By Justin Inskip, Director, Westlawn Business Services 23 June 2015
This tax roundup for June 2015 provides an update of what you need to know in relation to business tax and superannuation. It includes SMSF reporting and SuperStream as well as the ATO’s latest data matching efforts.
Reporting limited recourse borrowing arrangements for SMSFs
The ATO says it is time to prepare for the 2014 Self-managed super fund (SMSF) annual return (SAR). If an SMSF has assets held under limited recourse borrowing arrangements (LRBAs), they must be reported at the LRBA labels in Section H: Assets and liabilities of the SAR.
The ATO says that it has noticed some misreporting at these labels and has provided some tips to assist the preparation of the SAR.
If you have an SMSF, see your Westlawn Business Services Accountant for help with preparing the tax return.
Channelling dividends through SMSFs
The ATO has warned SMSF members against claiming franking credit benefits by channelling dividends from shares in private companies through SMSFs. This occurs when an SMSF member with interests in a private company transfers their interest to an SMSF and then distributes retained profits and franking credits through the fund. The SMSF then claims the franking credit tax offset which results in the tax paid by the company being refunded directly to the SMSF which can then be distributed to the member tax free.
Note: The ATO has issued a Taxpayer Alert TA 2015/1 in relation to ‘dividend stripping arrangements’ involving transfers of shares in private companies with accumulated profits to SMSFs. The ATO is concerned that contrived arrangements are being entered into by individuals (typically SMSF members approaching retirement) so that dividends subsequently flow to, and are purportedly treated as exempt from income tax in the SMSF because the relevant shares are supporting pensions. Consult your accountant if you have any concerns.
Time to get SuperStream ready
The ATO has issued a reminder that it’s time for SMSF trustees to ensure they are ready for SuperStream.
All SMSF trustees must be able to receive super contribution payments and information sent using SuperStream when a member’s employer starts using SuperStream. To be able to do this, each SMSF member will need to provide the SMSF’s ABN, bank account details and electronic service address (ESA) to the member’s employer.
The member should contact their employer about when the employer will need this information so the employer can get ready to make SuperStream contributions.
If you’re an employer with 20 or more employees, you should already be using SuperStream, although you have until 30 June 2015 to finalise implementation.
If you’re an employer with 19 or fewer employees, from 1 July 2015, you need to start sending SuperStream contributions electronically to all super funds, including SMSFs.
If an SMSF member doesn’t provide details in time to you, you can issue a new Standard choice form to obtain these details. If it is not completed and returned within 28 days, you can make the employee’s super contribution into the default fund.
Simplifying when a standard choice form must be provided by an employer
On 1 April 2015, the Commonwealth Treasury released exposure draft legislation that from 1 July 2015, employers will no longer be obligated to give a standard choice of fund form to temporary residents or provide this form to employees when their superannuation funds merge.
It is intended that these changes will reduce the compliance burden on businesses, especially small businesses. In particular, employers will no longer incur the choice shortfall penalty if they do not provide a standard choice of fund form to their employees in these situations.
These changes also complement the government’s announcement that access to the Small Business Superannuation Clearing House (SBSCH) will be expanded from 1 July 2015.
From 1 July 2015, all businesses with an annual turnover below the small business entity turnover threshold, currently set at $2 million, will be eligible to access SBSCH. This change means approximately 27,500 additional businesses will be able to access the SBSCH.
These changes have not yet been introduced into Parliament and as such are not yet law.
SuperStream certified product register
An ATO register of SuperStream certified products including payroll, clearing houses and other providers is now available.
Key superannuation rates and thresholds
View key rates and thresholds that apply in relation to contributions and benefits, employment termination payments, super guarantee and co-contributions.
If you have any questions about any of these superannuation-related changes, ask your Westlawn Business Services Accountant.
New ATO data matching programs
The ATO has established 2 new data matching programs.
1. Contractor Payments
On 13 March 2015 the ATO gave notice that it will continue to acquire details of entities that receive contractor payments from other businesses for the 2013-14, 2014-15 and 2015-16 financial years.
This is the continuation of an ongoing program where data will be obtained from businesses that are subject to compliance activities conducted by the employer obligations area within the ATO. Data may also be collected from other businesses associated with the primary businesses.
The data items that will be obtained are:
Australian Business Number (ABN) of the payer business
ABN of the payee business (contractor)
Name of the contractor
Telephone details of the contract
Dates of payments to the contractors
Amounts paid the contractor (including details of whether the payment included GST).
These records will be electronically matched with certain sections of ATO data holdings to identify non-compliance with registration, lodgement, reporting and payment obligations under taxation laws. The purpose of this data matching program is to ensure that taxpayers are correctly meeting their taxation obligations in relation to contractor payments. These obligations include registration, lodgement, reporting and payment responsibilities.
2. Online selling
The ATO has announced it will request and collect online selling data relating to registrants that sold goods and services of a total value of $10,000 or more for the period from 1 July 2013 to 30 June 2014: Commonwealth GazetteC2015G00559 (21 April 2015).
This acquired data will be electronically matched with certain sections of ATO data holdings to identify possible non-compliance with registration, reporting, lodgement and payment obligations under taxation law.
Data providers are included in the program based on the following principles:
The data owner or its subsidiary operates a business in Australia that is governed by Australian law
The data owner provides an online market place for businesses and individuals to buy and sell goods and services
The data owner tracks the activity of registered sellers;
The data owner has clients whose annual trading activity amounts to $10,000 or more
The data owner has trading activity for the year in focus
Where the client base of a data owner does not present an omitted or unreported income risk, or the administrative or financial cost of collecting the data exceeds the benefit the data may provide, the data owner may be excluded from the program.
Data will be sought from eBay Australia & New Zealand Pty Ltd, a subsidiary of eBay International AG which owns and operates www.ebay.com.au. It’s expected that records relating to between 15,000 and 25,000 individuals will be matched.
This program is called the 2014 online selling data matching program and will enable the ATO to:
Address the compliance behaviour of individuals and businesses selling goods and services via the online selling site who may not be correctly meeting their taxation obligations, particularly those with undeclared income and incorrect lodgement and reporting for goods and services tax, and
Be more strategic in its approach to determine appropriate educational and compliance strategies to encourage voluntary compliance for taxpayers in the online selling market to ensure they meet their taxation obligations.
DisclaimerWestlawn Business Services Pty Ltd provides this information for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation.