COVID-19 ADVICE

This will depend on whether you will be classed as employee under Jobkeeper or a Business Participant under JobKeeper

If you have employed your staff for more than 12 months your may be able to apply for JobKeeper but only if you GST turnover has reduced by 30% for a business with turnover under $1 Billion in a comparable period, or non profits organisations with turnover that has reduced by 15% in a comparable period

There is a lot of confusion about this. So if you need help to get this setup please call our office and we will help you but you must act now

As a jobkeeper employer you must have your jobkeeper nomination forms signed off by all your employees that are eligible. You cannot pick and choose who you want on this program. Eligible employees are those that have been employed by you the employer for 12 months or more.

Self Employed individuals(businesses without employees) will be eligible to receive the JobKeeper Payment where they meet the relevant turnover test outlined above.

Eligible Employees are employees who:
– are currently employed by the eligible emplolyer (including those stood down or re-hired
– were employed by the employer by 1 March 2020
– are full-time, part-time, or long-term casuals (a casual employed on a regular and systemic basis for longer than 12 Months as at 1 March 2020)
– are permanent employee of the employer, or if a long-term casual employee, not a permanent employee of any other employer
– are at least 16 years of age at 1 march 2020
– are an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder at 1 March 2020;
– were a resident for Australian tax purposes on 1 March 2020; and
– are not in receipt of a Jobkeeper Payment from another employer.

More on this at

What the ATO is seeing in the small business market

What the ATO is seeing in the small business market

What the ATO is seeing in the small business market from Deputy Commissioner Deborah Jenkins Speech to the Institute of Public Accountants 2018 national congress Sydney, 2 November 2018

The small business client base

Let’s get a bit of context around small businesses – we define them as those entities with annual turnover less than $10 million.

• There are around 4 million small businesses in Australia. They account for 99% of businesses in Australia, contribute $380 billion to the economy and employ approximately 5.6 million Australians. And they are a diverse group.
• 78% of small businesses have no employees
• 70% have turnover less than $75,000
• Around 70% pay their tax on time.

44% of this population are sole traders. The next largest group are companies followed by trusts and partnerships.

In addition, there are 1.88 million individuals linked to small business entities. They may be responsible for, or derive income from, small business activities.

With that many small businesses to engage with, we rely heavily on our relationships with associations such as the IPA and its members, you.

So what are we seeing in this client segment and what are we doing about it

I’d like to share some of the insights into this group that we come across in our work:

• There are a lot of them and they are not homogenous
• They are time poor, generally not tax literate and often have limited business acumen – but they have a lot of passion
• Cash flow tends to be a big challenge
• To them, tax and super seems complex and overwhelming
• They often use intermediaries – most commonly tax agents or book keepers
• Most use smart phones but are slower to adopt technology when it comes to their business operations – that takes time and time is something they don’t have.

With such a large and diverse population, how do we balance the ATO’s obligation to serve the needs of small businesses while also discharging our responsibilities as a trusted and fair regulator?

• We focus on prevention measures and engaging with our clients early, as well as on contributing to key ATO initiatives that will improve the small business experience.
• We undertake compliance activity to address instances when taxpayers have deliberately done the wrong thing. When mistakes occur unintentionally, we work with taxpayers to correct the error.
• We know that both prevention and correction are effective compliance strategies.

So what are the things we are paying particular attention to with small businesses at the moment that you should be aware of?
You are unlikely to be surprised by anything I’m about to say. The key issues continue to be:

• claiming private expenses in the business
• the attribution of personal and business use
• a lack of understanding of how tax applies for different and often complex business structures, and
• omitted income.

Some of the unintentional and basic mistakes we have observed in our recent work include:

• forgetting to check all bank accounts for interest
• forgetting to correctly report dividends and franking credits
• unable to substantiate small business expense claims
• not completing an annual reconciliation of income tax return information and business activity statements
• little calculation errors, transposition of figures
• claiming business expenses at the GST inclusive rate rather than GST exclusive (when registered for GST)
• over claiming agent fees, where the agent fees relate to more than one entity or taxpayer
• not including income from coupon sales.

At the more egregious end, we see a range of behaviours that indicate businesses operating in the black economy. Some examples include:

• Deliberately omitting income that has been diverted to personal bank accounts and mortgages
• deliberately omitting cash income
• not all sales put through the till or invoiced
• not reporting income from weekend sales
• paying staff in cash from cash takings that are not reported.

