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Australia considers digital company tax

Director liability laws could apply to existing buildings

The average Australian fails financial consciousness quiz


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A Video Update from
Forrester Korfiatis

PayID Security Crackdown

Australian banks and credit unions will have their transactional systems secretly tested to find deficiencies, and stop fraud & abuse of institutional infrastructure plugged into to the New Payments Platform after two PayID look-up attacks. The NPP confirmed it was taking its own steps to look for security holes among participants, a move strengthened by the impending designation of security settings like PayID address query limits. Non-compliant institutions could attract fines of up to $500,000 if they fail to meet the new designations. While the recent attacks did not result in direct financial loss or fraud to customers, they allowed the harvesting of customers’ personal data prompting breach notifications in multiple institutions.

UPCOMING KEY DATES

October 2019

21 October

Pay annual PAYG instalment notice (Form N). Lodge only if you vary the instalment amount or use the rate method to calculate the instalment.

Lodge and pay quarter 1, 2019–20 PAYG instalment activity statement for head companies of consolidated groups.

Lodge and pay September 2019 monthly business activity statement.

28 October
Lodge and pay quarter 1, 2019–20 activity statement if lodging by paper. Pay quarter 1, 2019–20 instalment notice (form R, S, or T).

Lodge the notice only if you vary the instalment amount.

Make super guarantee contributions for quarter 1, 2019–20 to funds by this date.

Employers who do not pay minimum super contributions for quarter 1 by this date must pay the super guarantee charge and lodge a Superannuation guarantee charge statement – quarterly (NAT 9599) by 28 November 2019.

Lodge and pay annual activity statement for TFN withholding for closely held trusts where a trustee withheld amounts from payments to beneficiaries during the 2018–19 income year.

31 October
Final date to add new clients to your client list to ensure their 2019 tax return is covered by the lodgment program.

Lodge tax returns for all entities if one or more prior year returns were outstanding as at 30 June 2019.

If all outstanding prior year returns have been lodged by 31 October 2019, the lodgment program due dates will apply to the 2019 tax return.

SMSFs in this category must lodge their complete Self-managed superannuation fund annual return by this date.

Lodge and pay Self-managed superannuation fund annual return (NAT 71226) for (taxable and non-taxable) new registrant SMSF if we have advised the SMSF that the first year return has a 31 October 2019 due date.

Lodge tax return for all entities prosecuted for non-lodgment of prior year returns and advised of a lodgment due date of 31 October 2019:

Some prosecuted clients may have a different lodgment due date – refer to the letter you received for the applicable due date.

Payment (if required) for individuals and trusts in this category is due as advised in their notice of assessment.

Payment (if required) for companies and super funds in this category is due on 1 December 2019.
 
SMSFs in this category must lodge their complete Self-managed superannuation fund annual return (NAT 71226) by this date.

Lodge Annual investment income report (AIIR).

Lodge Departing Australia superannuation payments (DASP) annual report.

Lodge Franking account tax return when both the:
return is a disclosure only (no amount payable)
taxpayer is a 30 June balancer.
 
Lodge PAYG withholding annual report no ABN withholding (NAT 3448).

Lodge PAYG withholding from interest, dividend and royalty payments paid to non-residents – annual report (NAT 7187). This report advises amounts withheld from payments to foreign residents for:  
interest and unfranked dividend payments that are not reported on an Annual investment income report (AIIR)
royalty payments.
 
Lodge PAYG withholding annual report – payments to foreign residents (NAT 12413). This report advises amounts withheld from payments to foreign residents for:
entertainment and sports activities
construction and related activities
arranging casino gaming junket activities.
 
Lodge lost members report for the period 1 January – 30 June 2019.

Lodge TFN report for closely held trusts for TFNs quoted to a trustee by beneficiaries in quarter 1, 2019–20.

November 2019

21 November
Lodge and pay October 2019 monthly business activity statement.
 
25 November
Lodge and pay quarter 1, 2019–20 activity statement if you lodge electronically.

28 November
Lodge and pay quarter 1, 2019–20 Superannuation guarantee charge statement - quarterly if the employer did not pay enough contributions on time.

Employers lodging 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.

95% of accountants say Australians do cryptocurrency taxes wrong

A survey conducted by crypto accounting platform Blox.io found that 95% of crypto tax experts believe their clients are incorrectly reporting taxes. Due to a lack of understanding of crypto tax rules, missing or inaccurate data, and poor record keeping, individuals and businesses could be exposed to fines. One solution is crypto tax software. But even current software solutions can present issues, according to Sharon Yip, founder of Crypto Tax Advisors. Software can’t yet easily handle tens of thousands of transactions. However, experts are confident that more automated software will soon be available, along with improved tax regulation and guidance. An accountant well-versed in crypto-currency tax may still be the best option.

Australia considers digital company tax, targeting Amazon, Google, Facebook 

Australia is considering imposing a tax on digital companies’ turnover, but will wait for other countries to take the lead. Tax experts warn that imposing taxes on Chinese and American multinational companies may cause these countries to try to collect more tax from Australia’s mining corporations. France has already implemented a 3% levy applying to revenue from digital services earned in France by companies with more than 25 million euros in French revenue and 750 million euros worldwide. Facebook, Amazon, and Google have indicated this law may hamper economic growth, and pass costs on to users. Treasurer Josh Frydenberg told ABC News the Government would wait for a multilateral plan on taxing the digital economy – being led by the OECD and the G20 – before introducing any measures.

Director liability laws could apply to existing defective buildings

Laws to hold directors of construction companies liable for building defects could apply to existing developments, according to ACT minister Gordon Ramsay. The move gives hope to victims of shoddy construction work, who have had to fund their own repair works after companies deliberately wound up to escape sanctions. Mr Ramsay said the practice which the laws would seek to punish was not the same as illegal phoenixing, although the two were related. Master Builders Association of the ACT chief executive Michael Hopkins welcomed the proposed new laws, but said it was important that efforts to deal with "rogue operators" did not impose extra burdens and costs on the majority of company directors. Other states may follow ACT’s example in the near future.

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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Disclaimer: This is not advice. Information provided in this bulletin may be in the form of summaries and generalisations - it may omit detail that could be significant in a particular context or to your personal circumstances. You should not act solely on the basis of material contained in this bulletin. Before you start any transactions, you should obtain appropriate professional advice relevant to your particular circumstances. Links to third-party websites are inserted for your convenience, but do not constitute endorsement of material at those sites or any associated product or service. Changes in legislation may occur quickly and we therefore recommend that our formal advice be sought before acting in any of the areas. The information in this bulletin is provided on the basis that all persons accessing the bulletin undertake responsibility for assessing the relevance and accuracy of its content.

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