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Company Tax Rates for Base Rate Entities lowered to 27.5%

10% GST added to online shopping purchases under $1000

Penalty rates for Sundays and public holidays cut by 10%


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A Video Update from
Forrester Korfiatis

Company Tax Rates Lowered

On the 18th of May 2017, the Treasury Laws Amendment Enterprise Tax Plan Bill 2016 was passed, reducing the company tax rate to 27.5% for companies that are considered to be Base Rate Entities. There are still two other company tax amendments pending before the senate. If passed one bill seeks to extend the lower 27.5% tax rate to all corporate tax entities by 2023, working towards a 25% tax rate by 2026, and the other will change the definition of Base Rate Entities to exclude corporate entities that have a passive income of more than 80%. Until these bills pass, the tax rate remains at 30% for companies that are not Base Rate Entities.

UPCOMING KEY DATES

August 2018

14 August
Lodge PAYG withholding payment summary annual report for:

  • large withholders whose annual withholding is greater than $1 million
  • payers who have no tax agent or BAS agent involved in preparing the report.
21 August
Lodge and pay July 2018 monthly business activity statement.
 
25 August
Lodge and pay quarter 4, 2017–18 activity statement if you lodge electronically.

28 August
Lodge and pay quarter 4, 2017–18 Superannuation guarantee charge statement - quarterly if the employer did not pay enough contributions on time.
 
Employers who lodge a Superannuation guarantee charge statement - quarterly can choose to offset contributions they paid late to a fund against their super guarantee charge for the quarter. They still have to pay the remaining super guarantee charge.
Note: The super guarantee charge is not tax deductible
 
Lodge Taxable payments annual report – building and construction industry.
 
September 2018

21 September
Lodge and pay August 2018 monthly business activity statement.
 
30 September
Lodge PAYG withholding payment summary annual report if prepared by a BAS agent or tax agent.
 
If a payer has only closely held payees and their tax agent helps prepare their report, they may be eligible for a concession to lodge this report by the due date of their tax return.

Lodge Annual TFN withholding report 2018 if a trustee of a closely held trust has been required to withhold amounts from payments to beneficiaries.

10% GST For Online Shopping

Have you noticed your online shopping has recently become a little bit more expensive? That’s because, as of the 1st of July 2018, the Australian Government has slapped a 10% GST on all overseas online purchases under $1,000. In 2017 alone, Australians spent $21 billion online. That’s an 18% spike on the previous year, and makes up 6.75% of Australia’s $300 billion retail sector!  Will this tax put a dampener on Australia’s online shopping addiction, or will the online shopping industry continue its meteoric boom?

ATO Cracking Down on Clothing Claims

This tax time, the ATO is preparing to closely examine taxpayers whose clothing claims and deductions don’t add up. Clothing claims are up nearly 20% over the past five years, and the ATO believes many taxpayers are ineligible for the deductions they’re claiming. Last year, around a quarter of all clothing and laundry claims were $150 – the maximum amount taxpayers can claim without providing detailed records. Remember: the only clothes that you can claim for are occupation specific, protective, and uniforms. Regular business attire, such as suits and dresses, are not eligible for tax deductions, and neither is the laundering of them. The ATO wishes to remind taxpayers to keep the receipts for the cleaning of their work clothes if they wish to make a claim.   

Small Businesses Beware of Government Grant Scams

Do you own a small business? Are you searching for a government grant? Don’t get caught out by convincing scams! Remember: government grant information is always free – you never have to pay for it. When seeking government grants, be wary of any website that charges a fee for special access or consideration. Government grants are awarded on merit and do not come with a price tag. Some scam websites may try to imitate government websites, so check that it’s officially affiliated with the government by looking for the .gov.au extension in their URL. If you believe that you’ve uncovered a scam, be sure to report it to the ACCC. 

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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