly periods of 1 July 2012 to 31 March 2017 had ceased by the time the associated BASs were lodged with the ATO on 21 June 2021, and therefore the ATO did not pay the taxpayer a refund.

The operation of the GST Act means that, unless an extension of time to lodge a BAS has been granted prior to the expiry of 4 years after the day on which it was required to be given to the ATO, the entitlement to input tax credits immediately ceases.

Valuing fund assets for an SMSF's annual return

One of the responsibilities of trustees of an SMSF is valuing the fund's assets at market value.

This must be done every income year, to comply with super laws.

The market value of an asset is the amount someone could be reasonably expected to pay if the asset was for sale.

Each year, the asset valuations will be reviewed by the fund's auditor as part of the annual audit prior to lodgment of the SMSF's tax return. The auditor will check that assets have been valued correctly, and assess and document whether the basis for the valuation is appropriate given the nature of the asset.

Trustees are reminded to get their valuations done before they go to the auditor, as this will streamline the process and avoid delays. The trustees' must also provide objective and supportable evidence to the auditor for the valuation of the fund's assets, including all relevant documents.

Failure to do so could result in a delay in auditing the fund and potential late lodgment of the fund's annual return and could also result in a contravention if the auditor believes mistakes have been made.

Super guarantee contributions due date for September 2022 quarter

The due date for employers to make super guarantee contributions for their employees for the September 2022 quarter is 28 October 2022. We remind the payment to be made at least 7 days in advance for the clearing house to deposit funds on time.

Varying PAYG instalments

Taxpayers can vary their PAYG instalments if they think the amount they pay now will be more or less than their expected tax liability for the year, by lodging a variation through myGov or Online services for business or by simply contacting us.

Instalments for those who are PAYG instalment payers have been increased by the GDP adjustment factor of 2% for the 2022/23 income year.

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.

September 2022 - Update

Fri, 16 Sep 2022 13:16:02 GMT

More COVID-19 business grants are now tax-free

The Federal Government has expanded the list of State and Territory COVID-19 grant programs that may be tax-free to eli gible businesses.

A State or Territory Government COVID-19 grant payment will generally be tax-free if:

1. the payment is received under a grant program that is formally declared to be an eligible program;
2. the recipient carried on a business and had an aggregated turnover of less than $50 million in the income year the payment was received, or in the previous income year; and
3. the payment was received in the 2021 or 2022 income year.

The following Victorian and ACT COVID-19 grant programs have recently been declared as eligible grant programs for these purposes:

Business Cost Assistance Program Round Two – Top Up (Victoria).
Business Cost Assistance Program Round Three (Victoria).
Business Cost Assistance Program Round Four (Victoria).
Business Cost Assistance Program Round Four – Construction (Victoria).
Business Cost Assistance Program Round Five (Victoria).
Commercial Landlord Hardship Fund 3 (Victoria).
Impacted Public Event Support Program Round Two (Victoria).
Licensed Hospitality Venue Fund 2021 – Top Up Payments (Victoria).
Live Performance Support Program (Presenters) Round Two (Victoria).
Live Performance Support Program (Suppliers) Round Two (Victoria).
HOMEFRONT 3 (ACT).

S uper comparison tool updated

The YourSuper comparison tool helps individuals compare MySuper products and choose a super fund that meets their needs.

It ranks the performance of these products by fees and net returns.

Each year, the Australian Prudential Regulation Authority ('APRA') assesses the performance of each MySuper product, and this information is displayed in the comparison tool. Updated information for the 2022/23 year is now available.

The comparison tool provides one of the following results for each MySuper product:

Performing – the product has met or exceeded the performance test benchmark.
Underperforming – the product has not met the performance test benchmark.
Not assessed – the product had less than five years of performance history and has not been rated by APRA.

Individuals who are members of underperforming MySuper products will receive correspondence to notify them of the underperforming status.

Individuals can access a personalised version of the tool which allows them to view and compare their existing MySuper products by doing the following:

Log in to ATO online services through myGov.
Go to the 'Super' drop-down menu and select ‘Information’, then select ‘YourSuper comparison’.

To access a non-personalised version of the tool (without logging into myGov), visit ato.gov.au/yoursuper

Sma ll business tax incentives

The government has advised that they will implement two tax incentives aimed at supporting small businesses to train and upskill employees and improve their digital and tech capacity.

The Technology Investment Boost and the Skills and Training Boost were announced in the 29 March 2022 Federal Budget but remain unlegislated.

Small businesses with an annual turnover of less than $50 million will be able to claim a ‘bonus’ 20% deduction for eligible expenditure on:

external training of employees until 30 June 2024; and
the uptake of digital technologies until 30 June 2023.

The incentives will be backdated to 29 March 2022.

These incentives are not yet law. If you have spent, or are considering spending, on training or digital technology, please contact our office for an update.

Rental properties and second-hand depreciating assets

The ATO is reminding taxpayers that have a residential rental property, to take care when making claims for ‘second-hand depreciating assets’ used in their properties.

In most cases, these are items that existed in the taxpayer's property when they purchased it, or were in their private residence (which they later rented out), such as:

flooring and window coverings;
air conditioners, washing machines, alarm systems, spas, pool pumps; and
items used for both the rental property and the taxpayer’s own home.

Since 1 July 2017, taxpayers generally cannot claim the decline in value of second-hand depreciating assets (some limited exceptions do apply).

However, this rule does not apply to a property that was rented out before this date, or if it is newly built or substantially renovated (conditions apply).

If you have a residential rental property, to help us get your claim right, please answer the following:

When did you purchase the property?
Was it a new or existing build?
Did you live in the property before renting it out?
When did you start renting the property?
Was the asset already in the rental property when you bought it?
Is the property used for business purposes?

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.

August 2022 - Update

Tue, 16 Aug 2022 11:56:05 GMT

Tax time focus on rental property income and deductions

The ATO is focusing on four major concerns this tax season when it comes to rental properties.

Concern 1: Include all rental income
When preparing tax returns, all rental income must be included, such as from short-term rental arrangements, renting part of a home, and other rental-related income like insurance payouts and rental bond money retained.

Concern 2: Accuracy of expenses
Not all expenses are the same – some can be claimed straight away, such as rental management fees, council rates, repairs, interest on loans and insurance premiums.

Other expenses such as borrowing expenses and capital works need to be claimed over a number of years.

Depreciating assets such as a new dishwasher or new oven costing over $300 are also claimed over their effective life.

Concern 3: Capital Gains Tax upon sale of a rental property
When selling a rental property, capital gains tax (‘CGT’) needs to be considered and any capital gains or capital losses need to be reported.

When calculating a capital gain or capital loss, it’s important to get the cost base calculation right.

It is also important to note that when selling any property for $750,000 or more, vendors/sellers must have a clearance certificate otherwise 12.5% will be withheld.

These clearance certificate applications can take up to 28 days to process so to avoid delays, sellers should apply as early as practical using the online form.

Concern 4: Record keeping
Records of rental income and expenses should be kept for five years from the date of tax return lodgments or five years after the disposal of an asset, whichever is longer.

Sessional lecture r entitled to superannuation support

The Federal Court has agreed with the ATO that a lecturer providing services to a higher education provider was a common law employee and therefore entitled to superannuation support, despite being engaged as an independent contractor.

The ATO reviewed the situation and concluded that the lecturer was entitled to receive superannuation support. This was on the basis that for superannuation guarantee purposes they were either an ‘employee’ within the ordinary meaning of that term, or was what is referred to as an ‘extended definition employee’ as someone engaged primarily for the provision of their labour services.

Some of the factors which indicated the lecturer was in an employment relationship with the higher education provider included:

that the lecturer was engaged in his personal capacity and not through an interposed entity (such as a company or trust);
that the higher education provider had a right of control over the lecturer, including the question of how, when and where he was required to provide the relevant teaching services; and
the mode or manner by which the lecturer was to be remunerated was clearly expressed by reference to the time that the lecturer was engaged in delivering lectures and marking, not by reference to any readily identifiable or quantifiable product or result.

Discr etionary trusts and corporate beneficiaries

When a trustee of a trust makes a decision to create an entitlement to income of the trust in favour of a corporate beneficiary (i.e., a privately held company), certain steps need to be taken to ensure that if the entitlement to the distribution remains unpaid (that is, no cash equal to the amount of the entitlement is paid to the corporate beneficiary), that this does not trigger what is called a ‘deemed dividend’ in the hands of the trust.

A deemed dividend is likely to give rise to unwanted taxation consequences for the trust.

Historically, one way to avoid triggering a deemed dividend in such circumstances was to place the amount representing an unpaid distribution in a sub-trust for the benefit of the corporate beneficiary.

With these sub-trust arrangements, the relevant funds are generally being invested in the main trust to be used for working capital or to make plant and equipment or real property acquisitions.

These sub-trust arrangements were typically based on interest only loan arrangements, with the requirement that the principal be repaid at the end of either seven years (i.e., as an Option 1 arrangement) or ten years (i.e., to as an Option 2 arrangement).

The ATO has now formed the view that for entitlements to trust income that come about from 1 July 2022 (effectively from the 2023 income year) that these interest only Option 1 and Option 2 arrangements are no longer sufficient to avoid the potential triggering of a deemed dividend with respect to any unpaid present entitlements.

Broadly speaking, from 1 July 2022, in relation to an unpaid distribution payable to a corporate beneficiary, one way to avoid the unpaid distribution giving rise to a potential deemed dividend is for the unpaid distribution to be replaced with what is referred to as a complying Division 7A loan.

These Division 7A loans are made under S.109N of the Income Tax Assessment Act 1936 (‘ITAA 1936’).

Ordinarily, such a loan is repaid on a principal and interest basis, over seven years, based on an interest rate provided by the ATO for each year of the loan, with annual minimum loan repayments calculated based on a formula provided by the income tax legislation.

Pandemi c Leave Disaster Payment reinstated

In recognition of the risks associated with more infectious new Covid-19 variants through the winter period, the Federal Government has agreed to reinstate the ‘Pandemic Leave Disaster Payment’ to 30 September 2022, which was otherwise set to end as of 30 June 2022.

Eligibility for the payment will be backdated to 1 July 2022, to ensure that anyone unable to work owing to isolation requirements in this period, without access to paid sick leave, is supported.

Access to these payments will commence from Wednesday 20 July 2022, with existing eligibility requirements to continue.

The Commonwealth and the States and Territories have agreed to share the costs of the payment 50:50.

For each 7-day period of self-isolation, quarantine or caring, the Pandemic Leave Disaster payment is:

$450 if you lost at least 8 hours or a full day’s work, and less than 20 hours of work: or
$750 if you lost 20 hours or more of work.

As a reminder, Pandemic Leave Disaster Payments are assessable income and should be reported in the tax return of the recipient in the year of receipt.

Reporting actual payments quarterly.
Reporting a reasonable estimate quarterly.

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.

July 2022 - Welcome to the New Financial Year

Mon, 11 Jul 2022 06:51:28 GMT

Happy New Year!
Tax Time 2022: Get Ready!

Welcome to the start of the new financial year and we thank you for your support and for partnering with us over the past 12 months.

Our team is up to date with all the latest tax laws, so it’s time to start thinking about completing your 2022 tax returns and beyond. If you have not yet organised your tax appointment, please get in touch with us asap. We conduct appointments at the office, via Zoom or Phone.

03 9853 1000
admin@crawfordaccountants.com.au
www. c rawfordaccountants.com.au

Remember our new office is located at Level 1, 88 Charles Street Kew, just a 2-minute walk from our previous office.

It’s easy to find, located opposite to Dan Murphy’s and next to Drummond Golf – check out the link below. The new location makes parking easier too. We have secured three dedicated visitor parking bays right out front, which you are welcome to use when you come for appointments (tandem parking behind staff cars) There are also many 2-hour parking bays on Charles Street, High Street and Union Street and we look forward to seeing you at the new premises.

Click here for directions to our new office.

Are you Audit Safe?

To alleviate the cost and stress we have offered you to take out our audit protection and you should have received an offer letter from us two weeks ago. It is a cheap and efficient way of dealing with an ATO audit.
For more information, please contact our office.

Tax Deductions

Tax deductions will help you minimise your tax, but there are three golden rules for tax deductions:

Expenses must be related to business/ work and not private. If a portion of the expense if private, the deduction must be apportioned.
You must have records to prove the deduction such as receipts
The expense must not be reimbursed

Small businesses will be able to take advantage of deducting the full cost of depreciating assets under the temporary full expensing rules and an immediate deduction is available for start-up costs and certain pre-paid expenses.
You may also be eligible to claim the business/ work related use of PPE related to COVID 19 safety.

New cents per KM rate

The ATO has updated the cents per kilometre rate relating to individual car expenses for the 2023 income year to 78 cents per business kilometre.
The cents per kilometre method:

uses a set rate for each kilometre travelled for business;
allows taxpayers to claim a maximum of 5,000 business kilometres per car, per year;
does not require written evidence to show exactly how many kilometres were travelled (but the ATO may ask taxpayers to show how they worked out their business kilometres, for example by means of diary records); and
uses a rate that takes all vehicle running expenses (including registration, fuel, servicing and insurance) and depreciation into account.

The cents per kilometre rate was 72 cents for the 2021 and 2022 income years.

Proposed Electric Car Incentives

The new federal government announced that electric cars below the luxury car threshold will be made FBT and import tariff exempt as part of their policies. If passed through the parliament, this would result in significant tax and import tariff savings on selected electric cars and the policy is to be reviewed after three years.

ATO’s Small Business Focus for 2022

The ATO announced that it will be focussing on the following matters for small business tax returns for the 2021/22 year:

Deductions that are private in nature and not related to business income, as well as overclaiming of business expenses (especially for taxpayers running a home-based business).
Omission of business income (e.g., income from the sharing economy or new business ventures).
Record keeping – including insufficient or non-existent records that are needed to substantiate claims.

ATO targeting SMSFs that fail to lodge annual returns

The ATO has observed an increase in the number of SMSFs that fail to lodge their first annual return and become what the ATO refers to as ‘NEVER’ lodgers. The ATO is particularly concerned where there has been a roll-over into these SMSFs, as this is a strong indicator illegal early release of superannuation benefits may have occurred.

A minority of SMSF trustees continue to ignore ATO reminders about lodging annual returns. This group is now being targeted with a compliance campaign the ATO calls ‘3 strikes and you’re out’.

Under this campaign, the ATO will take the following action:

The ATO’s compliance action starts with a blue letter, that encourages trustees to take immediate action and lodge their return and provides a pathway for those in need of support.
If the ATO does not receive a response to the blue letter, it will issue an amber letter warning the trustees of the consequences of failing to lodge their return.
If the ATO still does not receive a response, it will issue a final warning, a red letter advising the ATO is commencing the disqualification process and considering other enforcement action.

Last year the ATO issued red letters to trustees who had never lodged their first annual return and has now commenced disqualifying the 95 trustees that did not respond.

ATO to target ‘wash sales’ this Tax Time

The ATO is warning taxpayers to not engage in ‘asset wash sales’ to artificially increase their losses to reduce gains (or expected gains). Wash sales are a form of tax avoidance that the ATO is focussed on this tax time.

Wash sales typically involve the disposal of assets (e.g., cryptocurrency and shares) just before the end of the financial year, where after a short period of time, the taxpayer reacquires the same or substantially similar assets. Such sales are usually done to create a loss to be offset against a gain already derived, or expected to be derived, in certain circumstances, in a tax return.

The ATO’s sophisticated data analytics can identify wash sales through access to data from share registries and crypto asset exchanges. When the ATO identifies this behaviour, the capital loss is rejected, resulting in an even bigger loss to the taxpayer.

The ATO has warned taxpayers engaging in wash sales that they are at risk of facing swift compliance action and additional tax, interest and penalties may apply. Taxpayers are urged to ignore any advice encouraging a wash sale of any asset. The clear advice from the ATO is to check the ATO website or check with an independent registered tax professional and not to rely on advice received through media, social media, or advertisements.

Downsizer contributions age changes from 1 July 2022

From 1 July 2022, people aged 60 years and over will be eligible to make downsizer contributions of up to $300,000 per person ($600,000 per couple) from the sale proceeds of their home into their super. For downsizer contributions made prior to 1 July 2022, eligible individuals must have been aged 65 years or older at the time of making their contribution.

Eligible downsizer contributions do not impact or count towards the member’s concessional or non-concessional super contribution caps.

During the 2022 Federal election, the previous Coalition Government announced it would support a further reduction to the downsizer eligibility age to 55 years. However, this announcement has not become law. Accordingly, contributions received on or after 1 July 2022 from members who are 55 to 59 will:

be ineligible for treatment as downsizer contributions; and
generally count towards either the member’s non-concessional or concessional superannuation contributions caps.

Super guarantee contribution due date for June 2022 quarter

The due date for employers to make super guarantee contributions for their employees for the June 2022 quarter is 28 July 2022. Note that the super guarantee rate in relation to salary and wages paid on or before 30 June 2022 is 10%.

