ATO’s monthly performance
scorecard records a few misses
The ATO publishes a performance report on its service commitment activities each month, and the latest shows a few areas where it could have done better. Up to 31 March, responding within timeframes to SG employee notification issues within four months rated well below expectations (a 6% score when 60% was expected) and the same issue but within nine months also rated below expectations (39% when 90% was expected). Resolving complaints within 15 business days, to 31 January, was slightly down on expectations. This scored 83% when 85% had been flagged as desirable.
Financial regulator tweaks AFS requirements for some
ASIC has made changes to the financial requirements for some types of Australian financial services (AFS) licensees in relation to the treatment of leased assets. These changes will allow certain AFS licensees to include, where the licensee is a lessee, a right-of-use asset in the calculation of their net tangible assets and, where the right-of-use asset is a current asset, adjusted surplus liquid funds and surplus liquid funds.
SuperStream the standard for rollovers, but there are limited exceptions
While SuperStream is the go-to when a member requests a rollover to another fund, there are exceptions, such as in-specie rollovers. The ATO lists the other circumstances and situations where the SuperStream standard does not apply.
TPAR non-lodgment support
The ATO says that it may contact you or your clients in the near future to confirm that any taxable payments annual report (TPAR) non-lodgment advice was submitted correctly. If in the end it is found your client is actually required to lodge, the ATO has committed to offer support without penalty.
Business Competitiveness Program grants for Victorian businesses
Grants of up to $500,000 are available for eligible Victorian small to medium manufacturing businesses looking to expand their operations. Your relevant clients can apply now for the first round, open until 11:59pm 20 June 2021.
In other news…
Working from home study: Lessons for the future
In this working paper from the Institute of Transport and Logistics Studies, under the University of Sydney, the authors argue that while COVID‐19 has been a crippling event, working from home has the potential to be an unintended positive consequence of the widespread disruption. There are benefits to the individual employee, to employers and businesses, and to the wider economy, including the transport network.
Tax policy in the time of COVID
A report from the OECD provides an overview of the tax measures introduced during the COVID-19 crisis across almost 70 jurisdictions, including OECD, G20 countries and 21 additional Inclusive Framework members, examining the various tax policy responses and their evolution over the last year.
Financial stress and social security
The Centre for Social Research and Methods at ANU has provided research that finds that inadequate social security payments play a significant role in shaping poverty and financial stress trends in Australia. It also finds that it is possible to address these challenges by increasing the overall social security budget.
Tax return lodgments: Are you going to miss the bus?
Many of you are saying that it is impossible to meet lodgment targets. With this being so obvious, why doesn’t the ATO permit a blanket extension of tax returns? Tax & Super Australia have asked this of the ATO, and here is the latest information on the issue.
ATO and TPB target identity fraud with client verification move
After receiving feedback and on-screen testing from practitioners, significant updates have been made to the Modernising Customer Verification (MCV) guidelines as mentioned in yesterday’s Daily Update. Some of the major changes include making it clear agents do not need to re-verify their existing client base, detailing situations where agents might need re-verify clients or do additional checks (taking “reasonable care”), inclusion of 11 scenarios to show how the guidelines could be applied in scenarios that might occur in real-life, and clarifying that “Source ATO” method cannot be used for verification of individual representatives unless they are already clients of the agent (legal implications around ATO disclosure of information under Div 255 TAA).
COVID-19 financial complaints snapshot
The Australian Financial Complaints Authority (AFCA) has been compiling the complaints it has received that can be attributed to COVID-19 situations since 3 March 2020. As crunching some numbers can take time, the latest batch of complaints data ends at 28 February 2021. AFCA recorded 11,482 financial complaints over the period, 2,412 of which were regarding financial difficulty. The top 3 complaints by type of product were: Travel, credit cards, and home loans. The top 3 by type of issue were: Financial firm failing to respond to request for assistance, denial of claim due to exclusion or condition, and denial of claim.
Treasury announces changes to super fund benchmark standard
Treasury has announced via media release that fund administration fees will be included in the proposed underperformance test for superannuation funds, and that unlisted assets and infrastructure investments will also be included. Treasury has released for consultation exposure draft regulations underpinning the Your Future, Your Super bill. Consultation will be for four weeks and close on 25 May.
ATO conducting consultation on R&D Tax Incentive and software activities
Eligible R&D activities qualify for the R&D offset, but the eligibility of software activities needs some bedding down. To this end, the ATO along with its joint administrator AusIndustry will be participating in a collaborative workshop with industry on eligible software activities under the R&D Tax Incentive. Completion is expected by July.
CPI up for March quarter
The ABS has released the consumer price index figures covering the March 2021 quarter, which increased 0.6%. According to the bureau, the biggest rises in the first quarter of the year were automotive fuel (up 8.7%), medical and hospital services (up 1.5%), and pharmaceutical products (up 5.3%). It says the last two would have been due to the resetting of the Medicare and Pharmaceutical Benefits Scheme safety nets.
