July 2024 - Welcome to the New Financial Year

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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?

 
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 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


Crawford News

March 2026 - Update

March 4, 2026
$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

February 3, 2026
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

December 15, 2025
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

November 6, 2025
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.

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