Daily updates: 12-16 July

16 July

Lifestyle assets data matching program launched
The Commonwealth Gazette has published notice of a new data matching program that will extract data from insurance policies held on “lifestyle assets” (aircraft, vessels, horses etc). Policies for 2020-21 through to 2022-23 will be examined for the following assets where the value is equal to or exceeds nominated thresholds — for example, marine vessels $100,000, motor vehicles including caravans $65,000, thoroughbred horses $65,000, fine art $100,000 per item, aircraft $150,000. The information will be used for examining discrepancies between assets and income, accounting for GST and CGT, and for SMSFs that may be incorrectly using the assets to the benefit of the fund’s trustee or beneficiaries.

NSW land tax relief guidelines published
Further to the item in yesterday’s Daily Update about land tax relief offered to NSW landlords who provide assistance to their renters, Revenue NSW has released further details on the measure. The guidelines outline the eligibility criteria, application process and conditions for the relief program. Revenue NSW has also provided access to guidelines for previous similar measures (the program for 2020, and that for 1 January to 31 March 2021).

TPB offers support to NSW practitioners
The Tax Practitioners Board has put out a notice for NSW members, saying that it is committed to taking a more flexible approach in regard to the fulfilment of obligations that it would usually expect. Under current NSW restrictions, full compliance may be hard to achieve, and the TPB has assured members that support is available.

New small business clients? These ATO webinars could help them
Free webinars are on offer by the ATO on all manner of topics that will help your small business clients get on top of the issues and skills and knowledge to be successful in their small business venture. See what is on offer here (note that some are also presented in Chinese, Arabic and Vietnamese).

SMSF auditor reminder on disqualified trustees
Approved SMSF auditors are being reminded by the ATO that they should be checking the government website data.gov.au’s disqualified trustees register when determining whether they need to report a contravention of section 126K of the Superannuation Industry (Supervision) Act 1993 (SISA), as part of their annual and ongoing reporting obligations.

Free webinars from TPB
Short on CPD? Next week you can attend the TPB’s two free webinars on 21 July. At 11am AEST, TPB directors will open the floor to questions in relation to your obligations as a registered tax practitioner, and at 2pm AEST learn about practitioner obligations when dealing with client money and when you have the right to hold money or property as security for a debt.

Latest ABS survey extends “back to normal” timeframe
In June 2021, one in four people (26%) reported that life in Australia would take more than a year to return to normal, compared with one in seven people (14%) in November 2020, according to survey results released by the Australian Bureau of Statistics (ABS). Its latest Household Impacts of COVID-19 survey asked Australians about how long they expected it would take for life to return to normal. One in six people (16%) reported that life would never return to normal, compared with one in nine people (11%) in November 2020. The survey also showed that one in five Australians (20%) continued to experience high or very high levels of psychological distress and that prior to the most recent outbreaks there had been decreases in reported precautionary behaviours (washing hands, using hand sanitiser regularly, and keeping a physical distance from people).

15 July

NSW COVID assistance for renters and landlords
The NSW Government has announced new support for renters and landlords in light of the COVID-19 lockdown. Residential landlords who decrease rent for affected tenants can apply for a grant of up to $1,500 or land tax reductions (depending on their circumstances). The land tax relief will be equal to the value of rent reductions provided by landlords to financially distressed tenants, up to 100% of the 2021 land tax year liability. And residential tenants will have greater protection with a targeted eviction moratorium, which will be implemented through legislative changes.  

Updated guidance on residency for foreign-incorporated companies
The ATO has updated its guidance on corporate residency in light of the continuing outcomes from the pandemic, and the government’s announced but unenacted legislative amendments to the corporate residency test. As such, the transitional compliance approach outlined in practical compliance guideline PCG 2018/9 for foreign-incorporated companies has been extended.

AAT decision on assets betterment test to be reheard
Both the Commissioner and the taxpayers have been successful before the Federal Court in a case involving the application of the “assets betterment” test to assess their income. The court agreed with the Commissioner that the AAT had failed to properly apply the “onus of proof” requirement in the circumstances. However, it also found that the taxpayers had suffered “procedural unfairness” in view of the significant delay between hearing of evidence and the delivery of the decision. Accordingly, the court remitted the matter to the AAT for re-hearing. (FCT v Ross [2021] FCA 766.)

FBT retraining and reskilling exemption now law
Employers who provide training or education to redundant, or soon to be redundant, employees may now be exempt from fringe benefits tax (FBT). You or your client can check eligibility for the exemption at ato.gov.au/FBTexemption. Eligible employers can apply the exemption to retraining and reskilling benefits provided on or after 2 October 2020.

Clients claiming donations? The ATO may check
The ATO is urging taxpayers to make sure they have a record of any donation they are claiming this tax time. Last year nearly two thirds of the charitable claims that were adjusted were because the taxpayer could not prove they had made the donation. Taxpayers can confirm an organisation’s DGR status by checking the relevant ABN Lookup web page.

