CCS access extended for late lodgers
FBT includes ride sourcing as taxi travel
JobKeeper 2.0 extends scheme to March 2021
On The Money - Episode 42
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Tax time 2020 has seen various key changes and new measures. Those who have yet to complete their 2019-2020 financial year tax returns should take into account COVID-19 measures, which include early access to superannuation, the introduction of the optional simplified work-from-home deduction method, rental property income & expenses for individuals, the instant asset write-off threshold increase, JobKeeper payments, & accelerated depreciation deductions for businesses. Other key changes include the end of tax offsets and deductions for vacant land & disability aids; removal of the death benefit increase deduction; and an expansion of the tax incentive for investments in affordable housing. Stapled structures also saw a 30% withholding tax rate applied to trading income converted to passive income via a stapled structure or distributed by a trading trust; and to income from agricultural land & residential housing, besides affordable housing. Self-managed Superannuation Fund instructions were updated to clarify the requirements for the fund, and employers no longer need to give their employees payment summaries through single-touch payroll. To learn more about other changes, speak with your accountant or visit ato.gov.au.
Lodge PAY G 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 2020 monthly business activity statement.
Lodge and pay quarter 4, 2019–20 activity statement if you lodge electronically.
Lodge and pay quarter 4, 2019–20 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 (TPAR).
Lodge and pay Augusst 2020 monthly business activity statement.
Lodge and pay quarter 4, 2019–20 PAYG instalment activity statement for head companies of consolidated groups.
Lodge PAY G 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 2020 if a trustee of a closely held trust has been required to withhold amounts from payments to beneficiaries.
As seen in previous crises, including the GFC, scams are on the rise worldwide, and here in Australia. Businesses and individuals have been targeted by malicious SMS and email messages which impersonate reliable, trusted sources containing references to COVID-19. Over 150 malicious COVID-19-themed websites have been disrupted by the Australian Cyber Security Centre. Scamwatch has received over 3,300 scam reports mentioning the coronavirus, with over $1,667,000 in reported losses since the outbreak of COVID-19. Common scams include phishing for personal information, online shopping, and superannuation scams. Scammers are pretending to be banks, travel agents, insurance providers and telco companies, and ask for personal and financial information, ask users to open malicious links or attachments, gain remote access to computers, or seek payment for a fake service. Scammers are also taking advantage of the government’s superannuation early-access program. A scammer will call pretending to be from a superannuation or financial service, and attempt to steal superannuation money or charge for fake services. Businesses are targeted in business email compromise scams. Scammers are using COVID-19 as an excuse to divert usual account payments to a different bank account. Payments then go to the scammer instead of the real business. To learn more about COVID-19 scams, visit scamwatch.gov.au.
Individuals who have not submitted their 2018–19 tax returns can still access the Child Care Subsidy, or CCS, until March 31, 2021. While additional time has been granted to access the CCS, this doesn’t include an extension of time to lodge 2018–19 income tax returns. 2018–19 returns must be lodged as soon as possible, as failure to lodge on time penalties and general interest charges may apply. Un-lodged tax returns may also exclude individuals from receiving additional benefits, including the Family Tax Benefit. Families who received the Family Tax Benefit and did not confirm their family income by June 30, 2020 should phone the Services Australia families line. Services Australia can assist those who had special circumstances preventing them from lodging before the deadline.
The Australian Taxation Office has confirmed that for fringe benefits tax, or FBT purposes, the taxi travel exemption has been extended to include ride-sourcing vehicles. The change is due to amendments to the Fringe Benefits Tax Assessment Act 1986, which are now law. Before the amendments became law, a taxi was defined for FBT purposes as ‘a motor vehicle licenced to operate as a taxi’. This meant the FBT exemption did not extend to ride-sourcing not licensed to operate as a taxi. Employers will now be eligible for the exemption for travel provided to their employees if it’s a single trip to or from the employee’s workplace: on or after April 1, 2019, and in a licenced taxi or other vehicle involving the transport of passengers for a fare – other than a limousine – such as a ride-sourcing vehicle. Travel by an employee in such a vehicle on or after April 1 2019 is also exempt if it’s as the result of sickness of, or injury to, the employee, and whole or part of the journey is directly between: the employee’s place of work, the employee’s place of residence, any other place that it is necessary, or appropriate, for the employee to go as a result of the sickness or injury. The change means any benefit arising from travel by an employee using a registered taxi or ride-sourcing provider, other than in a limousine, is now exempt from FBT subject to meeting certain criteria. The change is designed to help minimise compliance costs for businesses providing transport for their employees. Because the changes apply from April 1 2019, the 2020 FBT return instructions have been updated to help employers who may need to amend their FBT return. For more information on the FBT taxi travel exemption, see ato.gov.au/FBTtaxi.
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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