One of the more common adjustments we make relates to the incorrect claiming of private expenses in the business. This can be either a deliberate action or error. Private expenses we observe being over claimed include:

• motor vehicle
• expenses associated with home offices
• overseas travel.

Our message to small business is always to substantiate business deduction claims.
We have three golden rules to help small business figure out what business deductions they can claim:

1. The money must have been spent for your business – not a private expense, for example you can’t claim child care fees or clothes for your family.
2. If it’s a mix of business and private use, only claim the portion related to your business.
3. You must have a record to prove your expense like bank statements or receipts, so you can demonstrate how you calculated your claim – including working out the business portion of the expense – substantiation.

Remember to include all income. This includes any cash, EFTPOS, credit or debit card and online sales. There may be other sources of business income to declare, depending on the circumstances.

Also, if you’re a sole trader you still need to lodge a tax return even if your income is below the tax-free threshold ($18,200 for the 2018-19 income year).

Aside from these golden rules it is important to remember that:

• income earned through the sharing or gig economy is income and needs to be declared. We are continuing to broaden the data we are getting from sharing economy platforms, so not declaring that income isn’t going to go unnoticed.
• You should be aware of the concessions that are available to small business – for example Small businesses with a turnover below $10 million are eligible for a range of tax concessions including the $20,000 instant asset write off
• Getting your employee obligations right is important – deducting and send us the PAYG withholding, paying super guarantee and paying the correct amount of FBT
• You need to lodge activity statements or income tax returns on a regular basis.

To read more on this go to www.ato.gov.au/media-centre/Speeches.

Future of Tax Revenue in Australia

Future of Tax Revenue in Australia

The Parliamentary Budget Office has cast its eye over the future of tax revenue in Australia, and says federal coffers will become more reliant on income tax.

The federal budget will become more reliant on personal income tax revenue, a new report says. (AAP) posted on SBS News 18/7/18 https://www.sbs.com.au/news/income-tax-continues-to-do-heavy-lifting

The federal budget will become more reliant on personal income tax revenue as other sources dwindle and no action is taken on reaping more from gas and mining firms, a new report says.

The Parliamentary Budget Office on Wednesday released an analysis of the tax system since 2001 and some of the risks ahead. The main changes since 2001 had been a drop in fuel excise due to fuel efficiency and a previous freeze in indexation, a fall in customs receipts due to free trade deals, and a drop in company tax receipts as losses are carried forward. Based on recent trends, the report found the future would see a drop in company tax receipts, an increase in personal income tax receipts and drops in consumer tax receipts driven by consumer behaviour and technological change.

“If these risks to tax receipts eventuate, and in the absence of other taxation reforms, maintaining Commonwealth Government revenue at recent levels as a share of GDP will lead to an increasing reliance on taxes on labour income through the personal income tax system,” the report concluded.

The study found personal income tax already accounted for 53.7 per cent of commonwealth receipts. In comparison, the report showed resource rent taxes made up 0.4 per cent of receipts.

Petroleum Resource Rent Tax had fallen as a share of GDP since 2001 despite the increase in petroleum production and exports and strong price growth through much of the period. The report warns that although Australia is set to become a leading producer and exporter of liquefied natural gas, there is a “significant likelihood that this will not translate into higher PRRT revenue”.

Labor’s mining tax was abolished by the coalition in 2014. Shadow treasurer Chris Bowen said the tax base clearly needed to be broadened, as the government continued to rely on income tax to fund basic services.

“The PBO’s key finding is premised on no tax reform occurring and the only major party going to the next election with a tax reform agenda which broadens Australia’s tax base is the Labor party,” Mr Bowen said.

Labor has announced reform of the taxation of trusts, tax affairs, negative gearing and capital gains tax, as well as removing dividend imputation refundability. It’s also outlined plans for a “bigger, better and fairer income tax cut” for low and middle income earners than the government had proposed.

Greens spokesman Senator Peter Whish-Wilson said generous deductions for resources companies and rampant tax avoidance meant workers carried the heavier burden. “Future budgets will still rely on bracket creep because the government’s income tax plan did not fix bracket creep – it just gave lots of money to wealthy people,” Senator Whish-Wilson said. He said the government needed to abolish capital gains tax concessions, overhaul petroleum taxes, introduce a mining super profits tax and treat multinational tax avoidance more seriously.

