2015 Practical Updates
Reminder of small business tax cuts
The ATO has reminded taxpayers that, from 1 July 2015, a new two-tier company tax system took effect and applies to all companies.
This system sees the whole of a company’s taxable income subject to the following rates:
· 28.5% if the company’s aggregated turnover is below a $2 million threshold (i.e., a small business entity or ‘SBE’); or
· 30% if the company’s aggregated turnover is equal to or above a $2 million threshold.
Importantly, companies don’t need to do anything now – if identified as a small business, the new rate will be automatically applied to their PAYG instalments rate or on their next activity statement.
Note that a capped 5% tax discount, designed to broadly mirror the small business company tax cut, was also introduced for unincorporated small businesses from the 2016 income year. It will be delivered to individual taxpayers in receipt of small business entity income via the ‘small business income tax offset’.
ATO supporting small business to implement SuperStream
As the SuperStream rollout for small businesses continues, the ATO claims that it is helping employers in select industries who need support implementing SuperStream.
Employers with 20 or more employees were expected to be using SuperStream no later than 31 October 2015. Employers with 19 or fewer employees need to be using SuperStream no later than 30 June 2016.
The ATO has also stated: “With only two quarters left until SuperStream becomes mandatory, now is a good time for employers to adopt SuperStream and familiarise themselves with it before the deadline.
“For some businesses, December and January are quieter periods, so now is a great opportunity to check that your SuperStream option is ready, whether that be your payroll software, your super fund’s online payment system, or a clearing house, such as the ATO’s Small Business Superannuation Clearing House. You can also ask your accountant or bookkeeper for help.”
Now is also the ideal time for employers to make sure they have all the information they need to use SuperStream correctly: “Importantly, you should collect the necessary employee identification data – being your employees’ TFNs and their funds’ unique super identifiers (USIs) – and enter it into your system ahead of the next quarterly due date on 28 January. That way, you have time to check that things are running smoothly before the deadline.
“Your employees can find their fund’s USI on their super statement or by calling their fund. You can also find these details using the Super Fund Lookup website – our online SuperStream checklist has the link.”
The ATO step-by-step checklist to help employers prepare can be found at www.ato.gov.au/SuperStreamChecklist.
ATO reviewing taxable payments annual reports
The ATO has advised that it is contacting businesses in the building and construction industry about information provided on their Taxable payments annual report, where the businesses have:
· provided a report with missing or invalid ABNs;
· included amounts paid for GST when the contractor isn’t registered for GST;
· not lodged a report; or advised the ATO they are not required to report, when the ATO’s records indicate they should.
The ATO will explain what their review has found and suggest ways to make it easier to complete accurate reports in the future, such as using the ABN Lookup tool or ATO app to check a contractor’s ABN or if they are registered for GST.
Guidance regarding the payment of death benefits
The Superannuation Complaints Tribunal, which can resolve disputes between large superannuation funds and their members, recently provided some guidance regarding the payment of death benefits from superannuation funds, possibly because the largest category of complaints the Tribunal determined at review last year (44.8%) was death complaints.
This guidance is reproduced below.
“There are some common misconceptions about superannuation death benefits that can result in unexpected outcomes for the beneficiaries of a death benefit, and may result in a complaint being made to the Tribunal.
The most common misconception, arguably, relates to the purpose of superannuation.
Broadly speaking, the purpose of superannuation is to provide income in retirement to members and their dependants; it does not form part of a person’s estate.
Accordingly, a superannuation death benefit should be paid to dependants and those who had a legal or moral right to look to the deceased member for financial support had they not died.
The ability of a superannuation fund to pay a death benefit directly to a dependant rather than to the estate has a number of advantages.
Firstly, it ensures that the benefit is paid directly for the benefit of the dependants and is not available to creditors who would be paid first from the assets of the estate.
Secondly, it can usually reach the beneficiaries quicker than if a grant of probate or letters of administration has to be obtained and the estate called in and distributed.
Thirdly, as a general rule, superannuation death benefits are protected from bankruptcy.
Therefore, even if the deceased member was bankrupt, or if the estate is insolvent, funds can be paid direct to the dependants to replace the income stream that may be lost as a consequence of the death.
However, if you would like to ensure that your superannuation is distributed a certain way then it is important to find out if your superannuation fund has the option for a binding nomination and if so, ensure you meet the requirements, including renewing your binding nomination every three years.”
The requirements for making a binding death benefit nomination for an SMSF are normally found in the trust deed of the fund, and may allow the nomination to be ‘non-lapsing’.
ATO’s Visa Data Matching Program
The Department of Immigration and Border Protection will provide the ATO with the following details of visa holders, their sponsors and migration agents for the 2013/14 to 2016/17 financial years:
· Address and contact history for visa applicants and sponsors;
· All visa grants, and visa grant status by point in time;
· All migration agents, and their address and contact history;
· Sponsor details (subclass 457 visa);
· Education providers (educational institution where the student visa holder intends to undertake their study);
· Visa subclass code and descriptor; and
· All international travel movements undertaken by visa holders (arrivals and departures).
It is estimated that records relating to approximately 1,000,000 individuals will be provided.
Immediate deductibility of capital start-up expenses
From 1 July this year, new provisions apply to allow certain small businesses, or an entity that is not in business, to immediately claim some start-up costs, including business costs associated with raising capital.
Claimable business-related start-up costs
Expenses can be fully deductible in the year in which they are incurred if the expenditure relates to a small business that is proposed to be carried on and is either:
- incurred in obtaining advice or services relating to the proposed structure or the proposed operation of the business (e.g., advice from an accountant or lawyer); or
- a payment to an Australian government agency of a fee, tax or charge incurred in relation to setting up the business or establishing its operating structure (e.g., the ASIC fee for registering a company).
It does not include the cost of acquiring assets that may be used by the business.
Data matching program – on eBay online sales
The ATO has announced that it will acquire online selling data relating to between 15,000 and 25,000 individuals who sold goods and services of $10,000 or more on eBay between 1 July 2014 and 30 June 2015.
Data will be sought from eBay Australia and New Zealand Pty Ltd, a subsidiary of eBay International AG which owns and operates www.ebay.com.au.
The data requested will include information that enables the ATO to match online selling accounts to a taxpayer, including name, address and contact information, as well as information on the number and value of transactions processed for each online selling account.
These records will be electronically matched with certain sections of ATO data holdings to identify non-compliance with registration, lodgement, reporting and payment obligations under taxation laws.
New multi-agency approach to fight serious financial crimes
Since 1 July this year, a new Serious Financial Crime Taskforce has been operating to ensure that Commonwealth financial crimes are disrupted and deterred.
The Taskforce is led by the Australian Federal Police, and also includes:
- the ATO;
- Australian Crime Commission;
- the Attorney-General’s Department;
- Commonwealth Director of Public Prosecutions; and
- the Australian Border Force
The Taskforce will work closely with international partner agencies, governments and organisations around the world and will initially concentrate on international tax evasion and criminality related to trusts and ‘phoenix activity’ (when companies deliberately and repeatedly liquidate to avoid paying creditors, employee entitlements and taxes).
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