Employers that do not pay an employee’s superannuation guarantee amount on time (and to the right fund) are liable to pay the ‘superannuation guarantee charge’ (‘SGC’). The SGC is more than the superannuation amount that is otherwise payable for the employee and is not tax deductible.

As we reported last month, the super guarantee rate increases to 10.5% in relation to salary and wages paid on or after 1 July 2022 (even if they are paid in relation to work performed before that date).

STP Finalisation

If your business has employees, the Single Touch Payroll information for 2022 must be finalised by 14 July.

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.

June 2022 - Update

Fri, 10 Jun 2022 13:25:42 GMT

Year-End Checklist

Click the link below to view a checklist with useful information in preparation for the year end planning for individuals and businesses.

Click Here for Year-End Checklist

ATO priorities this tax time

The ATO has announced four key areas that it will be focusing on for Tax Time 2022:

Record-keeping.
Work-related expenses.
Rental property income and deductions.
Capital gains from crypto assets, property, and shares.

Before claiming income tax deductions for their expenses, taxpayers must ensure:

they spent the money themselves and were not reimbursed;
if an expense is for both income-producing and private use, only the portion relating to producing income is claimed; and
they have a record to prove it.

Avoid mistakes on your deductions

Some of the ‘double dipping’ mistakes commonly made relate to the following deductions:

Working from home expenses

A common mistake involves using the 'shortcut method' to claim working from home expenses and then claiming additional amounts for expenses such as mobile phone and internet bills, as well as the decline in value of equipment and furniture.
The working from home shortcut method is all-inclusive.
There are three methods available to claim a deduction for working from home expenses depending on individual circumstances; namely, the shortcut, fixed rate and actual cost methods.
The method that gives the best outcome can be used, as long as the eligibility and record-keeping requirements for the chosen method are observed.

Reimbursed expenses

Taxpayers cannot claim expenses that have already been reimbursed by their employer.

Get ready for super changes from 1 July 2022

As the new financial year approaches, employers need to be aware of two important super changes.

From 1 July 2022, employees can be eligible for super guarantee (‘SG’), regardless of how much they earn, because the $450 per month eligibility threshold for when SG is paid has been removed.

Employers only need to pay super for workers under 18, when they work more than 30 hours in a week.

Furthermore, the SG rate will increase from 10% to 10.5% on 1 July 2022. Employers will need to use the new rate to calculate super on payments made to employees on or after 1 July, even if some or all of the pay period is for work done before 1 July.

Employers should update their payroll and accounting systems to ensure they continue to pay the right amount of super for their employees.

Employers need to prepare for changes under STP expansion

Single Touch Payroll ('STP') reporting has been expanded.

This expansion, known as ‘STP Phase 2’, means that employers will need to start reporting extra information to the ATO each time they run their payroll.

Some digital service providers (‘DSPs’) needed more time to update their products and applied for deferrals, which cover their customers – therefore, when an employer can start Phase 2 reporting depends on when their payroll product is ready.

Employers that have not already started Phase 2 reporting should ask their DSP when their product will be ready (if they don't already know).

Employers need to be across the changes and get ready to start Phase 2 reporting. This includes:

checking if changes need to be made to payroll pay codes/categories so they align with Phase 2 requirements;
reviewing allowances employers pay and how they need to be reported in Phase 2;
understanding changes to salary sacrifice reporting; and
understanding how to assign an income type to each payment.

The ATO is also reminding employers that amounts paid to 'closely held payees' should now be reported through STP.

A ‘closely held payee’ is an individual directly related to the entity they receive payments from. For example, family members of a family business, directors or shareholders of a company and beneficiaries of a trust.

There are concessional reporting options for closely held payees reporting which include the following:

Reporting actual payments on or before the date of payment (along with arm's length employees).
Reporting actual payments quarterly.
Reporting a reasonable estimate quarterly.

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.

May 2022 - Update

Tue, 10 May 2022 12:26:41 GMT

No reduction in the Private Health Insurance rebate as of 1 April 2022

An event that we have become accustomed to every 1 April, is that the amount of the Private Health Insurance (‘PHI’) rebate decreases. The Australian Government rebate on PHI is annually indexed on 1 April by a Rebate Adjustment Factor (‘RAF’) representing the difference between the Consumer Price Index and the industry weighted average increase in premiums. There will be no changes to the PHI rebate on 1 April 2022.

Disclosure of business tax debts

The ATO is in the process of writing to taxpayers that may be eligible to have their tax debts disclosed to credit reporting bureaus (‘CRBs’).
The ATO can potentially report outstanding tax debts to a CRB where the following criteria are satisfied:

• The taxpayer has an Australian business number and is not an excluded entity;
• The taxpayer has one or more tax debts and at least $100,000 is overdue by more than 90 days;
• The taxpayer is not engaging with the ATO to manage their tax debt; and
• The taxpayer does not have an active complaint with the Inspector-General of Taxation about the ATO’s intent to report its tax debt information.

Excluded entities are a deductible gift recipient, a complying superannuation fund, a registered charity and a government entity.
The purpose of this letter from the ATO is to raise awareness of the actions that the ATO can now take under the Disclosure of Business Tax Debts measure. The letter will be sent to all taxpayers with business tax debts that currently meet the criteria (discussed above) for disclosure. This letter from the ATO provides business taxpayers with information on how to effectively engage with the ATO to manage their tax debt. Taxpayers can avoid disclosure to a CRB by making payment in full or negotiating a payment plan.

If an eligible taxpayer does not take steps to actively manage their debt, they will remain eligible for disclosure. Before the ATO takes any final action to disclose a tax debt, it will issue the taxpayer with a formal Intent to Disclose Notice. If a taxpayer receives an Intent Notice, asking them to 'Act now or your tax debt will be reported to credit reporting bureaus', the taxpayer or their tax agent must contact the ATO within 28 days of receiving the notice to avoid the debt being reported.

It is crucial for taxpayers to engage with the ATO early before their debts become unmanageable.

If the ATO reports a taxpayer that has an outstanding debt to a CRB, this can have a negative impact on the client’s credit rating. This in turn may affect the client’s ability to borrow from banks and other financial institutions.

High Court rejects attempt to disclaim interest in trust distribution

The High Court has rejected a taxpayer’s attempt to disclaim an interest in trust income that arose as a result of a default beneficiary clause being triggered.

Ms Natalie Carter was one of five default beneficiaries of the Whitby Trust, a discretionary trust. For the 2014 income year the trustee had failed to appoint or accumulate any of the income of the Trust.

The Trust Deed contained a default beneficiary clause, nominating Ms Carter and four other beneficiaries, as the default beneficiaries, in the event that the trustee had failed to allocate trust income for the benefit of beneficiaries by 30 June of a particular year. The ATO issued each of Ms Carter and the four other default beneficiaries with an assessment for one-fifth of the income of the Whitby Trust for the 2014 income year on October 2015. This was done on the basis that they were “presently entitled” to that income within the meaning of S.97(1) of the Income Tax Assessment Act 1936. An initial unsuccessful attempt was made by the default beneficiaries to disclaim their entitlement to default distributions in November 2015. A further attempt by the default beneficiaries to disclaim their interest in trust income for the 2014 income year was made in September 2016 in what was referred to as the “Third Disclaimers”.

The Administrative Appeals Tribunal held that the Third Disclaimers were ineffective whereas the Full Federal Court found in the taxpayers’ favour that they were effective. The High Court was then asked to consider the legal status of the Third Disclaimers.

It was the unanimous decision of the High Court that the Third Disclaimers were ineffective. The High Court carefully analysed the words of S.97(1). In particular, the phrase “is presently entitled to a share of the income of the trust estate” in S.97(1) is expressed in the present tense. The plurality found that expression "is directed to the position existing immediately before the end of the income year for the stated purpose of identifying the beneficiaries who are to be assessed with the income of the trust – namely, those beneficiaries of the trust who, as well as having an interest in the income of the trust which is vested both in interest and in possession, have a present legal right to demand and receive payment of the income." The High Court took the view that the question of the "present entitlement" of a beneficiary to income of a trust must be tested and examined "at the close of the taxation year", not some reasonable period of time after the end of the taxation year.

Accordingly, Ms Carter and the other four beneficiaries had been assessed by the ATO under S.97(1) given their status as default beneficiaries under the Trust Deed. The High Court also rejected the taxpayers’ argument that a beneficiary of a discretionary trust, with reference to events that may occur in a “reasonable period” after the end of an income year, can trigger an event that would disentitle the beneficiary to a distribution.

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.

2022/23 Budget Update

Thu, 31 Mar 2022 11:23:11 GMT

Individuals

Increase to the low and middle income tax offset

The Government has announced a once-off $420 ‘cost of living tax offset’ for the 2022 income year, which will be provided in the form of an increase to the existing LMITO. This will increase the maximum LMITO benefit to $1,500 for individuals and $3,000 for couples.

Increase to the Medicare levy low-income thresholds

The threshold for singles will be increased from $23,226 to $23,365.
The threshold for families will be increased from $39,167 to $39,402.
The threshold for seniors and pensioners will be increased from $36,705 to $36,925.
The threshold for seniors and pensioners families will be increased from $51,094 to $51,401.

Tax Deductibility of COVID-19 tests

The costs of taking a COVID-19 tests to attend work are tax deductible for individuals from 1 July 2021. Also, FBT will not be incurred by businesses where COVID-19 tests are provided to employees to attend work premises.

Businesses

Skills and Training Boost

The skills and training boost will support small and medium-sized businesses to train and upskill their employees. The boost will apply to eligible expenditure incurred from 7:30pm on 29 March 2022 until 30 June 2024.

Small and medium businesses (with aggregated annual turnover of less than $50 million) will be able to deduct an additional 20% of expenditure incurred on external training courses provided to their employees. The external training courses will need to be provided to employees in Australia or online and delivered by entities registered in Australia.

For eligible expenditure incurred by 30 June 2022, the boost will be claimed in tax returns for the following income year. For eligible expenditure incurred between 1 July 2022 and 30 June 2024, the boost will be claimed in the income year in which the expenditure is incurred.

Technology Investment Boost

The technology investment boost will support digital adoption by small and medium-sized businesses. The boost will apply to eligible expenditure incurred from 7:30pm on 29 March 2022 until 30 June 2023.

Small and medium businesses (with aggregated annual turnover of less than $50 million) will be able to deduct an additional 20% of expenditure incurred on business expenses and depreciating assets that support their digital adoption (such as portable payment devices, cyber security systems or subscriptions to cloud-based services).

An annual cap will apply in each qualifying income year so that expenditure up to $100,000 will be eligible for the boost. This equates to a maximum additional deduction of $20,000 per eligible year.

For eligible expenditure incurred by 30 June 2022, the boost will be claimed in tax returns for the following income year. For eligible expenditure incurred between 1 July 2022 and 30 June 2023, the boost will be claimed in the income year in which the expenditure is incurred.

Modernising the PAYG Instalment System

Companies will be able to calculate their PAYG instalments based on current financial performance, extracted from business accounting software, with some tax adjustments.

New system is anticipated to commence from 1 January 2024.

Taxable Payment Annual Reports (TPAR)

The Government will provide businesses with the option to report taxable payments on the same lodgment cycle as their activity statements.
New system is anticipated to commence from 1 January 2024.

COVID-19 Business Grants are non-assessable non-exempt

Payments from certain state and territory COVID-19 business support programs are non-assessable non-exempt income for income tax purposes until 30 June 2022. This measure was originally announced on 13 September 2020.

The following state and territory grants are eligible.

NSW Accommodation and Support Grant
NSW Commercial Landlord Hardship Grant
NSW Performing Arts Relaunch Package
NSW Festival Relaunch Package
NSW2022 Small Business Support Program
QLD 2021 COVID-19 Business Support Grant
SA COVID-19 Tourism and Hospitality Support Grant
SA COVID-19 Business Hardship Grant

Superannuation

Extending the reduction in minimum drawdowns

The 50% reduction of superannuation minimum drawdown requirements for account-based pensions and similar products will be extended to 30 June 2023.

Based on this change, the reduced minimum pension percentages for ABPs (including TRISs) are set out in the following table for the 2023 income year.

Note that, for ABPs and TRISs that commence or cease part-way through the 2023 income year, a pro-rated minimum pension payment applies (unless the pension commenced on or after 1 June 2023, in which case, no minimum pension payment is required).

Recipient Ages age Minimum pension Reduced Minimum Pension

Under 65 4% 2%

65 to 74 5% 2.5%

75 to 79 6% 3%

80 to 84 7% 3.5%

85 to 89 9% 4.5%

90 to 94 11% 5.5%

95 and above 14% 7%

Other

GDP Uplift factor for PAYG and GST instalments
The GDP uplift factor for PAYG and GST instalments will be set at 2% for 2023.

Expanding access to employee share schemes
Where employers make larger offers in connection with employee share schemes in unlisted companies, participants can invest up to the following amounts:

$30,000 per participant per year, accruable for unexercised options for up to five years, plus 70% of dividend and cash bonuses; or
any amount, if it would allow them to immediately take advantage of a planned sale or listing of the company to sell their purchased interests at a profit.

The Government will also remove regulatory requirements for offers to independent contractors, where they do not have to pay for their interests.

Cost of living payment

The Government will provide a one-off $250 cost of living payment to help eligible recipients with higher cost of living pressures. The payment will be made in April 2022 to eligible recipients of the following payments and to concession cardholders:

Age Pension
Disability Support Pension
Parenting Payment
Carer Payment
Carer Allowance (if not in receipt of a primary income support payment)
Jobseeker Payment
Youth Allowance
Austudy and Abstudy Living Allowance
Double Orphan Pension
Special Benefit
Farm Household Allowance
Pensioner Concession Card holders
Commonwealth Seniors Health Card holders
Eligible Veterans’ Affairs payment recipients and Veteran Gold cardholders

The payments are exempt from tax and will not count as income support for the purposes of any income support payment. A person can only receive one economic support payment, even if they are eligible under two or more categories outlined above. The payment will only be available to Australian residents.

Temporary reduction in fuel excise
The Government will help reduce the burden of higher fuel prices by halving the excise and excise-equivalent customs duty rate that applies to petrol and diesel, and all other fuel and petroleum-based products except aviation fuels, for six months. This measure will commence from 12.01am on 30 March 2022 and will remain in place for six months.

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.

March 2022 - Update

Thu, 31 Mar 2022 11:09:51 GMT

If you have not yet lodged your 2021 tax returns, our office is open for Office, Zoom or Phone appointments. With due dates fast approaching, we encourage you to contact us on 03 9853 1000 or email admin@crawfordaccountants.com.au to organise your tax appointment.

Tax deductibility of COVID-19 test expenses

After much speculation, the Government announced that COVID-19 tests, including Polymerase Chain Reaction (‘PCR’) and Rapid Antigen Tests (‘RATs’), will be both:

tax-deductible; and
exempt from FBT;

where they are purchased for work-related purposes.

This will require the introduction of new specific legislation (i.e., to clarify that work-related COVID- 19 test expenses incurred by individuals will be tax-deductible or FBT exempt where employers provide the tests to their staff) which will apply both where an individual is required to attend the workplace or has the option to work remotely.

The Government intends that these changes take effect from the beginning of the 2022 income year and will apply permanently once enacted.

Super changes and full expensing 12-month extension now law

A plethora of superannuation law tweaks has recently been made which include:

Removing the $450 monthly super guarantee threshold.
Reducing the eligibility age for making downsizer contributions from 65 to 60.
Changes to facilitate the removal of the work test for those aged between 67 and 75 regarding non-concessional and salary sacrificed contributions. In addition, the bring-forward rule will now be available for people under the age of 75 (rather than 67, as is currently the case).
Increasing the maximum releasable amount under the First Home Super Saver scheme from $30,000 to $50,000.
Allowing super fund trustees to choose not to use the segregated assets method in certain circumstances.

Furthermore, the Government has extended accelerated depreciation with legislation passing to allow current Temporary Full Expensing measures to continue for another 12 months to 30 June 2023.

12-month extension of the temporary loss carry-back measure

As announced in the 2020/2021 Federal Budget, legislation has now passed to allow eligible corporate entities (i.e., with, amongst other things, an aggregated turnover of less than $5 billion) a 12-month extension to claim a loss carry-back tax offset in the 2023 income year.

The temporary loss carry-back rules were initially implemented in 2020 to promote economic recovery by providing cash flow support to previously profitable companies that fell into a tax loss position due to the COVID-19 pandemic.

The law allows eligible companies to carry-back tax losses from 2020, 2021, 2022 and now the 2023 income year to previously-taxed profits in the 2019 or later income years.

A company that does not elect to carry back losses under this temporary (yet extended) measure is still eligible to carry losses forward as usual.

Keeping and maintaining SMSF records

Trustees of SMSFs have been put on notice by the ATO that keeping and maintaining good records is one of their key responsibilities and legal obligations. Good record keeping ensures trustees can ensure accurate and timely SMSF accounts, audits and income tax return lodgments.

