5 minute tax updates: 30 Sept – 4 Oct

Every (yes, every) return to be ATO-scrutinised
Love and affection re-think with commercial debt forgiveness
Statement of tax record
No discretion to remit superannuation excess transfer balance tax
Residential vacancy fee: Annual return help, foreign owners
Retirement income review: details revealed
PAYGW for staff in foreign service equalised through new admin instrument
Tax debt relief appeal based on “serious hardship” not found to hold water
Your clients’ “overdue lodgement” letters
PCG issued on pension tax bonuses for APRA funds
Changes to super regime now law
Property developer reporting requirements for NDECs and NNDECs


Every (yes, every) return to be ATO-scrutinised
Assistant Commissioner Karen Foat released a statement at the end of September that centred on the ATO’s ongoing effort to close Australia’s “tax gaps”. The ATO, Foat says, is determined to scrutinise every tax return in its search for incorrect claims made during tax time 2019.

The ATO is particularly focused on third party data that indicates under-reported income, as well as deduction claims that appear higher than like taxpayers.

In a related compliance activity uptick, the ATO has also announced upcoming visits to about 400 businesses in inner-north Brisbane during October (Teneriffe, New Farm, Newstead, Fortitude Valley). Assistant Commissioner Peter Holt announced that ATO officers will be targeting businesses in these areas after a number of tip-offs from the community.

Love and affection re-think with commercial debt forgiveness
TD 2019/D9 considers changing the exclusion from commercial debt forgiveness on grounds of “love and affection” so that this only applies to natural persons.  Previously this could apply to other entities (or rather, it was not specified). View the draft TD here. Feedback can be emailed to the ATO’s Matthew Maher by 1 November.

Statement of tax record
The ATO says that businesses and their first tier subcontractors tendering for Commonwealth Government contracts over $4 million, including goods and services tax (GST), must obtain a statement of tax record (STR) showing satisfactory engagement with the tax system. See criteria here.

No discretion to remit superannuation excess transfer balance tax
An ATO decision to not remit a super excess transfer balance tax liability has been upheld in the AAT (Vernik and FCT [2019] AATA 3754). The liability was in relation to deemed earnings that kept accruing after an initial excess transfer balance had been commuted.

Residential vacancy fee: Annual return help, foreign owners
The vacancy fee return must be lodged by foreign owners of residential dwellings who made a foreign investment application for residential property after 7.30pm AEST on 9 May 2017, or foreign owners of residential dwellings who purchased under a New dwelling exemption certificate that a developer applied for after the same deadline. The vacancy fee may also apply if a foreign person failed to submit a foreign investment application but purchased a residential property before 9 May 2017.

The vacancy fee form and payment instruction page explains how to lodge a vacancy fee return, update a client’s details if their situation changes, and how to make a payment.

Retirement income review: Terms of reference and panel members revealed
Treasurer Josh Frydenberg has released some details of the government’s review of the retirement income system. In a media release issued last week, it was stated that the review will identify:

  • how the retirement income system supports Australians in retirement;
  • the role of each pillar in supporting Australians through retirement;
  • distributional impacts across the population and over time; and
  • the impact of current policy settings on public finances.

The review will be conducted by a three-person panel. Michael Callaghan, a former executive director of the International Monetary Fund and a former senior Treasury official will chair the review, together with Carolyn Kay, who was on the Future Fund Board of Guardians, and Deborah Ralston, a member of the RBA’s Payments System Board and most recently chair of the Alliance for a Fairer Retirement.

PAYGW for staff in foreign service equalised through new admin instrument
The ATO has registered a new legislative instrument Taxation Administration: Individuals Engaged in Foreign Service Variation Notice 2019 (see 27 September entry), which will allow employers to level out the tax withheld from payments made to Australians overseas so that tax does not exceed the level that would be payable in Australia (which can vary due to the relevant FITO). It replaces a previous legislative instrument.

Tax debt relief appeal based on “serious hardship” not found to hold water
The AAT has knocked back a taxpayer’s appeal for release from a tax debt and GIC. It found among other considerations that the taxpayer’s monthly income exceeded his expenditure by more than $2,500. See Burns and FCT [2019] AATA 3860 for details.

Your clients’ “overdue lodgement” letters
Tax practitioners can soon expect to be receiving the ATO’s new overdue lodgment reminder letters on behalf of their clients. Agents can access these letters via Communication history in Online services for agents and the Client communication list function in the tax and BAS agent portals.

PCG issued on pension tax bonuses for APRA funds
The ATO has issued guidance on its approach for large APRA funds that cannot incorporate the value of a pension tax bonus into an opening balance of a new retirement phase income stream. PCG 2019/7 provides a transitional compliance approach where funds are facing practical difficulties in complying with certain legislative requirements. It mentions that compliance resources are not being allocated to review calculations.

Changes to super regime now law
Both Treasury Laws Amendment (Putting Members’ Interests First) Bill 2019 (the opt-out insurance change to the SIS act) and Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2019 (regarding SG opt-outs, expanding NALI, including shares of LRBAs in TSB), both mentioned in last week’s 5 minute tax updates, have now both received royal assent.

Property developer reporting requirements for NDECs and NNDECs
Property developers who use New Dwelling Exemption Certificates (NDEC) and Near-New Dwelling Exemption Certificates (NNDEC) to sell property in a development to foreign buyers must report their sales to the ATO every six months.

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