Below is a list of past ATO alerts.  ATO alerts are courtesy of the Australian Taxation Office;

 

ATO’s administration of the CRP

The Inspector-General of Taxation and Taxation Ombudsman (“IGTO”) has issued a report identifying ways for the ATO to improve its administration of the Commissioner’s Remedial Powers (“CRP).

The CRP provides the Commissioner the statutory power to modify the operation of certain taxation law provisions that give rise to unintended or unforeseen outcomes. The lower-than-expected usage of the CRP may be due to the ATO adopting an overly narrow interpretation of the CRP criteria.

It was forecasted (at the time the law was passed) that the CRP would be used up to ten times per annum. However, since its enactment in 2017 (over six years ago), the ATO has received and considered 68 candidates (as at 30 September 2023) for the exercise of the CRP and has exercised the discretion seven times.

For more information, visit the IGTO website.

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SMS hyperlinks are being removed

To help combat ATO impersonation scams and make it easier for the community to identify our legitimate SMS communications, we will be removing hyperlinks from unsolicited outbound SMS by Tax Time 2024.

Removing hyperlinks is a scams preventative measure. It will help protect the community by making it easier to identify legitimate ATO SMS interactions and provide trust and confidence in the ATO and our tax, super and registry systems.

For information and examples of ATO impersonation scams, see Scam alerts

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Unregistered tax preparers will not go undetected

Perth-based Jessa Van Stroe (also known as Jessa Layola) was ordered to pay $230,000 in penalties after providing tax agent services for a fee while not registered with us.

She illegally charged clients to lodge returns on their behalf and the Federal Court declared she engaged in 531 contraventions of the TASA. This case is particularly concerning as she put taxpayers at risk for her own financial gain and consistently showed brazen disregard for the law.

For more information on this situation, visit the Tax Practitioners Board.

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myGov access to be tightened

The Assistant Treasurer has announced a tightening of the way in which individuals can access their myGov account. Individuals who use their myGovID to login to their ATO account will need to use that myGovID for future logins from now on.

It will not be possible to access an ATO account without it (eg via an email/username and password). This is to counter illicit access of ATO accounts by people using stolen personal information obtained from the dark web.

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Client-to-agent linking to more businesses

The ATO is further strengthening the security of their online services by adding an extra control into the process before you can link to new clients or change authorisations for existing clients.

From 13 November, client-to-agent linking will apply to all types of entities with an ABN, excluding sole traders.

The ATO needs to strengthen the security of the client-to-agent linking process so all parties – including agents, clients and the ATO – can have confidence the client has authorised the agent to:

  • have access to their information
  • act for them.

This will help us to defend against increasingly sophisticated criminal attempts to defraud the system.

Detailed information and support materials are available and the ATO will continue to add additional resources for both clients and agents.

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Rental property return errors

Nine in 10 rental property owners are getting their return wrong, according to the ATO, which is encouraging rental property owners and their tax agents to take care when lodging their returns.

Errors observed by the ATO include rental property owners double dipping in their deductions. Other areas of concerns are:

·         How interest expenses are apportioned

·         Deductions claimed for initial repairs as opposed to ongoing general repairs and maintenance

·         Apportioning of deductions for rental expenses when the property is used personally

Visit the ATO for more rental information

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ATO warns against copy-paste work-related claims

The ATO has issued a release reminding taxpayers of what it sees as the 3 “golden rules” when claiming a deduction for a work-related expense:

  • Money must be spent by the taxpayer and not be reimbursed
  • Expenditure must directly relate to earning the taxpayer’s income and not be private in nature and
  • There must be a record to validate claims (eg a receipt).

The ATO said that simply “copying and pasting” claims from last year may raise a red flag as there have been some “key changes to look out for this tax time”. These include:

  • The increase in the rate for working from home expenses (from 52 cents to 67 cents per hour);
  • The increase in the cents per kilometre rate for work-related car expenses (from 72 cents to 78 cents); and
  • The removal of the requirement to exclude the first $250 of certain self-education expenses.

For more information refer to the ATO’s website on Occupation and industry-specific guides for work related expenses

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Changes to Payments to Super Employees

 Currently employers are required to pay their employees’ super entitlements on a quarterly basis. In May 2023 the Australian government announced that commencing 1st of July 2026, employers will be required to pay their employee’s super at the same time as their salary and wages.

The start date allows for small business employers, super funds, and payroll providers to be provided with enough time to prepare for the changes.

The ATO and the Treasury will be consulting with industry and stakeholders in later 2023. The measure has not yet become law and for more information refer to the ATO’s website on Payday superannuation.

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Single Touch Payroll Phase 2

As per the 2019-20 Budget, the expansion of Single Touch Payroll (STP) aims to assist employers to reduce the burden of reporting information regarding their employees to multiple Government Agencies.

The approach to phase 2 is flexible, pragmatic and reasonable based on the business readiness and individual circumstances. Hence, digital service providers that require more time to make changes and update to support STP 2 can apply for deferral for their customers.

Employers can also request for more time to transition through:

OR

  • Registered agents

Further information on STP 2 delayed transition is available on the ATO website.

The following STP reporting will remain the same:

  • The way STP is lodged
  • The due date
  • The types of payments needed
  • Tax and super obligations
  • End of year finalisation

Key changes to STP reporting:

There so many benefits of STP 2 for employers and employees. Resources are available on the ATO’s website to assist employers with transitioning to STP Phase 2 reporting. Employers guide and checklist are also available.

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Missed the Directors ID deadline application?

The director ID deadline extension has passed however directors can still apply, though penalties are still applicable for directors who are deliberately not meeting their obligations.

 

Director ID can be applied online on the ABRS website.

 

Resources are available on the ATO website offering a step-by-step guide to applying online in languages other than English and through demonstration videos.

 

Once you have received your directors ID, keep it safe until you need it. For those who have registered, please contact our office by email or phone us to let us know so we may update our records accordingly.

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Current Monthly Business News on the ATO

The Australian Taxation Office (ATO) has published a recent up to date information for the month of November that is made available for businesses. New information are updated regularly and you can be the first to know by subscribing here.

