Daily updates: 5-9 July

9 July

COVID support liquid assets proviso to be scrapped
The Federal Government has announced via a speech by the PM that it will scrap the $10,000 threshold if the NSW pandemic lockdown enters into a third week — meaning affected Sydney residents who were ineligible due to the amounts of money held in their bank accounts could now apply for one week of the payment. More details as they come to hand.

Tailored support for registered agents
The ATO has updated the information it has to help you assist your clients who may be struggling to meet their tax obligations. If your clients are struggling to manage or pay their tax due to unexpected circumstances, the ATO has options to help them, including lodgment program deferrals, and payment-only deferrals for registered agents.

Guidance update on central management and control test for residency
The practical compliance guideline PCG 2018/9 has been updated, which deals with the central management and control test of residency, and where that central management and control is located. The PCG contains practical guidance to assist foreign incorporated companies and their advisers to apply the principles set out in TR 2018/5, and will help these companies determine tax residency. The guideline must be read in conjunction with TR 2018/5, which sets out the Commissioner’s views on the meaning of central management and control.

Bill to rein in revenue reporting for food delivery, ride sharing, other online platforms
Treasury has released draft legislation that proposes amendments that will see electronic platform operators be required to provide information on transactions facilitated through their platforms to the ATO from 1 July 2022. The measure will extend to all other types of sharing economy online platforms in the following year from 1 July 2023, and will, among other things, provide the ATO with pertinent information for data matching purposes. Treasury has released a fact sheet, and the last day for comments on the draft legislation and explanatory material is 2 August 2021.

Tasmania’s land tax and duty amendments pass
The Tasmanian Government’s bill Treasury Miscellaneous (Cost of Living and Affordable Housing Support) Bill 2021 has been passed (but awaits assent), which increases the First Home Owners grant from $20,000 to $30,000, applying from 1 April 2021 to 30 June 2022, gives a two year waiver of duties on electric and hydrogen vehicles, increases the dutiable value of property in relation to First Home Buyer and Pensioner Duty concessions (from $400,000 to $500,000, from 16 March 2021) and other land tax and duty amendments.

Debt management licensing regime has commenced
ASIC has announced that from 1 July 2021, providers of debt management services (including firms offering “debt negotiation” or “credit repair” services) are now regulated under the National Consumer Credit Protection Act. This means providers of these services must hold a credit licence with an authorisation that covers those services (or act as a representative of such an authorised licensee). ASIC says it will be closely monitoring compliance with the new laws, including identifying unlicensed conduct and taking action where necessary.

Key super rates and thresholds
The ATO has provided the key rates and thresholds that apply in relation to contributions and benefits, employment termination payments, super guarantee and co-contributions. See this web page for contributions caps, Division 293 tax, payments from super, super income stream tax tables, employment termination payments, super guarantee, government contributions, transfer balance cap, and other super rates and thresholds.

Report shows insurance and the law are failing vulnerable Australians facing extreme weather events
The Financial Rights Legal Centre latest report, based on the experiences of more than 700 clients impacted by extreme weather events between November 2019 and April 2021, indicates that reforms are needed to ensure the nation can adequately respond in the aftermath of future extreme weather events and urgent funding is needed to ensure Australians can get legal assistance when they need it most.

Australia-US bilateral investment in 2020: taxing times
The United States Study Centre in Sydney has produced a paper that argues that the downturn in foreign investment in Australia, including from the United States, can be explained by the pandemic downturn in global investment, a reduced Australian international borrowing requirement, more competitive US tax settings, and an increase in regulation and regulatory uncertainty arising from Australia’s foreign investment review process.

8 July

The second claim period for the JobMaker Hiring Credit closing soon
The ATO is reminding eligible participants that the second claim period for the JobMaker Hiring Credit closes on 31 July. It has resources available to help your clients claim the JobMaker Hiring Credit, including a guide and payment estimator to help you calculate the payment you could receive.

Remind your clients — JobKeeper payments are taxable
In helping your business clients prepare their returns, they may need a reminder that JobKeeper is taxable and needs to be included in their return. If they’re a sole trader, partnership, company or trust, the ATO will advise the total amount of JobKeeper payments received since 1 July 2020, or where this can be found, as well as where to report JobKeeper in a tax return. Sole traders who’ve received JobKeeper for themselves and employees will also be able to find the total amount of payments they’ve received through Online services for business and myTax (or as their registered tax agent, you will also have access). This will be “information only” and not be mapped to a label. Your client does not need to include any JobKeeper payments already repaid (or are repaying) in the return.

Too eager clients could end up delaying their own refund
Assistant Commissioner Tim Loh says that leaving out income is the number one reason tax returns and refunds are delayed in the middle of July. The ATO is therefore urging taxpayers to wait until at least the end of July before thinking of starting their tax return lodgment process. It says your clients should check that employers have finalised their income statement and it is “tax ready” — “this is usually done by 14 July, but this year, some employers impacted by COVID-19 have until 31 July”.

