Daily updates: 3-7 May

7 May

No more COVID-related “get out of jail” card from ATO regarding bad debts
At the top of the ATO’s web page listing its “completed issues” so far for 2021, it has inserted a notice about the treatment of, and general guidance on, bad debts. The ATO says: “We have determined that it is no longer necessary to provide specific COVID-19 related guidance on bad debts.”

Tax time “home office” options for your clients still includes the WFH shortcut
The working from home (WFH) shortcut method was created at the height of the pandemic last year, and then extended to 30 June 2021. It allows claims at the all-inclusive rate of 80 cents per hour. Although your clients, who may be partially still working from a home “office”, can make use of the shortcut method, the ATO is pointing out that it has identified four “no-go” expenses that client may need to be warned about (see these here). But there are other options for WFH expense claims, which the ATO spells out here.

Director ID deadline extended for indigenous directors
Further to an item in Monday’s Daily Update about a legislative instrument to extend the deadline for obtaining a director ID to 30 November 2022, a new Indigenous Corporations instrument extends the application period in which new eligible indigenous officers are required to apply for a director ID, under the CATSI Act, to 30 November 2023, if the individual becomes an eligible officer in the period from 4 April 2021 to 31 October 2022.

Foreign exchange rates updated
The ATO’s list of daily, monthly and annual foreign exchange rates have been updated to include the monthly rates for April 2021. All foreign income, deductions and foreign tax paid must be translated (converted) to Australian dollars before including it in tax returns. Generally, these require amounts to be converted at the exchange rate prevailing at the time of a transaction, or at an average rate.

Addition to supply categories of benchmark market values for GST and NFPs
Long-term accommodation has been added to the benchmark tables for 2021-22 regarding supplies by not-for-profits. Supplies by endorsed charities and NFPs are GST-free if they are for provided for nominal consideration, which are provided in the benchmark tables.

In other news

ANU research finds most Aussies say things look dire for when they retire
Research published by the Australian National University concludes that a majority of Australians think the age pension should be increased, while most Australians who aren’t retired think they won’t have enough money when they do. The ANU survey of almost 3,500 adults in early 2021 found more than seven-in-10 adults (70.5%) think the current age pension of $944.30 per fortnight for a single person with no children isn’t enough.

Financial services and human rights report
The University of Sydney has produced a report, The 2020 financial services human rights benchmark report, that assesses the performance of 22 financial companies against six human rights categories: privacy and information; anti-discrimination; economic security; health and safety; voice and participation; and right to remedy.

6 May

Standardised deductions may sound good, but it’s not so simple
A recent proposal to allow taxpayers to claim a standard $3,000 deduction for work-related and other personal expenses may sound good in theory, but it is unlikely to drastically change the tax return preparation process or reduce tax compliance work.

Statutory demand threshold will not revert back to pre-COVID level
Further to the changes proposed for bankruptcy and insolvency laws mentioned in yesterday’s Daily Update, Treasury has also announced that the threshold at which creditors can issue a statutory demand on a company, which was increased from $2,000 to $20,000 under COVID-19 temporary support measures, will not return to the $2,000 level that it used to be. The new threshold will be set at $4,000 (scroll down to the end of this announcement).

FBT re-skilling measure yet to made law
In the October Federal Budget, the Federal Government announced that it would make an FBT exemption for employer provided retraining and reskilling benefits provided to redundant (or soon to be redundant) employees where the benefits may not be related to their current employment. Further announcement earlier this year confirmed that the new measures would apply from the date of the announcement (2 October 2020), but the legislation is still in draft form. The ATO advises that if clients want to make such a claim, their FBT return should be completed under incumbent conditions, with an adjustment made after the re-skilling measures become law.

SMSF verification service
The ATO says APRA-regulated funds and self-managed super funds who receive a request to rollover their member’s super balance to a self-managed super fund must use the self-managed super fund verification service (SVS). Use of the SVS is mandatory under Regulation 6.33E of the Superannuation Industry (Supervision) Regulations 1994 (SISR) requires funds to use an electronic service upheld by the ATO, in this instance the SVS

Clients with school leavers in Townsville, Newcastle, Gosford or Geelong?
The ATO is launching a new recruitment program designed to give school leavers in the above regional centres an opportunity to get their foot in the door and gain valuable skills. The “Career Kickstart” program provides an opportunity for high school graduates who have successfully completed their year 12 studies within the last year to get a job at the ATO in one of these four regional locations. The program adds to the existing suite of entry-level employment programs the ATO has.