 

Here is a glimpse of the news available for the month of November:

 

Avoid surprises when borrowing from your company

21 November 2022

 

Our approach to the banking and finance industry

21 November 2022

 

The important work of the Tax Avoidance Taskforce received a boost in the recent Federal budget

21 November 2022

 

Private company benefits – Division 7A dividends

21 November 2022

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.au Domain URLs

.au domain URLs are now available to the public. The new URL is distinct compared to the previous .com or .net URLs.

 

Businesses with an existing domain name have been given priority to reserve their matching .au domain name since March this year.

 

One of the benefits of registering a .au domain is to safeguard your company and brand identity on the internet. Hence, if businesses do not reserve their .au domain name, cyber criminals can potentially take it and impersonate your business and conduct fraudulent cyber activities.

 

More information and registration for .au domain is available through .au direct | auDA or Accredited Registrars | auDA.

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Tax Scam Myths

The Australian Taxation Office (ATO) have summed up the truth on three common myths that floats around at tax time.

 

Myth 1: “Only older people get scammed”

This myth is said to be false by the ATO. Based on last years’ statistics, people between the age of 25 to 34 were affected by tax scams the most, followed by people between 18 to 24 years. Tax scammers do not look at age, they aim to target everyone. Hence, it is advisable to double check with the ATO if you get a phone call from “them” that does not sound right.

 

Myth 2: “Scams are easy to spot”

Please be aware that not all scams are full of grammatical errors and typos. With technology advancements scams are difficult to identify. Therefore, the ATO advises to “stop and think” before clicking on links from any messages or emails received.

 

Myth 3: “Tax scams only happen at tax time”

The ATO disagrees with this myth because they have seen different types of tax and super scams throughout the year. This means scammers are always working all year around setting traps for taxpayers to fall into.

 

More information on how to verify or report a scam is available on the ATO website.

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Detecting Tax Avoidance Scheme

It is that time of the year and promoters will take advantage of vulnerable individuals and businesses by promoting tax avoidance schemes. Those that become involved can cost their investments and may result in penalties and interest.

 

Before investing, be aware of the following red flags of a dodgy scheme:

  • Offers large tax deductions or refunds that no other tax planner can match
  • Focuses on ‘cash injection’ – scheme promoting government incentives or offsets to deliver quick cash into your pocket even if you are not eligible for it
  • Fees based on your savings – promoters basing their service fees on how much they promise you to save
  • Discouraging you from getting a second opinion

 

If you are not sure about the tax advice given, please contact the ATO by contacting them on 1800 060 062 or complete a tip off form.

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ATO’s guidance on taxpayers unpaid tax debts

The Australian Taxation Office (ATO) are aware that taxpayers, particularly sole traders, and small businesses can have issues with cashflow, which causes issues in being able to pay tax bills on time. Hence, they have released a guidance to assist taxpayers to understand the options available when tax debts cannot be paid by the due date. Their goal is to support taxpayers with the tools and services available, to ensure that taxpayers’ bills are addressed while it is still manageable.

 

Where taxpayers do not pay their bills by the due date, the ATO will:

 

Stronger action may apply, where taxpayers are unwilling to cooperate on addressing their debts or defaulting on the agreed payment plans.

 

It is important that taxpayers lodge activity statements and tax returns on time, even if you are unable to pay on time and contacting the ATO to discuss on a payment plan, to avoid any penalties.

 

More information on what to expect when tax debts are not paid is available on the ATO website.

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ATO’s decision impact statement on High Court case – Employees vs independent contractors

A decision impact statement (DIS) has been released by the Australian Taxation Office in response to the recent High Court case for Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022].

 

The concern of this case is whether the Applicant (Mr McCourt) was an employee of Personnel Contracting Pty Ltd.

 

Mr McCourt was engaged by Personnel Contracting for his services and entered into a written agreement titled ‘Administrative Services Agreement (ASA)’. He worked at one of Personnel Contracting’s major client (Hanssen Pty Ltd) building site. The work was completed under Hanssen’s direct supervision although no contract was signed with Hanssen. On the 30th of June 2017, he ceased working with Personnel Contracting and Hanssen.

 

Legal proceedings commenced against Personnel Contracting for compensation and penalties under section 545, 546 and 547 of the FWA. This resulted as Mr McCourt believes he was a ‘common law employee’ of Personnel Contracting and was not paid according to this entitlement pursuant to the Building and Construction General On-Site Award 2010.

 

The Federal Court and Full Federal Court had considered Mr McCourt’s claims and concluded that he was not an employee of Personnel Contracting. Unsatisfied, Mr McCourt appealed to the High Court. With the High Court’s judgement in a multifactorial approach, it was concluded that he was an employee of Personnel Contracting.

 

Hence, the ATO’s Commissioner considered the High Court’s decision in relation to the common law test of employment has provided clarity in the approach taken when characterising the legal relationships between parties. The practice of examining the totality of the relationship was maintained. However, the clarification arises in examining the terms of written contract between parties to establish the character of the relationship where the contract is an accurate and accepted record of the agreement struck.

 

In conclusion, the long-established employment indications are relevant when characterising contractual relationships which must be considered by emphasising whether the putative employee is working in the business of the employer. This is the reflection of the Commissioner’s understanding and application of the business integration test, which is one of the primary aspects that should be used when examining contractual terms (according to the High Court).

 

The High Court had concluded that the use of labels in contracts should not be determinative of the relationship nature which is consistent with the Commissioner’s existing views articulated in several public advice and guidance products. Though there are a few implications for certain advice or guidance which will be reviewed. The progress of any adjustments will be updated through the Advice under development program. Otherwise, more information on this link is available on the ATO website.

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Working Holiday Makers Employees

Employers with Working Holidays Makers (WHM) employees are required to withhold 15% tax from their pay unless specified a different amount from the ATO through a pay as you go variation notice.

 

If required, a tax table for WHMs is available to determine the amount required to withhold for your employees.

 

With the recent decision by the High Court in the matter of Addy v Commissioner of Taxation it is concluded that some WHMs may be tax assessed the same as an Australian resident if they are:

  • An Australian resident for tax purposes

AND

  • From Chile, Finland, Germany (for 2018 and later income years), Israel (for 2021 and later income years), Japan, Norway, Turkey or United Kingdom

 

Hence, if your WHM employees meet the requirements above, they can lodge a tax return at the end of the financial year to receive a tax refund, if eligible.