Source: AAP

Pauline Hanson has withdrawn her party’s support for the Coalition’s company tax cuts.

Pauline Hanson has withdrawn her party’s support for the Coalition’s company tax cuts.

One Nation leader Pauline Hanson has dealt a blow to the Federal Government by withdrawing her party’s support for the Coalition’s company tax cuts. From ABC News, www.abc.net.au/news/2018-05-22

Key points:
• Pauline Hanson struck a deal with the Coalition in March to support tax cuts in exchange for an apprenticeship pilot program
• Now she says no money has been put aside, and is effectively withdrawing support
• Finance Minister Mathias Cormann said the apprenticeship scheme was always conditional on the tax cuts passing

Senator Hanson said she regretted pulling out of a deal with the Government, but it had failed to deliver on a string of her demands, including reducing the immigration rate, building a coal-fired power plant in north Queensland and lowering spending.

She said she had not spoken to Finance Minister Mathias Cormann directly about her new position.

“I know he is devastated over this, but it is not Minister Cormann, it is his colleagues and the Government that have let him down,” Senator Hanson said.

Senator Cormann is pessimistic that the Government will ever reach a deal with One Nation on cutting the company tax rate.

“It looks that we might not ever get to that point,” Senator Cormann said.

Senator Hanson struck a deal with the Coalition in March to support the tax cuts in exchange for an apprenticeship pilot program for young Australians.

But the One Nation leader — who controls three votes in the Senate — says no money has been put aside for the program.

Will company tax changes pass the Senate?
76 senators are expected to vote on this bill. 39 votes are required to pass this bill. 38 votes are required to block this bill.

There appears to be a major dispute between Senator Hanson and the Government over the timing of what was agreed.

While Senator Hanson said no money had been set aside, Senator Cormann said the apprenticeship scheme was always conditional on the tax cuts passing.

“It was always understood and accepted by Pauline Hanson and One Nation that the things we agreed were conditional on the successful passage of the legislation in full, to reduce the business tax rate over time for all businesses down to 25 per cent and that remains the Government’s position,” Senator Cormann said.

He said One Nation had given firm private and public commitments that they would support the company tax cuts legislation when they negotiated earlier this year.

“I am obviously very disappointed with this latest development, but self-evidently I hope this is not the last word,” Senator Cormann said.

One Nation’s latest position makes it even harder for the Government to get the company tax cuts through Parliament before the next election

Senator Cormann told a Senate estimates committee the Government was committed to taking the company tax cut to the next election.

“Yes and I can explain why because it is even more important now than it was when we took it to the 2016 election,” he said.

Hanson wants lower immigration in exchange for support
Senator Hanson now says the Federal Government has not done enough to reduce debt, and the company tax cuts would not create enough jobs in the short term.

She is also listing other major changes she wants the Government to make.

In an interview with The Australian, Senator Hanson reiterated her party’s support for changing the petroleum resource rent tax, to make large companies pay more tax.

Senator Hanson’s change of mind presents a headache for the Federal Government, which has failed to convince enough crossbench to support the change.

It wanted to pass the legislation before the budget but was forced to defer debate with new independent senator Tim Storer unconvinced.

The two Centre Alliance senators (formerly the Nick Xenophon Team) are also unprepared to back the company tax cuts now.

CA senator Stirling Griff said the evidence so far “certainly would indicate to us that it’s not really the right time to have tax cuts or corporate tax cuts”.

News on Company Tax Rate & Mid Year Fiscal Outlook

News on Company Tax Rate & Mid Year Fiscal Outlook

News on Enterprise tax plan – reducing the corporate tax rate

 

The Treasury Laws Amendment (Enterprise Tax Plan Base Rate Entities) Bill 2017 was introduced to the House of Representatives on 18 October 2017 but is not yet law. This Bill proposes to remove the ‘carrying on a business’ test from the 2017–18 income year onwards and introduces a passive income test in determining which companies are subject to the lower corporate tax rate.

For more information see the Reducing the corporate tax rate new legislation page.