As a result, the ATO has recently confirmed that even where SMSF trustees rely upon super or tax professionals to administer their SMSF, each trustee remains personally responsible for good record keeping.

If trustees are unsure of their obligations, the ATO has encouraged them to view the ATO’s record-keeping videos available on their website (refer to QC 23333) and undertake an approved education course (refer to QC 41142) to improve their understanding and knowledge.

SMSF – statistical overview from 2020 lodgments published

As of 30 June 2021, SMSFs have been reported as making up 25% of all super assets (i.e., $822 billion as of 30 June 2021).

At the same time, there were approximately 598,000 SMSFs with almost 1.115 million individual members. Furthermore, as of 30 June 2020, on average, each SMSF has assets of just over $1.3 million.

The ATO has also reported that the total contributions to all SMSFs in 2020 was around $17.9 billion (a 4% increase from 2019).

Finally, according to ATO statistics, over 25,000 SMSFs were established in 2021 (with average assets of $391,000 upon establishment), and of these new SMSFs, 85% were founded with a corporate trustee (i.e., rather than an individual trustee).

Small employers and STP – the ATO gets serious

The ATO has advised it is in the process of shifting from its previous engagement and communication focus on Single Touch Payroll (‘STP’). In particular, it will begin a ‘failure to lodge penalty’ process for small business employers (i.e., those with 19 or fewer employers) who have yet to commence STP reporting.

STP reporting has been mandatory for most small employers from the 2020 income year, with a final ‘nudge letter’ being issued to approximately 700 small employers in late January 2022.

Notably, the ATO advised that any remaining non-compliant small employers (i.e., those not subject to any appropriate reporting extensions or exemptions) will have been issued pre-penalty warning letters from 18 February 2022.

Where an employer receives a pre-penalty warning letter, they will have a further 28 days to take action by either starting to lodge or contacting the ATO before a failure to lodge penalty will be imposed.

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.

February 2022 - Update

Wed, 16 Feb 2022 11:46:08 GMT

New Recognition for Crawford Accountants

We are excited to announce our Platinum Champion partnership status with Xero – the leading accounting software provider. Our relationship with Xero has given us incredible insight into our clients’ businesses and has played an important role in making our team more effective business advisors.

The Platinum Champion partnership is a special distinction awarded to accounting firms with sustained growth and expertise in cloud accounting technology. A Xero Platinum Partner status means you are working with an advisor who knows the application inside out and selected by the platform itself as better suited to provide technical support to its clients.

As a certified Xero Platinum Partner, we can offer our expertise in the following areas.

Work out If Xero is suitable to your business
Setting up Xero correctly
Migrating to Xero from another software
Training on Xero and best practice advice
Advice on add-on applications
Assistance with Payroll and STP

Get in touch with us and see the difference Xero can make to your business.

Support for businesses

The ATO has a range of support available for small businesses experiencing difficult situations, such as natural disasters, mental health challenges or financial hardship.

Depending on the business taxpayer’s circumstances, the ATO may be able to:

give the business extra time to pay its tax;
set up a payment plan tailored to its situation;
re-issue tax returns, activity statements and notices of assessment;
help the business reconstruct lost or damaged tax records;
prioritise any refunds the business is owed; and
remit penalties or interest charged during the time the business has been affected.

If your business is in financial difficulty and needs support, please contact our office and we can assist in finding a suitable solution.

SME Recovery Loan Scheme extended to 30 June 2022

The SME Recovery Loan Scheme has been extended by a further six months (to 30 June 2022) to support SMEs adversely economically affected by the Coronavirus Pandemic.

Under the Scheme, eligible businesses can obtain loans through participating bank and non-bank lenders with the backing of a Government loan guarantee.

Around 80,000 loans worth approximately $7.3 billion have been written to date since the Scheme commenced in March 2020.

SMEs who are dealing with the economic impacts of COVID-19 with a turnover of less than $250 million will be able to access loans of up to $5 million over a term of up to 10 years.

Other key features of the Scheme include the following:

Lenders can offer borrowers a repayment holiday of up to 24 months.
Loans can be used for a broad range of business purposes, including to support investment.
Loans may be used to refinance any pre-existing debt of an eligible borrower.
Loans can be either unsecured or secured (excluding residential property).

Importantly, the Government’s loan guarantee has been reduced to 50% (down from 80%) for loans available from 1 January 2022 until 30 June 2022.

COVID-19 vaccination incentives and rewards

The ATO has reminded employers to consider their tax and super obligations when employees are provided with incentives or rewards for getting their COVID-19 vaccination.

When employees are provided a cash payment, including paid leave for employees to get their COVID-19 vaccination (or additional paid leave to recover from any vaccination side effects), employers should withhold PAYG withholding and make super contributions on the amount.

Furthermore, the payment must be reported to the ATO via Single Touch Payroll (‘STP’) as part of the employee's salary or wage.

On the other hand, employers must consider the FBT consequences of providing non-cash benefits as an incentive for their employees to get vaccinated.

Such benefits may include:

Goods or services provided to the employee.
Vouchers and gift cards.
Prizes won by an employee in a competition (e.g., a raffle).

Note that certain FBT exemptions and reductions may apply in some circumstances.

For example, if an employer provides or pays for an employee's transport to get their COVID-19 vaccination, there is generally no FBT payable.

Higher PAYG withholding rates continue to apply to backpackers

As we recently communicated, the High Court has held that the 'working holiday maker tax' (also known as the 'backpackers tax') did not apply to a taxpayer on a working holiday visa from the United Kingdom who was also an Australian tax resident.

This was due to the application of the Double Tax Agreement between Australia and the United Kingdom.

This tax treatment will only apply where the working holiday maker is both an Australian resident for tax purposes and from Chile, Finland, Japan, Norway, Turkey, the United Kingdom, Germany or Israel.

However, the ATO has recently told employers that the higher PAYG withholding rates continue to apply to working holiday maker employees.
This is regardless of the country they are from (unless the employer receives an PAYG variation notice from the ATO).

Broadly, the working holiday maker withholding rates apply as follows:

If the employer is registered with the ATO as an employer of working holiday makers, they should withhold tax at the tax rate of 15% from the first dollar the working holiday maker employee earns up to $45,000. Tax rates change for amounts above $45,000.
If the employer is not registered with the ATO as an employer of working holiday makers, they must withhold tax at 32.5% from every dollar the working holiday maker employee earns up to $120,000. The foreign resident withholding rates must be applied to income over $120,000.

If a working holiday maker employee has had excessive amounts of PAYG withheld from their salary, they can lodge a tax return at the end of the income year to receive a tax refund (where eligible).

Single Touch Payroll exemption extended for WPN holders

Any entity covered by the exemption may still choose to voluntarily report under STP.

This continues the exemption that has been provided to relevant entities since the commencement of the 2018-19 financial year.

As a result of this extension, certain entities that have a WPN (but not an ABN) will not be required to report under STP for the 2021‑22 and 2022-23 financial years.

The ATO has extended the Single Touch Payroll (‘STP’) reporting exemption available to entities that have a withholding payer number (‘WPN’).

Payment extension relating to JobKeeper objections

The JobKeeper rules have been amended to ensure the ATO can make payments to certain taxpayers after 31 March 2022.

Where a taxpayer has objected to an ATO decision relating to JobKeeper, a payment can be made by the ATO after 31 March 2022 to give effect to the objection decision and decisions of the AAT or a court.

Importantly, this extended payment date will only apply where a valid objection was given to the ATO on or before 30 November 2021.

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.

December 2021 - Update

Sat, 18 Dec 2021 12:11:58 GMT

On behalf of the team at Crawford Accountants we thank you for your support during the past year and we wish you and your family a safe and happy Christmas and New Year!

Our office will be closed on Thursday the 23rd of December at 12:00pm and will reopen on Monday the 10th of January 2022 at 9am.

Merry Christmas!

Super is now following new employees

The ATO is reminding employers that, as of 1 November 2021, there is an extra step they may need to take to comply with the choice of super fund rules.

If a new employee does not choose a super fund, most employers will need to request the employee's 'stapled super fund' details from the ATO to avoid penalties.

A stapled super fund is an existing super account which is linked, or 'stapled', to an individual employee so that it follows them as they change jobs.

When a new employee starts, employers need to:

offer eligible employees a choice of super fund;
if the new employee does not choose a super fund, the employer will need to request stapled super fund details using Online services for business; and
pay super contributions into one of the following:

– the super fund they choose;
– the stapled super fund the ATO provides if they have not chosen a fund; or
– the employer's default fund (or another fund that meets the choice of fund rules) if the employer cannot pay into the two above.

ABN 'intent to cancel' program

The ATO is reviewing Australian business numbers ('ABNs') to identify potentially inactive ABNs for cancellation, and it has introduced a new automated process to allow taxpayers to confirm if their ABN is still required via a secure voice response system.

An ABN may be selected if the taxpayer has not reported business activity in their tax return, or there are no signs of business activity in other lodgments or third-party information.

The ATO reminds taxpayers that any income earned under an ABN needs to be reported in their tax return, regardless of the amount. By keeping their tax obligations up to date, the ATO can see they are actively undertaking a business.

'Backpacker tax' may not apply to some backpackers

The High Court has held that the 'working holiday maker tax' (also known as the 'backpackers tax') did not apply to a taxpayer on a working holiday visa from the United Kingdom who was also an Australian tax resident, due to the application of the Double Tax Agreement between Australia and the United Kingdom.

The ATO has responded to this High Court decision, noting that it is only relevant where a working holiday maker is both an Australian resident for tax purposes and from Chile, Finland, Japan, Norway, Turkey, the United Kingdom, Germany or Israel.

Working holiday makers who may potentially be affected by this decision are encouraged to check the ATO website for updated guidance prior to lodging or amending a return or lodging an objection.

Employers should continue to follow rates in the published withholding tables for working holiday makers until the ATO updates its website with further guidance.

The ATO notes that a working holiday maker’s residency status for tax purposes is determined by the taxpayer’s individual circumstances, but most working holiday makers will be non-residents (consistent with their purpose of being in Australia to have a holiday and working to support that holiday).

Beware of scams

Scamwatch is warning that scams cost Australian consumers, businesses and the economy hundreds of millions of dollars each year and cause serious emotional harm to victims and their families.
Cryptocurrency scams are the most 'popular' type of investment scams, representing over 50% of losses. Often the initial investment amount is low (between $250 and $500), but the scammers pressure the person to invest more over time before claiming the money is gone or ceasing communication and blocking access to the funds.

All age groups are losing money to investment scams, but the over-65s have lost the most, with $24 million lost this year.

Some simple steps individuals can take to protect themselves (and their businesses) are:

Never give any personal information to someone who has contacted you.
Hang up and verify the identity of the person contacting you by calling the relevant organisation directly — find them through an independent source such as a phone book, past bill or online search.
Do not click on hyperlinks in text/social media messages or emails, even if it appears to come from a trusted source.
Go directly to a website through a browser (e.g., to reach the MyGov website, type ‘my.gov.au’ into the browser).
Search for reviews before purchasing from unfamiliar online traders.
Be wary of sellers requesting unusual payment methods.
Verify any request to change bank details by contacting the supplier directly.
Consider a multi-factor approval process for transactions over a certain dollar amount.
Never provide a stranger remote access to your computer, even if they claim to be from a telco company such as Telstra.

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.

Director ID Requirement

Sat, 04 Dec 2021 12:28:01 GMT

From the 1st of November, Australian Company Directors are required by law to verify their identity with the Australian Business Registry Service and obtain a Director ID. Those who became company directors before 31 October 2021 have until the 30 November 2022 to obtain a Director ID.

How can I get my Director ID?

To obtain a Director ID you will need to complete the identification requirements through MyGovID or over the Phone.

MyGovID is an application designed to allow users to authenticate with the Australian Government websites and services and was developed by the Australian Tax Office (ATO) and the Digital Transformation Agency (DTA). The identification process requires you to verify your identity using a combination of identification documents and existing ATO held information.

Phone - If you are unable to obtain a MyGovID, you can complete your Director ID application over the phone by calling the Australian Business Registry Services on 13 62 50. When calling you will be required to verify your identity.

The details required are listed here.

https://www.abrs.gov.au/director-identification-number/apply-director-identification-number

Should you have any queries or require assistance in obtaining your Director ID, please contact our office on (03) 9853 1000.

November 2021 - Update

Sat, 04 Dec 2021 12:20:45 GMT

November 2021 – Update

Business as Usual

Lockdown has ended in Melbourne, and it’s business as usual at Crawford Accountants, so there is no reason to delay your tax return. Our office is now open and we encourage you to organise your tax appointment. This can be completed via telephone, Zoom or in person.
You can contact us on 03 9853 1000 or email admin@crawfordaccountants.com.au .

ATO Digital Correspondence including NOA

The ATO’s digital initiative now directs all your ATO notices to mygov. If you have a mygov account, the ATO notices and assessments will be issued to your mygov account, similar to the group certificates. Moving forward you will have the ability to download directly from mygov or you can contact our office if you require a copy.

The new Director ID regime

As part of its Digital Business Plan, the Government announced the full implementation of the 'Modernising Business Registers' program. This included recently enacted legislation introducing the new director identification number ('director ID') regime.

The director ID is a unique identifier that a director will need to apply for once and will keep forever.

The introduction of director IDs is intended to create a fairer business environment by helping prevent the use of false and fraudulent director identities, which "will go a long way to better identifying and eliminating director involvement in unlawful activity".

Note that all directors will need to apply for a director ID, including directors of corporate trustees of self-managed super funds ('SMSFs') and of family trusts.

Individuals will be able to apply for a director ID from 1 November 2021 on the new Australian Business Registry Services ('ABRS') website (at abrs.gov.au) and will need to log in using the myGovID app (set to a 'Standard' or 'Strong' identity strength).

When an individual must apply for a director ID depends on the date they became a director. For directors under the Corporations Act:

Those who became a director on or before 31 October 2021, they must apply for a director ID by 30 November 2022;
Those who become a director between 1 November 2021 and 4 April 2022, they must apply for a director ID within 28 days of appointment; and
Those who become a director from 5 April 2022, they must apply for a director ID before their appointment.

Individuals will need to apply for their director ID themselves to verify their identity (i.e., no one can apply for it on their behalf, including agents).

Varying PAYG instalments due to COVID-19

Taxpayers can vary their pay as you go ('PAYG') instalments throughout the year if they think they will pay too much, compared with their estimated tax for the year.

To assist taxpayers who continue to be affected by COVID-19, the ATO has stated that it will not apply penalties or interest on varied instalments for the 2021/22 income year for excessive variations when the taxpayer has taken reasonable care to estimate its end of year tax.

The ATO says this means making a reasonable and genuine attempt to determine the tax liability. When considering if a genuine attempt has been made, the ATO takes into account what a reasonable person would have done in the same circumstances.

Note that variations do not carry over into the new income year.

Therefore, if a taxpayer made variations in the 2020/21 income year, they may need to vary again in 2021/22. The varied amount or rate will apply for all of the remaining instalments for the income year, or until the taxpayer makes another variation.

The ATO encourages taxpayers to review their tax position regularly and vary their PAYG instalments as their situation changes.

If a taxpayer realises they have made a mistake working out their PAYG instalment, they can correct it by lodging a revised activity statement or varying a subsequent instalment.

If a taxpayer is unable to pay an instalment amount, they should still lodge their instalment notice and discuss a payment arrangement with the ATO to ensure they will not have a debt at the end of the year.

Permanent changes to AGMs and electronic communications

The Government has introduced into Parliament a Bill to permanently allow companies to use technology to meet their regulatory requirements, and ensure that companies can continue to meet their obligations amid the uncertainty of the COVID‑19 pandemic.

Specifically, the new permanent reforms will:

Ensure that meetings can be held physically, as a hybrid, or (if expressly permitted by the entity’s constitution) virtually, provided that members, as a whole, are given reasonable opportunity to participate in the meeting;
Ensure that companies (and registered schemes) can meet their obligations to send documents in hardcopy or softcopy, and give members the flexibility to receive documents in their preferred format; and
Allow documents, including deeds, to be validly executed in technology neutral and flexible manners, including by company agents.

AUSTRAC transaction report information data-matching program

The ATO will acquire transaction report information data from AUSTRAC for the period of 17 June 2021 through to 30 June 2027.

The data elements made available to the ATO will depend on what is captured in the reporting process and can include identifying information of customers and institutions facilitating transactions, identifiers such as ABNs, ACNs and Australian Financial Services Licence details, and transaction details (including transaction type, accounts, instruments, amounts and currency).

The ATO estimates that records relating to approximately nine million individuals will be obtained each financial year.

The data will be acquired and matched to ATO data to support the administration and enforcement of tax and superannuation laws, including registration, lodgment, reporting and payment responsibilities.

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.

October 2021 - Update

Wed, 20 Oct 2021 12:10:29 GMT

Extra super step when hiring new employees

Employers may soon need to do something extra when a new employee starts to work for them. Currently, if a new employee does not choose their own fund, their employer can pay contributions for them to a default fund.