 

More information on WHMs for employers is available on the ATO website.

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ATO Impersonation Scams

As part of Scams Awareness Week, the ATO has partnered with ACCC with an aim to keep the community safe.

 

The ATO warns the community that scammers are always looking for new ways to trick people into getting their personal details or paying out money. When it comes to the ATO impersonation scams, below is a list of things to look out for to determine between what is real and fake, as the real ATO will never:

  • Threaten you with immediate arrest
  • Cancel your TFN
  • Send unsolicited pre-recorded messages to your phone
  • Keep you on the phone until payment is made
  • Request payment through unusual payment methods such as cryptocurrency, gift cards or cashless cards

 

If you or know anyone who have experienced this, please do not hesitate to verify and report.

 

More information is available on Scamwatch.

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Cancellation of inactive ABNs

The ATO are currently reviewing Australian Business Numbers (ABNs) to determine those that are potentially inactive for cancellation. There has been an improvement to the ABN cancellation program, where tax agents or their clients are able to confirm the ABN status through a secure voice respond system.

 

ABNs that are likely to be identified for cancellation, if there is no business activity being reported in their tax returns, lodgements or any information retained by third party services. Tax agents must advise clients to report any income earned (regardless of the amount) under their ABN in their return. In doing this, the ATO can differentiate ABNs that are active and inactive.

 

For tax agents where your clients have been selected for ABN cancellation, you may be contacted by the ATO and advise actions that must be taken to proceed or prevent the ABN from cancelling. Clients with a cancelled ABN but requires one can apply to reactivate.

 

More information on ABN cancellation program is available on the ATO website.

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ATO’s alert on taxpayers disguising foreign income as gifts or loans

The ATO are concerned on Australian-resident taxpayers deriving foreign income or capital gains and failing to declare it in their Australian income tax returns. Especially in situations where taxpayers are aware of their residency status and the possible tax implications that can result from declaring foreign income but avoids declaring by concealing the actual nature of the funds by disguising it as gifts or loans.

 

Currently, the ATO are undertaking reviews and audits as well as engaging with taxpayers who have entered such arrangements. The ATO aims at gathering data of taxpayers deriving income overseas by using their ‘exchange of information powers’ as well as through the Australian Transaction Reports and Analysis Centre to identify fund movements into Australia.

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ATO on a look out on copying claims

This year the Australian Taxation Office (ATO) is alerting taxpayers on their work-related expenses claims. The ATO is predicting for these claims to decrease. In the 2020 financial year, approximately 8.5 million Australians had claimed around $19.4 billion worth of work-related expenses. Hence, with the impact of COVID-19 on working environment, Assistant Commissioner, Tim Loh has noted that the ATO is expecting to see changes in claims to reflect taxpayers “new” working habits. With more people working from home increasing claims on home offices expenses are anticipated.

 

How COVID-19 has changed work-related expenses

Working from home expenses

The temporary shortcut method is available in the 2021 financial year. A rate of 80 cents per hour is accessible for taxpayers who work from home. Taxpayers can calculate home office expenses by multiplying 80 cents by the hours worked. It is advised to record the number of hours worked. If there are other expenses that are over $300 (such as a desk or computer) you will be required to keep copies of the receipts.

 

Personal protective equipment (PPE)

Industries like healthcare, cleaning, aviation, hair and beauty, retail and hospitality that requires physical or proximity contact with clients or customers are able to claim expenses like gloves, face masks, sanitizer or anti-bacterial sprays. Eligibility on claims is only available for taxpayers if these items was purchased for work at their own expense.

 

Clothing and laundry, self-education, car and travel expenses

The ATO is expected to see a similar decreasing trend shown in the 2020 financial year for work-related expenses for car, travel, non-PPE clothing and self-education to reflect travel restrictions and limits on social gathering.

 

Employees who had to work from home and needed to travel to work are not able to claim the cost of travel from home to work as these are considered as private expense.

 

Case study on overclaiming work-related expenses

“A Canberra administrative worker fraudulently received up to $7,000 worth of refunds after claiming untitled work-related expenses. He had fraudulent claims knocked back in 2014, after he was unable to provide receipts and instructed the ATO to process the return. He continued to over claim in the 2015 and 2016 returns and provided a fake letter from his employer. It was concluded by the ATO, with the repetitive nature of fraud, the taxpayer was prosecuted and now has a criminal record. He was also fined $1,800”.

 

For more information on determining what you can and cannot claim please follow this link. Assistance on how to calculate claims on items over $300 is available on the ATO website.

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Current ATO Alerts

Be COVID farud aware

16 April 2021

ATO’s guide on how to recognize common scams and tips on how to protect your business and customers.

 

$10 million grant funding for Australian tech companies to solve regulatory challenges

15 April 2021

A $10 million grant is open for applicants. Australia’s small and medium enterprises (SME) and start-up companies are able to submit ideas for a chance to work with the government and help solve regulatory challenges.

 

$8.4 million for 12 Aussie innovators developing revolutionary products and bringing them to market

20 April 2021

Entrepreneurs’ Programme awards over $8.4 million in grant funding to Aussie Innvators.

 

Free and confidential mental health support for small business owners

Mental health support for small business owners known as NewAccess available through Beyond Blue

 

It’s time to review your fringe benefit for the year

26 August 2020

FBT is currently due for lodgement. More information on FBT is available on the ATO website.

 

The Payment Times Reporting Scheme first reporting window opens 1 July 2021

14 April 2021

Are you a large business that may have reporting requirements? The payment times reporting scheme commenced at the start of this year.

 

Customer story: Planet Protector Packaging – Boosting Female Founders Initiative grant recipient

23 March 2021

Planet Protector Packaging CEO and Boosting Female Founders Initiative gran recipient Joanne Howarth discusses on how the the grant has helped expand her business in Australia.

 

Making more possible with Export Finance Australia

9 April 2021

If your business require finance to support your growth strategy or cashflow to help prepare you for when international borders reopen, Export Finance Australia could help make more possible.

