5 minute tax updates: 9-13 December

CPD results from a review by TPB
Board of Taxation paper on residency released
Remission of extra SG charge practice statement
Backpacker employer guidance
Consider lodgments and reports before ATO systems become unavailable
No more paper forms for certain SMSF functions with ATO
FBT exemptions relating to natural disaster
Testamentary trust concession wind-back bill is tabled
No hiding from director responsibilities
SMSFs still to get SMSs (or emails)
Employee share scheme concession eligibility clarified
STP: Time is running out
GST and supply of anything but goods and property connected to Australia
Illegal SMSF schemers warning
LRBA changes have affected reporting requirements
Government tender threshold triggers statement of tax record requirement
Guidance on fuel tax credit eligibility on environmental standard

CPD results from a review by TPB
From July to October, 545 tax practitioners were randomly selected by the TPB for a review of their CPD obligations. The following key outcomes were found:

  • 287 met their obligations
  • 25 received education letters
  • 10 surrendered their registration
  • three had extenuating circumstances
  • six were presented to the Board Conduct Committee, resulting in five suspensions and six orders
  • seven investigations are underway
  • 207 reviews are still in progress.

Don’t forget, the best way to keep on top of your CPD obligations could be a subscription to CPDpro.

Board of Taxation paper on residency released
The definition of residency has been a pebble in a lot of shoes over recent times, and with the bill to deny the CGT discount for a main residence to non-residents now passed both houses of Parliament, the issue may become even more central to tax outcomes.

On 6 September 2019 the Board of Taxation (BoT) published a consultation guide on its corporate residency review project, in which it presented six consultation questions for stakeholder comment.  BoT has now released a second consultation paper for stakeholder review and input which summarises the comments and feedback that have been collected and sets out a number of proposed reform options. It also includes additional consultation questions for stakeholder consideration, including setting a “bright-line” tax residency definition. Submissions are open until 31 January 2020.

Remission of extra SG charge practice statement
A new practice statement, PS LA 2019/1, sets out ATO guidelines for the remission of additional superannuation guarantee charges, and where penalty relief can be appropriately applied. These measures operate under Part 7 of the Superannuation Guarantee (Administration) Act 1992. Note that this has no bearing on the SG amnesty measure.

Backpacker employer guidance
The ATO has published guidance on what you need to do as an employer of working holiday makers (backpackers) holding a working holiday visa (subclass 417) or work and holiday visa (subclass 462).

Consider lodgments and reports before ATO systems become unavailable
From midday Christmas eve, the ATO’s systems will progressively become unavailable as it prepares for major systems upgrades over the holiday break. It advises practitioners to consider which reports or activities they can lodge before the outage period starts. Services are expected to be restored at 6:00am AEDT on 2 January 2020.

During this period it will not be possible to notify the ATO of any changes to SMSF details or check registration status. The eSAT tool used to lodge an auditor/actuary contravention report will also be unavailable. For more information on the system shutdown, check the ATO’s system maintenance web page.

FBT exemptions relating to natural disaster
Note that fringe benefits tax (FBT) exemptions can apply when employers provide certain assistance to their employees in emergencies. This can include natural disasters, but also accidents, serious illness, civil disturbances, armed conflict or similar events.

No more paper forms for certain SMSF functions with ATO
For SMSFs without an ABN, the ATO’s online services has now updated its offerings so that paper forms are no longer needed for elections regarding excess concessional and non-concessional contributions, as well as Division 293. Also APRA-regulated fund members will be able to track their adjusted transfer balance cap earnings transactions.

Testamentary trust concession wind-back bill is tabled
Legislation has been introduced (Treasury Laws Amendment (2019 Measures No. 3) Bill 2019) covering previously announced measures that will amend the ITAA 1936 to ensure the tax concessions available to minors in relation to income from a testamentary trust only apply in respect of income generated from assets of a deceased estate that are transferred to a testamentary trust (or the proceeds of the disposal or investment of those assets). The measure is intended to apply in relation to assets acquired by or transferred to the trustee of a testamentary trust estate on or after 1 July 2019.

The bill also defers transitional timeframes for existing financial advisers to comply with training and educational standards. The transitional timeframe for the approved degree or equivalent qualification will be deferred by 2 years to 1 January 2026, while the transitional timeframe for the approved exam will be deferred by one year to 1 January 2022.

Additionally, the bill corrects anomalies in law that affect penalties in relation to a taxation law applied to some consolidated groups or significant global entities.

No hiding from director responsibilities
A bill was recently introduced that re-introduces measures that lapsed with the last federal election. The Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2019 provides for a unique identifier number, dubbed a director identification number (DIN), that will provide traceability of a director’s relationships across companies, enabling better tracking of directors of failed companies, and will prevent the use of fictitious identities. The aim is to prevent illegal phoenix activity.

SMSFs still to get SMSs (or emails)
A previous 5-minute tax update news item announced that the ATO will send SMS messages or emails to SMSF trustees when changes have been made. This was going to start on 30 November, but has now to be delayed after an issue was identified by the ATO. We will update news when details come to hand.

Employee share scheme concession eligibility clarified
A new taxation determination, TD 2019/13, clarifies the definition of an “employee share trust” in relation to the operations of a bone fide employee share scheme. Application will apply before and after the date of issue.

STP: Time is running out
If you or your clients have not started Single Touch Payroll (STP) reporting it is not too late, but time is running out. The ATO should have already sent most practitioners a list of their clients that are yet to report through STP, or have not contacted the ATO about a start date or possible deferral. If you have micro employer clients, those with 1–4 employees, who wish to use the quarterly reporting concession, you can apply on behalf of your client now and start reporting by 28 February 2020. After this date, quarterly reporting will only be considered for those micro employers with extenuating circumstances.

GST and supply of anything but goods and property connected to Australia
The government has issued GST ruling GSTR 2019/1, GST and the supply of anything other than goods or real property connected with the indirect tax zone (Australia). The ruling discusses when such supplies are connected with the “indirect tax zone” (Australia) under paragraphs 9-25(5)(a), (b) and (c) and Division 85 of the GST act. It also explains exclusions to the “connected with Australia” rules.

Illegal SMSF schemers warning
The ATO is warning Australians of scheme promoters that promise to allow SMSF members and trustees to withdraw their superannuation early, and illegally. In one case, a NSW woman had a $220,000 penalty and 7-year ban imposed by the Federal Court for just such actions.

LRBA changes have affected reporting requirements
Recent LRBA law changes with a retrospective start date of 1 July 2018 may have had an impact on some of the information included in already lodged SMSF annual returns. As a result, some SMSF annual returns may have required amendments.

Government tender threshold triggers statement of tax record requirement
Businesses and first tier subcontractors tendering for Commonwealth Government contracts over $4 million (including GST) need a statement of tax record (STR).

Guidance on fuel tax credit eligibility on environmental standard
Under the Fuel Tax Act, taxpayers are not entitled to claim a fuel tax credit for fuel used in a motor vehicle that does not meet specified environmental criteria. Fuel Tax Determination FTD 2019/1 spells out the details.

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