From 1 November 2021, if a new employee does not choose a specific fund, their employer may need to request the employee’s ‘stapled super fund’ details from the ATO. A stapled super fund is an existing account which is linked (or 'stapled') to an individual employee, so it follows them as they change jobs.

Businesses will be able to request stapled super fund details for new employees using ‘Online services for business’, or by asking their registered tax or BAS agent to do this for them.

ATO support for employers with expansion of STP

As part of the expansion of Single Touch Payroll (known as STP Phase 2), from 1 January 2022, employers will need to report additional payroll information in their STP reports including:

• disaggregation of gross amounts (including separate reporting of paid leave, allowances, overtime, directors’ fees and salary sacrifice amounts);

• employment and taxation conditions (including information from the TFN declaration); and

• income types (for example, salary and wages, working holiday maker income, foreign employment income).

To support employers with the move to STP Phase 2 reporting, the ATO will take the following approach.

• Employers that can start Phase 2 reporting by their digital service provider’s deferral date (if applicable), do not need to apply to the ATO for more time.

• If an employer’s software will be ready for 1 January 2022 and they are able to start reporting before 1 March 2022, they do not need to apply to the ATO for more time (that is, an automatic extension applies).

The ATO has also advised that penalties will not be applied for genuine mistakes in the first year of Phase 2 reporting until 31 December 2022.

Additional ATO support during COVID-19

The ATO is providing additional support to taxpayers having difficulty meeting their tax and superannuation guarantee charge obligations for employees because of COVID-19.

Available support includes the following:

• Lodgement or payment support options – for example, payment plans or remitting interest and penalties.

• Varying PAYG instalments – The ATO will not apply penalties or charge interest on varied instalments that relate to the 2022 income year where taxpayers have taken reasonable care to estimate their end of year tax liability.

• Moving from quarterly to monthly GST reporting for quicker access to refunds.

• Applying for administrative relief for Division 7A minimum yearly repayments.

If you need assistance with your tax or super obligations, we can assist with identifying your options and apply to the ATO on your behalf

Paid Parental Leave changes support parents in lockdown

The Paid Parental Leave (‘PPL’) scheme has been amended to enable expectant parents whose work has been affected by COVID-19 lockdowns to access Parental Leave Pay or Dad and Partner Pay under the scheme.

Many people who would otherwise have qualified for PPL, may no longer meet the ‘work test’ condition to be eligible for payment because of continued lockdowns across much of Australia. For example, this could apply to a person who has been stood down, had their hours of work reduced or ceased work entirely as a result of a lockdown.

The changes to the PPL ensure that the period a person receives an Australian Government COVID-19 payment or the COVID-19 Disaster Payment (that is, because their work has been impacted by lockdowns) counts towards the work test, so that they may still receive Parental Leave Pay or Dad and Partner Pay.

Reminder of SG obligations for September 2021 quarter

From 1 July 2021, the minimum contribution required is 10% (up from 9.5%) of an employee’s Ordinary Time Earnings base, up to a maximum quarterly contribution base of $58,920 for 2021/22.

The due date for making SG contributions for the September 2021 quarter is 28 October 2021.

Victorian Commercial Tenancy Relief Scheme

If you’re a commercial tenant struggling with rent payments, support is available through the Commercial Tenancy Relief Scheme.

Small and medium businesses that have experienced a loss in turnover of more than 30% during the pandemic will receive financial relief in the form of proportionate rent reduction. The Scheme will apply retrospectively from 28 July 2021 and will run until 15 January 2022.

Tenants and landlords can contact the Victorian Small Business Commission for further information on 13 87 22 or visit vsbc.vic.gov.au.

Victorian Commercial Landlord Hardship Fund 3

Small landlords can apply for a grant of up to $6,000 per eligible tenancy in proportion to their ownership share. In cases where landlords are experiencing acute hardship because of the rent waiver agreed with their tenant(s), the grant may be increased to a maximum of $10,000 per eligible tenancy.

Applications to the Commercial Landlord Hardship Fund 3 will close at 11:59pm on 15 January 2022, or until funds are exhausted.

To be eligible for the fund, the landlords must:

• Have received a written request for rent relief made by a commercial tenant

• Respond to the tenant in writing within 14 days, or the agreed timeframe

• Agree to reduce rent in proportion to their tenant’s downturn in turnover

• At least 50 per cent of the agreed rent relief must be a rent waiver

• Provide the tenant with a landlord acceptance letter detailing the agreement.

• Is a small landlord with total taxable landholdings of less than $3 million, including part holdings but excluding principal place of residence, or where a property is held on trust, the total taxable landholdings of the trust must be less than $3 million

• Is an owner and landlord of the property for which an application is made

• Is a landlord that has made a rent relief agreement with their tenant under the Commercial Tenancy Relief Scheme in operation between 28 July 2021 and 15 January 2022

• Is an Australian citizen, resident or Australian incorporated entity.

To be eligible for acute hardship consideration, in addition to the above, small landlords will be required to attest that the information provided in the application is true and correct and they hold the written consent of the tenant to provide business and contact details and commercial rent represents more than 50 per cent of their total gross annual income for the 2019-20 financial year.

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.

Victorian Business Costs Assistance Program Round Four - Construction

Wed, 20 Oct 2021 12:04:41 GMT

If you are a construction business based in Victoria and were affected by the 2-week shutdown for the period 21 September 2021 to 4 October 2021 and you have not previously received funding through the Business Costs Assistance Program Round Two or Business Covid Hardship Fund, you may be eligible to receive between $ 2,800 - $ 8,400 depending on the payroll size.

To be eligible for this grant, a business must:

• Hold an ABN and have held that ABN on and from 24 September 2021.

• Be located in Victoria.

• Be registered for GST on and from 24 September 2021.

• If employing staff, the annual Victorian payroll must be $10 million or less in 2019-20 on an ungrouped basis.

• Be registered as operating in an eligible industry sector identified in the list of eligible ANZSIC classes.

• Have been contracted (prior to the restriction period being announced) to undertake, or supply workers to undertake, work at an impacted construction site located in the following areas shut down due to COVID restrictions announced 20 September 2021 including:

1. Local Government Areas (LGAs) in metropolitan Melbourne

2. City of Greater Geelong

3. Mitchell Shire, and

4. Surf Coast Shire

• Have been unable to operate the business or provide services remotely at the contracted work site during the restricted period0

• Incurred direct costs because of the health restrictions in effect from 21 September to 4 October 2021, that have not been and will not be partially or fully recovered or otherwise reimbursed.

• Employing businesses must also be registered for WorkCover with WorkSafe Victoria and attest that the business supported its workers to access any paid leave entitlements during the construction sector shutdown, and supported their casual workers, where possible.

• Non-employing businesses must hold a WorkSafe Construction Induction Training Card (white card) or interstate equivalent issued by a comparable governing authority in another Australian state or territory for the business owner.

• Businesses undertaking construction work at Fully Exempt State Critical Infrastructure Projects are not eligible for a grant.

• Businesses undertaking exempt construction work at shutdown constructions sites are not eligible for a grant.

• Businesses will not be eligible to receive a Business Costs Assistance Program Round Four – Construction grant if they have received support under any of the following programs:

• Business Costs Assistance Program Round Two

• Business Costs Assistance Program Round Two July Extension

• Small Business COVID Hardship Fund.

• If an eligible business has previously applied for support under programs listed above and has not received an outcome on assessment, it will be eligible for the grant that provides the higher amount should the business be assessed as being eligible for more than one.

The following grant amounts are available depending on payroll size:

Non-employing business $2,000

Payroll below $650,000 $2,800

Payroll between $650,000 and less than $3 million $5,600

Payroll between $3 and $10 million $8,400

Grant funds must be used to assist the business, for example on:

• meeting business costs, including utilities, wages or rent

• seeking financial, legal or other advice to support business continuity planning

• any other supporting activities related to the operation of the business.

The Program will be open for applications until program funds are exhausted or early November 2021.

If you did not receive funding through one of the programs listed above, based in Victoria, registered for GST and your ABN is registered and you operate in one of the following industries you may be eligible for this grant.

https://business.vic.gov.au/grants-and-programs/business-costs-assistance-program-round-four-construction/eligible-anzsic-classes

More information on the program can be found at the following page.

https://business.vic.gov.au/__data/assets/pdf_file/0006/2036814/Business-Costs-Assistance-Program-Round-Four-Construction-Guidelines.pdf

The information provided in this update is general in nature and if you require assistance from our office with the application process, please get in touch with us as soon as possible due to funding limitations.

September 2021 - Update

Thu, 16 Sep 2021 13:06:02 GMT

Business as Usual

As we go in and out of lockdowns, it’s business as usual at Crawford Accountants, so there is no reason to delay your tax return. Although our office is closed for appointments during lockdowns, our team continues to work remotely at the same capacity, and we encourage you to organise your tax appointment via telephone or Zoom by calling us on 03 9853 1000 or email us on admin@crawfordaccountants.com.au.

Support for Victorians who could not work due to Lockdown 6

Financial support is still available from the federal government for those who have lost work due to the lockdowns. We also encourage you to keep an eye out for our regular updates as we constantly update you with support programs and grants as they become available.

If you are an employee who lives in an area affected by a health order (lockdown) and have lost more than 20 hours of work, you may be eligible for $ 750 per week, and if you have lost between 8 - 20 hours of work, you may be eligible for $ 450 per week.

If you are a sole trader and you did not qualify for business support, you may be eligible for the Disaster Payment. Trusts and Companies should refer to business support.

Please refer the following link for eligibility criteria and application process.

https://www.servicesaustralia.gov.au/individuals/services/centrelink/covid-19-disaster-payment-victoria

ATO PAYG Instalments now issued to myGov

ATO continues to issue PAYG instalment notices to myGov accounts. If you have not received your quarterly PAYG Instalment from our office, please keep an eye on your myGov account.

Extending administrative relief for companies to use technology

The Government has passed legislation renewing the temporary relief that allows companies to use technology to meet regulatory requirements under the Corporations Act 2001.

These temporary relief measures will allow companies to hold virtual meetings and use electronic communications to send meeting-materials and execute documents until 31 March 2022. This should ensure that companies can meet their obligations as they continue to deal with the uncertainty of the COVID-19 pandemic.

With the extension of this temporary relief, the Government will now seek to introduce permanent reforms later this year to give companies the flexibility to use technology to hold meetings, such as hybrid meetings, and sign and send documents.

Expansion of support for SMEs to access funding

The Government is providing additional support to small and medium sized businesses ('SMEs') by expanding eligibility for the SME Recovery Loan Scheme.

Specifically, in recognition of the continued economic impacts of COVID‑19, the Government will remove requirements for SMEs to have received JobKeeper during the March quarter of 2021, or to have been a flood affected business, in order to be eligible under the SME Recovery Loan Scheme.

As with the existing scheme, SMEs who are dealing with the economic impacts of the coronavirus with a turnover of less than $250 million will be able to access loans of up to $5 million over a term of up to 10 years.

Other key features include:

The Government guarantee will be 80% of the loan amount.
Lenders are allowed to offer borrowers a repayment holiday of up to 24 months.
Loans can be used for a broad range of business purposes, including to support investment, as well as to refinance any pre-existing debt of an eligible borrower.
Loans can be either unsecured or secured (excluding residential property).
The loans will be available through participating lenders until 31 December 2021.

Div.293 concessional contribution assessments have been issued

The ATO has recently issued approximately 30,000 Division 293 assessments for the 2018/19 and 2019/20 financial years.

Due to a system issue, concessional contributions reported for these financial years were not included in Division 293 assessments where that super account was also reported as closed during that financial year. This reporting issue was resolved in June 2021, and this has resulted in affected members receiving either an initial or amended Division 293 assessment.

Time running out to register for the JobMaker Hiring Credit

The JobMaker Hiring Credit scheme's third claim period is now open. If a taxpayer has taken on additional eligible employees since 7 October 2020, they may be able to claim JobMaker Hiring Credit payments for their business.

Eligible businesses can receive up to:

$10,400 over a year for each additional eligible employee hired aged 16 to 29 years; and
$5,200 over a year for each additional eligible employee hired aged 30 to 35 years.

The JobMaker Hiring Credit is available to businesses for each additional eligible employee hired before 6 October 2021, so, if a business is thinking about taking on extra staff, they should check if they are eligible to participate in the scheme.

Victorian Commercial Tenancy Relief Scheme

If you’re a commercial tenant struggling with rent payments, support is available through the Commercial Tenancy Relief Scheme.

Tenants and landlords can contact the Victorian Small Business Commission for further information on 13 87 22 or visit vsbc.vic.gov.au.

Victorian Commercial Landlord Hardship Fund 3

Applications to the Commercial Landlord Hardship Fund 3 will close at 11:59pm on 15 January 2022, or until funds are exhausted.

To be eligible for the fund, the landlords must:

Have received a written request for rent relief made by a commercial tenant
Respond to the tenant in writing within 14 days, or the agreed timeframe
Agree to reduce rent in proportion to their tenant’s downturn in turnover
At least 50 per cent of the agreed rent relief must be a rent waiver
Provide the tenant with a landlord acceptance letter detailing the agreement.
Is a small landlord with total taxable landholdings of less than $3 million, including part holdings but excluding principal place of residence, or where a property is held on trust, the total taxable landholdings of the trust must be less than $3 million
Is an owner and landlord of the property for which an application is made
Is a landlord that has made a rent relief agreement with their tenant under the Commercial Tenancy Relief Scheme in operation between 28 July 2021 and 15 January 2022
Is an Australian citizen, resident or Australian incorporated entity.

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.

August 2021 - Update

Wed, 11 Aug 2021 07:02:29 GMT

Ongoing Lockdowns

Support for Victorian Businesses due to Lockdown 6.0

If you were eligible for the business costs assistance program and received funding during lockdown 4.0 and 5.0, you will automatically receive an additional $ 2,800. The business cost assistance program was targeted towards specific industries and your ABN should be registered under one of the following ANZISC codes.

https://business.vic.gov.au/__data/assets/pdf_file/0010/2030131/List-of-Eligible-ANZSIC-classes-Business-Costs-Assistance-Program-R2-Extension.pdf

If you are a licenced hospitality venue and receive funding through the Licenced hospitality venue fund during lockdowns 4.0 and 5.0, you will automatically receive further $ 5,000 - $ 20,000 based on the venue capacity.

Alpine businesses will also receive between $ 5,000 - $ 20,000 under an extension to the Alipne Resort Winter Support program.

If your ABN is registered under one of the above ANZISC codes or you are a licenced hospitality venue or an alpine business, and you did not previously apply for the above grants and need assistance with the application process, please contact our office.

If you are a Victorian business that experienced a downturn in turnover in excess of 30% during April – June 2021 compared to April – June 2019, you may be eligible for rent relief.

If you are a landlord who provides rent relief to an eligible tenant, you will be eligible for 25% land tax relief.

Support for Victorian Individuals who could not work due to Lockdown 6.0 (Covid 19 Disaster Payment)

If you are an employee who lives in an area affected by a health order (lockdown) and have lost more than 20 hours of work, you may be eligible for $ 750 per week, and if you have lost less than 20 hours of work, you may be eligible for $ 450 per week.

If you are a sole trader and you did not qualify for business support, you may be eligible for the Disaster Payment. Trusts and Companies should refer to business support.

Please refer the following link for eligibility criteria and application process.

https://www.servicesaustralia.gov.au/individuals/services/centrelink/covid-19-disaster-payment-victoria.

Reminder of superannuation caps indexation for 2022

From 1 July 2021, the superannuation contributions caps have been indexed for the 2022 income year. The new concessional contributions cap for the 2022 financial year is $27,500 (increased from $25,000).

The new non-concessional (i.e., non-deductible) contributions cap for the 2022 financial year is now $110,000 or (where the ‘bring forward’ rules are applicable) $330,000 over three years (increased from $100,000 or $300,000 respectively).

The CGT cap amount for the 2022 financial year is now $1,615,000 (increased from $1,565,000).

Division 7A benchmark interest rate for 2022 remains unchanged

The Division 7A benchmark interest rate for the 2022 income year remains unchanged from the 2021 rate of 4.52%.

Changes to STP reporting from 1 July 2021

Employers should have already been reporting through Single Touch Payroll (‘STP’) unless they only have closely held payees, or they are covered by a deferral or exemption.

From 1 July 2021, there have been changes to STP reporting for small employers with closely held payees and quarterly reporting for micro employers.

More specifically, for employers with closely held payees, employers must now report amounts paid to their closely held payees through STP.

They can choose to report such payments via one of three methods, being:

• Actual payments each pay day;

• Actual payments quarterly; or

• A reasonable estimate quarterly.

For micro employers reporting quarterly, the STP quarterly reporting concession is only available if they meet certain eligibility requirements (which now include the need for exceptional circumstances to exist).

Maximum contributions base for super guarantee

The maximum super contributions base is used to determine the limit on any individual employee's earnings base for superannuation guarantee purposes on a quarterly basis.

