Daily updates: 2-6 August

6 August

JobMaker Hiring Credit scheme’s third claim period now open
The ATO has advised that the JobMaker Hiring Credit scheme’s third claim period is now open. If an employer has taken on additional eligible employees since 7 October 2020, they may be able to claim JobMaker Hiring Credit payments for their business.
Draft Ruling and instrument re “stapled super funds” 
The ATO has released Draft SPR 2021/D2 which sets out guidelines for the reduction of an employer’s individual super guarantee shortfall for late contributions to a notified “stapled super fund” (i.e. an existing super account of an employee that follows them as they change jobs). It deals with the situation  where an employer has new employees from 1 November 2021 who don’t choose a superfund. A related Draft Legislative Instrument provides that in this case, the employer may now need to request an employee’s stapled super fund details from the ATO. The Draft instrument also provides that a failure to comply with this requirement may result in an increase of an employer’s super guarantee shortfall for the relevant quarter.

Hayne Royal Commission financial sector reform regulations made
The Financial Sector Reform (Hayne Royal Commission Response – Breach Reporting and Remediation) Regulations 2021 have been registered. The regulations support amendments made by the Financial Sector Reform (Hayne Royal Commission Response) Act 2020 to: prescribe civil penalty provisions and key requirements that are not taken to be significant (and therefore may not be reportable) under the relevant breach reporting regime if those provisions are contravened; and, ensure certain breach reporting offences and civil penalty provisions are subject to an infringement notice.

For those interested in a $42m tax debt…
A taxpayer who was indebted to the Commissioner for over $42m in unpaid tax, and who has had his world-wide assets frozen under a “freezing order”, has been unsuccessful in claiming that an accompanying “sealed” disclosure affidavit was subject to privilege on the grounds of “self-incrimination”. In a majority decision, the High Court has ordered that “the Privilege Affidavit” be filed and served on the DCT. However, this order was stayed subject to Federal Court determining whether suppression or non-publication orders should be made in relation to the Privilege Affidavit. (DCT v Shi [2021] HCA 22, 4 August 2021)

“Your Future, Your Super” regulations released
The Government has released a range of regulations to support the Your Future, Your Super reforms, which passed the Parliament on 17 June 2021. The regulations will, among, other things: ensure the final methodology applied for the annual performance test is further strengthened to incentivise underperforming products to reduce fees; prescribe the definition of a ‘stapled fund’, including tie-breaker rules for determining which fund is to be an employee’s stapled fund where they have multiple existing funds; and specify how products will be ranked on the online YourSuper comparison tool.

5 August

ATO information on tax treatment of COVID payments
The ATO has released information on the tax treatment of COVID-related government grants, payments or stimulus payments received by individuals or businesses. In particular, the information deals with whether the amounts are taxable or non-assessable, non-exempt income (NANE) and if there are any GST implications.

Board of Taxation Review of GST rules for low-value imports
The Board of Taxation is seeking submissions into its review of the Low Value Imported Goods measures which facilitates the addition of GST on low value imported goods. The Board will assess the effectiveness of these GST rules provide advice regarding its ongoing operation.

Exchange rates for July 2021 released
The ATO has released exchange rates for nominated countries for between 30 June 2021 and 1 July 2021 on its website.

Draft TR 2021/D5: Expenses of holding of vacant land
The ATO has released Draft TR 2021/D5 dealing with the non-deductibility of expenses associated with holding vacant land. The draft ruling explains the Commissioner’s view of the application and the exclusions in s 26-102 of the ITAA 1997. The ATO also issued an addendum to TR 2004/4 (Deductions for interest incurred prior to the commencement of, or following the cessation of, relevant income earning activities). It provides that where the interest expense is associated with holding vacant land and is otherwise deductible in accordance with TR 2004/4, then s 26-102 may operate to deny that deduction.

ATO app for sole traders
The ATO has reminded sole traders of the availability of its app which allows them to securely access personalised information. Under its streamlined login, among other things, sole traders can: see when lodgements and payments are due; view income tax and activity statement accounts; access ATO Online for individuals to make payments or for a breakdown of transactions and payment plan details; and keep personal and business details up-to-date.

