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Tax Relief Ahead of May Election

Significant Increase for Aged-Care Sector

1.25 Million Jobs to be Created over Five Years


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A Video Update from
Forrester Korfiatis

Tax Relief

Major tax relief headlines this year’s budget. In a move predicted in light of the coming election, lower and middle-income Australians will enjoy an immediate tax relief. Those in the $48,000 to $90,000 tax bracket will receive full tax relief of $1080, earners between $37,001 and $47,999 will see between $255 and $1080 in relief, while those in brackets up to $37,000 will receive up to $255 of tax relief. These benefits affect over 10 million Australians in total. Small businesses are also getting a boost this year in the form of an increase in the instant asset write-off threshold to $30,000. Access to this write-off will include medium-sized businesses with turnover of less than $50 million.

UPCOMING KEY DATES

April 2019
 
21 April
Lodge and pay quarter 3, 2018–19 PAYG instalment activity statement for head companies of consolidated groups.
   
Lodge and pay March 2019 monthly business activity statement.
 
28 April
Lodge and pay quarter 3, 2018–19 activity statement if lodging by paper.

Pay quarter 3, 2018–19 instalment notice (form R, S or T). Lodge the notice only if you are varying the instalment amount.

Make super guarantee contributions for quarter 3, 2018–19 to the funds by this date.
Employers who do not pay minimum super contributions for quarter 3 by this date must pay the super guarantee charge and lodge a Superannuation guarantee charge statement – quarterly (NAT 9599) by 28 May 2019.
Note: The super guarantee charge is not tax deductible.
 
30 April
Lodge TFN report for closely held trusts if any beneficiary quoted their TFN to a trustee in quarter 3, 2018–19.

Lodge lost members report for the period 1 July 2018 to 31 December 2018.
 
May 2019
 
15 May
Lodge 2018 tax returns for all entities that did not have to lodge earlier (including all remaining consolidated groups), and are not eligible for the 5 June 2019 concession.

Due date for companies and super funds to pay if required.
  Note: Individuals and trusts in this category pay as advised on their notice of assessment.
 
21 May
Lodge and pay April 2019 monthly business activity statement.

Final date to add new FBT clients to your client list to ensure they receive the lodgment and payment concessions for their fringe benefits tax returns.
 
Lodge and pay Fringe benefits tax annual return if lodging by paper.
 
26 May
Lodge and pay eligible quarter 3, 2018–19 activity statements if you lodge electronically.
 
28 May
Pay Fringe benefits tax annual return if lodging electronically.

Lodge and pay quarter 3, 2018–19 Superannuation guarantee charge statement - quarterly (NAT 9599) 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.

Health

The budget includes an increase in spending on healthcare, with a total of $81.8 billion to be spent in the 2019/2020 financial year, and $89.5 billion across 2022 to 2023. Starting July 1, 2020, the Government is providing $199 million towards diagnostic imaging items, reducing out-of-pocket expenses for patients. The Pharmaceutical Benefits Scheme will get $331 million for medicines to treat a variety of cancers. This budget also sees a significant increase in funding for the aged care sector, a record funding of $21.6 billion in 2019-2020. $5.9 billion will be spread over the course of two years to support the Commonwealth Home Support Programme, which provides essential services like Meals on Wheels.

Climate

$3.5 billion has also been earmarked for the Climate Solutions package – aimed at ensuring Australia meets its emissions reduction target in partnership with Indigenous communities, small businesses, and farmers. This new injection of funds will go towards Australia’s emissions reductions, in line with promises made in the Kyoto agreement. With the Climate Solutions Fund, carbon emissions across Australia should be reduced to 65% of 2005 levels by 2030.

Finance

The new budget promises the creation of 1.25 million jobs over the next 5 years. In addition, the budget includes measures aimed to boost worker wages, a welcome development during national and global economic slowdown. An increase in infrastructural and environmental projects is the main source of new jobs. Meanwhile, financial regulators ASIC and APRA will receive $550 million in response to the royal banking commission fallout, in order to address misconduct. APRA funding will continue to increase through 2023.

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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