Once an employee earns over $235,680 during the 2022 income year, no additional superannuation guarantee will generally be required to be paid by an employer.

Practically, this means that the maximum superannuation guarantee contribution that an employer must pay for the 2022 income year is 10% of $235,680 (or $23,568).

Taxable Payments Annual Reports (‘TPARs’) due 28 August

2021 TPARs are due to be lodged for businesses who have paid contractors to provide the following services:

• Building and construction

• Cleaning

• Courier, delivery or road freight

• Information technology

• Security, surveillance or investigation.

With specific reference to the TPAR due on 28 August 2021, the ATO has reminded taxpayers they may need to report payments made to contractors during the 2021 income year for the first time.

This will particularly be the case where such payments were made for delivery services done on behalf of their business.

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.

July 2021 - Welcome to the New Financial Year

Wed, 11 Aug 2021 06:58:59 GMT

FY 2021… It’s a wrap and hello 2022!

Welcome to the start of another new financial year. Despite all the challenges we all faced throughout 2021, this is a year to remember because we all made it work in one way or another. As we prepare for 2022, thank you for your support and partnering with us over the past 12 months.

It’s also the tax time again and if you have not yet organised your tax appointment, please get in touch with us asap. We conduct appointments at the office, via Zoom or Phone.

03 9853 1000

admin@crawfordaccountants.com.au

www.crawfordaccountants.com.au

Are you Audit Safe?

To alleviate the cost and stress we encourage you to take out our audit services subscription. It is a cheap and efficient way of dealing with an ATO audit. Please note late lodgements, penalties, shortfall liabilities and interest are not covered by audit protection and it only covers the accounting fees incurred in an audit or a review. For more information, please contact our office.

Changes to Super guarantee contributions

The due date for employers to make super guarantee contributions for their employees for the June 2021 quarter is 28 July 2021. Note that the super guarantee rate on salary and wages paid on or before 30 June 2021 is 9.5%, but the super guarantee rate is 10% on salary and wages paid from 1 July 2021 (even if they are paid in relation to work performed before that date). Also, contributions made (and received by the fund) after 30 June 2021 will not be deductible in the 2021 income year, even if they are made in relation to work performed during the 2021 income year.

The increase in the SG rate to 10% means the maximum super contribution will increase from 1 July 2021 to $235,680 per annum, up from $228,360.

The increase in the SG rate to 10% also means that the SG opt-out income threshold will increase to $275,000 up from $263,157.

Concessional contributions cap increase

From 1 July 2021 the annual concessional contributions will increase from $25,000 to $27,500. Concessional contributions made beyond this amount may attract higher tax rates and an excess contributions charge and therefore should generally be avoided.

Extension of time to make repayments on Division 7A loans

An extension of the repayment period is now available for those who were unable to make their MYRs by the end of the lender’s 2020/21 income year (generally 30 June). The borrower can apply for this administrative relief using the ATO's online application. Note that they must still make up the shortfall of their 2020/21 MYR by 30 June 2022.

Rent or lease payment changes due to COVID-19

The ATO has provided updates regarding the tax implications when a landlord gives, or a tenant receives, rent concessions (such as waivers or deferrals of rent) as a result of COVID-19.

If the waived rent is related to a past period of occupancy that the tenant has already incurred and claimed a deduction for, they are still entitled to that deduction.

However:

• if they have already paid the incurred rent and it has been waived and refunded to the tenant, they will need to include this amount in their assessable income when they receive it; or

• if they have not already paid the incurred rent and it has been waived, the rent waiver will be a debt forgiveness. When such a debt is forgiven, the tenant will make a gain. The amount isn't usually included in the business's assessable income — it is instead offset against amounts that could otherwise reduce the business's taxable income.

If the waived rent is related to a future period of occupancy, they will not be entitled to a deduction for that amount.

SMSF limited recourse borrowing arrangements interest rates

The ATO has confirmed that the following interest rates charged under a limited recourse borrowing arrangement ('LRBA') to an SMSF would be consistent with the safe harbour terms the ATO will accept for the 2021/22 financial year.

Real property: 5.10%

Listed shares or units: 7.10%

Note that these rates are unchanged from those the ATO accepted for the 2020/21 year.

New ATO data-matching programs

The ATO will engage in two new data matching programs, as outlined below:

• Novated lease data from McMillan Shakespeare Group, Smartgroup Corporation, SG Fleet Group, Eclipx Group, LeasePlan, Toyota Fleet Management, LeasePLUS and Orix Australia for the 2018/19 through to 2022/23 financial years (relating to approximately 260,000 individuals each financial year); and

• Account identification and transaction data from cryptocurrency designated service providers for the 2021 financial year through to the 2023 financial year inclusively (relating to approximately 400,000 to 600,000 individuals each financial year).

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.

2021/22 Budget Update

Fri, 25 Jun 2021 01:09:54 GMT

Individuals

Low and Middle Income Tax Offset extended to 2022

LMITO will be retained for one more income year, so that it will still be available for 2022. Under current legislation, the LMITO was due to be removed from 1 July 2021.

The LMITO will apply as follows for the 2022.

$37,000 or less Up to $255
$37,001 to $48,000 $255 + 7.5% of excess over $37,000
$48,001 to $90,000 $1,080
$90,001 to $126,000 $1,080 – 3% of excess over $90,000
$126,001 + Nil

Consistent with current arrangements, the LMITO will be applied to reduce the tax payable by
individuals when they lodge their tax returns for the 2022 income year.

Increased Medicare levy low-income thresholds

The Medicare levy low-income thresholds will be increased for singles, families and seniors and pensioners for the 2021 income year, as follows:

Singles will be increased from $22,801 to $23,226.
Families will be increased from $38,474 to $39,167.
Single seniors and pensioners will be increased from $36,056 to $36,705.
Seniors and pensioners will be increased from $50,191 to $51,094.

For each dependent child or student, the family income thresholds increase by a further $3,597, up from the previous amount of $3,533.

Update to individual tax residency rules

The individual tax residency rules will be replaced with a new, modernised framework.
The primary test will be a simple ‘bright line’ test – a person who is physically present in Australia for 183 days or more in any income year will be an Australian tax resident.

Individuals who do not meet the primary test will be subject to secondary tests that depend on a
combination of physical presence and measurable, objective criteria. The new framework will be easier to understand and apply in practice, deliver greater certainty, and lower compliance costs for globally mobile individuals and their employers. This measure will have effect from the first income year after the date of Royal Assent of the enabling legislation.

Update to self-education expense deductions

The exclusion of the first $250 of deductions for prescribed courses of education will be removed.
This measure will have effect from the first income year after the date of Royal Assent of the
enabling legislation.

Employee Share Schemes – ‘cessation of employment’ to be removed as a taxing point

The ‘cessation of employment’ will be removed as a taxing point for tax-deferred Employee
Share Schemes (‘ESS’) that are available for all companies. This change will apply to ESS interests issued from the first income year after the date of Royal Assent of the enabling legislation.

Currently, under a tax-deferred ESS, where certain criteria are met, employees may defer tax until
a later tax year (‘the deferred taxing point’). The deferred taxing point is the earliest of:

cessation of employment
in the case of shares, when there is no risk of forfeiture and no restrictions on disposal
in the case of options, when the employee exercises the option and there is no risk of forfeiting the resulting share and no restriction on disposal
the maximum period of deferral of 15 years.

This change will remove the ‘cessation of employment’ taxing point and result in tax being deferred until the earliest of the remaining taxing points.

Businesses

Temporary full expensing extension

In the 2020/21 Budget, the Government announced amendments to allow businesses with an aggregated turnover of less than $5 billion to access a new temporary full expensing of eligible depreciating assets until 30 June 2022. In the 2021/22 Federal Budget, the Government has announced that temporary full expensing will be extended by 12 months to allow eligible businesses with aggregated annual turnover of less than $5 billion to deduct the full cost of eligible depreciable assets of any value, acquired from 7:30pm AEDT on 6 October 2020 and first used or installed ready for use by 30 June 2023. All other elements of temporary full expensing will remain unchanged, including the alternative eligibility test based on total income, which will continue to be available to businesses.

Temporary loss carry-back extension

In the 2020/21 Budget, the Government announced amendments to introduce a temporary loss carry-back measure. Broadly, this initial measure allowed ‘corporate tax entities’ with an aggregated turnover of less than $5 billion to carry back tax losses made in the 2020, 2021 and 2022 income years to claim a refund of tax paid (by way of a tax offset) in relation to the 2019, 2020 and 2021 income years. In the 2021/22 Budget, the Government has announced that the loss carry-back measure will be extended to allow eligible companies with aggregated turnover of less than $5 billion to carry back tax losses from 2023 to offset previously taxed profits as far back as 2019 when they lodge their tax return for the 2023 income year.

The tax refund available under this measure is limited by requiring that the amount carried back is not more than the earlier taxed profits and does not generate a franking account deficit. Companies that do not elect to carry back losses under this measure can still carry losses forward as normal.

Digital economy

The Digital Economy Strategy includes the following:

Taxpayers to self-assess the tax effective lives of eligible intangible depreciating assets, such as patents, registered designs, copyrights and in-house software. This measure will apply to assets acquired from 1 July 2023, after the temporary full expensing regime has concluded. The tax effective lives of such assets are currently set by statute.
Digital Games Tax Offset to provide a 30% refundable tax offset for qualifying Australian digital games expenditure ongoing from 1 July 2022, with the criteria and definition of qualifying expenditure to be determined through industry consultation.
Develop and transition government services to a new, enhanced myGov platform, providing a central place for Australians to find information and services online

Debt recovery for small business

Small business entities with an aggregated turnover of less than $10 million per year to apply to
the Small Business Taxation Division of the Administrative Appeals Tribunal (the ‘Tribunal’) to
pause or modify ATO debt recovery actions, such as garnishee notices and the recovery of general interest charge or related penalties, where the debt is being disputed in the Tribunal.

Tax treatment of qualifying storm and flood grants

Category D grants provided under the Disaster Recovery Funding Arrangements 2018, where those grants relate to the storms and floods in Australia that occurred due to rainfall events between 19 February 2021 and 31 March 2021 to be income tax exempt. These include small business recovery grants of up to $50,000 and primary producer recovery grants of up to $75,000. The grants will be made non-assessable non-exempt income for tax purposes. This is subject to eligibility criteria.

Superannuation

Removing the work test for voluntary contributions

Individuals aged 67 to 74 years (inclusive) to make or receive non-concessional contributions (including under the bring-forward rule) and salary sacrifice contributions without meeting the work test, subject to existing contribution caps. Individuals aged 67 to 74 years (inclusive) will still have to meet the work test to make personal deductible contributions.

The measure will have effect from the start of the first income year after Royal Assent of the
enabling legislation, which the Government expects to have occurred prior to 1 July 2022.
Currently, individuals aged 67 to 74 years (inclusive) can only make voluntary contributions (both
concessional and non-concessional) to their superannuation fund, or receive contributions from
their spouse, if they satisfy the work test (subject to a limited work test exemption). Generally, to
satisfy the work test, an individual must be working for at least 40 hours over a period 30 consecutive days in the income year the relevant contribution is made.

Reducing the age limit for downsizer contributions

The downsizer contributions age will be reduced from 65 to 60.The measure will have effect from the start of the first income year after Royal Assent of the enabling legislation, which the Government expects to have occurred prior to 1 July 2022.The downsizer contribution allows eligible individuals to make a one-off, after-tax contribution to their superannuation fund, of up to $300,000 per person, following the disposal of an eligible dwelling, where certain conditions are satisfied. Under the current requirements, an individual must be at least 65 years of age at the time of making the relevant contribution, for the contribution to qualify as a downsizer contribution.

Removing the $450 per month threshold for Superannuation Guarantee

The current $450 per month minimum income threshold, will be removed. i.e superannuation guarantee applies from the first $1 of wages paid to employees. The measure will have effect from the start of the first income year after Royal Assent of the enabling legislation, which the Government expects to have occurred prior to 1 July 2022.

Relaxing the residency requirements SMSFs

The Government will relax residency requirements for SMSFs and small APRA-regulated funds by:

extending the central control and management test safe harbour from two years to five years for SMSFs
removing the active member test for both types of funds.

The measure will have effect from the start of the first income year after Royal Assent of the
enabling legislation, which the Government expects to have occurred prior to 1 July 2022.

Exiting legacy retirement products

The Government has announced that it will allow individuals the temporary option to exit and
convert from a specified range of legacy retirement products (together with any associated
reserves) into more flexible and contemporary retirement products, for a two-year period.
The products covered by this measure include market-linked, life-expectancy and lifetime products that were first commenced before 20 September 2007 from any provider (including an SMSF), but not flexi-pension products or a lifetime product in a large APRA-regulated or public sector defined benefit scheme. The measure will have effect from the first income year after the date of Royal Assent of the enabling legislation.

Currently, these products can only be converted into another like product and limits apply to the
allocation of any associated reserves without counting towards an individual’s contribution caps.
This measure will permit full access to all of the product’s underlying capital, including any reserves, as part of transitioning into a more flexible and contemporary retirement product.

Social security and taxation treatment will not be grandfathered for any new products commenced with commuted funds, and the commuted reserves will be taxed as an assessable contribution.

Changes to the First Home Super Saver scheme

The Government has announced that it will make the following changes to the FHSS scheme.

The maximum releasable amount of voluntary concessional and non concessional
contributions under the FHSS scheme to be increased from $30,000 to $50,000. This change will apply from the start of the first income year after Royal Assent of the enabling legislation, which the Government expects will have occurred by 1 July 2022.
Four technical changes to the legislation underpinning the FHSS. These four changes will apply retrospectively from 1 July 2018.
Increasing the discretion of the Commissioner of Taxation to amend and revoke FHSS scheme applications.
Allowing individuals to withdraw or amend their applications before receiving a FHSS scheme amount and allow those who withdraw to re-apply for FHSS scheme releases in the future.
Allowing the Commissioner of Taxation to return any released FHSS scheme money to superannuation funds, provided that the money has not yet been released to the individual.
Clarifying that the money returned by the Commissioner of Taxation to superannuation funds is treated as a fund’s non-assessable non-exempt income and does not count towards the individual’s contribution caps.

The information provided in this update is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.

June 2021 - Update

Tue, 08 Jun 2021 00:27:40 GMT

PAYG and GST Instalments

As part of its digital improvement program, the ATO stopped issuing paper quarterly PAYG and GST instalment notices where taxpayers had a digital preference on ATO systems. The September 2020 notice was the last one issued to these taxpayers. The following instalment notices and all other ATO correspondence were issued to myGov accounts.

Please be sure to check your myGov accounts for your PAYG and GST instalments.

Cryptocurrency under the microscope this tax time

ATO data analysis shows a dramatic increase in trading since the beginning of 2020 and has estimated that there are over 600,000 taxpayers that have invested in crypto-assets in recent years.

This year, the ATO will be writing to around 100,000 taxpayers with cryptocurrency assets explaining their tax obligations and urging them to review their previously lodged returns. The ATO also expects to prompt almost 300,000 taxpayers as they lodge their 2021 tax return to report their cryptocurrency capital gains or losses.

Gains from cryptocurrency are similar to gains from other investments, such as shares. CGT also applies to the disposal of non-fungible tokens ('NFTs').

The ATO matches data from cryptocurrency designated service providers to individuals’ tax returns, helping it to ensure investors are paying the right amount of tax.

The best tip to nail your cryptocurrency gains and losses is to keep accurate records including dates of transactions, the value in Australian dollars at the time of the transactions, what the transactions were for, and who the other party was, even if it’s just their wallet address.

Businesses or sole traders that are paid cryptocurrency for goods or services will have these payments taxed as income based on the value of the cryptocurrency in Australian dollars.

Holding a cryptocurrency for at least 12 months as an investment may mean the holder is entitled to a CGT discount if they have made a capital gain.

Temporary reduction in pension minimum drawdown rates extended

The Government has announced an extension of the temporary reduction in superannuation minimum drawdown rates for a further year to 30 June 2022.

As part of the response to the coronavirus pandemic (and the negative effect on the account balance of superannuation pensions), the Government reduced the superannuation minimum drawdown rates by 50% for the 2019/20 and 2020/21 income years.

This 50% reduction will now be extended to the 2021/22 income year.

Super Guarantee rate rising from 1 July 2021

The super guarantee rate will rise from 9.5% to 10% on 1 July 2021, so businesses with employees will need to update their payroll and accounting systems to incorporate the change.

Family assistance payments

Individuals receiving Child Care Subsidy and Family Tax Benefit payments from Services Australia mustlodge their 2019/20 Individual tax returns by 30 June 2021. Lodgement deferrals with the ATO do not alter this requirement.

If tax return lodgement is not made by 30 June 2021:

clients receiving Child Care Subsidy may lose their ongoing entitlement and/or receive a debt from Services Australia and have to repay the amount received in the 2019/20 financial year; and
clients receiving Family Tax Benefit may miss out on additional payments, may also receive a debt from

Services Australia and/or may have their fortnightly payments stopped.

