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Ride Sourcing data matching program

The Ride Sourcing data matching program has been developed to address the compliance risk of the registration, lodgement and reporting of businesses offering ride sourcing services as a driver.

Editor: ‘Ride sourcing’ = Uber (basically).

It is estimated that up to 74,000 individuals (‘ride sourcing drivers’) offer, or have offered, this service.

The ATO will request details of all payments made to ride sourcing providers from accounts held by a ride sourcing facilitator’s financial institution for the 2016/17 and 2017/18 financial years, and match the data provided against their records.

This will identify ride sourcing drivers that may not be meeting their registration, reporting, lodgement and/or payment obligations.
Where the ATO is unable to match a driver’s details against ATO records, it will obtain further information from the financial institution where the driver’s account is held.

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Changes to the ‘backpacker tax’

From 1 January 2017, tax rates changed for working holiday makers who are in Australia on a 417 or 462 visa (these rates are known as ‘working holiday maker tax rates’).

If a business employs a working holiday maker in Australia on a 417 or 462 visa, from 1 January 2017, they should withhold 15%from every dollar earned up to $37,000, with foreign resident tax rates applying from $37,001.

Businesses must register with the ATO by 31 January 2017 to withhold at the working holiday maker tax rate.
If they don’t register, they will need to withhold at the foreign resident tax rate of 32.5% (and penalties may aply to businesses employing holiday makers that don’t register).

Editor: Therefore, if this affects you and you haven’t registered by the time you read this, please contact us immediately!
Also, note that businesses already employing working holiday makers will need to issue two payment summaries (with different rates) this year – one for the period to 31 December 2016, and a second for any period from 1 January 2017.

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Superannuation changes passed by Parliament

The government’s extensive changes to the taxation laws regarding superannuation were passed by Parliament on 23 November 2016.

According to the Treasurer, Mr Scott Morrison:
“The superannuation reform package better targets tax concessions to make our superannuation system fair and sustainable, as the population ages and fiscal pressures increase.

“The reforms include the introduction of a $1.6 million transfer balance cap, which places a limit on the amount an individual can transfer into the tax ­free earnings retirement phase and the introduction of the Low Income Superannuation Tax Offset”.

The amendments also include the following two new measures to provide more flexibility to help Australians save for their retirement:

  • the removal of the ‘10% rule’, allowing anyone (including employees) to claim a deduction for personal contributions into superannuation from 1 July 2017 which will particularly help contractors who also draw income from salary and wages); and
  • the ability for individuals with superannuation balances below $500,000 to make ‘catch up’ concessional contributions from 1 July 2018 allowing them to ‘tap into’ unused amounts of their contributions cap from prior years, which will help those with broken work patterns – the overwhelming number of whom are women – better save for their retirement).
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Personal income tax cuts are law!

The government has finally legislated the tax cuts originally announced in the May 2016 Budget, so that the marginal tax rate of 37% now starts at $87,000.
The following are the rates for adult residents for the 2016/17 income year (i.e., from 1 July 2016).

Taxable income:
Tax on this income 0 – $18,200: Nil
$18,201 – $37,000: 19c for each $1 over $18,200
$37,001 – $87,000: $3,572 plus 32.5c for each $1 over $37,000 $87,001 – $180,000: $19,822 plus 37c for each $1 over $87,000 $180,001 and over: $54,232 plus 45c for each $1 over $180,000

The above rates do not include the temporary budget repair levy (due to expire on 30 June 2017), nor the Medicare levy of 2%.
The ATO has updated the tax tables and PAYG withholding tax schedules (and their online tax withheld calculator) to reflect these changes.

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ATO Data matching programs

The ATO has announced it is embarking on the following three (major) data matching programs.

Share transactions data matching program
Editor: The share transactions data matching program has been conducted since 2006 to ensure compliance with taxation obligations on the disposal of shares and similar securities. The collection of transaction history data dating back to 20 September 1985 (the introduction of the CGT regime) is used to enable cost base and capital proceeds calculations.

The ATO will continue to acquire details of around 61 million share transactions (in relation to 3.3 million individuals) for the period 20 September 1985 to 30 June 2018 from various sources, including share registries (such as Link Market Services, Computershare, Advanced Share Registry Services, and Automic Registry Services), and the Australian Securities Exchange Limited.

Credit and debit card data matching program
The ATO will continue to annually acquire data relating to credit and debit card payments to merchants, in this case acquiring data for the 2015/16 and 2016/17 financial years from the big four banks, as well as other banks (such as the Bank of Queensland and the Bendigo and Adelaide Bank) and others involved with credit and debit card payments (including American Express, First Data Merchant Solutions, Diners Club Australia and Tyro Payments Limited).
It is estimated that around 950,000 records will be obtained, including 90,000 matched to individuals.

Online selling data matching program
The ATO will continue to acquire online selling data, with an estimated 20,000 to 30,000 records obtained relating to registrants who sold goods and services to an annual value of $12,000 or more during the 2016, 2017 and 2018 financial years, from eBay Australia and New Zealand Pty Ltd (which owns and operates www.ebay.com.au). It is estimated that around half of the matched accounts will relate to individuals.

 

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Last chance for non­arm’s length related party LRBAs

The ATO has released a taxation determination regarding how it will apply the non­arm’s length income (‘NALI’) rules to income generated from assets purchased by an SMSF using a related party ‘limited recourse borrowing arrangement’ (or ‘LRBA’).

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Leased properties were still ‘new residential premises’

The AAT has held that GST applied to the disposal of four properties that had been built, leased and then sold.

Editor: GST does not ordinarily apply to sale of residential premises unless they are ‘new residential premises’. However, there is a special rule in the GST law that states that a newly constructed property will not be ‘new residential premises’ if it has been applied only to receive residential rent (i.e., leased out) for at least a five year period.

In this case, the taxpayer had acquired four properties between November 2003 and August 2007, then built residential dwellings on them and, once completed, the dwellings were leased, and then sold between January 2011 and August 2012.

The AAT agreed with the ATO that the sales of the four properties in question should be treated as sales of new residential premises.
In particular, some of the dwellings had been simultaneously marketed for sale whilst being leased. Also, there were periods of time where the dwellings were without a tenant.

Due to the combination of these factors, none of the dwellings were used only for making input taxed supplies (of residential rent) for a five year period. Therefore, when disposed of, they should have been treated as taxable supplies and subject to GST.

The AAT also held that the ‘margin scheme’ could not be applied to reduce the GST payable, as the taxpayer was not able to provide any written evidence of an agreement between her and the purchasers to apply the margin scheme, as required by the GST Act.

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September 2016 Newsletter Practice Update

Included in this edition of our newsletter:

1. Pre-retirees: Avoid ‘too good to be true’ tax schemes
2. ATO assistance with the pending $500,000 lifetime super cap
3. Deductibility of gifts provided to clients
4. Deductibility of airport lounge memberships
5. Phoenix Taskforce swoops on dodgy businesses
6. ATO exposes dodgy deductions