4 August

COVID-19 Economic Response Bill introduced into Parliament
Yesterday the Treasury Laws Amendment (COVID-19 Economic Response No. 2) Bill 2021 was introduced into Parliament. The Bill will, among other things, make amendments relating to “Coronavirus economic response payments” to allow the Treasurer to make rules for an additional kind of coronavirus economic response payments; provide for the disclosure of tax information to Australian government agencies to facilitate COVID-19 business support programs; and set out the tax-free treatment of payments from COVID-19 business support programs and COVID-19 disaster payments.

ATO: Mistakes when applying loss carry back rules
The ATO has advised that it has noticed some common errors with recent claims for loss carry back (LCB). The ATO said that “to prevent these mistakes and ensure we can process your client’s company tax return as quickly as possible, review their records carefully when calculating their tax offset and completing the LCB labels”. The ATO also usefully listed relevant “tips” to take into consideration when doing so.

Payment for deceptive conduct and wrongful dismissal an ETP
The AAT has ruled that a payment of $505,000 received by an accountant in settlement of a claim against his former employer for “deceptive conduct and wrongful dismissal” was an assessable ETP. Despite the taxpayer’s claims that the amount was specifically excluded from being an ETP on the basis of, among other things, that it related to his “capacity to derive income from personal exertion income”, the AAT found that there was sufficient causal relationship between termination of his employment and the payment for it to be treated as an ETP. Editorial comment: The case supports the view that where there is even a hint of the payment being in respect of the termination of employment, it will probably be an ETP. (Stark and FCT [2021] AATA 2583, 29 July 2021.)

NSW Revenue: Summary of recent changes to all duties, taxes etc 
NSW Revenue has released a document explaining recent changes and updates relating to land tax, duties, surcharges, first home benefits, payroll tax, unclaimed money and the NSW Budget 2021-22. The document explains the changes up to June 2021.

Payments assessable as salary; not FBT remote housing
The AAT has affirmed that monies paid as salary to a taxpayer (and declared as such by the taxpayer between the 2008 and 2014 tax years) should be treated as taxable salary and not as payments of remote area housing benefits or expense payment benefits subject to FBT (as later claimed by the taxpayer). In short, the AAT found that the payments were not remote housing benefits or expense payment benefits under s 58ZC or s 60 of the FBTA Act 1986 but were instead assessable as salary. (Hartley and FCT [2021] AATA 2622, 2 August 2021.)

Financial advice licensees can be liable for actions of advisers
ASIC has released a media statement in relation to the decision of the Federal Court in ASIC v RI Advice Group Pty Ltd (No 2) [2021] FCA 877. In that case, the Court found that RI Advice failed to take reasonable steps to ensure that one of its former financial advisers provided appropriate advice to clients, acted in the clients’ best interests and put the clients’ interests ahead of his own. ASIC said that the decision demonstrated that “financial advice licensees need to understand that they can be liable if their advisers do not act in the best interests of their clients and do not prioritise their clients’ interests over their own”.

3 August

Queensland lockdown support package
The Queensland Government has announced a lockdown support package for businesses across all industries in the State. Under the package, small and medium businesses affected by the current COVID-19 lockdown will be eligible for a $5,000 payment. The Queensland Government also said that it will be providing support payments to eligible impacted large businesses in the hospitality and tourism sector in the 11 local government areas currently locked down.

ATO reminder to property investors – beware data matching
The ATO is reminding property investors to beware of common tax traps that can lead to an audit. It said that the most common mistake rental property and holiday homeowners make is neglecting to declare all their income (including capital gains). The ATO also emphasised that it was expanding the rental income data it receives from third-party sources such as sharing economy platforms, rental bond authorities and property managers.
Editorial comment: One matter that is easy to overlook is “Div 43 deductions for capital works” – and accounting for them properly in calculating any capital gain on the property. (See also Tax Determination TD 2005/47 in relation to this issue.)