Luxury car tax threshold

The LCT threshold for fuel efficient vehicles in 2021/22 is $79,659 (up from $77,565 in 2020/21) and the LCT threshold for other vehicles in 2021/22 is $69,152 (up from $68,740 in 2020/21).
Note that these thresholds determine whether LCT is payable, and are different from the luxury car depreciation limit of $60,733 for 2021/22.

New ATO data-matching programs involving property

The ATO will engage in two new data matching programs dealing with property transactions.

property management data from property management software providers for the 2018/19 through to 2022/23
rental bond data from state and territory rental bond regulators bi-annually through to 30 June 2023

Victorian Circuit Breaker Business Support Package

If you are an ABN holder with a GST registration (Individual/Company/Trust/Partnership) affected by the recent Victorian Circuit Breaker Restrictions, you may be eligible for a cash grant.

Business Costs Assistance Program Round Two
Grants of $ 2,500 to $5,000 for eligible businesses and sole traders in the most impacted sectors. Applications are open now and will close on Thursday 24 June 2021. Please use the following link to determine if your business is in an eligible industry.
https://business.vic.gov.au/grants-and-programs/circuit-breaker-business-support-package/business-costs-assistance-program/eligible-anzsic-classes
Licensed Hospitality Venue Fund
The Licensed Hospitality Venue Fund 2021 program provides businesses holding an eligible liquor licence and food certificate with a $3,500 or $7,000 grant per premises. The program is now open for applications and will remain open until 11:59pm on Thursday 24 June 2021.Eligible liquor licensees under the Licensed Hospitality Venue Fund 2021 payment have been emailed directly by Business Victoria with a link to their grant application form.

May 2021 – Update

Sat, 08 May 2021 02:02:32 GMT

Government proposal to modernise business communications

The Government has committed to modernising certain laws so that they are 'technology neutral', to enable easier communication between businesses, individuals and regulators.

The first phase of legislative reform will focus on key areas raised by stakeholders which are implementation-ready (ideally by the end of 2021), including:

expanding the range of documents that can be validly signed electronically;
increasing the range of documents that can be sent electronically to shareholders and amending requirements to contact lost shareholders;
improving flexibility for customers when changing address and consenting to electronic communication with credit providers;
removing prescriptive requirements for notices to be published in newspapers, where suitable alternatives have been identified; and
addressing provisions in Treasury legislation where only non-electronic payment options are in place.

Subsequent phases will consider reforms in additional areas that could benefit from greater technology neutrality, including communication with regulators, and product disclosure and record keeping requirements.

Independent review service for small businesses made permanent

Following a successful multi-year pilot, the ATO’s small business independent review service will be offered permanently as a dispute resolution option for eligible small businesses.

ATO Deputy Commissioner Jeremy Geale said the service is all about ensuring small businesses are given the opportunity to achieve an independent, fast, free, and fair resolution when they disagree with the ATO’s audit position:

“Independence is critical when handling a dispute, so we ensure each and every independent review is done by an officer from a different part of the ATO who was not involved in the original audit”.

The ATO’s small business independent review service is available to eligible small businesses with an annual turnover of less than $10 million in relation to disputes about income tax, GST, excise, luxury car tax, wine equalisation tax, and fuel tax credits, and is in addition to other dispute options.

Disputes about employer obligations like superannuation and FBT are not eligible for the independent review service.

More information about the ATO’s independent review service, including how to request a review and eligibility criteria, is available on the ATO’s website.

ATO asks businesses to check if they are still using their ABNs

The ATO has advised that, if a business hasn’t used its ABN for a while, the ATO may contact them about cancelling their ABN.

The ATO may also contact them about their ABN if their business situation has changed.

To ensure businesses don’t miss out on Government support, including during unfortunate events, it’s essential that they regularly review their ABN details and keep them up to date (or cancel their ABN if the business is no longer operating, so that Government agencies can tailor their support to those that need it).

It’s also important to check that the business has listed the physical address of the business, as otherwise it can be difficult for emergency services and Government agencies to make contact.

A business' mailing address and physical location address can be listed separately on its ABN data, and these (and other ABN details) can be checked and updated online at any time.

Super contribution caps will increase from 1 July 2021

The ATO has confirmed that, from 1 July 2021, the superannuation concessional and non-concessional contribution caps will be indexed.

The new caps for the 2021/22 year will be:

Concessional Cap: $27,500

Non-Concessional cap: $110,000 (or $330,000 over 3 years)

The total superannuation balance limit that determines if an individual has a non-concessional contributions cap of nil will also increase from $1.6 to $1.7 million, effective from 1 July 2021.

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.

April 2021 – Update

Wed, 07 Apr 2021 23:24:16 GMT

ATO Mail Update

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. The following instalment notices and all other ATO correspondence were issued to myGov accounts.

However, the ATO has received feedback from tax professionals that this has caused significant inconvenience to those who do not regularly access their myGov accounts.

As an interim solution, the ATO said it will issue paper PAYG and GST quarterly instalment notices starting with the March 2021 quarterly notices.

JobKeeper comes to an end
The final JobKeeper payment will be processed in April 2021.

Enrolled businesses do not have to do anything when the program closes, although they will need to complete their final March monthly business declaration by 14 April 2021.

When a business is no longer claiming JobKeeper Payments, it may start to be eligible to receive the JobMaker Hiring Credit for any additional employees that started employment on or after 7 October 2020.

Taxable Payments reporting system (TPAR) update
The ATO has confirmed that more than 60,000 businesses have not yet complied with lodgment requirements under the taxable payments reporting system ('TPRS') for 2019/20.

The TPRS is designed to assist the ATO to identify contractors who don’t report or under-report their income.

The ATO estimates that around 280,000 businesses need to lodge a Taxable payments annual report('TPAR') for the 2020 financial year.

Importantly, 2020 was the first year that businesses that pay contractors to provide road freight, information technology, security, investigation, or surveillance services may need to lodge a TPAR with the ATO (in addition to those businesses providing building and construction, cleaning, or courier services).

Businesses who have not yet lodged need to lodge as soon as possible to avoid penalties.

FBT rates and thresholds for the 2021/22 FBT year

The ATO has updated the fringe benefits tax ('FBT') rates and thresholds for the 2017/18 to 2021/22 FBT years.
Two amounts that were not previously announced for the 2021/22 FBT year are:

the FBT record keeping exemption is $8,923 (up from $8,853 for the 2020/21 FBT year); and
the statutory or benchmark interest rate is 4.52% (down from 4.80% for the 2020/21 FBT year).

STP reporting for closely held payees
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.

Victorian Technology Adoption Innovation Program

The Victorian Government has announced a package to support eligible businesses to acquire innovative technologies or develop innovative, new and commercial technology by contributing funding support for projects. The program contains two streams of financial assistance.

SME technology and digital adoption
Grants of up to $50,000 for Victorian SMEs to adopt technology or digital solutions to improve their processes and productivity and support their future growth.
Innovative , commercial technology development
Grants of up to $50,000 for Victorian technology companies to implement defined projects to develop commercial technology or digital products.

The indicative key dates for this scheme are:

Applications open: 31 March 2021
Applications close: 19 April 2021
Program reporting: 4 months, 8 months, 12 months
Program end: 30 June 2022

Under both Streams each successful SME will be required to contribute a minimum of $20,000 (GST exclusive) towards eligible project expenditure. Both Streams will provide grants on a 1:1 co-fund basis between the company and government respectively. Refer the following link for further details on this program. https://business.vic.gov.au/grants-and-programs/technology-adoption-and-innovation-program

Victorian Small Business Digital Adaptation Program

We provided information on this grant in our February 2021 Update. The program was originally due to be expired on the 31 ^st March 2021 and has now been extended until 30 June 2020. Please refer the February 2021 Update for further details.

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.

March 2021 – Update

Sun, 07 Mar 2021 13:49:39 GMT

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.

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.

February 2021 – Update

Sun, 07 Feb 2021 23:14:44 GMT

New measures applying from 1 January 2021

The Government has introduced a number of new measures which came into effect from 1 January 2021, including (among others):

The most significant changes to Australia’s insolvency framework in 30 years, which are intended to reduce costs, cut red tape and help more small businesses recover from the pandemic. The reforms introduce a new, simplified debt restructuring process. These measures apply to incorporated businesses with liabilities of less than $1 million — covering around 76% of businesses subject to insolvencies today, 98% of which have less than 20 employees.
Australians will have more power to choose their own superannuation fund: ‘Your Superannuation, Your Choice’ allows around 800,000 Australians to decide where their retirement savings are invested, representing around 40% of all employees covered by a current enterprise agreement.
The Government’s HomeBuilder program has been extended to 31 March 2021. The scheme is expected to support the construction or major rebuild of an additional 15,000 homes.
Major reforms to Australia’s foreign investment framework take effect, with new requirements for foreign investors.

JobMaker Hiring Credit scheme open from 1 February 2021

The JobMaker Hiring Credit is a wage subsidy payment to employers as an incentive to employ additional job seekers aged 16 to 35 years. Registrations for the JobMaker Hiring Credit scheme opened on 7 December 2020 and claims for the first JobMaker period can be made from 1 February 2021, provided employers are registered and meet all eligibility requirements.

Employer eligibility requirements are:

Up to date with their tax and GST lodgement obligations for the last 2 years
Have not claimed JobKeeper payments for a fortnight that started during the JobMaker period
Reporting payroll through Single Touch Payroll

Shortcut rate for claiming home office expenses extended

The ATO has extended (again) the ability to utilise the "shortcut rate" for claiming home office running expenses to 30 June 2021 (it previously only applied until 31 December 2020). The ATO's guideline allows certain taxpayers to claim a fixed rate per hour (80 cents per hour) for most additional running expenses incurred when working from home by keeping a record of the number of hours they have worked from home, rather than needing to calculate specific running expenses. The expenses included in the shortcut rate include lighting, heating, cooling and cleaning costs, the decline in value and repair of home office items (such as furniture and furnishings in the area used for work, computers and laptops, etc.), and phone and internet expenses. However, the guideline does not cover "occupancy expenses", such as rent, mortgage interest, property insurance and land taxes.

AAT decision on JobKeeper and backdated ABNs

On 21 December 2020, the AAT handed down its decision in a case relating to a taxpayer's eligibility for JobKeeper payments, in circumstances where the Registrar of the Australian Business Register decided to reactivate a previously cancelled ABN after 12 March 2020, with a backdated effective date on or before 12 March 2020. The AAT held that the taxpayer met the JobKeeper requirement to have an ABN on 12 March 2020. However, the ATO disagrees with this decision and has lodged an appeal in the Federal Court. While the appeal outcome is pending, the ATO will postpone finalising decisions regarding an entity’s eligibility for JobKeeper where the entity has backdated its registration to qualify. The ATO is taking a similar position in relation to eligibility for the Cash Flow Boost. Note that the AAT's decision has not changed the need to satisfy all other eligibility conditions.

ATO data-matching programs

The ATO has announced it will engage in the following data-matching programs:

it will acquire motor vehicle registry data from state and territory motor vehicle registry authorities for 2019/20 through to 2021/22, with records relating to approximately 1.5 million individuals to be obtained each financial year; and
it will acquire data on Australian sales made through online selling platforms for the 2018/19 through to 2022/23 financial years, collecting 20,000 to 30,000 account records each financial year (with around half of the matched accounts relating to individuals).

These records will be electronically matched with ATO data holdings to identify non-compliance with registration, lodgement, reporting and payment obligations under taxation laws.

Cash payment limit Bill shelved

It appears that the Government has decided not to proceed with its proposal to limit cash payments in Australia to $10,000. This measure was originally raised as part of the 2018/19 Budget, and the Government subsequently introduced a Bill to the House of Representatives, proposing to make it an offence for entities to make or accept cash payments of $10,000 or more. That Bill passed the House and was then introduced to the Senate on 11 November 2019, but proceeded no further, and the Government withdrew the Bill from the Senate on 3 December 2020.

Victorian Small Business Digital Adaptation Program

The Small Business Digital Adaptation Program allows eligible businesses to trial and receive access to digital products used in their day-to-day operations. Once the eligible product is purchased, eligible businesses can apply for a rebate of $1,200 to access the product for 12 months. You must register in this program before 28 February 2021 to access the rebate and claim the rebate before 31 March 2021.
To be eligible for the program an applicant must:

operate a business located in Victoria
hold an Australian Business Number (ABN)
have held that ABN on 13 September 2019
be registered for Goods and Services Tax (GST) on 13 September 2020.

Not-for-profit entities that are not registered for GST and are registered with the Australian Charities and Not-for-Profit Commission are also eligible to apply.

Products from the following suppliers are currently eligible:Mr Yum

MYOB
Shopify
Square
Squarespace
Xero
Australian Good Food Guide
Ecwid Inc.
Intuit Australia (QuickBooks)
Lawpath
Reckon Limited
ServiceM8
Trade Trak
Victorian Automobile Chamber of Commerce (VACC)

Products chosen by eligible businesses must be new products not currently used by the business, or an upgrade of an existing product with additional product features providing specific digital adaptation capability (for example, upgrading an existing website to an e-commerce site), or a product available under the program that has been used by the business before (more than one year ago) that it would like to resume using.

The Small Business Digital Adaptation Program will not cover the cost of: renewals of existing product or software licences, or minor updates to existing products (for example, a software version update), or products that are not available under the program.

You may use the following link for registrations:
https://www.business.vic.gov.au/support-for-your-business/grants-and-assistance/business-resilience-package/Small-Business-Digital-Adaptation-Program#Registration-form

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.

December 2020 – Update

Tue, 08 Dec 2020 01:06:36 GMT

As 2020 draws to a close, the team at Crawford Accountants would like to wish you and your family a very Merry Christmas and a Happy New Year! Our office will be closed during the holiday season from 12:00pm on Wednesday the 23 ^rd of December 2020 until 9:00am on Monday the 11 ^th of January 2021.

Improvements to be made to full expensing measure

The government will expand eligibility for the temporary 'full expensing measure', which temporarily allows certain businesses to deduct the full cost of eligible depreciable assets in the year they are first used or installed. The government initially announced in the 2020/21 Budget that businesses with a turnover of up to

$5 billion would be able to immediately deduct the full cost of eligible depreciable assets as long as they are first used or installed by 30 June 2022. The government will also allow businesses to opt out of temporary full expensing and the backing business investment incentive on an asset‑by‑asset basis.

This change will provide businesses with more flexibility in respect of these measures, removing a potential disincentive for them to take advantage of these incentives (Editor: For example, where the automatic application of full expensing might cause the entity to make a loss).

JobMaker Hiring Credit passed

The government has passed legislation to establish the JobMaker Hiring Credit, which is part of the government’s economic response to the COVID-19 pandemic. The JobMaker Hiring Credit is specifically designed to encourage businesses to take on additional young employees and increase employment. It does this by providing employers with a fixed amount of $200 per week for an eligible employee aged 16 to 29 years and $100 per week for an eligible employee aged 30 to 35 years, paid quarterly in arrears by the ATO.

To be eligible, the employee must have been receiving JobSeeker Payment, Youth Allowance (Other) or Parenting Payment for at least one of the previous three months, assessed on the date of employment. Employees also need to have worked for a minimum of 20 hours per week of paid work to be eligible, averaged over a quarter, and can only be eligible with one employer at a time. The hiring credit is not available to an employer who does not increase their headcount and payroll.

Employers and employees will be prohibited from entering into contrived schemes in order to gain access to or increase the amount payable. Existing rights and safeguards for employees under the Fair Work Act will continue to apply, including protection from unfair dismissal and the full range of general protections.

STP data-sharing with Services Australia

Single Touch Payroll ('STP') allows the ATO to share data in real-time with other government agencies. As part of the ATO's data-matching program, it has a STP data-sharing arrangement with Services Australia to help them administer Australia's welfare system. This means that those who are on an income support payment from Services Australia and need to report their employment income fortnightly to Centrelink will now see their employer details are pre-filled.

Proposed FBT exemption — retraining and re-skilling

The government has announced it will introduce an exemption from FBT for retraining and re-skilling benefits provided by employers to redundant, or soon to be redundant, employees where the benefits may not be related to their current employment. It is proposed that this exemption will not apply to:

retraining provided under a salary packaging arrangement;
training provided through Commonwealth supported places at universities; or
repayments towards Commonwealth student loans.

If enacted, this proposed measure is intended to apply from the day it was announced (i.e., 2 October 2020).

Victorian Global Gateway Program

The Global Gateway program will support established Victorian exporters to help them stabilise their business and adapt their export strategies in response to the challenges created by the coronavirus (COVID-19) pandemic. The Global Gateway program is a key part of the Victorian Government’s $15.7 million Export Recovery Package. Eligible Victorian businesses can apply for a one-off grant of up to $50,000 to identify and engage professional service providers to deliver project activities to support their export recovery.

These activities may include marketing and promotion, market access and marketing intelligence. Businesses must make a minimum co-contribution of 20 per cent of the project. Grant applications are now open and will close at 11.59 pm on Sunday 17 January 2021.

