Daily updates: 29 March – 1 April

1 April

Full expensing and loss carry back hot tax time topics
The Tax Practitioner Stewardship Group reports that it is receiving a lot of feedback from both taxpayers and tax practitioners that there is a keen desire to be prepared early if planning to make claims under the temporary full expensing and/or loss carry back measures. The TPSG advises that to prepare for tax time 2020-21, visit the temporary full expensing and loss carry back tax offset pages for the latest information, and to add a 22 April placeholder to your calendar for the ATO’s tax professionals conversations webcast, which will unpack both.

Taxable payments report system for contractors showing results
The taxable payments annual report initiative, introduced in 2018 and spread progressively to different industries over time, is starting to prove its revenue chops. The ATO reports that it is using data exposed in the reports to remind businesses that paid contractors in 2019-20 in the courier, cleaning, building and construction, road freight, information technology, security, investigation, or surveillance services industries that more than $172 billion must be properly declared.

OECD tax treaty country arbitration profiles published
The OECD has published the arbitration profiles of 30 jurisdictions under the multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting (referred to as the MLI). Part VI of the MLI allows jurisdictions choosing to apply it to adopt mandatory binding arbitration for the resolution of tax treaty disputes.

Changes to mechanisms to move bankrupt estates to a trustee
The Australian Financial Security Authority (AFSA) recently consulted on proposed changes to improve the effectiveness of transferring bankrupt estates to registered trustees. The changes relate to the principles for determining the type of work undertaken by an official trustee and private sector registered trustees, and streamlining the distribution of work to registered trustees. It has released a proposal paper that explains the proposed changes in more detail.

After retiring, most will use up all their super savings
Research from the Association of Superannuation Funds of Australia (ASFA) strongly indicates that retirees exhaust any savings made into a superannuation fund before passing away. The research paper released this week, which uses ATO and APRA data and previously unpublished Household, Income and Labour Dynamics in Australia (HILDA) survey results, shows that only 5% of retirees aged over 80 have a super balance of more than $110,000 in the four years before death. A surprising finding of the data is the number of Australians over 70 — 1.7 million — with no super savings at all (see page 7 of the paper).

Section 20C notices about to be issued
The ATO has announced that notices related to former temporary residents (section 20C notices) are soon to be distributed. It says if individuals are incorrectly identified, a revocation request should be emailed as soon as possible (email SuperCRT@ato.gov.au).

Determination issued on ACT building works on Crown land
GSTD 2021/1 provides advice on the GST treatment of arrangements between government agencies and private developers in the context of the development of land in the ACT, in particular whether “building works” carried out by developers on land they have acquired under a long-term Crown lease and “associated site works” are non-monetary consideration for the supply of that lease by a government agency. A related determination has also been amended (GSTR 2015/2) with regard to the calculation of the market value of development works in general (applies from 24 March).

Floods, other natural disasters, and help with tax
Now that the floodwaters are starting to subside, it is perhaps timely to be reminded that as well as the more obvious immediate devastation inflicted on people’s property, destructive events such as fires or floods can also mean loss of income for the many affected people.

31 March

Allocation of professional firm profits guidance consultation extended
The ATO has extended the due date for comments on draft PCG 2021/D2from 26 March to 16 April 2021. Mentioned in the Daily Update early in March, the PCG sets out the ATO’s proposed compliance approach to the allocation of professional firm profits and also provides a risk assessment framework to assist individual professional practitioners to self-assess their risk. It is to apply retrospectively from 1 July 2021.

Scams for “payment redirection” costs Australian businesses $14 million
Australian businesses reported over $14 million in losses to the ACCC due to payment redirection scams last year, and average losses so far in 2021 are more than five times higher compared to average losses in the same period last year. In a payment redirection scam, also known as business email compromise scams, scammers impersonate a business or its employees via email and request that money, which usually is owed to the legitimate business, is sent to a fraudulent account.

Popular derivative investment gets ASIC’s close attention
product intervention order has been placed by ASIC on the derivative known as “contracts for difference”. The order sets a leverage limit and strengthens protections for retail clients trading CFDs after ASIC found that CFDs have resulted in, and are likely to result in, significant detriment to retail clients. The order is for 18 months so far. CFDs are banned in the US.

Changes to eligible rollover funds
Under new provisions, now that Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020 has passed into law, eligible rollover funds (ERFs) must identify accounts they hold on 1 June 2021. The reporting and payment of ERF accounts will be due and payable by 30 June 2021 — for ERF low balance accounts (less than $6,000), and by 31 January 2022 — for all other accounts held by ERFs.

Personal financial details back-up? The ATO can help
Perhaps on the back of the floods, but just as a good idea anyway, the ATO is reminding taxpayers that it is possible to maintain credit and debit card details via the ATO. It says the quickest way to maintain card details is through its online services for individuals (taxpayers will need a myGov account linked to the ATO. It is also possible to do so by phone.

Whole of balance rollover between super funds: Updated instructions
By completing a certain form (request for rollover of whole balance of super benefits between funds [NAT 75359]) your clients can request the transfer of the whole balance of their super benefits between super funds, in accordance with the Superannuation Industry (Supervision) Act 1993. Partial rollovers must be arranged through the fund.

FBT guidance under development not expected soon
The FBT year ends today, but if you have a client who is keen to get their FBT return done and dusted, and you’re waiting for certain fringe benefit issues to be finalised by the ATO, such as the ongoing conundrum over car parking benefits, be advised that the ATO has indicated that final updates to taxation ruling TR 96/26Fringe benefits tax: car parking fringe benefits and draft TR 2019/D5 (chapter 16) Fringe benefits tax – a guide for employers are not expected until June this year. Note however that any changes made will apply from 1 April 2022.

