Daily updates 17-21 May

21 May

No GDP adjustment for client GST and PAYG instalments
The ATO advises that there will be no gross domestic product adjustments for your clients’ quarterly GST and PAYG instalment amounts for the 2021-22 income year. The ATO generally updates the GDP adjustment factor at the start of each income year using data provided by the Australian Bureau of Statistics. The adjustment is based on GDP activity over the previous two calendar years.

Three occupations added to the ATO’s employment guides
To help your clients determine what they can and can’t claim, the ATO has guides for certain occupations, such as construction employees, bus drivers, teachers and so on. In all there are nearly 40 occupation and industry guides produced. This year the ATO has added three new guides, with these focused on gaming attendants, community support workers and recruitment consultants. Visit ato.gov.au/occupations.

Tax determination issued on post appointment liabilities
Taxation determination TD 2021/5 deals with income tax and a receiver’s obligation to retain money for post appointment tax liabilities under section 254 of ITAA36. It explains the Commissioner’s view where the entity in receivership has an assessed post-appointment tax liability. It only applies to receivers appointed as agent for the entity in receivership, and does not apply to court-appointed receivers.

Victorian budget major measures
The Victorian Budget 2021-22 includes measures that have to be approved by the Victorian Parliament before they can start. The measures are listed in this table on the SRO Victoria website, along with their expected start date.

APRA says retirement has become more expensive
The ASFA Retirement Standard March quarter 2021 figures indicate that couples aged around 65 living a comfortable retirement need to spend $62,828 per year and singles $44,412, both up by 0.4% on the previous quarter. A factor in this rise has been an increase in the price of petrol, which was up a substantial 8.7% in the March quarter. The overall increase in the March quarter All Groups CPI was 0.6%, however ASFA claims there are different factors at work for retirees relative to the overall population.

A warning on “copy-pasting” work-related claims
The ATO says its sights are set on work-related expenses like car and travel claims, which it expects should have decreased substantially in this year’s tax returns. It says that last income year, the value of car and travel expenses decreased by nearly 5.5%, however there was a slight increase of around 2.6% in clothing expenses. With uniform and laundry claims significantly lower, the ATO says this increase was driven by frontline workers’ first-time need for things like hand sanitiser and face masks.

The digital future: A roadmap
The Federal Government claims the digital economy is key to securing Australia’s economic future and recovery from COVID-19. It has released a strategic paper, which targets investments that will hopefully underpin improvements in jobs and productivity, and make Australia’s economy more resilient.

Cost of living differences for immigrants
The Tax and Transfer Policy Institute has released a working paper that examines the impact of the depreciation of the Australian dollar on the expenditure of households with foreign-born members. Titled Exchange rates, remittances and expenditure of households with foreign-born members: evidence from Australia, it provides insights on how exchange rate changes may affect immigrants differently than natives.

20 May

NSW build-to-rent COVID land tax discount extends to 2040
Revenue NSW has issued a ruling on the land tax discount available for new build-to-rent properties from the 2021 land tax year until 2040. The ruling sets out that for the purposes of assessing land tax, the land value of a parcel of land is to be reduced by 50% if construction of the building situated on the land commenced on or after 1 July 2020, and it is being used and occupied as a build-to-rent property in accordance with the guidelines approved by the NSW Treasurer. Eligibility is also determined by a use factor of certain classes of labour employed in the project (a table specifying which is included in the ruling).

Any clients interested in foreign investment in Australia?
The ATO has provided a one-stop web page for practitioners who have potential foreign investment clients, with topics covered including residential real estate application forms, new or near-new dwelling exemption certificates, non-sensitive commercial application enquiries, land and water registers, vacancy fee enquiries, and foreign investment compliance. There is also information if a client is calling from overseas.

Super rollover requests can be completed the easy way
Under the portability rules, members of most super funds can request that their super benefits be transferred (rolled over) into a fund of their choice. To transfer the whole balance of a super account between APRA funds or to an SMSF, members can submit an electronic portability form (EPF) online. Your client need a myGov account linked to the ATO, which will verify the member’s identity and membership details before sending the EPF to the transferring fund for processing.

Intangible arrangements guideline issued in draft form
The draft practical compliance guideline PCG 2021/DF4 deals with the ATO’s compliance approach to international arrangements connected with the development, enhancement, maintenance, protection and exploitation (DEMPE) of intangible assets and/or involving a migration of intangible assets. A “migration” refers to any transaction or transactions that allows an offshore party to access, hold, use, transfer, or obtain benefits in connection with intangible assets and/or associated rights. These arrangements are collectively referred to as “intangibles arrangements”. Comments are invited by 18 June.