$200 Victorian Regional Travel Voucher Scheme

Victorians are encouraged to experience everything regional Victoria has to offer thanks to the Regional Travel Voucher Scheme. The scheme will provide Victorians with a $200 voucher when they spend $400 or more on accommodation, tourism attractions or tours in regional Victoria, the Yarra Ranges and the Mornington Peninsula. Registrations opened on 11 December 2020.

Small Business Digital Adaptation Program

The program is open to Victorian businesses from all industry sectors and places are limited. Businesses must register for this program online via the Business Victoria website. Registered businesses may then access selected products for trial and view the workshops and training calendar. Registered businesses can attend free digital adaptation workshops offered via the Business Victoria website. Workshops will be delivered across Victoria in face-to-face (subject to COVID restrictions) and online formats.

Registered businesses can trial the digital products on offer via the Business Victoria website. Available digital products include online website, e-commerce, finance and business management tools. Registered businesses must purchase a digital product available under this program before applying for a program rebate. Registered businesses will be invited to apply for a rebate and will be asked to provide evidence of purchase.

Applicants will be contacted six weeks after applying for a rebate to ensure their business has established product use and begun its digital adaptation journey. Applicants who confirm continued use will receive a purchase rebate of $1,200 to cover 12 months’ access to their chosen product. Businesses will pay the ongoing costs of access to their digital product after fully utilising the rebate.

If you have any queries or require further information or assistance with applications to the grants listed above, please contact our office.

November 2020 – Update

Sun, 08 Nov 2020 23:49:44 GMT

The Government announced various tax measures in the 2020 Budget on 6 October 2020, and it was able to secure passage of legislation containing some of the important measures very shortly afterwards, as summarised below.

Tax relief for individuals

The Government brought forward 'Stage two' of their Personal Income Tax Plan by two years, so that, from 1 July 2020:

the low income tax offset increased from $445 to $700;
the top threshold of the 19% tax bracket increased from $37,000 to $45,000; and
the top threshold of the 32.5% tax bracket increased from $90,000 to $120,000.

In addition, in 2020/21, low and middle-income earners will receive a one-off additional benefit of up to $1,080 from the low and middle income tax offset.

Tax relief for business

Businesses with a turnover of up to $5 billion are now able to immediately deduct the full cost of eligible depreciable assets as long as they are first used or installed by 30 June 2022. To complement this, the Government will also temporarily allow companies with a turnover of up to $5 billion to offset tax losses against previous profits on which tax has been paid. Also, businesses with an aggregated annual turnover between $10 million and $50 million will, for the first time, be able to access up to ten small business tax concessions. Under the changes passed by the Parliament, the Government will also enhance previously announced reforms to invest an additional $2 billion through the Research and Development Tax Incentive.

Employers need to apply recent tax cuts as soon as possible

The ATO has now updated the tax withholding schedules to reflect the 2020/21 income year personal tax cuts — the updated schedules are available at ato.gov.au/taxtables . The ATO has said that employers now need to make adjustments in their payroll processes and systems in order for the tax cuts to be reflected in employees’ take-home pay. Employees should be aware that any withholding on the old scales will be taken into account in their tax return.

Deferrals of interest due to COVID-19

Many lenders have recently allowed borrowers with investment property loans to defer repayments for a period of time. While repayments are being deferred, interest (and fees) will usually be added to the loan balance (i.e., the deferred interest will be 'capitalised'). However, it is important to recognise in such situations that, while repayments are not being made during the relevant period, borrowers continue to ‘incur’ the interest during that time. Further, interest will continue to be calculated and will accrue on both the unpaid principal sum of the loan and the unpaid (i.e., capitalised) interest. The interest that accrues on the unpaid or capitalised interest is referred to as ‘compound interest’. Importantly, the ATO has previously acknowledged that, if the underlying, or ordinary, interest is deductible, then the compound interest will also be deductible. Accordingly, interest expenses (including any compound interest) will generally be deductible to the extent the borrowed monies are used for income producing purposes (such as where the borrowed funds are used to purchase a rental property). However, interest on a loan will not be deductible to the extent to which the borrowed funds are used for private purposes (e.g., to purchase a home, a private boat, or to pay for a holiday).

Simplified home office expense deduction claims due to COVID-19

Given that many Australians continue to work from home due to COVID-19, the ATO has updated its Practical Compliance Guideline which allows taxpayers working from home to claim a rate of 80 cents per hour, by keeping a record of the number of hours they have worked from home, rather than needing to calculate specific running expenses. The application of the Guideline has been extended so that it now applies from 1 March 2020 until 31 December 2020.

Companies holding meetings and signing documents electronically

The Government has made another determination extending the timeframe within which companies can hold meetings electronically and enabling electronic signatures to be used, to relieve companies from problems they face due to the Coronavirus situation. This determination is intended to be in effect until (and will be repealed from) 22 March 2021, unless the Government determines otherwise.

Employees on JobKeeper can satisfy the ‘work test’

The Australian Prudential Regulation Authority ('APRA') has confirmed that, where an employer is receiving the JobKeeper wage subsidy for an individual, superannuation funds should consider the individual to be ‘gainfully employed’ for the purpose of the ‘work test', even if that individual has been fully stood down and is not actually performing work. As such, superannuation funds can assume that all members in receipt of the JobKeeper subsidy satisfy the ‘work test’ when determining whether they can make voluntary superannuation contributions.

October 2020 - Update

Wed, 07 Oct 2020 23:31:46 GMT

JobKeeper Payment Extended

The JobKeeper Payment has been extended for eligible businesses and not-for-profits until 28 March 2021. Such entities are required to demonstrate a decline in actual GST turnover with a comparable period. JobKeeper payment rates are also changed based on the employees/ eligible business participants working hours.

If you're already receiving JobKeeper payments, you don’t need to do anything differently until 28 September 2020. Continue to pay all eligible employees $ 1,500 per fortnight (before tax) up to and including the fortnight ending 27 September 2020.

From 28 September 2020, you need to nominate the rate you're claiming for each of your eligible employees and/or business participants based on their working hours. For the first extension period from 28 September 2020 to 3 January 2021, the tier 1 rate will be $ 1,200 per fortnight, and the tier 2 rate will be $750 per fortnight. Both rates are before tax.

For the second extension period from 4 January 2021 to 28 March 2021, the tier 1 rate will be $ 1,000 per fortnight, and the tier 2 rate will be $650 per fortnight. Both rates are before tax. Enrolments for the JobKeeper extension are now open. Please contact our office for assessment of your eligibility and enrolments.

SME Guarantee Scheme

Under this scheme, the federal government is guaranteeing 50% of new loans issued by eligible lenders to SMEs. The scheme has enhanced lenders willingness and ability to provide credit to support small business navigate through the pandemic. The initial phase is available until 30 September 2020 and the second phase will begin on 1 October 2020 and will be available until 30 June 2021. Eligible lenders are currently issuing guaranteed loans up to $ 250,000 to be repaid over three years with the initial 6 months of a repayment holiday. From 1 October 2020, eligible lenders will be able to offer loans up to $ 1 million to be repaid over 5 years with a 6-month repayment holiday. These loans will be subject to lenders credit assessment process.

Victorian Business Support Fund Round Three

A one-off cash grant is available to eligible businesses with an annual payroll of up to $ 10 million. General
Eligibility criteria is:

Operate a business in Victoria
Participate in the Jobkeeper Payment Scheme
Employ staff and be registered with WorkSafe
Annual Payroll for 2020 financial year below $ 10 million
Registered for GST
Hold an ABN
Registered with the responsible federal or state regulator

Depending on the annual payroll size, an eligible business will receive a third-round cash grant of $ 10,000, $ 15,000 or $ 20,000. Applications are now open and will close on 23 November 2020.

Victorian Sole Trader Support Fund

Sole traders in eligible sectors such as retail, accommodation, food services, media, hairdressing, gyms, events, education and training etc. who operate from commercial premises may be eligible for a cash grant of $ 3,000. Applications are now open until the funds are exhausted.

Victorian Licensed Hospitality Venue Fund

Grants of up to $30,000 for licensed pubs, clubs, hotels, bars, restaurants and reception centres, based on their venue capacity and location.

Victorian Grants to Alpine Businesses

Grants of up to $ 20,000 to help businesses pay a service charge to Alpine Resort Management Boards.

Victorian Grants for Business Chambers and Trader Groups

Grants of $ 10,000, $ 20,000 or $ 50,000 are available to Victorian business chamber and trader groups for initiatives that enable local business collaboration, help members access support and transition into recovery.

Melbourne City Recovery Fund

Grants for small and medium businesses in Melbourne CBD to pay for equipment, convert spaces like rooftops and courtyards into hospitality zones and remodel internal layouts.

Victorian Outdoor Eating & Entertainment Package

Eligible businesses can apply for a grant of $ 5,000 to pay for outdoor equipment, training, marketing and other costs.

Victorian Vouchers for Digital Presence

A voucher program to assist sole traders and small business in building their digital capability.

Victorian Export Recovery Package

Assistance for Victorian exporters to get their products to market by addressing logistics and supply chain issues.

September 2020 - Update

Tue, 08 Sep 2020 00:45:56 GMT

Extension of the JobKeeper Payment

The JobKeeper Payment, which was originally due to run until 27 September 2020, will now continue to be available to eligible businesses (including the self-employed) and not-for-profits until 28 March 2021 . Businesses and not-for-profits must satisfy the turnover tests from 28 September 2020 and again on 4 January 2021 by demonstrating that they have suffered an ongoing decline in turnover using actual GST turnover.

To be eligible for the JobKeeper Payment from 28 September 2020 to 3 January 2021 employers must reassess their eligibility with reference to actual GST turnover in the September quarter 2020 compared to the actual GST in the September quarter in 2019.

To be eligible for the JobKeeper Payment from 4 January 2021 to 28 March 2021 reassessment of eligibility will be in reference to actual GST turnover in the December quarter 2020 compared to the actual GST in the December quarter in 2019.

From 3 August 2020, the date of employment for assessing employee eligibility will move from 1 March 2020 to 1 July 2020, increasing employee eligibility for the existing scheme and the extension. The other conditions for eligibility of employees remain the same.

An eligible employee:

1. is currently employed by the eligible employer. (including those stood down or re-hired)
is employed either as a full-time or part-time employee, or a casual employed on a regular and systematic basis for longer than 12 months as of 1 July 2020.
were aged 18 years or older of 1 July 2020. (if they were 16 or 17 they can also qualify if they are independent or not undertaking full time study)
were either an Australian resident or an Australian resident for the purpose of the Income Tax Assessment Act 1936 and the holder of a Subclass 444 (Special Category) visa as of 1 March 2020.
is not in receipt of any of government parental leave or a payment in accordance with Australian worker compensation law.

The payment rate of $1,500 per fortnight for eligible employees and business participants will be reduced to $1,200 per fortnight from 28 September 2020 and to $1,000 per fortnight from 4 January 2021.

From 28 September 2020, lower payment rates will apply for employees and business participants that worked fewer than 20 hours per week in the relevant reference period.

Victorian Business Support Fund – Expansion

Due to the stag 3 and stage 4 restrictions imposed in Victoria, the Victorian government announced further grants to impacted employing businesses. Businesses in regional Victoria will be supported through a $5,000 grant and businesses in metropolitan Melbourne or Mitchell Shire will be eligible to receive a $10,000 grant. This program will close on the 14 ^th of September 2020. Please contact our office urgently if you wish to apply or have any queries.

Superannuation guarantee rate increase update

Recently, arguments both for and against increasing the rate of compulsory superannuation guarantee ('SG') have continued to be tossed around! The SG is the compulsory amount of superannuation an employer must pay into an eligible employee’s chosen super fund. The rate of SG has been frozen at9.5% of an employee’s ordinary wages since July 2014, but from 1 July 2021 it is due to incrementally increase (by 0.5% each financial year) until it ultimately reaches 12% in July 2025. As a result, the superannuation guarantee rate is currently set to increase to 10% from 1 July 2021. At this stage, despite a lot of political rhetoric and media coverage, no change has been announced to change these set plans.

Audit Protection

Audit activities by the Australian Taxation Office and other government agencies will become more prevalent in line with the recent JobKeeper scheme and the local government grants. We recommend “audit protection” to all clients that will cover the professional fees incurred in the event of such an audit.

If you have any queries or require further information relating to above, please contact our office.

August 2020 - Update

Thu, 06 Aug 2020 23:39:58 GMT

Extension of the JobKeeper Payment

Businesses and not-for-profits must satisfy the turnover tests from 28 September 2020 and again on 4 January 2021 by demonstrating that they have suffered an ongoing decline in turnover using actual GST turnover.

To be eligible for the JobKeeper Payment from 28 September 2020 to 3 January 2021 employers must reassess their eligibility with reference to actual GST turnover in the September quarter 2020 compared to the actual GST in the September quarter in 2019.

To be eligible for the JobKeeper Payment from 4 January 2021 to 28 March 2021 reassessment of eligibility will be in reference to actual GST turnover in the December quarter 2020 compared to the actual GST in the December quarter in 2019.

From 3 August 2020, the date of employment for assessing employee eligibility will move from 1 March 2020 to 1 July 2020, increasing employee eligibility for the existing scheme and the extension. The other conditions for eligibility of employees remain the same. An eligible employee:

1. Is currently employed by the eligible employer. (including those stood down or re-hired)

2. Is employed either as a full-time or part-time employee, or a casual employed on a regular and systematic basis for longer than 12 months as of 1 July 2020.

3. Were aged 18 years or older of 1 July 2020. (if they were 16 or 17 they can also qualify if they are independent or not undertaking full time study)

4. Were either an Australian resident or an Australian resident for the purpose of the Income Tax Assessment Act 1936 and the holder of a Subclass 444 (Special Category) visa as of 1 March 2020.

5. is not in receipt of any of government parental leave or a payment in accordance with Australian worker compensation law. The payment rate of $1,500 per fortnight for eligible employees and business participants will be reduced to $1,200 per fortnight from 28 September 2020 and to $1,000 per fortnight from 4 January 2021. From 28 September 2020, lower payment rates will apply for employees and business participants that worked fewer than 20 hours per week in the relevant reference period.

Victorian Business Support Fund – Expansion

Due to the stag 3 and stage 4 restrictions imposed in Victoria, the local government has announced further grants to impacted employing businesses. Business in regional Victoria will be supported through a $5,000 grant and businesses in metropolitan Melbourne or Mitchell Shire will be eligible to receive a $10,000 grant.

To be eligible, businesses must:

Operate a business located within Victoria; and
Be a participant in the Commonwealth Government’s JobKeeper Payment scheme; and
Employ people and be registered with WorkSafe on 30 June 2020; and
Have an annual payroll of less than $3 million in 2019-20 on an ungrouped basis; and
Be registered for Goods and Services Tax (GST) on 30 June 2020; and
Hold an Australian Business Number (ABN) and have held that ABN at 30 June 2020; and
Be registered with the responsible Federal or State regulator (ASIC, ACNC or CAV)

Owners of businesses that do not employ people are not eligible for this grant and applications will be open until 11.59 pm on 14 September 2020.

Grant funds may be used to assist the business on meeting business costs including utilities, salaries or rent, seeking financial, legal or other advice to support business continuity planning, developing the business through marketing and communications activities or any other supporting activities related to the operation of the business.

Applicants will be subject to audit by the Victorian Government or its representatives and will be required to produce evidence (such as payroll reports to demonstrate impact) at the request of the Victorian Government for a period of four years. If any information in the application is found to be false or misleading, or grants are not applied for the purposes of the business, the grant will be repayable on demand.

80 cents per hour 'shortcut' method for home office expenses has been extended

Back in April 2020 the ATO announced that a 'shortcut' method was to be made available to use from 1 March 2020 until 30 June 2020 for individuals claiming home office expenses due to COVID-19. The ATO has recently announced an extension of this shortcut method to also include 1 July 2020 to 30 September 2020.

In summary, a taxpayer can claim a deduction of 80 cents for each hour they work from home due to COVID-19 as long as the individual is:

working from home to fulfil their employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls; and
incurring additional deductible running expenses as a result of working from home.

A taxpayer does not have to have a separate or dedicated area of their home set aside for working, such as a private study.

The shortcut method rate covers deductible running expenses such as:

electricity and gas used for heating/cooling and running electronic items used for work purposes
depreciation and repair of assets used for work purposes
work-related phone and internet costs

Audit Protection

If you have any queries or require further information relating to above, please contact our office.

Practice Update - July 2020

Wed, 15 Jul 2020 01:17:03 GMT

Welcome to the New Financial Year

It goes without saying there has been significant and wide-reaching change in 2020. Like so many other businesses, Crawford Accountants has adapted new ways to make sure that our services to you are unaffected.

We have been in regular contact with you regarding State and federal funding including Jobkeeper and Cashflow boost. We are committed to assisting you and your business with reliable advice and compliance services. At Crawford Accountants, its business as usual. So please get in touch for your 2020 taxes or any queries you may have. We strongly recommend frequent communication more than ever to collectively navigate through this time.

