By Justin Inskip, Director, Westlawn Business Services 23 November 2015
This tax roundup for November 2015 provides an update on what you need to know in relation to business tax and superannuation. It includes amendments to work-related car expenses and third party reporting, GST determinations, SMSF compliance and data matching.
Scamwatch: Taxpayers still being targeted
First up, an important reminder about scams targeting Australian taxpayers. We reported on this back in July, with scammers impersonating ATO representatives on the phone or through fraudulent emails. Unfortunately, these tax scams are continuing as this 18 November report in the Telegraph demonstrates.
Work-related car expenses, third party reporting and other measures
On 15 October 2015, the Assistant Treasurer introduced into the House of Representatives the Tax and Superannuation Laws Amendment (2015 Measures No 5) Bill2015. The Bill will make amendments in the following areas:
Work-related car expenses
Zone Tax Offset
FBT concessions on salary packaged entertainment benefits
Third party reporting.
Detailed below are the new measures in this Bill that might be relevant to your business.
Work-related car expenses
The Bill will change the methods for calculating work-related car expense deductions. Currently, there are 4 methods taxpayers can use to calculate work-related car expenses (12% of original value method, one-third of actual expenses method, cents per kilometre and logbook method).
The ‘12% of original value’ method and the ‘one-third of actual expenses’ method will be removed from the law leaving the ‘cents per kilometre’ and ‘logbook’ methods as the only 2 methods available.
The Bill will also provide a streamlined process for calculating the cents per kilometre method by providing a single rate of deduction which more accurately reflects the actual running expenses of a vehicle. In the 2015-16 income year, the cents per kilometre rate will be set at 66 cents per kilometre. The Bill gives the Commissioner the power to set the cents per kilometre rate for later years via legislative instrument.
Changes to the income tax law for this measure will generally apply in relation to the 2015-16 income year and later income years. Changes to the FBT law for this measure will operate from 1 April 2016 and later fringe benefits tax years.
The Bill will make amendments to improve taxpayer compliance by increasing the information reported to the Commissioner by a range of third parties by creating a new third-party reporting regime. This regime will require certain entities (third parties) to report information to the ATO on transactions that could reasonably be expected to have tax consequences for other entities.
The following third parties will be required to report under the regime:
Government-related entities, other than local governing bodies, must report on government grants
Government-related entities must report on consideration they provide for services
States and territories must report on transfers of real property in their jurisdiction
The Australian Securities and Investments Commission (ASIC), market participants and trustees of trusts with an absolutely entitled beneficiary must report on transactions relating to shares and units of unit trusts
Listed companies must report on transactions relating to their shares
Trustees of unit trusts must report on transactions relating to their units, and
Administrators of payment systems must report on electronic business transactions.
The Bill contains measures dealing with:
Timing of reports
Reporting exemptions, and
Transactions that entities must report.
Third-party reporting obligations in relation to transfers of real property (reported by States and Territories) and ASIC market integrity data (reported by ASIC) will apply to transactions happening on or after 1 July 2016. All other third-party reporting obligations will apply to transactions happening on or after 1 July 2017.
Speak with your Westlawn Business Services Accountant to see if there are any potential implications for your business from any of the above measures.
The ATO has made a number of legislative determinations affecting various aspects of GST law, as follows:
Recipient created tax invoice (RCTI) determinations
Acquisition of second-hand goods – global accounting method
Telecommunication supplies through enterprise not carried on in indirect tax zone
Direct Entry Services – waiver of tax invoice requirements
Representatives of incapacitated entities – cash basis of accounting for GST
Gas and electricity retailers – extension of time to issue adjustment note
Supplies by electricity distributors to electricity retailers – extension of time to issue adjustment note
Supermarkets or convenience stores – simplified GST accounting method
Margin scheme valuation requirements, and
Distribution of multi-media products – application of intermediary arrangements.
A number of these determinations may have an impact on your business’ GST registration. Contact your Westlawn Business Services Accountant about any possible implications for your business.
a) Lodgment of SMSF annual returns
The ATO has issued a reminder that once the audit of a self-managed superannuation fund (SMSF) has been finalised, an annual return should be lodged. The SMSF annual return is used to report income tax, regulatory information and member contributions, and to pay the supervisory levy.
If a fund was registered on or after 1 January 2015, it must lodge an SMSF annual return for the year it was registered, regardless of the amount of assets it holds, and even if a nil tax assessment is expected.
If a fund was registered before 1 January 2015 and does not have assets, it may not need to lodge a return.
b) Changes to “return not necessary” for SMSFs
The ATO has issued a reminder that every self-managed super fund (SMSF) registered on or after 1 January 2015 must now lodge an annual return for its first year, regardless of the assets it holds or if a nil tax assessment is expected.
If the SMSF was registered before 1 January 2015 and does not have assets, the ATO can be requested to either:
Cancel the registration, or
Flag the record as “return not necessary” (RNN).
An RNN is generally only available for an SMSF’s first year of registration.
a) SMSFs must have active electronic service addresses
All SMSfs now need to be able to receive SuperStream-compliant contributions.
To do this, an SMSF needs a bank account to receive the contributions, an active electronic service address to receive data associated with contributions, and an ABN.
An SMSF trustee can get an active electronic service address from an SMSF messaging provider, or through the SMSF’s administrator, tax agent, accountant or bank.
If you have an SMSF, check with your adviser to make sure it has met all the relevant compliance requirements, including having an active electronic service address.
Data matching program – credit and debit cards 2014-15
The ATO is going to be collecting data relating to credit and debit card payments to merchants for the periods from 1 July 2014 to 30 June 2015.
The data will be collected from the following financial institutions:
American Express Australia Limited
Australia and New Zealand Banking Group Limited
Bank of Queensland Limited
Bendigo and Adelaide Bank Limited
BWA Merchant Services Pty Ltd
Commonwealth Bank of Australia
Diners Club Australia
National Australia Bank Limited
St George Bank
Tyro Payments Limited
Westpac Banking Corporation.
The data requested will include information that enables the ATO to match merchant accounts to a taxpayer, including name, address and contact information as well as information on the number and value of transactions processed for each merchant account.
This acquired data will be electronically matched with certain sections of ATO data holdings to identify possible non-compliance with taxation law.
The purpose of this data matching program is to ensure that merchants are correctly meeting their taxation obligations in relation to their business income. These obligations include registration, lodgement, reporting and payment responsibilities.
Contact your Westlawn Business Services Accountant
Westlawn 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.