AAT reports a 10% drop in case load
The annual report from the Administrative Appeals Tribunal for 2019-20 shows that the tribunal’s case load declined by 10% year-on-year, although it is still above average on a five-year trend. It handled 54,378 applications for that income year, finalising 51,605, which is 16% more than the previous period. However the number of cases on hand at 30 June 2020 (indicating the trend for the 2020-21 year) was 72,360 — 4% higher than the same time a year before. The most common types of decisions dealt with were child support, Commonwealth workers’ compensation, family assistance, paid parental leave, social security and student assistance, migration and refugee visas and visa-related decisions, taxation, and veterans’ entitlements.
Tax Wrap podcast
Tax Wrap revisits Tax & Super Australia’s in-house CGT guru Kirk Wilson to find out all the ins and outs, the dos and don’t-dos, of the concessions available for capital gains when a property is inherited.
National tax revenue is down, says ABS
The latest data on tax collections from the Australian Bureau of Statistics shows that total taxation revenue collected in Australia in 2019-20 was $552 billion, which is a decrease of $8 billion (1.4%) on the previous year. Total taxation revenue as a percentage of GDP was 27.8%. The ABS says COVID-19 affected taxation revenue in 2019-20 across all levels of government, both as a result of changes in taxation policy and through changes in economic activity.
Downsizer contribution into SMSF? Evidentiary concern from ATO
The ATO says that it will expect, as part of the annual SMSF audit, that approved SMSF auditors will check for “sufficient and appropriate audit evidence” if a member claims to have made a downsizer contribution during the income year. The ATO has published a seven-point list of what it says will be required at a minimum.
Financial planners get guidance on best practice file note taking
TSA members who are also members of the Financial Planning Association of Australia (FPA) should note that it has released new guidance on file notes to better help its members manage record keeping, in response to consumer complaints to the Australian Financial Complaints Authority that highlighted gaps in records. The FPA best practice guide for its members includes a number of apps that can capture client communications using video or audio recording and convert it to text such as OneNote, Notability and Evernote.
SuperStream Rollover v3 includes SMSFs
The transition period for implementation and onboarding to SuperStream Rollover v3 is from 31 March 2021 to 30 September 2021, and includes SMSFs and digital release authorities. The ATO has provided onboarding resources for APRA-regulated funds and digital service providers (DSPs) and also for SMSF DSPs to implement SuperStream Rollover v3.
Proposed new “client verification” standard
The ATO is proposing to transition to a new way to verify clients, and is looking for practitioner feedback on the web content it is creating for the change in client verification within tax and superannuation practices. The web content will include guidelines that are designed to set a minimum standard to be applied across the tax profession to ensure due diligence is taking place when engaging new clients, or where you suspect an existing client may have had their identity compromised. See here for the consultation paper, for background and reasons for the proposal, and for the link to provide comments by 10 June.
Whacky Tax Fact
The expenses of World War I were so great that the Commonwealth Government introduced three new taxes in 1917: an entertainment tax, a wartime profits tax and a bachelor tax. The latter was argued in Parliament in September 1917, and raised such a bitter protest (including from Catholic priests) that it was never put into operation.
Did someone say “lodgment deferral?
Being put in a position of being leaned on to defer lodging a client return is something of an issue with lot of agents (see Talkback Tuesday below), and in the lead up to peak lodgment time, the ATO seems to be pre-empting the heat it may soon feel from the practitioner community. It reminds agents that it may take the full 28-day processing time to finalise deferral requests, and to remember that you may not need to request a deferral for some entities’ tax returns with a lodgment due date of 15 May 2021 (they can be lodged up until 5 June 2021, provided your clients pay any liability by then).
Non-STP standard employers to be able to still claim JobMaker
The Commissioner has registered an instrument, the JobMaker Credit Reporting Obligations Amendment Instrument 2021. JHCR 2021/1 issues amendments that will ensure that employers who use software solutions that do not support the reporting of all the required information necessary through single touch payroll can still make a claim for the JobMaker Hiring Credit.
Gig economy and managing the various forms of value-added tax (such as GST)
The huge numbers of entities that are now active players in the sharing and “gig” economy has presented some head-scratching considerations for the various tax collection agencies across the globe — Australia’s included. Now the OECD has produced a report, titled The Impact of the Growth of the Sharing and Gig Economy on VAT/GST Policy and Administration, which considers the large numbers of new economic operators (often private individuals), who monetise (often) underutilised goods and services by offering these, via digital platforms, for temporary (“shared”) use by primarily private consumers.
Your clients may be able to manage their super through myGov
The ATO is reminding taxpayers that it is possible to check their super using ATO online services through myGov. This enables clients to view details of all their super accounts, including lost or unclaimed amounts, consolidate eligible multiple accounts (including any ATO-held super) into one account, and withdraw ATO-held super where they have met certain conditions of release.