 

Have your say on the Measurement Law Review

15 April 2021

Submissions are now open to provide your feedback on the proposed reform options for modernizing measurement law.

 

26 researchers receive funding to support science and innovation projects that address challenges posed by COVID-19 in the Asia-Pacific region

7 April 2021

Successful applicants have been announced for the Regional Collaborations Programme COVID-19 digital grants.

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The use of company money or assets

A company and a director or shareholder are separate legal entities. The money produced by the company and its assets belong to the company. Hence, it is important to correctly record and report transactions, especially when company money or assets are taken for personal or private use. Incorrect transaction records can result in unfranked deemed dividend to be included part of assessable income.

If you require any assistance with these transactions, please contact our office to book an appointment. Otherwise more information is available on the ATO website.

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New Business Online Services

New online services for businesses is now available and will be replacing the Business Portal. The ATO’s new online services can be accessed on multiple devices and offers new features for “easier” interactions with the ATO regarding the management of your tax and superannuation obligations.

The new range of features include:

  • Making a payment plan
  • Obtaining copies of income tax returns
  • Quickly navigating between ABNs you manage using Switch ABN
  • Viewing your communication history with the ATO

Accessing the online services for businesses requires a myGovID log in. If you are new, you can refer to this link for more information on how to set up your myGovID.

The Business Portal will still be available until late 2021, to support and give businesses time to change over to the Online Services for business.

More information regarding where to access your business reporting and transactions online is available on the ATO website.

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Fight against Phoenix Advice

Illegal phoenix activity is based on cases where directors liquidates and winds up a company to avoid paying its debts and create a new company to progress without the debts. The ATO aims to protect businesses from untrustworthy advisers who would suggest such illegal activities.

 

How to avoid phoenix advice

There are advisers who assist businesses to proceed with phoenix. It may seem like it is an easier way out but for businesses who agree and take the advice are at risk of a fine, criminal conviction or jail term.

Directors and businesses must be cautious of advisers:

  • who are not registered with a relevant statutory body or a professional association member
  • who claim to give pre-insolvency advice and encourage you to engage in inappropriate or illegal activity

If you know or suspect any illegal phoenix activity, the ATO advise to not engage and report immediately to them.

It is important to act if your business is facing difficulties. It is also important to seek for help from a registered professional. If your business require assistance with winding up or restructuring, please contact our office to discuss further. Otherwise, more information on what to look out for regarding phoenix advice or qualities of an untrustworthy adviser can be found on the ATO website.

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JobKeeper Justice

The ATO’s JobKeeper assurance reviews are happy to inform that majority of businesses have been reporting their applications correctly. Most errors and misunderstandings have been treated as an “honest mistake”. Where the ATO believes that a business is inappropriately taking advantage of JobKeeper benefits, they have been required to repay any overpayments with additional penalties.

Examples of inappropriate business claims include:

  • Large businesses that applied the 30% decline in turnover threshold when they are required to apply for the 50% decline in turnover threshold
  • Businesses that manipulated their sales to change their projected GST turnover to meet the decline in turnover test
  • Businesses that backdated employment relationships to misrepresent employee eligibility to claim more JobKeeper amount
  • Businesses failed to meet the wage condition in relation to their employees by not paying them the full JobKeeper amount
  • Individuals who control multiple businesses and deliberately claimed JobKeeper for themselves as the eligible business participant multiple times

More information on the ATO’s approach to treat JobKeeper overpayment cases is available on the ATO website.

 

JobKeeper extension

The JobKeeper eligibility and payment conditions are now changed. The ATO has identified areas of concerns from the original stimulus and will monitor businesses that:

  • Did not meet the decline in turnover test
  • Do not meet the wage condition for their employees
  • Claim JobKeeper for ineligible employees
  • Claim for more than one business participant (i.e. disguising as employees)
  • Claim JobKeeper for ineligible business participants

The examples listed above will also be considered to help the ATO determine whether requirements are met for the JobKeeper extension.

 

Occurrence of an honest mistake

The ATO will continue to aid businesses who have tried to do the right thing but due to errors or misunderstanding resulted them to create an honest mistake. However, these errors are expected to decline and businesses are expected to become familiar to the JobKeeper obligations. Hence, repayment of an overpayment will not be pursued in certain circumstances where the ATO is able to identify that an honest mistake was made and an entity has not retained a benefit.

A published guidance on overpayment discretion is available here.

 

New compliance areas of focus

The ATO will also be monitoring the actual decline in turnover test and claiming the incorrect higher tier rate of JobKeeper payment.

 

Actual decline in turnover test

The decline in turnover tests as well as the actual decline in turnover test must be satisfied to qualify for JobKeeper payments from 28 September 2020. There are differences between the two and businesses are advised to be aware of these differences.

Please be aware, businesses that:

  • Have apparent irregularities in their current GST turnover due to omitting sales or delaying and altering sale recognition
  • Have unusual BAS amendments which inflate sales

Are in high risk of a decline in turnover assessment review.

The documentations listed below is required when the ATO reviews a business’ decline in turnover assessment.

  • Sales and trading records
  • Sales contracts or customer correspondence
  • Invoices issued
  • Bank statements

 

Claiming the incorrect higher tier rate of JobKeeper payment

The JobKeeper payment rate various depend on tier applies to each eligible individual (from 28 September 2020 onwards).

The higher Tier 1 rate is applicable for individuals who satisfies the 80-hour threshold test.

Entities who claims at this rate are in risk of a review, in which the ATO will require them to verify how they have assessed the individual to satisfy the test as well as providing support documentations.

An eligible participant must be actively engaged in the business to the related JobKeeper fortnight payment tier. The ATO acknowledges that most businesses have not been able to “actively operate” due to the pandemic. Hence, in such circumstances, the eligible participant may still be eligible regardless of any sale of goods or services, providing that the business is not ceased.

The ATO encourages every business to play their part in being compliant. To report illegal or behaviours of concerns, please make a tip-off or contact the ATO on 1800 060 062. If there are any queries regarding workplace entitlements and obligations in relation to JobKeeper payments please visit the Fair Work Commission website for more guided information.