State budget season starts
The Victorian state budget will be handed down today, with the Queensland state budget to be announced on 15 June. And NSW, after a COVID-coerced deferral last year, is back to its traditional timing and will be handed down on 22 June.

The birth of every SMSF should, of necessity, initiate a conversation about death
Newly minted SMSF trustees will likely be focused on the first part of the ATO’s statement on “sole purpose”, but it is the last few words (“or their dependants if a member dies”) that can take on greater importance as time goes by.

19 May

Rectification starts on ongoing financial advice fees problem
An instrument has been registered that, among other reforms, also aims to rectify significant issues (identified by the Hayne Royal Commission) regarding the fact that clients were being charged for services that were not provided (particularly in relation to ongoing fee arrangements). The instrument acts upon recommendation 2.1 of the Hayne report.

Data collection regime: More preparation guidance from APRA
Further information has been issued by the Australian Prudential Regulation Authority (APRA) in relation to the imminent launch of APRA Connect. This is in preparation for the new service, a data collection solution for reporting entities to lodge entity information and regulatory data. A test environment is planned to be available from 17 June 2021 and will be a permanent feature for entities to become familiar with the interface and functionality of APRA Connect  and trial submission of entity information and data. APRA Connect is expected to launch from September.

TBAR lodgment methods outlined
Under the event-based reporting regime for SMSFs, there are different methods for lodging a super transfer balance account report (TBAR) to the ATO, and a process to follow if a trustee needs to correct a report. The ATO notes that information lodged through TBAR is not used in forming an assessment for the fund’s annual return.

Lodgment requirement notice registered for 2021
The legislative instrument Notice of Requirement to Lodge a Return for Income Year Ended 30 June 2021 has been registered, and covers income tax returns, as well as other lodgments for franking account returns (including special rules for late balancing corporate tax entities that elect to use 30 June as a basis for determining their franking deficit tax liability), venture capital deficit tax returns, ancillary fund returns, and SMSF trustees of SMSFs. The instrument also covers use of approved forms for lodgment, lodgment deferrals, lodgment exemptions, and non-lodgment penalties.

Another blow dealt to “contractor” employment arrangements on payroll tax
In a Supreme Court of Queensland appeal case, Compass Group Education Hospitality Services Pty Ltd & Anor v Commissioner of State Revenue, it has been found that two taxpayers were common law employers, not supplying services with contractors, and hence liable for payroll taxes. The appellants used their own employees to provide services to charitable institutions, and relied to some degree on the interpretation of comparable provisions in NSW, which the courts found did not apply.

Whacky Tax Fact
A “scutage” tax was first introduced by King Henry I (English monarch 1100-1135), and was an opportunity for knights and nobles to opt out of their duties to fight in wars (the term is derived from Latin scutum, “shield”). Under Henry and his successor Stephen (reigned 1135-1154), this was deemed as reasonable as the tax was not excessive, so the nobles who did not want to fight didn’t have to as they could afford to pay the scutage tax. This changed under King John (1199-1216), as he deemed scutage tax as a “cowards tax” and slapped a 300% increase on it. This was not well received and forced knights and nobles to fight in wars they could ill afford. It was part of other actions of King John that is believed to have led to the creation of the Magna Carta in 1215, which limited the monarch’s power.

18 May

Fee record requirements, and electronic advice consent
An instrument has been registered that amends the corporations regulations to specify the records that fee recipients must keep to evidence compliance with the obligations for ongoing arrangements. It also amends the Electronic Transactions Regulations 2020 to enable written consents in relation to financial product advice fees paid out of a superannuation interest to be provided electronically.

PAYG instalment concession for SME clients
If you have a new SME client who is looking to pay tax in instalments, or an existing client who could make their tax obligations a little more straightforward, they may appreciate knowing that they can pay their pay as you go (PAYG) instalments using an amount the ATO calculates for them. It’s quick and easy because there’s no need to work out instalments. And if they are not a small business because their turnover is $10 million or more (but is less than $50 million), from 1 July 2021 they can pay PAYG instalments using an amount calculated by the ATO.

Minimum pension payment requirements: ATO lists FAQs
Once an account-based pension commences, there is an ongoing requirement for trustees of a complying SMSF to ensure the pension standards in the super laws are satisfied. This includes meeting the minimum pension payment requirements. The ATO has had a significant number of enquiries regarding this area of super, and has published relevant FAQs.

