Changes to SMSF member verification service
Super guarantee rate rises from 9.5% to 10%
Australians attempt to write off face masks, hand sanitiser
On The Money - Episode 48
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The ATO has implemented a new Self-Managed Superfund verification service (SVS) to assist funds with their requirements to validate SMSFs and their members when processing a rollover. Superfunds will have until the end of September 2021 to start using the SVS. To help with this transition, the online MVS function will remain available to super funds until COB on September 24, 2021 from the Online services for business login page. Currently, funds need to select "Login to the Business Portal" from the Online services for business login page to access the MVS. From the end of July, the Business Portal will retire and an option to "Login to use SMSF member verification services" will be available for funds to select from the online services for business login page.
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.
Lodge and pay July 2021 monthly business activity statement.
Lodge and pay quarter 4, 2020–21 activity statement if you lodge electronically.
Lodge and pay quarter 4, 2020–21 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.
Lodge Taxable payments annual report (TPAR).
Lodge and pay August 2021 monthly business activity statement.
Lodge and pay quarter 4, 2012–21 PAYG instalment activity statement for head companies of consolidated groups.
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 2021 if a trustee of a closely held trust has been required to withhold amounts from payments to beneficiaries.
The Superannuation Guarantee (SG) rate increased from 9.5% to 10% on July 1, 2021, with further increases of 0.5% per year to come into effect from July 1, 2022, until it reaches 12% from July 1, 2025 onwards. Employers need to update their payroll settings to reflect the 0.5% increase in the SG rate. Both employers and employees will need to consider the potential increased SG costs of these changes going forward. Employers cannot use an employee’s salary sacrifice contributions to account for the extra 0.5% of SG. The ordinary time earnings, or OTE, base for SG purposes now specifically includes any sacrificed OTE amounts. This means that contributions made on behalf of an employee under a salary sacrifice arrangement are not treated as employer contributions which reduce an employer’s charge percentage. The increase in the SG rate also means the maximum super contribution base will increase to $58,920 per quarter up from $57,090 per quarter. The increase also means that the SG opt-out income threshold will increase to $275,000, up from $263,157. In addition, the annual concessional contributions cap has increased from $25,000 to $27,500. Concessional contributions made beyond this amount may attract higher tax rates and an excess contributions charge.
Many employees are required to wear masks and use hand sanitiser at work. However, not everyone can claim the items on tax. Anyone working a job requiring close proximity with customers or clients during COVID-19 may be able to claim a deduction for items like gloves, face masks, sanitiser, antibacterial spray, and more in the health care, retail, and hospitality industries. To claim these items and similar items back on tax, employees will have had to purchase them for work use only, using their own money, without reimbursement from their employer. Employees will also need proof of purchase. Personal expenses like coffee, tea, and toilet paper aren't directly related to earning income, and therefore cannot be claimed as a work expense, even though they may normally be supplied by an employer.
The approximately 2 million Australians who invest in property may face unforeseen tax hurdles as a direct result of rental moratoriums, border closures and COVID restrictions. The ATO has gained increasing access to new property data this income year, including property management and updated rental bond data covering millions of individuals. COVID may have changed investment property deductions and expenses, including insurance payouts and repayment holidays. Other circumstances which may affect a taxpayer’s claim are changes to property management fees and advertising during COVID. Lost rental income can’t be claimed as a tax deduction. Landlords who reduced the rent to enable tenants to stay in the property, won’t have reduced deductions for rental property expenses. These may include interest on investment loans, land tax, council and water rates, body corporate charges, repairs and maintenance and agents’ commissions. Landlords may also be entitled to claim depreciation for the declining value of assets such as stoves, carpets and hot-water systems. Landlords that received back payments or insurance payouts for lost rent must report these in their tax return. Property investors can deduct any interest paid on deferred payments due to a repayment holiday.
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.
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.
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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