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Vacant Land Deductions

From the 2020 financial year, expenses incurred for holding a vacant land with the intention to build a rental property will no longer be allowed as a deduction until the property is available for rent. This means that expenses are no longer claimable for lands claimed in prior years. However, under the exceptional circumstances provision, deductions for vacant lands are exempted for lands:

  • Held by certain entities
  • Used in a business or primary production
  • That is vacant due to exceptional circumstances caused by natural disasters (i.e. bushfire)

Therefore, if your land becomes vacant as a result of the rental property becoming destroyed by natural disasters, you may be eligible to claim costs for holding the land while you rebuild your rental property – for up to three years.

More information on vacant land deductions can be found on the ATO website or you can contact our office to arrange an appointment and discuss if you are eligible to claim.

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Stop Scammers in their Tracks

It is Scams Awareness Week, and the ATO is reminding the community to keep their personal and financial information safe.

Scammers will impersonate government agencies like the ATO, to collect information, in which they may use the information to drain your bank account, take out loans or gain access to your online government services. It is better to be extra cautious when you are asked for your personal details over the phone because it can take years to recover a stolen identity.

The community are encouraged to:

  • Contact the ATO if in doubt or need to verify an interaction
  • Ensure that your computer security systems are up to date

And practices are encouraged to:

  • Discuss the importance of securing personal information with your staff
  • Ensure that your staff understand what is appropriate to discuss on social media or via email
  • Ensure that your staff have appropriate access and permissions associated with their myGovID. Employers can customise access and view user history reports in Access Manager.

With many things becoming digital, it is better to be extra cautious as scammers have more opportunities to trick people. For more helpful tips and resources on scams, please follow this link.

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Detecting Tax Avoidance Scheme

During tax time, promoters will take advantage of vulnerable individuals and businesses by promoting tax avoidance schemes. Those that become involved can cost their investments and may result in penalties and interest.

The ATO warns the community to be aware of promoters that:

  • Offer inappropriate or artificial access to the stimulus packages
  • Offer zero risk guarantees for their product
  • Offer access to your superannuation savings
  • Refer them to an adviser or expert that is associated with the tax arrangement
  • Claim to be an industry or topic expert without any supportive qualifications
  • Ask them to maintain secrecy to protect the arrangement from rivals
  • Charge a fee or commission based on tax saved
  • Discourage them from obtaining independent advice
  • Do not have a PDS or prospectus for the product
  • Offer advice on illegal phoenixing or liquidation of key companies

The ATO advises the community to seek advice from them or trusted professionals. If you have been caught up in the tax scheme, please contact the ATO at 1800 060 062 or complete a tip-off form as soon as possible to resolve any issues. Otherwise, if you require assistance with your tax planning, please do not hesitate to contact our office.

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Be Aware of COVID-19 Stimulus Fraudsters

Communities and businesses are warned to be aware of organisers imposing as tax experts as there has been a significant number of complaints, when seeking advice or support in accessing the government’s COVID-19 stimulus packages. It is found that such services are usually promoted through social media platforms.

The Tax Practitioner Board (TPB) are currently prioritising investigations on affected organisations. Organisers who act as an unregistered tax practitioner and engages in providing advice or services are in breach of the Tax Agent Services Act (TASA) and may be imposed by the Federal Court with a civil penalty.

Steps to take to ensure you are one step away from being scammed:

  • Check on your tax practitioner if they are registered – tpb.gov.au/search-register
  • Do not share your myGov log in details with anyone
  • Anyone who completes your tax return through myGov should not charge you

Affected taxpayers are advised to seek legal advice. If you receive any tax scheme, do report the situation to TPB via email or contact them at 1300 362 829 (select option 5).

More information about the Government’s COVID-19 stimulus packages can be found on our Patane Accounting website. Otherwise, if you require any further information please contact our office.

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ATO warns to be aware of illegal SMSF super schemers

 The ATO warns taxpayers of scam scheme promoters promising you the dream of retirement through early illegal withdrawals of your superannuation, through self-managed superfunds (SMSF). Immediate shut down and charges will be raised against illegal promoters and facilitators of early release of super scheme.

Recently, a NSW Woman was taken to court for her role of facilitating and promoting of early superannuation withdrawal, which she assisted 68 Australians to establish SMSFs. Due to such action, she was charged with a penalty of $220,000 and a seven-year ban that prevents her from setting up SMSFs.

Taxpayers are advised that there will be consequences to illegal accessed super. It will cause considerable financial disadvantage resulting you needing to pay tax with penalties and interest. If you receive any suspicious tax or super scheme, do get a second opinion before acting.

Things to consider before withdrawing your super:

  • you are 65 years old, regardless of whether you are retired or not
  • you are retired & have reached preservation age, or
  • you meet strict criteria such that you are temporary/ permanent incapable, suffering financial hardships, a temporary resident, or on compassionate grounds

For more information about when you can withdraw your superannuation, please visit the ATO website.

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Work Christmas parties and gifts

The ATO has warned taxpayers before you start making spirits bright and rewarding your employees with gifts or parties, know what fringe benefits tax may apply.

Things to consider:

  • how much it costs
  • where and when it is held – a party held on work premises on a normal work day is treated differently to an event outside of work
  • who is invited – is it just employees or are partners, clients or suppliers also invited?

Similarly, where you provide Christmas gifts, you’ll need to consider:

  • the amount you spend
  • the type of gift – gifts such as wine or hampers are treated differently to gifts like tickets to a movie or sporting event
  • who you are giving the gift to – there are different rules for employees and clients/suppliers.

For more information about work Christmas parties and gifts please visit the ATO website.

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ATO warning to be aware of unregistered tax preparers

The ATO has warned taxpayers and tax agents to keep an eye out for people posing as tax agents who are not registered with the Tax Practitioners Board (TPB).

It reminded the public that a legitimate tax practitioner will never ask for a person’s myGov credentials as they use dedicated ATO online services to lodge returns for their clients.

The ATO is working with the TPB, as well as law enforcement agencies, to identify and put a stop to unregistered preparers and strongly advise only to only engage registered tax preparers like Patane Accounting Pty Ltd.

For more information to protect yourself against unregistered tax preparers please visit the ATO website.