R&D Tax Incentive dual-agency administration to be reviewed
Tucked away in last week’s Budget brochures was the announcement that the Board of Taxation (BoT) has been requested to evaluate the R&D Tax Incentive dual agency administration model. The R&DTI is jointly administered by the ATO and Industry Innovation and Science Australia (IISA) and the Department of Industry, Science, Energy and Resources. The ATO is responsible for the administration and processing of R&D Tax Incentive claims, and IISA is responsible for registering companies’ R&D activities. The BoT has been tasked with identifying opportunities to reduce duplication between the two administrators, simplify administrative processes, or otherwise reduce the compliance costs for applicants. The BoT may make recommendations (by 30 November) to modify the R&DTI’s administrative model or to streamline existing administrative functions and/or processes. See here for more details and for the terms of reference.

Corporate collective investment vehicle regulatory framework start date
In the 2021-22 Federal Budget, it was announced the Government will progress the tax and regulatory framework for the corporate collective investment vehicle (CCIV) with a new commencement date of 1 July 2022. Subject to legislation, the tax framework for the CCIV will broadly align with the attribution tax regime for managed investment trusts. CCIVs will be required to meet similar eligibility criteria as managed investment trusts. This includes being widely held and engaging primarily in passive investment activities.

Property taxes in Victoria
Announced as part of the 2021 Victorian budget were a number of property related measures. Developers and speculators will face a windfall gains tax of up to 50% on planning decisions to rezone land from 1 July 2022 applying from a $500,000 gain. From 1 January 2022, private gender-exclusive clubs will no longer receive the land tax concession reserved for charities, clubs and associations. From the same date, the land tax rate will rise by 0.25 percentage points for taxable landholdings exceeding $1.8 million and 0.30 percentage points for taxable landholdings exceeding $3 million. And with no date mentioned yet, Victoria will bring in a new premium stamp duty rate for property transactions with a value above $2 million, increasing stamp duty payable to $110,000 plus 6.5% of the dutiable value in excess of $2 million.

17 May

The ATO is offering a hand: Take it if you need it
The ATO says it understands that many tax practitioners have been significantly affected by COVID-19 and other events, and that if you need help at this time to reach out sooner rather than later, as it has services available that can help you and your clients get back on track.

The TPB is running a campaign for taxpayers, and you can be part of the solution
An online campaign is planned by the TPB to run in June and July 2021 to increase consumer awareness of using only the services of tax practitioners who are listed on the TPB register. The campaign highlights the serious issue of unregistered agents using taxpayers’ MyGov account details to lodge tax returns, and will encourage consumers (individuals and businesses) to check the TPB Register to ensure the tax practitioner they use or intend to use is registered.

Bill to pause indexation for private health insurance income threshold
The bill, the Private Health Insurance Amendment (Income Thresholds) Bill 2021, has been introduced to pause indexation of the applicable income thresholds until July 2023 and recommence annual indexation thereafter. The income thresholds are for both singles and families, tier 1, tier 2, and tier 3.

Legislation to establish financial markets omni-regulator
On the back of Hayne Royal Commission recommendations, the Financial Regulator Assessment Authority Bill 2021 and the Financial Regulator Assessment Authority (Consequential Amendments and Transitional Provisions) Bill 2021 have been introduced to Parliament in order to establish a new statutory body that will, among other tasks, assess the effectiveness and capability of each of APRA and ASIC.

Reporting financial institutions need to keep up the standard
The Common Reporting Standard (CRS) requires a reporting financial institution (RFI) to obtain self-certifications for all new accounts. Penalties may be imposed on RFIs that do not obtain valid self-certifications for all new accounts under the CRS.

Preventing data breaches: TPB adds pertinent Q&As
Tax & Super Australia has found with past webinars that very pertinent questions tend to be raised by participants after the event. The same has also been found by the TPB, so it has compiled some of the questions it received during its recent webinar Preventing data breaches and has provided answers to them.

Land tax exemptions in ACT indefinitely extended if rent cut
The ACT Government has indefinitely extended land tax exemptions for landlords who rent their properties at less than 75% market rates, to help address rental affordability across Canberra. Details about the plan are available at the ACT Revenue Office.

SA discretionary trusts get extension to beneficiary nominations
The Premier of South Australia Steven Marshall has announced that SA land-owning trustees of discretionary trusts will be granted a 12-month extension in which to nominate a designated beneficiary for pre-existing trust land under proposed changes to the Land Tax Act 1936. The deadline for nominating a designated beneficiary for pre-existing trust land will be extended from 30 June this year to 30 June 2022.

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