5 minute tax updates: 20-24 January

Proposal to widen STP to record child support payments
Disaster relief collection options
After this week, myGovID will be the default login option
Deferred tax obligations granted for bushfire affected taxpayers
Men’s sheds and women’s sheds proposed to gain DGR status
Support program that helps Indigenous businesses to be expanded
ATO seeking input from practitioners with know-how
Payment deemed to be a dividend under Div 7A
Risk of delayed GST at settlement refunds
Warning on international non-arm’s length arrangements
The Tax Integrity Centre
Amended ruling on creditable purposes for car expenses

Proposal to widen STP to record child support payments
Treasury has released draft legislation to widen the scope of STP to include amounts currently reported to the Child Support Registrar. The proposal would enable employers to voluntarily report child support deductions from salary or wages and child support garnishee amounts from salary or wages using Single Touch Payroll.

Disaster relief collection options
If your clients wish, they can start their own efforts to collect funds for bushfire relief. The ATO spells out what is involved. Concerned taxpayers can:

  • collect for an established deductible gift recipient (DGR) – donations made to DGRs are tax deductible
  • start their own disaster relief fund
  • collect to help victims (but without supporters being eligible to claim a tax deduction).

After this week, myGovID will be the default login option
Although there are about eight weeks left where users can still login with an AUSkey, from 25 January, myGovID will become the default login option for “Online services for agents”. Between now and the end of March, practitioners should ensure they have set up their myGovID access to continue using Online services and their SBR-enabled software.

Deferred tax obligations granted for bushfire affected taxpayers
The ATO has announced that income tax, activity statement, SMSF and FBT lodgments and their associated payments will be deferred for those in identified disaster affected postcodes until 28 May 2020. The ATO will also fast track refunds that are due to affected taxpayers, and remit any interest and penalties applied to affected taxpayers’ tax debts since the start of the bushfires. Even if affected by bushfires although not in one of the identified areas, the ATO says taxpayers should make contact to ensure access to disaster concessions.

Men’s sheds and women’s sheds proposed to gain DGR status
Draft legislation has been released for consultation to establish a new deductible gift recipient general category that will enable local “shed” initiatives (men’s sheds and women’s sheds) to access DGR status from 1 July 2020. Submissions close, appropriately perhaps, on Valentines Day.

Support program that helps Indigenous businesses to be expanded
The ATO’s Reach Out business support program is a government initiative introduced to increase economic participation of Indigenous Australians and to help more Indigenous people build sustainable businesses that will support themselves, their families and their communities. Starting in Queensland in 2018, the initiative is to be expanded into NSW, SA and Victoria over 2020.

ATO seeking input from practitioners with know-how
The ATO has opened several matters for open consultation. It says the views and opinions of those with relevant taxation knowledge is valuable to help with making well-informed decisions and shape the future services and advice it can offer. To participate, email the person listed in the relevant item in the following web pages — Individuals, Business, Not-for-profit, Superannuation, Intermediaries.

Payment deemed to be a dividend under Div 7A
The AAT has held (see Wing and Commissioner of Taxation) that a $500,000 payment from a related company to a taxpayer was a deemed dividend under Division 7A and that the taxpayer’s assessable income should be increased by that amount minus $1. The Tribunal also refused to exercise a discretion of there being an honest mistake or inadvertent omission. Finally, it upheld the penalty imposed for lack of reasonable care.

Risk of delayed GST at settlement refunds
The ATO has warned that incorrectly completing Form 2, GST property settlement date confirmation, can cause delays and may necessitate manually processing transactions. Find out how you and your clients can avoid these common errors when lodging GST at settlement forms.

Warning on international non-arm’s length arrangements
In the first taxpayer alert for the year, the ATO has issued TA 2020/1, which deals with non-arms length arrangements and schemes connected with the development, enhancement, maintenance, protection and exploitation of intangible assets. It warns that it is reviewing international arrangements that may mischaracterise Australian activities that may result in inappropriate outcomes for Australian tax purposes. The ATO says it is particularly concerned where intangible assets and/or associated rights are “migrated” to international related parties as part of a non-arm’s length arrangement and/or in a manner intended to avoid tax.

The Tax Integrity Centre
The ATO’s website is home to its Tax Integrity Centre, the taxpaying community’s single point of contact to report any information it has on dodgy tax practices such as evasion and black economy or phoenix activities — or really any behaviour where people may be gaining an unfair advantage by intentionally doing the wrong thing. Users are urged to use a provided online and secure Tip-off form. Privacy is assured, and there is also a hotline number, 1800 060 062.

Amended ruling on creditable purposes for car expenses
GST ruling GSTR 2006/4 has had amendments made to it regarding methodologies for determining the extent of creditable purposes for vehicle expenses. The changes apply from 22 January 2020, and previous guidance (GSTB 2006/1W) has been withdrawn. Note that for income tax purposes, while the cents-per-kilometre method is limited to the first 5,000 business kilometres in an income year, there is no such restriction for GST purposes (provided the entity’s records are sufficient to demonstrate that the extent of creditable purpose is a fair and reasonable approximation of the actual use of the vehicle).

NOTE: Readers should note that a typographical error led to an incorrect tax rate being published in the 2019-20 Tax Summary. In the table of tax rates for companies, on page 270, the base corporate tax rate for 2019-20 should read 27.5%, not 27%. All other figures in the table are correct.

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