Note for family assistance recipient clients to lodge before 30 June
Notification has been issued via the ATO website that if any of your clients receive Child Care Subsidy and Family Tax Benefit payments from Services Australia, your client and their partners must lodge their 2019-20 Individual tax returns by 30 June 2021. Entitlements may be lost if this is not achieved. Lodgment deferrals with the ATO do not alter this requirement.
Privacy not so assured, but the TPB has advice
Each year the Office of the Australian Information Commissioner (OAIC) runs a campaign called Privacy Awareness Week, which this year runs from 3 to 9 May. The Tax Practitioners Board has come to the party to support the initiative, and notes that to perform your duties as a registered tax practitioner you are often required to collect, use and store personal information of your clients. You also have obligations under the Code of Professional Conduct (Code item 6) to maintain the confidentiality of client information and other legislation to protect tax file number information.
Lodgment deferrals – what a waste of time. Spend all day compiling a list of clients for deferral, fill in the form, upload the form and hope it goes through on Online Services instead of working on a client’s tax return. By the time the ATO responds to the deferral requests, the returns have either been lodged and/or the deferral date has passed.
Meanwhile, we are being bombarded by lodgment requests for overdue tax returns and if we give these priority then our current lodgment due returns will be late.
I would expect that most agent lodgments would be down by at least 15% as compared with last year. We need a blanket lodgment extension to catch up otherwise we will all fail our 85% quota. The ATO must think the profession is Penn & Teller inspired robots.
The lodgment demands is a problem I’m facing at the moment. The ATO has a current campaign of demanding lodgments which seems to have unreasonable timeframes. They have rung me about a lodgment and I have advised that we are working on the return whilst trying to keep up with other lodgment deadlines. They state that they have noted the file. However a campaign of letters then begins with the usual increasing level of severity. Note that for three of my files, they issued a lodgment demand letter on 26/03/2021 and then again on 01/04/202 some 6 days later! Read more…..
BH, Tarragindi Qld
JobMaker Hiring Credit claim period one ends soon
The Tax Practitioner Stewardship Group reminds practitioners that the first claim period for the JobMaker Hiring Credit finishes this Friday, 30 April 2021. Until this date, eligible employers can claim payments for the first JobMaker period (7 October 2020 to 6 January 2021). The ATO has provided resources to help employers, including an overview video, guide and a calculator for estimating payments. The second claim period opens on 1 May 2021 and runs until 31 July 2021. Employers can claim JobMaker Hiring Credit payments for employees hired during the JobMaker period 7 January to 6 April 2021.
FBT self-preparer lodgment extended, but payment deadline remains
Self-preparers (including significant global entities) will be able to lodge their 2021 FBT return up until 25 June 2021 without incurring a failure to lodge on time penalty — the same due date for FBT returns lodged through a tax agent. But the payment date for any self preparer liability remains 21 May 2021 and the general interest charge will still apply if payment of any FBT liability is not made by then.
Practice statement on the ATO’s discretion to retain tax refunds
PS LA 2021/2 provides guidance on the administration of the extension to the Commissioner’s discretion to retain a refund, which was extended as part of the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020. The Commissioner may now retain a refund where a taxpayer has an outstanding notification that is required to be given to the Commissioner under any taxation law (previously this was limited to the business activity statement or petroleum resource rent tax provisions), and which affects or may affect the amount of the refund.
ASIC consults on breach reporting reform draft guidance
Set to commence on 1 October 2021, the key reforms dealt with in consultation paper 340 flow from the Financial Services Royal Commission and findings from the ASIC Enforcement Review Taskforce. ASIC’s draft regulatory guide covers the reforms which aim to clarify and strengthen the existing obligation on AFS licensees to self-report certain breaches of the law to ASIC and extend the obligation to credit licensees. Comments close 3 June.
JobKeeper overpayment guidance
The ATO has suggestions for what to do if your business client had received a JobKeeper overpayment that they (or their employees) were not eligible for. It says that understandably, some overpayments will have arisen from people making an honest mistake. It has provided further guidance about how it will approach and manage JobKeeper overpayments, including when a JobKeeper overpayment does not need to be repaid.
Tax avoidance schemes and promoter penalty laws
The promoter penalty laws are not intended to obstruct tax advisers and intermediaries from giving typical advice to their clients, the ATO says, but advisers who are involved in the design, marketing and implementation of schemes that claim to provide taxation benefits should consider them seriously. It points to PS LA 2021/1, which sets out the processes the ATO follows when administering the promoter penalty laws.
Financial report deadline extended one month
ASIC has announced that it will extend the deadline for both listed and unlisted entities to lodge financial reports (under Chapters 2M and 7 of the Corporations Act 2001) by one month for balance dates from 23 June to 7 July 2021 (inclusive).
Briefing a barrister
When you’re faced with a complex or high-risk question in tax or super, briefing a barrister can provide you with the expertise and perspective to help you and your client move towards a solution with confidence.