Business and Tax Updates – Summer 2019

Ensure your Tax Deduction for payments to Workers

From the 2020 income tax year, an employer must comply with all PAYG withholding obligations or the income tax deduction will be denied.
In order to claim an income tax deduction for payments to workers, the following conditions must be satisfied:

  • Withhold the required amount prior to payment to the worker
  • Report the PAYG withholding amount to the ATO

If an employer makes a mistake with a PAYG withholding amount, it must be corrected as soon as possible. An employer will not lose a tax deduction if they voluntarily correct a mistake prior to the commencement of any ATO compliance activity.

Electronic Lodgements over Christmas Break

All ATO online portals including Business Portal, ATO Online Services and Small Business Superannuation Clearing House will be unavailable after 6:15pm on Tuesday 24th December due to annual system upgrades. The portals will remain offline until Thursday 2nd January 2020. Therefore, if any Activity Statements, Income Tax Returns or other ATO Reporting is required, please ensure it is lodged prior to 24th December.

Organisations may still lodge Single Touch Payroll reports during this period, however the information will not be processed by the ATO until 2nd Jan 2020.

Activity Statement Financial Processing (ASFP)

The ATO is upgrading its accounting system that processes Activity Statement and Franking Deficits Tax Accounts into a single system. The upgrade will improve the visibility of activity statement information and will be active from 2 January 2020.

The new system will also enable direct debit payment plans to be setup automatically via an ATO online portal. Additionally, any Director Penalty Notices for PAYG or Superannuation will be visible on the Directors personal account.

If you need any assistance with ATO online services, please do not hesitate to contact your CIB representative.

Get your myGovID and RAM now!

A reminder that the AusKey system is being retired in April 2020. The new identification products are myGovID and RAM which are now up and running, so register under the new system today.

  • myGovID – is a secure proof of identity app which is stored on your phone and can be used to access many online government services for both business and personal matters
  • Relationship Authorisation Manager (RAM) allows you to link a myGovID an Australian Business Number (ABN). It lets you manage who can act on behalf of your organisation online.

The AUSkey system can still be used during the transition period to myGovID and RAM.

Limited Deductions on holding Vacant Land

From 1 July 2019, the tax law relating to claiming income tax deductions for the holding costs of vacant land (such as interest, land tax, rates and maintenance costs) has been amended. The changes limit the deductions even if land was held prior to 1 July 2019. Land is considered vacant if it contains no permanent and substantial structure.
The limit on deductions do not apply to corporate entities, land used in carrying on a business or land used in the business of primary production.

Salary Sacrifice Arrangements involving Super

From 1 July 2020 an employer must calculate their superannuation guarantee obligations (currently 9.5%) on an employee’s earnings base before any salary sacrifice superannuation amounts are taken into account. Previously, employers were able to reduce their superannuation guarantee obligations by multiplying 9.5% on the post salary sacrifice earnings base.

Small Business Tax Gap

The Australian Taxation Office has renewed its focus on the black economy as it estimates that 90% of small business tax obligations are paid voluntarily. The 10% tax gap is estimated as being over $11 billion. The ATO has scheduled area visits to Bankstown NSW, Bega NSW, Frankston VIC and Croydon VIC, in response to black economy warning signs. The ATO is also receiving 230 tip offs a day to the Tax Integrity Centre as taxpayers want all members of the economy to pay their share.

Tax Deferrals due to Bushfires in NSW and QLD

The ATO has granted taxpayers who have been impacted by the recent bushfires in New South Wales and Southern Queensland a two month lodgement and payment deferral. If you are located in one of the specified 16 local government areas directly impacted by the fires, the deferral has been automatically granted.

GIC and SIC Rates

The ATO has published general interest charge (GIC) and shortfall interest charge (SIC) rates for the second quarter of the 2019-20 income year.
The GIC annual rate for October – December 2019 is 7.98% and the SIC rate is 3.98%.