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ATO scam alert

The ATO are advising to be aware of scammers using technology to make their calls appear to be from a legitimate ATO phone number.

In addition to this:

  • Scammers are leaving people voicemail messages threatening the recipients with arrest due to an unknown tax debt or suspected tax evasion. The scammers claim to be from the ATO and many threaten that a warrant for the person’s arrest will be issued if they do not call the scammer back on the phone number provided.
  • Scammers are sending fake ATO emails asking completion of a ‘tax refund review’ form to receive a refund. The form asks for online banking credentials, credit card numbers and limits, and personal address information.

The ATO generally act in a professional manner and you can read more about this by viewing the ATO website.

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The ATO issues new scam alert

Unfortunately there are a lot of scams out there and the ATO’s latest scam alert warns:

  • Scammers are leaving people voicemail messages threatening the recipients with arrest due to an unknown tax debt or suspected tax evasion. The scammers claim to be from the ATO and many threaten that a warrant for the person’s arrest will be issued if they do not call the scammer back on the phone number provided.
  • Scammers are sending fake ATO emails asking completion of a ‘tax refund review’ form to receive a refund. The form asks for online banking credentials, credit card numbers and limits, and personal address information.

Remember the ATO generally act in a professional manner and if you ever need any further assistance you can contact our office.

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Single Touch Payroll

Single Touch Payroll (STP) will be mandatory for employers with 20 or more employees as of the 1st of April 2018.

Employers will need to do a headcount and if they are considered to be a ‘substantial employer’ (as of this date) will need to be lodging using STP enabled software as of the 1st of July 2018.

Most online payroll providers will be compliant and in summary STP will mean that:

  • Wages information will be reported directly to the ATO when the payroll is processed (including superannuation)
  • Year-end payment summaries and year-end annual payment summaries will no longer need to be provided to the ATO (however a finalisation declaration will need to be made)
  • Employees will be able to see their year-to-date and super information through myGov
  • Monthly instalment activity statements will be able to pre-filled

In the lead up to this you should speak to your software provider and review your business processes. Note there are some available deferral options and exemptions available however hopefully they won’t be necessary if you are using online payroll software.

For more information on Single Touch Payroll (STP) you can visit the ATO website.

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What can hurt small business

There are a number of things that cause small businesses to fold and high on that list is poor record keeping.

More than half of the businesses the ATO visited as part of their ‘Protecting honest business’ campaign need to improve their record keeping. Issues the ATO found include businesses:

  • estimating their sales and income
  • using the ‘no sale’ and ‘void’ button on cash registers when taking cash payments
  • not keeping cash register tapes and not reconciling at the end of the day
  • paying their employees cash-in-hand.

The ATO offer workshops to cover why good record keeping is important and how it will save time and you can find more information on the ATO website regarding ‘Protecting honest businesses’.

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Beware of scammers

Cybercriminals use a variety of ways to trick you into clicking on links or opening attachments that install malware or ransomware on your computer systems. These criminals may even pose as potential clients.

The malware or ransomware allows them to access your files or block you from accessing your files until you pay a ransom. Paying the ransom does not guarantee you access or that scammers will not demand more money.

To help protect from viruses, use the following tips:

  • do not open attachments or click on links in unsolicited or unfamiliar emails, SMS or social media messages
  • ensure your computer security systems are up to date with anti-virus and anti-spyware software
  • use a firewall to block unauthorised access
  • secure your wireless network and remote accesses
  • do not allow thumb drives or other removable media to be plugged into your network unless trusted and checked for viruses
  • maintain regular physical backups kept separate from your network
  • only visit reputable websites.

You can find more information on reporting a verifying a scam by visiting the ATO website .

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Reminder to pay your superannuation guarantee on time

Paying super is an important part of being an employer and it is important that it is paid on time. The ATO have developed a super guarantee (SG) client health checklist for employers to quickly check that they are meeting their superannuation obligations.

The checklist raises issues like:

  • Do you know which of your employees you are required to pay SG and how much?
  • Did you know that super contributions aren’t tax deductible if you don’t meet the requirements?
  • Are you paying a minimum orate of SG to your eligible employees?
  • Does the company pay super for its directors?
  • Do you know when SG has to be paid?
  • Do you know that your employees have the option of choosing their own super fund?
  • Are you paying superannuation using SuperStream or a Small Business Clearing House?
  • Do you keep records to show that you have met your SG obligations?

As an employer it is important that you meet your superannuation obligations. The ATO offer help and support to employers that want to do the right thing however they do take non-compliance seriously and employers that are continually failing to comply and/or are deliberately doing the wrong thing may be subject to penalties.

You can view the full Super Guarantee Client Health Checklist.

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Timely reminder of tax avoidance schemes

Unfortunately there are many tax avoidance schemes being offered to unsuspecting taxpayers. Generally the schemes try to reduce the amount of tax payable by reducing your income, increasing deductions or rebates and some avoiding tax and other obligations entirely.

For more information regarding Tax avoidance schemes (and some identified schemes) please visit the website.

ATO data matching – Department of Human Services and Insurance Details

The ATO has given notice that it will acquire details of individuals in receipt of Family Tax Benefit Part B, paid parental leave, carer allowance and Medicare entitlement statements from the Department of Human Services (Centrelink and Medicare) for the 2014-15, 2015-16 and 2016-17 financial years.

The ATO has also given notice that it will acquire details of insurance policies for certain classes of assets, including marine vessels, enthusiast motor vehicles, thoroughbred horses, fine art and aircraft where the value exceeds nominated thresholds for the 2013-14 and 2014-15 financial years.

More information can be found by following the Federal Register of Legislation Link.

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ATO data matching programs

The ATO is currently undertaking data matching programs in the areas of:

  • credit and debit cards
  • motor vehicle registries
  • online selling
  • specialised payment systems
  • ride-sourcing

More information can be found by following the link above.

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Phone Scams

The ATO is warning the public to be aware of a phone scam that is again circulating where fraudsters are intimidating people into paying a fake tax debt over the phone. The aggressive scam attempts to force people to pay a fake tax debt over the phone by threatening arrest if they don’t comply.