 

2017-18 Mid-Year Economic and Fiscal Outlook (MYEFO)

 

The Government released the 2017–18 MYEFO on 18 December 2017, with several proposed changes to tax and superannuation laws. Below is a list of the announced measures, including start dates (as announced by Government, but dependent on passage of legislative amendments through parliament). You can access the papers here: budget.gov.au

 

List of announced measures

Measure name

Proposed start date

Pacific labour scheme

1 July 2018

Seasonal worker programme – improving take up and streamlining administration

1 July 2018

Capital gains tax – main residence exemption – application to temporary residents

Various

Expanding tax incentives for investments in affordable housing

1 January 2018

Personal income tax – exemption of JobSeeker Payment for newly bereaved recipients

20 March 2020

Personal income tax – exemption for Australian participants of British nuclear tests and veterans of the British Commonwealth Occupation Force

2017-18

Company tax – passive investment companies excluded from lower company tax rate

2017-18 income year

Single Touch Payroll – deliver a tax incentive for small business to invest in standard business reporting enabled software – reversal

N/A

Superannuation – closing salary sacrifice loopholes

From 1 July 2018

Superannuation guarantee integrity package – modernising payroll and superannuation fund reporting

2018-19 financial year (transitional)/1 July 2019 (full implementation)

Superannuation guarantee integrity package – more effective collection of superannuation guarantee liabilities

1 July 2018

Superannuation guarantee integrity package – reversal of 2014-15 MYEFO measure – Superannuation guarantee charge

N/A

Superannuation guarantee integrity package – stronger penalties for superannuation guarantee

TBA

Superannuation guarantee integrity package – superannuation guarantee compliance taskforce

N/A

Additional foreign investment amendments

TBA

Debt-Equity rules – allowing debt tax treatment for tier 2 capital issued by customer-owned banks

Day after registration of amending regulation

Tax integrity – Extension of the OECD hybrid mismatch rules

Six months after royal assent

International tax – adoption of the multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting

Various

Reducing Pressure on Housing Affordability – Affordable housing through MITs – modification

1 July 2017

Technical amendments to venture capital and innovation programs

Various

GST on low value imported goods – modification

1 July 2018

Improving the integrity of GST on property transactions – transitional arrangements

As a transitional arrangement, contracts signed before 1 July 2018 and settled before 1 July 2020 are to be excluded

Wine equalisation tax rebate tightened eligibility – transitional rules for wine producers

1 July 2018

Deductible gift recipient reform – strengthening governance and integrity and reducing complexity

Various

Extending deductible gift recipient eligibility to organisations promoting indigenous languages

TBA

Philanthropy – updates to the list of specifically listed deductible gift recipients

Various

Philanthropy – managing the risks of overseas philanthropy

TBA

Indirect tax concessions scheme – diplomatic and consular concessions

TBA

Heavy vehicle road reforms – next steps

TBA

Higher education reforms – revised implementation

Various

Junior Minerals Exploration Incentive Scheme – establishment

2017-18

National business simplification initiative – modernising business registers

N/A

VET Student Loans – separation from the Higher Education Loan Program

1 July 2019

 

 

 

Capital allowances: draft effective lives of assets used in the fruit and vegetable processing industry

Capital allowances: draft effective lives of assets used in the fruit and vegetable processing industry

Proposed new determinations effective asset lives in fruit and vegetable industry

The ATO propose to add the following list of effective life determinations to the Commissioner’s schedule to apply to assets purchased (or otherwise first used or installed ready-to-use) on or after 1 July 2018 (within the meaning of section 40-95 of the Income Tax Assessment Act 1997).

Tell the ATO what you think

The ATO is seeking comments on the draft list of effective lives to be released for assets used in the fruit and vegetable processing industry. Comments are open until 15 January 2018. If you disagree with a proposed effective life, tell them why a different effective life should be recommended.
Send your comments or questions to Kim Dziedzic by 15 January 2018:
• phone (07) 3213 5764
• fax (07) 3119 9901
• email kim.dziedzic@ato.gov.au

Fruit and vegetable processing (ANZSIC code 11400)

Dried fruit manufacturing assets (other than sun-dried)

Packaging assets:

Asset Life (years)
Box sealers (including taping machines) 10
Carton erecting, packing and closing machines (including cartoners) 15
Form, fill and seal machines see Table B Packaging machines
Labellers see Table B Packaging machines
Multihead weighers see Table B Packaging machines
Palletisers see Table B Packaging machines
Wrapping machines, including pallet wrappers. shrink wrappers and stretch wrappers – see Table B Packaging machines