Whacky tax fact
After Federation in Australia, the colonies (now states) levied income tax, with the Commonwealth (Federal) Government getting a smaller slice of income tax from 1915. In 1942 the Federal Government introduced legislation that increased its income tax rates to raise more revenue. The legislation provided for reimbursement grants to the states and territories provided that they ceased to levy their own income taxes. The uniform taxation arrangements were initially only meant to apply for the duration of the Second World War and one year thereafter. At the end of the war, the states sought to regain their income taxing powers but were unsuccessful. More slices of the revenue pie came their way when GST was introduced.

30 March

Div 7A and LRBA repayment relief
The ATO has updated its COVID-19 repayment relief guidance for SMSF trustees who have an LRBA which also meets Division 7A requirements. It has recommended that trustees should read its new LRBA guidance if their fund has an LRBA from a related private company where Division 7A applies, and they have negotiated repayment relief with the lender on commercial terms as a result of the financial impacts of COVID-19.

R&D registration statutory deadline not extending
R&D registration applications are due within 10 months after the end of an income year, as specified in the relevant legislation. The statutory deadline for companies to register R&D activities for the year ended 30 June 2020 is 30 April 2021. AusIndustry allowed an automatic extension last year for 2018-19 applications due to COVID-19, but this general extension does not apply for 2019-20 registrations, which are due 30 April 2021.

SMSF verification changes when rollovers requested
At the moment, when a member of an SMSF makes application to roll over funds from an APRA-regulated fund to an SMSF, confirmation the applicant is actually a member of the target SMSF is made by the “member verification service”, with Superfund Look up also consulted. This system is to change and a new “SMSF verification service” (SVS) is now available. Standard Business Reporting has also supplied a SVS guide.

APRA Connect prepares for launch
The Australian Prudential Regulation Authority has released 10 final reporting standards and a response paper for the first phase of its multi-year Superannuation Data Transformation (SDT). These are in preparation for the new APRA Connect, the data collection solution for reporting entities to lodge entity information and regulatory data. Interested businesses can register for an overview webinar on 1 April, 2021 at 11:00am AEDT.

PODCAST: The COVID-19 depreciation frenzy 
Tax Wrap 235: To support business through the pandemic, the Federal Government introduced a range of measures to help, such as the cranking up of the instant asset write-off, the Backing Business Investment measure, and the full expensing of assets. While the news seems to be all good, Tax & Super’s tax technical expert Frank Drenth says there are certain conditions and stipulations to look out for. 

TALKBACK TUESDAY: Remote and non-roadside mail delivery exposes an ASIC shortcoming
I have had several clients, who live in a non-roadside mail delivery area, have their company/ies deregistered or nearly deregistered. Irrespective of who sets up a company, ASIC require you provide your street address. This is problematic for anyone in a rural or remote area. The end result is that the ASIC mail never reaches the company officer and never gets paid. The company is fined and can eventually be deregistered for non-payment of fees.  Read more…
Lyn, Northern Territory

29 March

SME Recovery Loan Scheme rules amended
A legislative instrument has been registered that amends some rules relating to notices under the SME Recovery Loan Scheme, which was established in response to COVID-19. The amendments mainly centre on the notifications required from the Commissioner to entities that participate in the scheme.

Non-arm’s length expenditure: ATO’s compliance approach extends NALI relief
PCG 2020/5 has been issued, which spells out the ATO’s transitional compliance approach until 30 June 2022 for a complying superannuation entities where the fund incurs certain non-arm’s length expenditure (or where expenditure is not incurred) in gaining or producing ordinary or statutory income. The ATO says the PCG should be read in conjunction with draft Law Companion Ruling LCR 2019/D3.

Victorian land tax relief applications open for 2021
COVID-19 land tax relief measures from the SRO Victoria are open for residential landlords and for landlords with multiple tenancies (residential or commercial). Commercial single tenancy land tax relief  applications will open 12 April and for commercial owner-occupiers on 26 April. And if you have a client who is yet to apply for 2020 land tax relief, remind them they only have until this Wednessday 31 March.

ATO says “significant changes” made to reportable tax position instructions
The ATO has just published the reportable tax position (RTP) schedule instructions 2021 to assist with completing lodgment obligations, and notes that there have been significant changes made to the instructions, including simplified Category B, additional and altered Category C questions, and guidance on the RTP schedule expansion to large private companies.

Independent review service for small businesses to help resolve disputes
Following a successful multi-year pilot, the ATO’s small business independent review service will be offered permanently as a dispute resolution option for eligible small businesses. The ATO’s service ensures eligible small businesses have an additional opportunity to resolve a dispute with the ATO in a cost-effective and time-efficient way.

Incumbent bankruptcy regulations end this week, new rules lined up
The existing regulations controlling bankruptcy sunset on 1 April, with the new Bankruptcy Regulations 2021 set to replace them immediately. The Federal Government says there have been significant changes necessary to bring the regulations up to speed and make sure they are fit for purpose. The new regulations also contain a number of changes to clarify provisions that have caused confusion or administrative inefficiencies in the past.

Minimising clients (and your own) potholes in the road back to business-as-usual
Rightly or otherwise, all signs are pointing to life and the economy heading back to a business-as-usual status — and the world of tax, and tax compliance, will follow closely behind.

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