“Generally the ATO would send an SMS or letter to remind you that a payment was due. If we don’t get a response from this we would then call you to discuss payment. If you do have a tax debt we encourage you to contact us early on 13 11 42 so we can discuss your circumstances,” Mr Ryan said.

For more information view the ATO.

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Information Alert – Immediate deductibility for assets less than $20 000

The Australian Government announced a new measure in the 2015 Budget for small business with immediate deductibility for assets costing less than $20,000. The measure will require legislation and will apply to assets acquired from 7.30pm on 12 May 2015 until 30 June 2017.

When a proposed law change is announced but not yet enacted, the ATO provides advice to taxpayers about following the existing law and also information about the proposed changes.

As this law change will be retrospective if enacted, it is important that small businesses understand their obligations under both the existing and proposed laws.

Importantly, under the announced new measure, small businesses will need to keep records of their purchases in order to verify their deduction.

More information about the ATO’s administration of retrospective legislation can be found at administrative treatment of retrospective legislation .

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Time Limits for Family Assistance

A reminder to taxpayers who want to claim family assistance payments for the 2014 financial year to lodge a claim with the Department of Human Services (Centrelink) by Tuesday 30 June 2015. The deadline applies to those who intend to lodge a claim for Family Tax Benefit, Child Care Benefit and Single Income Family Supplement.

You can read more by visiting the ATO website.

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Appetite for Tax risk decreasing

In a recent speech, George Hitti, Assistant Deputy Commissioner, ATO, discussed the ATO’s approach to large corporates and the issue of tax avoidance and evasion. He said the ATO has noticed that the “appetite for taking on tax risk – i.e. the risk of the ATO taking a different view to them, is currently decreasing if anything”. However, Mr Hitti noted that if the ATO does find evidence of deliberate non-compliance, it will take the necessary enforcement actions. He said the ATO has to be “taking action against those not doing the right thing or those aggressively testing the boundaries”.

You can read the full speech .

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Claiming work related expenses?

The ATO this year are using extensive data analysis to identify areas requiring attention across all work-related expense claims, regardless of occupation.

We are paying particular attention to work-related expense claims relating to:

    • overnight travel
    • transporting bulky tools and equipment
    • the work-related use of computers, phones or other electronic devices.

Clients need to be able to satisfy the following:

    • they must have spent the money
    • the expense must be related to their job
    • they must have a record to prove it.

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Focus on Rental Properties

The ATO is increasing its focus on rental property deductions. Common errors made by rental property owners include: claiming rental deductions for properties not genuinely available for rent; incorrectly claiming deductions for properties only available for rent part of the year such as a holiday home; incorrectly claiming structural improvement costs as repairs when they are capital works deductions, such as re-modelling a bathroom or building a pergola; overstating deduction claims for the interest on loans taken out to purchase, renovate or maintain a rental property.

The aim of the system is to improve compliance with tax obligations by those contractors who are not doing the right thing. The information reported about payments made to contractors will be used by the ATO’s data matching section to detect contractors who have not lodged tax returns or have not reported all of their income in their tax returns.

If you require any assistance with your rental property please contact us on 97211 055 or you can view further information from the ATO  or a series of short videos which explain the tax implications of buying, owning and selling a rental property.

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Improper use of trusts by Property Developers

ATO Deputy Commissioner Tim Dyce said the ATO “has begun auditing property developers who are carrying out activities which conflict with their stated purpose of the capital investment”. He said a “growing number of property developers are using trusts to suggest a development is a capital asset to generate rental income and claim the 50 per cent capital gains discount”. Mr Dyce warned that penalties of up to 75% of the tax avoided can apply to those found to be deliberately using special purpose trusts to mischaracterise the proceeds of property developments.

The ATO issued TA 2014/1 which describes arrangements where property developers use trusts to return the proceeds from property developments as capital gains instead of income on revenue account.

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Be wary of email scams

With only a month left for people who prepare their own tax return to lodge, the ATO is warning taxpayers to protect their personal and financial details following a sharp spike in reports of tax-related email scams.

Since June, reports from the public of phishing scams have quadrupled to 15,441 compared with just 3,586 during the same period last year.

“While the public is reporting scam emails to ATO in increasing numbers, scammers are also becoming more sophisticated in the way they trick taxpayers into handing over their personal details,” Tax Commissioner Chris Jordan said.

“We advise people to be vigilant of emails that mimic the ATO’s online publications. Think very carefully before clicking on links and attachments in emails or on social networking sites.

“The ATO will never send taxpayers an email asking them to confirm, update or disclose confidential information including your name, date of birth, home address, passwords or credit card details.”

For more information please follow the link http://www.ato.gov.au/Media-centre/Media-releases/Spike-in-email-scams-as-31-October-tax-deadline-looms/

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Trust Taskforce

The ATO’s recent compliance operations have uncovered evidence of increased manipulation of trusts as vehicles that can be at the centre of tax avoidance or evasion arrangements.

In the 2013-14 Federal Budget, the government announced that it would provide $67.9 million over four years for us to audit taxpayers who have been involved in tax avoidance or evasion using trusts. This measure is estimated to increase revenue by $379.0 million over the forward estimates period and, in underlying cash terms, increase receipts by $217.1 million.

We will target those people that exploit trusts to conceal information, mischaracterise transactions and artificially deal with trust income to avoid or reduce tax. We will undertake compliance activity to target known tax scheme promoters, individuals and businesses who participate in such arrangements.

Some of the factors that will attract our attention include arrangements where:

  • trusts or their beneficiaries who have received substantial income are not registered, or have not lodged tax returns or activity statements
  • agreements with no commercial basis appear to be in place so as to direct income entitlements to a low-tax beneficiary while the benefits are enjoyed by others
  • there is artificial characterisation of amounts, such that tax outcomes do not reflect the economic substance, with the result that some parties have received substantial benefits from a trust while the tax liabilities corresponding to that benefit have been attributed elsewhere – for example, by making resolutions that artificially reduce trust income in attempts to direct minimal present entitlement but full tax liability to entities with no capacity or intention of paying
  • there has been mischaracterisation of revenue activities to achieve concessional CGT treatment – for example, by using special purpose trusts to attempt to re-characterise mining or property development as discountable capital gains
  • changes have been made to trust deeds or other constitutional documents to achieve a tax planning benefit, and are not credibly explainable for other reasons

For more information please follow the link http://www.ato.gov.au/content/00353969.htm.

