5 minute tax updates: 18-22 November

What the ATO’s ASFP means for tax professionals
How the new whistleblower laws operate, according to the TPB
De-registration on basis of not being “fit and proper person”
Additional conditions to be met for some small business CGT concessions
Transfer balance cap correspondence issuing with a due date during the Christmas/New Years
Work related deductions denied
Bushfire concession announced
SMSFs and “fractional” property investment
Extending the anti-avoidance rules
Employer deductions for payments to workers
Clients involved with National Rental Affordability Scheme?
Project Super Scheme Smart

What the ATO’s ASFP means for tax professionals
The Activity Statement Financial Processing (ASFP) project will move all activity statement and franking deficit tax financial information into the one ATO system, delivering a single accounting system with multiple accounts. This system change will occur in December 2019 during the ATO’s annual closure, with its online systems unavailable from COB 24 December until first thing 2 January. Afterwards a number of changes will be noticed in Online services for agents. [Relevant discussion can be found in our latest podcast: “Portal closure, using myGovID, TPB activity

How the new whistleblower laws operate, according to the TPB
New whistleblower laws commenced on 1 July 2019 to legally protect people who ‘blow the whistle’ about an entity that is not complying with the tax laws. The reforms aim to protect whistleblowers when they disclose information about an entity in relation to tax avoidance behaviour and other tax issues to an eligible recipient prescribed under the legislation. The TPB explains. ASIC also has published some guidance.

De-registration on basis of not being “fit and proper person”
The Full Federal Court has dismissed an appeal by a tax agent and confirmed the TPB’s decision to terminate his registration on the grounds he was not a “fit and proper person” — largely based on a false declaration the agent made to the Migration Agents Registration Authority. The decision also precludes the tax agent from applying for re-registration for 5 years.

Additional conditions to be met for some small business CGT concessions
If the CGT asset is a share in a company or interest in a trust, the additional conditions the taxpayer must meet include they must be carrying on a business just before the CGT event if they do not meet the maximum net asset test, and the share or interest must satisfy the modified active asset test which looks through to the activities and assets of the underlying entities. There are more conditions, which can be found here.

Transfer balance cap correspondence issuing with a due date during the Christmas/New Years
Your clients need to action commutation authorities issued by the due date, even where the due date falls in the upcoming holiday period. The ATO says it will need to have received and processed any amended reporting by 10 December 2019 for a client to be likely to receive a notice that the ATO has revoked the commutation authority before Christmas.

Work related deductions denied
A taxpayer claimed work-related deductions for his car, home office and other expenses.  The AAT decided the taxpayer could not use the log book due to inconsistencies with its preparation.  The taxpayer owned two vehicles, one he used privately and one predominantly as a work vehicle. He received a car allowance of $15,000 per annum and no other payment in respect of that use. He claimed 91% business use of one of the cars, however he had a very incomplete logbook, with repeating entries that were proven to be wrong. Further, other expenses were unsubstantiated.  The AAT affirmed the ATO’s treatment of the expenses.

Bushfire concession announced
The ATO has announced that it will grant a two month lodgment and payment deferral to taxpayers affected by the recent catastrophic bushfires in New South Wales and Queensland. It added that if taxpayers are concerned about their tax obligations, they should feel free to contact the ATO on 1800 806 218 to discuss how the office can support them. Also, see here for new due dates.

SMSFs and “fractional” property investment
The ATO has issued guidance that confirms its approach on the sole purpose test for SMSF trustees investing in fractional property investment products, such as was the subject of the Full Federal Court in the Aussiegolfa case. There, it was found that an SMSF was maintained for the collateral purpose of providing accommodation to a related party.

Extending the anti-avoidance rules
Anti-avoidance rules for circular trust distributions now extend to family trusts. For income years starting on or after 1 July 2019, the amended legislation brings family trusts under the anti-avoidance rules which impose trustee beneficiary non-disclosure tax (TBNT) on circular trust distributions. The TBNT is imposed on the untaxed part of a circular trust distribution, to which a trustee of a family trust becomes entitled, at a rate equal to the top marginal tax rate plus the rate of the Medicare levy.

Employer deductions for payments to workers
Remind your business clients that they cannot claim deductions for payments to workers if they have not met their pay-as-you-go (PAYG) withholding obligations. This applies to income tax returns lodged for the 2020 income year onwards. If the PAYG withholding rules require an amount to be withheld, to claim a deduction for a payment to a worker, your client must withhold the amount from the payment before they pay their worker and report that amount to the ATO.  If a mistake is made, this can still be corrected.

Clients involved with National Rental Affordability Scheme?
The ATO states that it will be sending letters to claimants of the National Rental Affordability Scheme (NRAS), reminding them of the conditions for claiming a refundable tax offset and to apportion their expenses when claiming deductions. Remind your clients of the requirements to claim the NRAS.

Project Super Scheme Smart
There are a number of schemes targeting Australians planning for their retirement. These schemes encourage individuals to send money inappropriately through their self-managed super fund (SMSF). The ATO has advice for taxpayers and their advisers on how to recognise such a scheme. It also provides an anonymous tip-off channel to report schemes and promoters.

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