ATO tweaks payment plan administration
From this month, the ATO says it will be “monitoring your clients’ payment plans at the client level rather than account level” — which is to say it will take a more holistic view of an individual’s debt position. This includes identifying missed scheduled payments and overdue liabilities, and informing clients of new liabilities across all accounts. The ATO has also introduced a new “arrears status” to the payment plan system. This will indicate that your client may have missed a scheduled instalment or not paid a new liability by the due date, and provides an opportunity to bring their payment plan up to date before it defaults.

Dispute resolution guide from ASIC
The ASIC regulatory guide 271 (“Internal dispute resolution”) comes into effect 5 October. Applying to “financial firms”, which broadly includes AFS licensees, trustees of approved deposit funds, retirement savings account providers, Australian credit licensees and super fund trustees (not SMSFs), the standards and requirements highlighted in the guide are enforceable. ASIC says the guide should be read in conjunction with regulatory guide 267, “Oversight of the Australian Financial Complaints Authority”.

Client: “Where’s my tax refund?” Explaining timeframes, key terms, and possible reasons for delays
For some clients, waiting for their expected tax refund can seem to drag out interminably. So if you have a client who has a bad case of ants in their pants, here are some facts that could go some way to allay their tax refund anxiousness.

14 July

NSW COVID-19 support package, with Federal input, announced
In a combined NSW and Federal Governments statement, it has been announced that from week four of a lockdown because of a declared hotspot, the COVID-19 disaster payment will increase to $600 if a person has lost 20 or more hours of work a week or $375 if a person has lost between eight and less than 20 hours of work a week. The Federal and NSW Governments have also agreed that from 18 July the COVID-19 Commonwealth Disaster Payment will be available to those outside federally declared hotspots in NSW that meet the criteria for the payment. Also a new business support payment will also be available to entities with an annual turnover between $75,000 and $50 million who can demonstrate a 30% decline in turnover. To receive the payment, eligible entities will be required to maintain their full time, part time and long term casual staffing level as of 13 July 2021. Eligible entities, which includes not-for-profits, will receive payments of between $1,500 and $10,000 per week based on the level of their payroll. For non-employing businesses, such as sole traders, the payment will be set at $1,000 per week. A new grant program has also been introduced for smaller micro businesses with turnover between $30,000 and $75,000. To help avoid delays in completing an application for support, affected entities should ensure that their business and contact details are up-to-date with the Australian Business Register (ABR) and that, likewise, personal, contact and business details are up-to-date in their MyServiceNSW account and their business profile (or to create an account). More details here. Also, further information will be posted to the Services NSW website soon.

The COVID-inspired accelerated depreciation measure ends, but claims still afoot
The Backing Business Investment (BBI) accelerated depreciation initiative had an expiry date of 30 June 2021, however your relevant clients (businesses with an aggregated turnover of less than $500 million) can still claim for the 2019-20 and 2020-21 income years. Assets must be new and first held by your client at or after 12 March 2020 until 30 June 2021, or installed ready to use for a business purpose in that timeframe. Remind clients however that they cannot claim BBI for an asset if they use temporary full expensing or instant asset write-off for the same asset.

Development of intangible arrangements PCG: Chance for input winding up
Draft PCG 2021/D4, which sets out the ATO’s compliance approach to international arrangements connected with the development, enhancement, maintenance, protection and exploitation of intangible assets and/or involving a migration of intangible assets is still under development but is winding up soon. Comments and input are open until 16 July.

Meaning of “term of lease” for residual value of a leased asset
Guidance is being developed on a proposed clarification of the operation of tables in the determination TD 93/142 that are used to calculate the minimum residual value of a leased asset, such as a car. An addendum is deemed to be required for the purposes of calculating the residual value of a leased item, should a lower residual value than those outlined in IT 28 be adopted in light of more generous depreciation rates.

Increased SMSF membership now law
The ATO has reminded trustees of SMSFs that Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020 received royal assent on 22 June 2021. Under the measures contained in the bill, from 1 July 2021, SMSFs and small APRA funds will be able to have up to six members. However the ATO also advises that it will also be necessary to consider things such as what the fund’s trust deed allows, the structure of the fund and its reporting requirements. Note that some state and territory laws restrict the number of trustees a trust can have, so changing to a corporate trustee may in some cases be required.

Whacky Tax Fact
A few years ago, Conegliano, a town in Italy’s Veneto region famous for its dry prosecco, began to apply a little-known 1993 nationwide law to levy a tax of €100 ($158) a year on shopkeepers whose signage and awnings created shadows on public spaces. The local shopkeepers, many of whom did not even know they were being hit with the tax, fought back of course.

13 July

SMSF auditor independence webinar from ATO
For all audits completed after 1 July 2021, approved SMSF auditors who previously conducted in-house audits must now comply with independence requirements. To help auditors comply with these independence standards, the ATO is offering a free one-hour webinar to remind SMSF professionals of their obligations for the 2021-22 financial year. More details, and booking form, available here (CPD value).