Will deregulation moves impact TPB’s interactions with practitioners?
The Australian Government is refreshing how it sets out its expectations for regulator performance and reporting, and has issued a draft “regulator performance guide” that outlines principles of best practice and supporting guidance to assist federal regulators to report on their performance against the principles. It is consulting widely, including via the TPB, on the draft guide to ensure it is informed by business and community expectations of regulators, with comments and submissions closing 21 May.

ATO will soon notify you of your clients’ STP reporting status
Practitioners with clients who are, or should be, reporting payroll via STP may soon receive an email from the ATO that will indicate the STP reporting status of those clients. The ATO also says it will be contacting your clients who will be affected by the STP reporting changes that start from 1 July, as well as those yet to start using STP.

Legislation to amend banking regulations to secure deposits
The bill Banking Amendment (Deposits) Bill 2020, now before the Senate, aims to confirm that the conversion and write-off provisions of the Banking Act 1959 do not apply to deposit accounts, and to confirm that nothing in the act or any other legislation extends power to APRA to implement or authorise or direct the implementation of bail-in (requiring the cancellation of debts owed to creditors and depositors) in respect of deposit accounts as defined in the bill. See the EM for more.

Tax temperature survey of members
It’s only a few days to go until the 2021-21 Federal Budget is handed down, and we’d like to get your thoughts on what you’d like to see included as well as on some of the recent proposals that impact the tax profession. Insights gathered will be used to better advocate for you and your clients, and to inform some of the educational materials we develop. Take the short survey here.

5 May

More pre-Budget tasters, this time on child care subsidy increase
As part of the 2021-22 Federal Budget, it has been announced that the childcare subsidy will be increased up to a maximum of 95% from 1 July 2022. It says it will increase the child care subsidies available to families with more than one child aged five and under in child care, and remove the $10,560 cap on the Child Care Subsidy. Scroll down to the end of the announcement above for a table that summarises the changes.

More guidance issued, now that Apted decision is here to stay
The recent taxpayer victory in the Full Federal Court JobKeeper case Commissioner of Taxation v Apted [2021] FCAFC 45, and the ATO’s issuing of a Decision Impact Statement and a Law Administration Practice Statement, has also led it to publish further guidance, now that more clients may be coming forward to make a claim.

Bankrupty and insolvency amendments in the offing
Proposed amendments contained in a draft bill issued by Treasury will amend a number of acts, and should be read in conjunction with the relevant regulations. Public consultation on the draft legislation and explanatory material will close this Friday.

Margin scheme errors not helpful, says ATO
If your client sells property as part of their business, they may choose to use the margin scheme to work out how much GST they must pay — if they are eligible. The ATO is keen for practitioners to make sure their clients are indeed eligible to use the margin scheme before they sell property, and that all the relevant calculations are correct.

Rollover user guide for super
The ATO’s rollover user guide is intended to act as a reference document for solution providers developing SuperStream compliant systems for processing superannuation contributions, member registrations and rollovers. Solution providers may include APRA-regulated funds and RSA providers, SMSFs, fund administrators, and other intermediaries and commercial software developers providing SuperStream solutions. The guide is also available in PDF format.

Unpaid or late super: SG charge statement due soon
A warning for your business clients that have overdue or unpaid SG obligations — they need to lodge a super guarantee charge statement with the ATO by 28 May 2021 to disclose any super they have missed or paid late, and pay the super guarantee charge. And a reminder — unlike paying super guarantee on time, the super guarantee charge is calculated on an employee’s total salary and wages (including overtime and some allowances) and includes interest and an administration fee of $20 per employee, per quarter.

Whacky Tax Fact
Latin possesses a word that has come to be deemed the origin of our modern word tax, which was the verb taxare, which means to estimate or appraise. Hence taxo (“I estimate”). The original Latin verb became taxer in Old French, and crossed over into English as both task (retaining the meaning of estimate) and tax (both verb and noun). Speaking of Latin and the Roman empire (scroll down), Julius Caesar was the first to implement a sales tax. During his rule, sales tax was a flat 1%, but under Caesar Augustus, the sales tax was 4% for slaves and 1% for free citizens.

4 May

Brewers and distillers shouted on excise tax, plus a lodgment cherry on top
The 600 brewers and 400 distillers in the country have been given a small taste from next week’s budget with news of $255 million-worth of tax relief in the form of a tripling of the annual excise refund cap, from $100,000 to $350,000. To apply from 1 July, the Treasurer says this will align brewers and distillers with the Wine Equalisation Tax (WET) producer rebate. More “cheers” was added just yesterday with a further announcement that there will also be no requirement to either pay excise or lodge an excise return after 1 July. Instead, alcohol producers will automatically receive remission up to the new refund cap.