Financial services reform: Committee recommends Bill be passed
The Senate Economics Legislation Committee has recommended that the Financial Sector Reform (Hayne Royal Commission Response – Better Advice) Bill 2021 be passed . Among other things, the Bill: makes provision for the Financial Services and Credit Panel within ASIC to operate as the single disciplinary body for financial advisers to ensure that less serious misconduct does not go unaddressed; creates new penalties and sanctions for financial advisers who have breached their obligations under the Corporations Act 2001; and introduces a new registration system for financial advisers to improve the accountability and transparency of the financial services sector.

Guidelines for the reduction of an increase in an SG shortfall
The Government has released draft legislative instrument SPR 2021/D1 which provides guidelines that the Commissioner must have regard to for the purpose of s 19(2E) of the Superannuation Guarantee (Administration) Act 1992 in deciding the level of reduction to apply to an increase in an employer’s individual superannuation guarantee shortfall under s 19(2A) of that Act.

No entitlement to JobKeeper – business did not exist at required time
The AAT has affirmed that a taxpayer was not entitled to the JobKeeper payment subsidy as it did not carry on a business on 1 March 2020 as required. The taxpayer had been incorporated on 16 June 2020 to acquire a car dealership business from the previous owner. In this case, the AAT found that the taxpayer could not satisfy the requirement that it carried on a business in Australia on 1 March 2020 because it did not exist on that day. (Cessnock Holden Central Pty Ltd and FCT [2021] AATA 2576, 29 July 2021.)

2 August

Financial services provider failed in duty to act honestly etc

With the consent of the parties, the Federal Court has made a declaration for contravention of s 912A of the Corporations Act 2001 (Cth)  in relation to a financial services provider’s failure to act efficiently, honestly and fairly when providing financial services. It was agreed that the financial services provider failed to adequately monitor the promoter of one of its “superannuation sub-funds” to ensure business model risks were addressed, including the prevention of false or misleading representations and the risk of giving unauthorised personal advice.  (ASIC v MobiSuper Pty Ltd [2021] FCA 855, 27 July 2021).

Reporting private company dividends – ATO reminder

The ATO has stated that it will soon be contacting private companies that haven’t lodged a dividend and interest schedule (DIS) for one or more income years. It also reminded taxpayers and their tax-agents that a private company needs to lodge a DIS as part of their company tax return if they’re reporting any dividend and interest amounts paid or credited, and that they may face a penalty for failure to lodge a DIS.

Super guarantee charge statement due by 30 August 2021

The ATO has reminded employers that if they have missed or underpaid their employees’ super guarantee (SG) that was due on 28 July 2021, they must lodge a Superannuation guarantee charge statement to us by Monday 30 August 2021. It has also advised that if employers lodge the SG charge statement by the due date, they will avoid late lodgment penalties.

ATO information on claiming temporary full expensing

The ATO has provided information about claiming deductions under the temporary full expensing measures (which are only applicable in the 2020–21 and 2021–22 income years). The ATO also notes that you can choose to opt out of temporary full expensing for an income year on an asset-by-asset basis and claim a deduction using other depreciation rules, but that you must notify the ATO in your tax return that you have chosen not to apply temporary full expensing to the asset.

ATO information on Single Touch Payroll (STP) reporting guidelines

The ATO has published a range of information on its website about the Single Touch Payroll (STP) reporting guidelines.

ASIC sues AMP companies for fees for no service charged

ASIC has commenced civil penalty proceedings in the Federal Court against six companies that are, or were, part of the AMP Limited group, alleging these entities charged fees for no service on corporate superannuation accounts. ASIC alleges the AMP companies charged advice fees to more than 1,500 customers despite being notified that those customers were no longer able to access the relevant advice. ASIC alleges AMP received over $600,000 in advice fees from affected customer accounts.

Super annual balance reporting reminder – clarification

In the Daily Update for Friday 30 July 2021 it was reported that superannuation funds have an obligation to report the 30 June 2021 account balance amounts and any applicable phase values, notional taxed contributions and defined benefit contributions on or before 31 October 2021. It should be noted that this obligation only applies to APRA-regulated funds, and not SMSFs. 

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