Legislation changes salary sacrificing super regulations

TPRS expands to include more industries

New e-invoicing framework commences

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Forrester Korfiatis

AUSkey to be scrapped

The AUSkey system will no longer be used to report to the ATO starting April 1. AUSkey sent business information to the government online. Businesses will soon need to use myGovID and Relationship Authorisation Manager (RAM) instead. According to the ATO, this new process will be a more secure, streamlined and flexible way to report information. AUSkey and Manage ABN Connections will continue to be supported while businesses move to myGovID and RAM. Access to business services after March 31 will first require businesses to link their ABN to their myGovID using RAM.


February 2020

21 February

Lodge and pay December 2019 monthly business activity statement for business clients with up to $10 million turnover who report GST monthly and lodge electronically.
Lodge and pay January 2020 monthly business activity statement.
28 February

Lodge tax return for non-taxable large/medium entities as per the latest year lodged (except individuals).

Payment (if required) for companies and super funds is also due on this date. Payment for trusts in this category is due as per their notice of assessment.
Lodge tax returns for new registrant (taxable and non-taxable) large/medium entities (except individuals).
Payment (if required) for companies and super funds is also due on this date. Payment for trusts in this category is due as per their notice of assessment.

Lodge tax return for non-taxable head company of a consolidated group, including a new registrant, that has a member who has been deemed a large/medium entity in the latest year lodged.
Lodge tax return for any member of a consolidated group who exits the consolidated group for any period during the year of income.
Lodge tax return for large/medium new registrant (non-taxable) head company of a consolidated group.
Lodge and pay Self-managed superannuation fund annual return (NAT 71226) for new registrant (taxable and non-taxable) SMSF, unless they have been advised of a 31 October 2019 due date at finalisation of a review of the SMSF at registration.

March 2020

21 March
Lodge and pay February 2020 monthly business activity statement.
31 March
Lodge tax return for companies and super funds with total income of more than $2 million in the latest year lodged (excluding large/medium taxpayers), unless the return was due earlier.

Payment for companies and super funds in this category is also due by this date.

Lodge tax return for the head company of a consolidated group (excluding large/medium), with a member who had a total income in excess of $2 million in their latest year lodged, unless the return was due earlier.
Payment for companies in this category is also due by this date.

Lodge tax return for individuals and trusts whose latest return resulted in a tax liability of $20,000 or more, excluding large/medium trusts.
Payment for individuals and trusts in this category is due as advised on their notice of assessment.

Lodge TFN report for closely held trusts if any beneficiary quoted their TFN to a trustee in quarter 2, 2019–20.

New legislation requires overtime for salaried employees

This year, all employers must keep records of the start, finish and break times of their employees. Any excess hours worked must be paid to the employee as overtime if the employee’s annual salary does not pay them at minimum wage for their total hours. Records must also be signed, or acknowledged as correct, by employees. Experts have voiced concerns about practicality and how these changes will impact the culture of employers. Additionally, beginning March 1, employers must pay employees for overtime worked if their annual salary does not cover that overtime. If an employer finds that their employee received less pay on their annualised wage agreement than if they were paid under the award, they must pay the employee the difference. Any shortfalls must be paid to them within 14 days. This process must occur every 12 months, even upon the termination of a contract.

Legislation changes salary sacrificing super regulations

Salary sacrificed super contributions no longer reduce the ordinary time earnings that employers must calculate super entitlements on from January 1. Salary sacrifices don’t count towards the amount of super guarantee contributions employers must make to avoid the super guarantee charge. Salary sacrificed super contributions are classified as employer super contributions rather than employee contributions. Those deciding whether to salary sacrifice a percentage of their income into their super and those already salary sacrificing can get more information or check entitlements under the Fair Work Act 2009.

TPRS expands to include more industries

The expansion of the taxable payment reporting systems (TPRS) means that the system will no longer apply just to the building and construction industry. It was extended to cleaners and couriers for the 2018–19 financial year and now has been further extended to include road freight, IT, security, and investigation or surveillance for the 2019–20 financial year. The change even covers services by businesses that may not actually identify as operating within those particular industries. If a business provides courier services, they now may need to lodge a taxable payments annual report each year and include payments to contractors and subcontractors that provide courier services on their behalf. Businesses supplying road freight, security, investigation, surveillance or IT services will need to report payments to contractors if the payments are for road freight, security, investigation or IT services, with the first annual report due to be lodged by August 28. More information is available on the ATO website.

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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