Small businesses to receive energy incentive. 

Small business technology investment boost.

Appointing an SMSF auditor.

ATO compliance with regards to SMSF.

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A Video Update from
Letizia Palmer

Small Business Technology Investment Boost

Eligible small businesses with an annual turnover of less than $50 million can claim a 20% bonus deduction on technology expenditure to help them digitise their operations.

This boost applies to costs incurred between March 29, 2022, and June 30, 2023, and is capped at $100,000 of expenditure per income year. Eligible small businesses can receive a maximum of $20,000 per income year in bonus deductions.

In order to qualify, your business needs to be considered a small business and should not have made over $50 million in income during the year you incurred the expense. On top of that, the expenditure must already be eligible for deduction according to tax laws.

Eligible expenditure includes: digital enabling items such as computers, internet costs, software, and telecommunications hardware; digital media and marketing such as audio and visual content; e-commerce expenses such as for platform-enabled online transactions, portable payment devices, and cloud-based subscriptions; and cyber security.

If you’re a nonprofit organization with a turnover of less than $50 million and your expenses meet the eligibility criteria, you can also claim a boost in technology investment. Do keep in mind that G.S.T. and F.B.T. regulations still apply.

Appointing an SMSF auditor

It’s important to remember that appointing an approved self-managed super fund auditor should be done at least 45 days prior to your S.M.S.F. annual return due date. The audit of your S.M.S.F. must be completed before you can lodge it, as certain details from the audit report will need to be included in your annual return.

Make sure to double-check that your auditor details are accurate to avoid any potential penalties for providing false or incorrect information.

An audit is required for all self managed super funds, regardless of contributions or payments made during the financial year.

Your approved S.M.S.F. auditor must: be registered with the Australian Securities & Investments Commission, or ASIC with a current S.M.S.F. auditor number; and also be independent – meaning they shouldn’t audit any fund they hold financial interest in, or work for a firm who provides your fund with other services.

ATO compliance SMSF

The A.T.O. oversees and regulates S.M.S.Fs, and can take action if trustees do not fulfill their obligations under super laws.

Trustees must preserve their superannuation benefits until they meet the conditions of release. In other words, early access of super is not allowed except in certain circumstances.

Trustees must also ensure they get their fund audited and lodge an annual return each year.

Throughout the income year, the A.T.O. will take action against trustees who fail to comply with their obligations and breach superannuation laws. In the 2023 income year, the A.T.O. issued an additional $29 million in income tax liabilities, admin and tax shortfall penalties, and interest on S.M.S.F. trustees and-or members. They also disqualified 753 trustees.

If you happen to be a trustee who may have accidentally breached the superannuation laws, we advise you to seek assistance to promptly rectify the violation. Neglecting to take action could potentially put your retirement savings and fund in jeopardy.

Protecting worker entitlements

As part of the government’s new Protecting Worker Entitlements laws, there are several notable changes to the Fair Work Act.

Effective January 1, 2024, the National Employment Standards will include a right to superannuation contributions – meaning underpaid or unpaid super can be enforced under the Fair Work Act.

As of July 1, 2023, employees can enjoy greater flexibility with unpaid parental leave. Employees are able to take up to 100 days of their 12-month leave entitlement flexibly during the 24 months following the birth or placement of their child. This is an increase of 70 days compared to the previous entitlement.

Also as of July 1, 2023, the interaction between enterprise agreements and workplace determinations has changed. The Fair Work Commission can now make workplace determinations with set terms and conditions, which, in some cases, replaces enterprise agreements.

Effective December 30, 2023, there will be changes to authorise employee deductions. Employees will be able to authorise salary deductions that are recurring and of varying amounts. This can be withdrawn in writing by the employee at any given time.

As of July 1, 2023, there are greater protections for migrant workers. The change confirms that migrant workers continue to have the same rights and entitlements as other employees, regardless of migration status, under the Migration Act 1958. It also means the validity of an employment contract cannot be affected by a breach of the Act.

Sharing economy reporting regime (SERR)

According to the Sharing Economy Reporting Regime, or S.E.R.R., starting from July 1, 2023, all Electronic Distribution Platform, or E.D.P., operators are required to report certain transactions. These transactions include taxi travel and short-term accommodation. For any other reportable transactions, the reporting obligation will come into effect on July 1, 2024.

As per the Sharing Economy Reporting Regime, operators of E.D.Ps have the responsibility to report any transactions that occur when a seller utilizes their platform to make a supply that’s connected with Australia. This reporting requirement ensures transparency and compliance within the sharing economy ecosystem.

Failure to report correctly or on time, means there could be some serious penalties coming your way. So, make sure you get everything in order and submit those reports on time to avoid any trouble.

Contractor or Employee?

The difference between a contractor and an employee is not always clear cut. The courts and tax office take a number of factors into account when determining the actual status, such as hours worked, superannuation, method of payment and leave to name a few. Any written agreement stating the nature of the relationship is certainly relevant, but it’s not conclusive, and should not be relied solely upon. Both employers and contractors need to be fully aware of their situation as serious penalties are involved with sham contracting arrangements. Find out more here.

"Holiday home" included in tax concession test

A taxpayer company has been unsuccessful before the Administrative Appeals Tribunal (AAT) in a claim to secure the capital gains tax (CGT) concessions for small businesses.

In this case, the AAT affirmed the Commissioner's decision that the taxpayer did not satisfy the "maximum net asset value" test for the purposes of qualifying for the concessions. The AAT found that the individual who controlled the company could not exclude from the test his interest in a Queensland property, which he claimed was used for "personal use and enjoyment".

TIP: The small business CGT concessions are intended to offer small business taxpayers a range of unique tax concessions. However, despite being targeted towards taxpayers who typically have less complicated affairs, the rules are riddled with complexities that may not appear obvious at first glance.

Each concession has its own particular rules. However, there are two basic conditions for the relief - either the taxpayer is a small business entity (SBE) or is a partner of a partnership that is an SBE, or the taxpayer satisfies the maximum net asset value test. If you have any questions, please contact our office.

Small business benchmarks catch out florist

The AAT has recently dismissed an appeal by a florist against the Tax Commissioner's decision to issue income tax and GST assessments following an ATO audit of her florist business.

The taxpayer had reported that the cost of goods sold in her business represented 83% of her reported business income. The ATO had selected the taxpayer for audit because this figure was outside what it considered to be the industry benchmark range of between 44% and 54%.

In this case, the taxpayer was unable, due to a lack of evidence, to prove to the AAT that the assessments were excessive.

TIP: The Tax Commissioner has warned that businesses operating outside the relevant benchmarks could be subject to ATO review and/or audit, and where the businesses do not have adequate records to substantiate their performance, the ATO will make a default assessment using the appropriate small business benchmark.

Businesses may want to consider reviewing their record-keeping practices and assess whether they are at risk of an audit. Please contact our office for further information.

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