Financial and regulatory technology future interim report
The Senate Select Committee tasked with informing the future direction of the FinTech sector has tabled its second report. This new report makes 23 recommendations across a range of areas relevant to FinTech and Australia’s innovation sector more broadly, including recommendations relating to the R&D Tax Incentive, the consumer data right, “rules as code” initiatives, changes relating to retail shareholders, enhanced global visa programs and more.

Legislative instrument issued on excluded transactions for third party reports
Draft TPRE 2021/D1, titled Taxation Administration Excluded Classes of Transactions and Entities for Third Party Reports on Shares and Units Determination 2021, applies to companies whose shares are listed for, trustees of a unit trust, and trustees of other trusts who hold shares in a company or units in a unit trust in relation to transactions for which the trustee does not lodge an income tax return.

Promotors and Tax Exploitation Program has teeth
The ATO’s Promotors and Tax Exploitation Program is dedicated to identifying and disrupting arrangements that exploit the tax system. Just recently, a trio of professionals were ordered to pay over $9.4 million for their part in promoting an unlawful tax avoidance scheme. The ATO says if practitioners think they have been approached by a promoter of a tax avoidance scheme, or are inadvertently involved in one, they should contact the ATO right away. See this LinkedIn blog for more details of similar cases.

OECD says COVID-19 resulted in the largest decrease in taxes on wages since the GFC
The OECD’s annual publication Taxing Wages includes comparative data on the various taxes levied on salaries and wages in OECD countries, with the latest issue highlighting that the COVID-19 crisis has resulted in the largest decrease in salary and wages since the GFC. The OEDC media release announcing the publication of this year’s report highlights the wage tax trends.

Talkback Tuesday
I remember John Jeffreys summarising his first JobKeeper webinar and bringing up the mental wellbeing of accountants and the stress the additional work will bring as well as working from home. If the ATO keeps up the pressure of demanding late returns and doing tax audits, which will keep us away from catching up on current returns, family time, health checks, rest, etc, there are a lot of tax agents over 60 years of age (and they would be over 10% of the tax agent population and I am one of those) who will just walk out of their practice on 30 June. Read more…
IG, Melbourne

(Replying to IG, Melbourne in last week’s Talkback Tuesday, 27 April) Tax ruling MT 2024 provides a clear guideline on applying the gross weight and the kerb weight mass identifying the commercial vehicle and application of FBT exemption.
Jalanga Fernando, Mount Gravatt, Qld

3 May

JobKeeper and Cash Flow Boost denials revisited, reopened
In the wake of a Full Federal Court case, the ATO will review all JobKeeper applications where it originally denied the taxpayer a “later time” ABN condition that resulted in the taxpayer not being considered eligible, as well as similar outcomes for the Cash Flow Boost.

Director ID number application extension
A legislative instrument has been issued that provides additional time for new directors to apply for a director ID during the testing period. It also extends the application period for new directors appointed during this testing period to ensure that they are not disadvantaged or exposed to the offence provision. The extension is until 30 November 2022.

Have you clients with outstanding FBT obligations?
Just in case, the ATO has provided historical fringe benefits tax (FBT) rates and thresholds for the 2012-13 to 2016-17 FBT years. Information includes gross up rates, exemption threshold, cents per kilometre and more.

EOFY promoter penalty warning
The ATO warns that if you are providing tax planning advice to clients, you need to recognise tax avoidance schemes and understand the risks in facilitating a scheme. It advises agents to consider processes to protect you and your practice from inadvertently breaking the promoter penalty laws.

Not-for-profit “sheds” must meet certain requirements to gain DGR status
To reach deductible gift recipient status, an organisation such as community sheds (men’s and women’s sheds) are required to meet certain conditions, says the ATO. From 1 October 2020, a new category of DGRs includes such sheds, and the ATO spells out here what is expected.

Prudential standard for remuneration consultation
The Australian Prudential Regulation Authority (APRA) has released draft guidance to assist industry meet the requirements of APRA’s updated prudential standard on remuneration. The draft Prudential Practice Guide CPG 511 Remuneration sets out principles and examples of better practice to assist banks, insurers and superannuation licensees comply with prudential standard CPS 511 Remuneration, which will be finalised later this year.

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