Business Tax Update - January 2019
1. Single Touch Payroll
2. Small Business Accelerated Depreciation Concessions
3. Superannuation Amnesty and Contribution Limit
4. Current Taxation Office Data Matching Activities and Black Economy Project
Single Touch Payroll (STP)
For those with 20 or more employees, you will already be familiar with Single Touch Payroll. For smaller businesses, this is the new ATO electronic system, where your payroll software sends a message to the Taxation Office each time you prepare a wages/pay run to advise of the details of the payment – gross wages, tax deducted and the attached superannuation liability.
From this information, the ATO can data match BAS payments for PAYG Withholding, and superannuation payments (and the dates that they are made). This not only confirms that the payments have been made, but also whether the business is entitled to a deduction for the superannuation payment made (based on the amount and date paid).
Employees can log into their MyGov accounts, and see all of the elements of their wages progressively throughout the year on their Income Summary. Employers are no longer required to provide a payment summary to employees where they have reported through STP - employees will be able to access an annual Payment Summary from the Taxation Office via MyGov after 15 August each year.
For those with less than 20 employees who are currently using a non-compliant STP provider to prepare their wages, we recommend upgrading your software well before 30 June 2019, to ensure that all is in place before your official start date of 1 July 2019. The Taxation Office has a list of low cost providers of compliant software.
Small Business Accelerated Depreciation
Just a reminder that the small business (group aggregated turnover of less than $10m for the 2019 financial year) accelerated depreciation concessions end on 30 June 2019.
Where a small business purchases an asset (installed and ready for use in their business) before 30 June 2019, where the GST exclusive cost of the asset is less than $20,000, the full amount of the purchase price can be claimed as a depreciation deduction this financial year. From 1 July 2019, small business depreciation reverts to 15% of the cost of the asset in the first year and 30% of the diminishing value balance each year thereafter, where the cost of the asset exceeds $1,000.
To qualify for the accelerated depreciation concession, the asset does not have to be a new asset – used assets still qualify for the concession.
Just a reminder, the limit of $20,000 relates to the full GST exclusive cost of the asset, not the amount that you may have paid after a trade in, or be borrowing to fund the acquisition.
Primary producers have also received some additional depreciation concessions for fodder storage. They can claim a full deduction for the cost of a fodder storage asset in the year they incurred the expense, where the expense was incurred either:
- on or after 19 August 2018
- before 19 August 2018, and it was first used and installed ready for use after that date.
The facility must be mainly used to store fodder and used in a primary production business in Australia – even if you are a lessee of the land.
Alternately, fodder storage assets can continue to be depreciated over 3 years where the expense was incurred from 12 May 2015 to 18 August 2018.
Superannuation Amnesty and Contribution Limit
The Government announced in May 2018 a 12 month amnesty for the payment of outstanding superannuation contributions of behalf of employees, for the quarters ended March 2018 and earlier. We see this as a great opportunity for some businesses to ‘catch up’ on the payment of prior year superannuation contributions for staff (and often the business owners), which may be outstanding for a variety of reasons. The proposal is for the amnesty payments to be tax deductible to the employers.
Unfortunately, this legislation is currently in the Senate and has not yet been passed into law. Considering the proposal was for a 12 month amnesty, we are unsure as to whether this will be approved before the election in May 2019.
We note, when the amnesty was announced, the Taxation Office had a separate form to be completed and lodged with the superannuation payments, to identify these amounts separately as under the amnesty, but this form is no longer available on their website.
We will update all clients once the legislation is passed.
Just a reminder of the payment and lodgment dates for employee superannuation:
Quater - Payment Received by the fund and lodgment on or before
1 July to 30 September - 28 October
1 October to 31 December 28 January – note, this differs from the BAS deadline
1 January to 31 March - 28 April
1 April to 30 June - 28 July
Only payments received by the fund by these due dates are able to be claimed as income tax deductions. We have had a number of clients having trouble with lodging the information to match the payments through the business portal – please call Julie in our office if you are experiencing any difficulty.
Finally, a reminder that the concessional (tax deductible) contribution for each individual is $25,000 per annum – excess contributions attract tax and penalties at the individual’s marginal tax rate.
Current Taxation Office Data Matching Activities and Black Economy
You may be surprised to know that the Taxation Office receives over 600 million items of information from external bodies each year as part of its data matching activities. This has been occurring for years, but each year the ATO has a different focus.
From the ATO website: We are currently undertaking specific data-matching activities in the following areas:
- Credit card sales
- Specialised Payment Systems (related to merchant transactions)
- On line Selling (sale of goods or services of $12k or more)
- Ride Sourcing e.g. Uber
- Motor Vehicle Registries (sale or transfer of vehicles for $10k or more)
The Taxation Office have a number of examples at the below link detailing their successes as a result of the data matching programs. While we frequently receive information re amending clients returns for interest or dividends that had not been included in the original return, we also receive requests for further information from the ATO in relation to property sales, and most recently they have started to advise of share sale information.
If you are ever unsure as to whether to include an amount in your return, please email and we will be able to advise.
Black Economy Project
From the BAS Agent minutes of 31 August 2018, the Taxation Office estimates that the black economy may be as large as 3% of GDP ($50 billion economic impact). As a result, the Government in the 2018 budget, has provided additional funding to the ATO to help to reduce the incidence of unreported income.
In addition to the data matching activities currently being undertaken, the ATO will conduct 40,000 ‘walk ins’ to small businesses over the next 4 years. From client experience, we know that this is already occurring. Please ensure that you request identification if you receive a visit from ATO officers – they usually travel in pairs.
As an additional integrity measure, businesses wanting to transact with the Government will need to have a Statement of Tax Record – we are still waiting for details of what this will contain. If your business is currently tendering for Government work valued at over $4m, this may apply to you.
From the ATO website:
On 8 May 2018, the Government announced that from 1 July 2019 businesses wanting to tender for Australian Government contracts over $4 million (including GST) will need a Statement of tax record (STR) from the ATO.
The statement will be based on details held in ATO systems including information supplied by the taxpayer under the self-assessment system and statements made by the taxpayer when requesting the STR.
The ATO will build an online system that will enable businesses to request and receive these statements in a short time frame. It is expected that most businesses will be able to obtain the STR without any difficulty.