Processing assets:

Aspirators 20
Cappers and destemmers 15
Cookers 15
Cooling tunnels 15
Drying assets (including dehydrators and dryers) 20
Mixers 15
Pitters 15
Riddles (including pre-riddles and rotary sieves) 15
Shaker tables 15
Sulphur tanks 15
Washing assets (including barrel washers, brush washers and ripple washers) 15

 

Product and raw material handling assets:

Asset Life (years)
Bins 10
Bin tippers 15
Conveyors and elevators 15

 

Quality control and inspection assets:

Asset Life (years)
Colour sorters and laser scanners 10
Inspection equipment including checkweighers, metal detectors see Table B Packaging machines
Testing equipment 15

 

Support assets:

Asset Life (years)
Coolrooms see Table B Refrigeration assets
Weighers 20

Canned, bottled or preserved fruit and vegetable manufacturing assets

Packaging assets:
Asset Life (years)
Carton erecting, packing and closing machines (including cartoners) 15
Labellers 10
Palletisers and depalletisers see Table B Packaging machines
Pallet wrappers and stretch wrappers see Table B Packaging machines

 

Filling and sealing assets:

Asset Life (years)
Canning assets (including can loaders, closers and seamers) 10
Capping machines: Cappers 10
Capping machines: Induction sealers 5
Filling machines (including aspectic, bag in box, cup, direct, piston) 10

 

Processing assets:

Asset Life (years)
Blanchers and paste finishers (including bean, spaghetti) 12
Concentrates and syrup assets (including centrifuges, decanters and syrupers) 15
Cookers: Rotary atmospheric sterilisers 20
Cookers: Rotary pressure sterilisers 10
Cookers: Static retorts 15
Crushing mills 30
Graders 15
Peelers: Chemical (including caustic peelers) 10
Peelers: Mechanical (including ginacas and magnesium scrubbers) 5
Pitters and re-pitters 20
Slicers and re-sizers 15

 

Quality control and inspection assets:

Asset Life (years)
Colour sorters 10
Inspection equipment including checkweighers, metal detectors see Table B Packaging machines

 

Support assets:

Asset Life (years)
Bin tippers 20
Control systems see Table B Control systems and control system assets
Conveyors and elevators 15
Filtration systems 15
Pasteurisers (including heat exchangers) 10
Pumps 10

Jam, pickles and sauce manufacturing assets

Packaging assets:
Asset Life (years)
Carton erectors 12
Labellers see Table B Packaging machines
Palletisers 10
Pallet wrappers and shrink wrappers see Table B Packaging machines

 

Filling and sealing assets:

Asset Life (years)
Bottle rinsing machines 10
Capping machines 15
Denesters 10
Filling machines (including aseptic, bucket, portion control) 15
Jar depalletisers 15
Lid descramblers, cap sorters, hoppers 15

 

Processing assets:

Asset Life (years)
Brush finishers and pulper finishers 15
Cookers 10
Cooling tunnels (including water cooling tunnels) 15
Micro filters 20
Pasteurisers 15
Pectin mixers 10
Pipes and pipelines (pigging) 15
Tanks and vats (including blending, holding and mixing tanks) 15

 

Quality control and inspection assets:

Asset Life (years)
Metal detectors and camera vision scanners 10

 

Support assets:

Asset Life (years)
Accumulation tables and turntables 15
Air compression assets (including air compressors, air dryers and air receivers) 10
Boilers see Table B Boilers
Conveyors 15
Exhaust systems 10
Heat exchangers 10
Pumps (including cavity, diaphragm, lobe) 15

See also TR 2017/2 – Income tax: effective life of depreciating assets

Private use of exempt motor vehicles for FBT

Private use of exempt motor vehicles for FBT

Eligible Motor Vehicles by Employees

The ATO have released a draft practical guideline on the private use of eligible motor vehicles by employees. Where private use of these vehicles by your employees is limited, some fringe benefits tax (FBT) car-related exemptions may apply.

The guideline explains when the Commissioner will not apply compliance resources to determine if the private travel was limited to travel for the purposes of the car-related FBT exemptions where travel is:
• between employees’ home and workplace; and
• is minor, infrequent and irregular.

When finalised, this guideline will apply from the 2018 FBT year and onwards.

The Guideline

To see the guideline click here. This guideline is open to comment until 9 February 2018.