Boosted user guidance for OSfA
The “Help” section that is provided online when users are logged in to the ATO’s system Online services for agents (OSfA) has now been given a timely back-up with an improved user guide. Menu options in the guide reflect the system, and will either be practice or client summary. You will need to navigate between the agent home page and the client depending on the action you are performing.

Key updates for July 2021 to online systems
The ATO continues to update features to Access Manager and OSfA to keep up with legislative changes and enhanced functionality, based on feedback or where shortcomings are identified. Key updates for July 2021 include payment plan monitoring system changes, the introduction of “arrears status”, and with that a new arrears letter to support payment plan monitoring.

Taxable payments reports due soon
If you have clients with a business that makes payments to contractors or subcontractors, they may need to lodge a taxable payments annual report (TPAR) by 28 Augusteach year. The business sectors included in the TPAR regime include building and construction services, cleaning services, courier services or road freight services, information technology (IT) services, security, investigation or surveillance services, and government entities.

Commercial lease payment changes due to COVID-19
If your client’s business has received, or given, a rent concession as a result of COVID-19 market conditions, there may potentially be changes to tax obligations for them. A rent concession can be a waiver (the tenant no longer needs to pay the amount of rent that is waived) or a deferral (the tenant still needs to pay the amount of rent deferred, but they can pay at a later stage). The income that must be declared, and deductions claimed as well as GST and CGT obligations, will depend on the type of rent concession received or given, if an existing agreement has changed, or a new or additional agreement is created, and the accounting method used (if your client is a landlord).

TPB wants to know your views on its education requirements
A survey has been launched by the Tax Practitioners Board seeking the opinions of tax practitioners on the education requirements you were required to meet to register as an agent. It says the current education requirements for tax and BAS agents were set about 10 years ago, and the board is currently reviewing these requirements and may change them depening on feedback from the survey.

12 July

Further support for lockdowned NSW residents, but no savings hurdle
The Federal Government has announced that eligible NSW employees affected by the lockdown for more than 14 days can claim a second COVID-19 disaster payment from 8 July 2021. It is no longer necessary for applicants to declare less than $10,000 in liquid assets to be eligible for the payment where the lockdown extends into a third week. Also, those in a declared hotspot who have not worked because of a restricted movement order when they returned to other parts of NSW or other states may also be eligible for the payment.

Does your client need to use a payment plan? The ATO estimator may help
If your client ends up needing to apply to set in place a payment plan, it may prove useful to try the ATO online payment plan estimator to work out a payment plan that they can afford. They can then calculate different payment scenarios to best pay off their tax debt.

Alternative approach to lodge RAS to be soon redundant
Over the pandemic, super fund administrators had to implement changes to their workforce arrangements. In response, the ATO assisted with an alternative electronic option to lodge Release Authority Statements (RAS) and End Benefit Notices (EBN) on excel templates via Online services for business as outlined in CRT Alert 011/2020. With funds transitioning to SuperStream v3 by 30 September 2021, the alternative electronic option for RAS will no longer be required. Therefore from 31 October 2021 the alternative approach will no longer be offered.

SuperStream v3 to change the way SMSFs administer certain functions
From 1 October 2021, SMSFs will need to use SuperStream Rollover v3 to rollover member benefits to or from their fund. SMSFs will also be able to use SuperStream Rollover v3 for certain electronic release authorities. The ATO has spelled out what will change here.

Trading stock and the treatment of proceeds from the sale of software
The ATO says the tax treatment of software sales proceeds depends on the software’s purpose and if it is identified as “trading stock”, which is defined as anything a business acquires, produces or manufactures for the purposes of manufacture, sale or exchange.

Ancillary fund returns
Public and private ancillary funds (which are categories of deductible gift recipients) must lodge an annual information return. However the ATO notes that only ancillary funds that are not registered as a charity with the Australian Charities and Not-for-profits Commission (ACNC), should complete the ancillary fund return 2021 (NAT 73640).

NSW land life interest holdings ruling issued
Revenue NS has issued a ruling dealing with land tax liabilities that arise on land subject to a life interest. The ruling (LT110), effective from 1 April 2021, explains the land tax liability of the person who has the life interest, and of the persons who have an interest in the remainder or on reversion when the life interest expires. It also explains the different outcomes resulting when an interest is held by a company, fixed trust or special trust, and application of an exemption when the land is used and occupied as a principal place of residence.

Client communication preference types available
The ATO has provided a list of digital communications that registered agents can use with their client’s written authority. The information issued details the six communication types that practitioners can set communication preferences for and the available digital communications under each. Note that BAS agents can only set preferences for activity statement related and debt communications.

Travel (remember that?) allowances refresher — and some common mistakes
Travel allowances can be an area of tax law that is misunderstood by many, and with the extended COVID-19 enforced break in dealing with such matters, a refresher scan over the issues may be warranted.

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