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ATO Online Selling Data Matching

The ATO collects data from various online selling sites and use this to assess compliance.

The ATO make evident how they:

  • Collect the data
  • Use the data
  • Match the data

For more information please follow the link http://www.ato.gov.au/content/00250217.htm.

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Self-managed superannuation funds – new obligations

New regulations for self-managed super funds (SMSFs) took effect on 7 August 2012. They require your SMSF trustee clients to:

  • regularly review their fund’s investment strategy
  • consider insurance for members as part of their fund’s investment strategy
  • value assets at market value for reporting purposes.

In addition, we are now able to enforce the requirement that the fund keep its money and assets separate to that held by trustees personally, or standard employer-sponsors.

For more information, refer to Obligations and responsibilities for self-managed super fund trustees.

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Important changes for trusts

The ATO have indicated they will be undertaking compliance activities to make sure resolutions have been made by the 30th of June.  Failure to do so may result in the trustee suffering tax at 46.5%, or such amount being automatically assessed to the default beneficiaries.
This change has been brought about by the withdrawal of IT 328 and 329 so the administrative concession previously applied no longer applies.  This issue has been highlighted in draft Taxation Determination TD 2012/D2 and in a recent factsheet titled Trustee Resolutions must be made no later than 30 June.
For the full transcript of the 2012 trust changes please follow the link below.

http://www.ato.gov.au/businesses/content.aspx?doc=/content/00320345.htm

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Our approach to managing income tax returns held for integrity checks

We have a responsibility to government and the community to make sure that everyone pays the correct amount of tax under the law. We conduct programs each year where selected returns are reviewed before issuing the assessment. Tax returns that are held for review and action before release include returns identified as containing ‘high risk’ refund claims.

We are now using specialist technology to help identify and review tax returns that may contain missing or incorrect information. Claims outside normal occupation or industry ranges will result in a thorough review of all aspects of an individual’s tax affairs before a refund is issued. We understand that the time taken to process the income tax returns held for integrity checks has an impact on some of you.

While registered tax agents lodge 71% of individual returns, less than half of the returns held for integrity checks were prepared by tax agents. With more than 21,000 tax agents preparing returns, this overall is a positive reflection of the quality of work done by you. Returns prepared by tax agents, are significantly less likely to be reviewed, than self-prepared returns.

Most affected tax agents had only one or two returns held for review, however we are concerned with a small group of tax agents who had significant numbers of held returns; half of the tax agent prepared held returns, were lodged by just 1,200 tax agents.

Why have delays occurred?

Last year, we checked around 29,000 returns and found more than 20,000 refunds were incorrect or fraudulent. This year, we expected to review about 30,000 returns to remove any incorrect or fraudulent claims before refunds were issued.

Since 1 July 2011, 106,000 tax returns with refund claims totalling $447 million have been held. This has meant that the processing of some tax returns has taken longer than anticipated and resulted in delays in receiving an expected refund.

To date, our reviews have resulted in amendments to 80% of held returns. These results support the necessity to review these types of claims.

Why claims are disallowed

Our review process may require the substantiation of the claim made at specific income tax labels. Our letter refers to information that is available on our website www.ato.gov.au, that lists the appropriate documents to support different claims. Where the claim is not fully supported through appropriate documentation, substantiation, or explanation, it is disallowed.

If adjustments are made, the notice of assessment will issue, detailing the adjustments and penalties imposed, where relevant. As this process involved a review, rather than an audit, the notice of assessment will be the only correspondence issued that shows the adjustments made.

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Additional reporting obligations for Trusts:

The Australian Taxation Office has introduced a new Tax File Number (TFN) Report requiring closely held trusts (including discretionary trusts) to include the following details of all beneficiaries:

  • Tax File Number
  • Full Name
  • Date of birth
  • Postal address
  • Residential address

Unfortunately if this isn’t done the beneficiary can be subject to withholding tax and the trustee held liable – fortunately minors (children under 18) will be exempt from this reporting.  This is all part of the ATO’s initiative to match trust income with the beneficiaries to improve the data matching process.

For more information please follow the link below;

http://www.ato.gov.au/individuals/content.aspx?doc=/content/00247255.htm&page=18

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ATO warns about labour hire arrangements using a discretionary trust

The ATO today issued a taxpayer alert warning people to be cautious when entering into an arrangement with a firm that includes steps to split their income with an associate, usually their spouse, by using a discretionary trust.

“I’m concerned that people involved in this arrangement may be unaware of the risk that it may be ineffective under the taxation laws and the superannuation guarantee provisions,” Tax Commissioner Michael D’Ascenzo said.

“We are concerned that individuals may enter into these arrangement to reduce tax liabilities by splitting their income with an associate and that the arrangement may not satisfy the personal services income tests and that the anti-avoidance provisions could possibly apply,” Mr D’Ascenzo said.

“The ATO is reviewing these arrangements and will be writing to entities facilitating them about our concerns that they may risk contravening the promoter penalty laws.”

Mr D’Ascenzo also reminded firms entering into such arrangements that they may not be withholding the appropriate amount of tax and providing the correct superannuation support to the individual participants and may be liable for penalties and charges under the Taxation Administration Act 1953 and the Superannuation Guarantee (Administration) Act 1992.

Anyone who has participated in these arrangements should seek guidance from the ATO prior to 30 April 2011 and before they are contacted by us. If they do so, they will be entitled to a reduction in any penalties that might apply if the arrangements prove to be ineffective.

Full the full article please visit http://www.ato.gov.au/corporate/content.asp?doc=/content/00271401.htm

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ATO lodgment alert letters

The ATO has advised that it will send letters titled ‘Lodgment alert for your clients’ overdue documents’ to most tax agents, highlighting clients (other than large businesses and superannuation funds) with overdue lodgment obligations. Each letter lists the companies, trusts, partnerships and individual clients with either of the following:

  • overdue income tax returns for the period 1 July 2006 to 30 June 2010
  • overdue activity statements for the period 1 July 2006 to 30 September 2010