Phone appointments, Zoom and electronic signing can also be accommodated to meet your needs.

Victorian Business Support Fund – Expanded

The Victorian Government has announced a $ 5,000 grant to employing businesses that were affected by the 6-week lockdown.

If you are a business that:

employs staff
currently receives Job keeper
affected by the lockdown

Please contact our office urgently as the applications close on the 19 August 2020.
(Guidelines for the grant attached)

ATO Audit Protection

Even if you can substantiate your claim for an allowable deduction, if queried you must still go through the audit process. To alleviate the cost and stress we encourage you to take out our audit protection. It is a cheap and efficient way of dealing with an ATO audit. For more information, please contact our office.

Treasury Laws Amendment (2020 Measures No 3) Bill 2020

Treasury Laws Amendment (2020 Measures No 3) Bill 2020 has passed both Houses of Parliament and is now law.

Extending the Instant Asset Write-Off

This legislation amends the income tax law to allow a business with an aggregated turnover for the income year of less than $500 million to immediately deduct the cost of a depreciating asset (instant asset write-off). The asset must cost less than a threshold of $150,000 and be first used or installed ready for use for a taxable purpose by 31 December 2020. Without these amendments the $150,000 instant asset write-off would have ended on 30 June 2020.

By extending the previous end date of 30 June 2020 to 31 December 2020, the amendments give businesses additional time to access the $150,000 instant asset write-off for their acquisitions of depreciating assets, including those purchases that have been delayed by supply chain disruptions. Further, the amendments extend cash flow support to businesses through the early stages of the recovery from the economic conditions caused by COVID-19.

It will be interesting to see if this timeframe is further extended at some later point. Note that, come 1 January 2021, if there is no further extension, the $150,000 threshold for the instant asset write-off for depreciating assets will collapse to $1,000 and the turnover threshold for eligibility for the outright deduction of less than $500 million will fall to a turnover of less than $10 million.

Editor: Please contact our office if you are considering purchasing a depreciating asset for your business and want to know if you will be eligible for the instant asset write-off.

Treasury Laws Amendment (2019 Measures No 3) Bill 2019

Treasury Laws Amendment (2019 Measures No 3) Bill 2019 has passed both Houses of Parliament and is now law.

Testamentary trusts and minors

This legislation contains amendments to ensure the tax concessions available to minors in relation to income from a testamentary trust only apply in respect of income generated from assets of the deceased estate that are transferred to the testamentary trust (or the proceeds of the disposal or investment of those assets).

Broadly speaking, when a trustee distributes income to a minor it is taxed at the highest marginal rate (plus Medicare levy). However, there are certain exceptions to this rule. One such exception is where the trust is a testamentary trust – being a trust that was established as a result of the will of a deceased individual. Income from a testamentary trust is a type of ‘excepted trust income’ that is generally taxed at ordinary rates.

Prior to this legislation being passed, the previously existing law did not specify that the assessable income of the testamentary trust be derived from assets of the deceased estate (or assets representing assets of the deceased estate). As a result, assets unrelated to a deceased estate that were injected into a testamentary trust may, subject to anti-avoidance rules, generate excepted trust income that was not subject to the higher tax rates on minors. This was an unintended consequence, which allowed some taxpayers to inappropriately obtain the benefit of concessional tax treatment.

This legislation clarifies that excepted trust income of the testamentary trust must be derived from assets transferred to the testamentary trust from the deceased estate or from the accumulation of such income.

This change will apply in relation to assets acquired by or transferred to the trustee of a testamentary trust on or after 1 July 2019.

Please contact our office if you have any concerns about testamentary trusts making distributions to minor beneficiaries.

Regulations confirm no SG obligation on JobKeeper payments where work is not performed

The federal government has registered the Superannuation Guarantee (Administration) Amendment (Jobkeeper) Payment Regulations 2020.

These regulations ensure that amounts of salary or wages that do not relate to the performance of work and are only paid to an employee to satisfy the wage condition for getting the JobKeeper payment are prescribed by the Regulations as excluded salary or wages.

The effect is that these amounts are excluded from the calculations of an employer’s superannuation guarantee shortfall and the minimum compulsory superannuation contribution an employer is required to make in respect of an employee to avoid a superannuation guarantee charge liability.

Likewise, the Regulations recognise that an employer is only entitled to a JobKeeper payment for its employees if the business has suffered a substantial decline in turnover. In these circumstances, it is appropriate to require employers to only make minimum superannuation contributions in respect of amounts that are required to be paid to an employee for the performance of work.

Employers would not be required to make contributions in relation to additional amounts paid to satisfy the wage condition (for example, the amount by which $1,500 exceeds an employee’s normal pay).

Editor: If you are concerned about the calculation of compulsory superannuation for any employees supported by JobKeeper, please contact our office.

COVID-19 and Division 7A relief

The ATO has announced some limited relief for private companies that have loans to their shareholders or related parties that are governed by what are referred to as “complying loan agreements”.

A complying loan agreement is entered into to avoid triggering an assessable deemed dividend that could potentially be equal to the amount of the loan from the private company.

When there is a complying loan agreement between a private company and a borrower, the borrower must make the minimum yearly repayment (MYR) by the end of the private company’s income year. This avoids the borrower being considered to have received an unfranked dividend, generally equal to the amount of any MYR shortfall.

As a result of the COVID-19 situation, the ATO understands that some borrowers are facing circumstances beyond their control. To offer more support, the ATO will allow an extension of the repayment period for those borrowers who are unable to make their MYR by the end of the lender’s 2019–20 income year (generally 30 June).

Requesting the extension

A request for a 12-month extension can be made through the completion of an online application. Borrowers will be asked to confirm the shortfall, that the COVID-19 situation has affected them and that they are unable to pay the MYR as a result.

When the ATO approves an application, it will let the borrower know they will not be considered to have received an unfranked dividend. This is subject to the shortfall being paid by 30 June 2021. It will not be necessary to submit further evidence with the application.

This particular streamlined process established by the ATO only applies to applications for an extension of up to twelve months for COVID-19 affected borrowers. It is still open to a borrower to apply to obtain a longer extension of time outside the streamlined process.

Editor: If you have been affected by the COVID-19 situation and need more to time to make your minimum yearly repayment (MYR) in relation to complying loans from private companies, contact our office for assistance.

Please Note: The comments in this publication are general in nature and if you are intending to apply the information to your circumstances please get in touch with us to verify their interpretation and the information’s applicability to your particular circumstances.

June 2020 – Update

Mon, 08 Jun 2020 00:19:49 GMT

JobKeeper declaration due 14 June

Businesses that have enrolled in the JobKeeper Scheme and identified their eligible employees are reminded that they will need to make a monthly declaration to the ATO to ensure they continue to receive JobKeeper payments. The monthly declaration must be made by the 14th day of each month to claim JobKeeper payments for the previous month. As part of the declaration, businesses will need to:

ensure they have paid their eligible employees at least $1,500 (before tax) in each JobKeeper fortnight they are claiming for;
re-confirm their eligible employees, including notifying if an eligible employee has changed or left employment; and
provide the current and projected GST turnover of the business – note: this is not a retest of the eligibility of the business.

For example, to claim JobKeeper payments for the May 2020 JobKeeper fortnights, businesses must report their GST turnover for the month of May 2020 as well as their projected GST turnover for the month of June 2020 by 14 June 2020.

Please get in touch with us urgently to complete your monthly declaration for the month of May.

ATO reminder for employers – Finalise STP data for 2020

The ATO has issued a reminder to employers who report through Single Touch Payroll (‘STP’) – which should be all employers, unless an exemption or deferral applies – that they will need to finalise payroll information for the 2020 income year by making a declaration. The due date for making finalisation declarations is:

14 July 2020 for employers with 20 or more employees; and
31 July 2020 for employers with 19 or fewer employees.

Employers that finalise through STP are not required to provide payment summaries to employees and lodge a payment summary annual report to the ATO. Instead, employees will be able to access their payroll information (for preparation of their 2020 tax return) through a registered tax agent or via ATO online services. Please contact our office if you require more information on finalising STP data.

Guidance on JobKeeper reporting via STP

For each eligible employee, employers must notify the ATO:

when an eligible employee started being paid JobKeeper payments;
top-up payments to employees earning less than $1500 per fortnight; and
when an employee is no longer eligible and JobKeeper payments need to be stopped.

The ATO says this process will be managed through the 'STP Pay Event' by entering the relevant JobKeeper description (as outlined below) in the 'Other Allowances' field.

Making corrections to (previously reported) JobKeeper start and finish information

The ATO’s guidance identifies several situations where errors made in reporting the JobKeeper start or finish information may need correction and sets out options for doing so.

In particular, guidance is provided for making corrections where:

the wrong employee was reported as starting or finishing;
a later start or finish fortnight is incorrectly reported;
an earlier start or finish fortnight is incorrectly reported; or
a future-dated start or finish fortnight is reported.

The ATO is urging employers to exercise extreme caution to ensure the accuracy of originally reported information as multiple corrections cannot be made through the STP Pay Event, 'Other Allowances' field.

Please contact our office if you require more information or assistance on reporting JobKeeper payments through STP.

May 2020 – Update

Fri, 08 May 2020 01:26:00 GMT

We are continuing to re-assess our response to the COVID-19 crisis to align with Government Health and Safety recommendations. The safety, health and wellbeing of our people, clients and the community is of paramount importance to us.

Our office is open, however we encourage all guests to use the provided hand sanitiser and maintain social distancing at all times. COVID-19 is an evolving situation and we continue to monitor developments and provide updates via our monthly newsletter. At any stage, if you have any queries, please do not hesitate to contact us.

Coronavirus: Government’s JobKeeper Payment

A major part of the Government’s response to the Coronavirus (or 'COVID-19') pandemic is the ‘JobKeeper Payment’ Scheme. The JobKeeper Payment is a wage subsidy that will be paid through the tax system (i.e., it will be administered by the ATO) to eligible businesses impacted by COVID-19. Under the scheme, eligible businesses will receive a payment of $1,500 per fortnight per eligible employee and/or for one eligible business participant (i.e., an eligible sole trader, partner, company director or shareholder, or trust beneficiary).

The subsidy will be paid for a maximum period of six months (i.e., from 30 March 2020 up until 27 September 2020). It will be paid to eligible businesses monthly in arrears, with the first payments to employers commencing from the first week of May 2020. The JobKeeper Payment will ensure that eligible employees (and, where applicable, eligible business participants) receive a gross payment (i.e., before tax) of at least $1,500 per fortnight for the duration of the scheme.

An employer will only be eligible to receive a JobKeeper Payment in respect of an ‘eligible employee’ if, at the time of applying:

for employers with an aggregated annual turnover of $1 billion or less - the employer estimates that their projected GST turnover has fallen (or is likely to fall) by 30% or more; or
for employers with an aggregated annual turnover of more than $1 billion - the employer estimates that their projected GST turnover has fallen (or is likely to fall) by 50% or more; and
the employer is not specifically excluded from the scheme (e.g., one that is subject to the Major Bank Levy, one that is in liquidation, etc.).

For an employer that is registered as a charity with the Australian Charities and Not-for-Profits Commission (excluding universities and non-government schools registered as charities, which are subject to the 30% or 50% decline in turnover tests, as outlined above), a 15% decline in turnover test applies. Importantly, eligible employers must actually elect to participate in the JobKeeper Scheme via an application to the ATO.

In making such an application, an employer will also need to:

Provide information to the ATO on all eligible employees (i.e., confirming the eligible employees were engaged as at 1 March 2020 and are currently employed by the business, including those who have been stood-down or re-hired). Treasury has indicated that, for most businesses, the ATO will use Single Touch Payroll (‘STP’) to pre-populate these details.
Continue to provide information to the ATO on a monthly basis, including the number of eligible employees employed by the business and details of its turnover.

The ATO has available on its website an online form which can be used by employers to register their interest in the JobKeeper Payment Scheme.

Please contact our office If you have any queries in relation to the JobKeeper Scheme.

Shortcut method to claim deductions if working from home

As the situation around COVID-19 continues to develop, the ATO understands many employees are now working from home. To make it easier when claiming a deduction for additional running costs you incur as a result of working from home, special arrangements have been announced. A simplified method has been introduced that allows you to claim a rate of 80 cents per hour for all your running expenses, rather than having to calculate the additional amount you incurred for specific running expenses. This simplified method will be available to use from 1 March 2020 until 30 June 2020. You may still use one of the existing methods to calculate your running expenses if you would prefer to.

You can claim a deduction of 80 cents for each hour you work from home due to COVID-19 as long as you are:

Working from home to fulfil your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls; and
Incurring additional deductible running expenses as a result of working from home.

You do not have to have a separate or dedicated area of your home set aside for working, such as a private study. Please contact our office if you need more information about this deduction.

SMSFs may be able to offer rental relief to related party tenants

As a result of the financial effects of the COVID-19 pandemic, some self-managed superannuation funds (‘SMSFs’) which own real property may want to give a tenant – who is a related party – a reduction in rent because the related party tenant has had a collapse in revenue. Charging a related party a price that is less than market value is usually a contravention of the strict legislative rules SMSFs and their trustees are required to follow.

The ATO has recently advised that its approach for the 2019–20 and 2020–21 financial years is that it will not take action if an SMSF gives a tenant – even one who is also a related party – a temporary rent reduction, waiver or deferral because of the financial effects of COVID-19 during this period.

If there are temporary changes to the terms of the lease agreement in response to COVID-19, it is important that the parties to the agreement document the changes and the reasons for the change. You can do this with a minute or a renewed lease agreement or other contemporaneous document.

Please contact our office if you have an SMSF that could be impacted by a lease with a tenant, where the tenant cannot afford to pay some or all of its rent because of the economic consequences of COVID-19.

ATO reminder about salary packaged super

The ATO has provided employers with a recent reminder that, from 1 January 2020, there has been a legislative change to ensure that when an employee sacrifices pre-tax salary in return for an additional concessional contribution into superannuation, it will not result in a reduction in the 9.5% Superannuation Guarantee (‘SG’) obligation their employer has even though doing so reduced their Ordinary Time Earnings.

The ATO has provided information for employers, payroll software providers and intermediaries who may need to change the way they calculate SG. The ATO advises that, from 1 January 2020, you calculate the minimum amount of SG on the employee's ‘OTE base’. This is the sum of the employee's OTE and any OTE amounts they sacrifice in return for super contributions. Additionally, super contributions to an employee's fund under an effective salary sacrifice arrangement no longer count towards an employer’ super guarantee obligations.

If your business allows for salary sacrifice arrangements, feel free to contact our office to ensure that you are calculating SG correctly.

Crawford Accountants News & Updates

April 2026 - Update

March 2026 - Update

February 2026 - Update

December 2025 - Update

November 2025 - Update

ATO Focus on Small Business

Dual Cab Utes and FBT

Claiming Business Expenses

New ATO Data-Matching Programs

Rental Properties

Offshore Merchant Data-Matching

SMSF Compliance and Release Authorities

October 2025 - Update

September 2025 - Update

August 2025 - Update

July 2025 - Welcome to the New Financial Year

June 2025 - Update

May 2025 - Update

April 2025 - Update

2025/26 Budget Update

March 2025 - Update

February 2025 - Update

December 2024 - Update

November 2024 - Update

October 2024 - Update

September 2024 - Update

August 2024 - Update

July 2024 - Welcome to the New Financial Year

June 2024 - Update

May 2024 - Update

2024/25 Budget Update

April 2024 - Update

March 2024 - Update

February 2024 - Update

December 2023 - Update

November 2023 - Update

October 2023 - Update

September 2023 - Update

August 2023 - Update

What is Negative Gearing?

July 2023 - Welcome to the New Financial Year

Is your SMSF compliant and ready for 2024?

June 2023 - Update

May 2023 - Update

April 2023 - Update

March 2023 - Update

February 2023 - Update

December 2022 - Update

November 2022 - Update

2022/23 October Federal Budget Update

October 2022 - Update

September 2022 - Update

August 2022 - Update

July 2022 - Welcome to the New Financial Year

Happy New Year! Tax Time 2022: Get Ready!

June 2022 - Update

May 2022 - Update

2022/23 Budget Update

March 2022 - Update

February 2022 - Update

December 2021 - Update

Director ID Requirement

November 2021 - Update

October 2021 - Update

Victorian Business Costs Assistance Program Round Four - Construction

September 2021 - Update

August 2021 - Update

July 2021 - Welcome to the New Financial Year

2021/22 Budget Update

Individuals

Low and Middle Income Tax Offset extended to 2022

Increased Medicare levy low-income thresholds

Update to individual tax residency rules

Update to self-education expense deductions

Employee Share Schemes – ‘cessation of employment’ to be removed as a taxing point

Businesses

Temporary full expensing extension

Temporary loss carry-back extension

Digital economy

Happy New Year!
Tax Time 2022: Get Ready!

New measures applying from 1 January 2021