Super guarantee Part 7 penalty system being reviewed
A revised law administration practice statement is being drafted that will outline the Commissioner’s revised approach in relation to the remission of additional super guarantee charge imposed under Part 7 of the SG regime. After the recent SG amnesty, certain decision-making principles regarding penalty remission were deemed to be in need of review, as the relevant principles in an earlier practice statement only applied to quarters covered under the SG amnesty. The draft is expected to be finalised later this month.

Preliminary guidance on expenses associated with vacant land
Publishing of this draft ruling was interrupted by the ATO reallocating work due to COVID-19, but it is now back on the drawing board. The draft ruling will provide preliminary guidance in relation to the application of section 26-102 of ITAA97. Feedback and comments can be sent to Michelle.Gainford@ato.gov.au.

Authorising new employees in RAM this tax time
If you are the principal authority or authorisation administrator in your practice, you can create and manage authorisations for employees in Relationship Authorisation Manager (RAM). But it will pay to remember that “basic” users can only be authorised for up to a year, and will need to be renewed if the authorisation is still needed after this 12 months period expires.

Eligibility requirements for SMSF trustees or directors
Anyone 18 years old or over can be a trustee or director of a super fund as long as they’re not under a legal disability, but other eligibility factors should not be overlooked.

7 July

Tax time GST tips to remember when completing your client’s return
The ATO has issued a six-pack of GST tips to remember when preparing your client’s tax return. They include checking for missing credits, that registration is correct and even backdated if need be, real property transaction considerations, the correct treatment of any stimulus payments and more.

myGov phishing scam reminder for clients
Now that tax time has commenced, so too have the various scams and rip off attempts from the shysters out there. The scam du jour is one purporting to come from the “myGov customer care team”, and is an email that includes screen shots of the myGovID app, asking people to verify their identity by clicking on a link.

APRA-regulated fund secure contact lists
Speaking of online security, the ATO is also aware that the internet is not 100% secure, and has therefore provided several primary contact points for enquiries about APRA-regulated funds as well as a range of self-help tools in case a client’s enquiry can be satisfied with these. It has also provided a few common queries and resolutions.

WA tax disclosure rule adjustments
A new regulation posted on the Government Gazette WA, Taxation Administration Amendment Regulations 2021, adjusts the existing rules to insert provisions permitting disclosures to the Building Commissioner, Commissioner for Consumer Protection and designated industrial inspectors. The changes also amend existing provisions on disclosures to various other authorities.

GST on low value goods under review
Goods valued at less than $1,000 started to collect GST from 1 July 2018 (they were exempt before), using a vendor registration model which requires suppliers, online platforms and re-deliverers with an Australian GST turnover of $75,000 or more to register, collect and remit GST to the ATO. At the time it was also announced that these arrangements would be reviewed after two years to ensure they were operating as intended and to consider any international developments. The Board of Taxation is undertaking this review to assess the effectiveness of the regime and provide advice regarding its ongoing operation.

Patent box proposal requests input from stakeholders
The Federal Budget proposed introducing a “patent box” concept that would see innovative corporates in the medical and biotechnology sectors that rake up income on the back of eligible inventions taxed at 17% for income years commencing on or after 1 July 2022. Treasury has now issued a discussion paper with an objective to inform the Government’s consideration of the detailed design of the patent box. It has also flagged extending the proposal to clean energy technology companies. Submissions are due 16 August.

ASFA release its insolvency compliance program for 2021-22
The Australian Financial Security Authority (AFSA) every year establishes a compliance program based on its observations of trends and current ongoing issues experienced in the insolvency system. It has just released the program for the 2021-22 year, which emphasises areas of concern that have been identified following an evaluation of information and data available to AFSA, as well as through consultation with the profession.

Whacky Tax Fact
To quote from a scene of the Australian movie The Castle, there is an item of Australian tax law that really does depend on “the vibe”. In this particular ruling, the words used however are “ambience” and “atmosphere”. Taxation ruling TR 2007/9 describes the circumstances when an item used to create a particular atmosphere or ambience, for example in a cafe, restaurant, licensed club or hotel, constitutes an item of plant for the purposes of determining whether a deduction is available under either Division 40 (for depreciating assets) or Division 43 (for capital works). Think, for example, of a restaurant that has decorated its dining area as a medieval banquet hall. As part of the medieval theme, replicas of stone walls are constructed out of painted polystyrene and are fastened to the walls, as are themed lights that look like flaming torches. The polystyrene walls and the themed lights do not form part of the structure of the building, but retain a separate visual identity with the sole purpose of creating an atmosphere or ambience to entice customers and add to their dining experience. Being so related to the restaurant’s business, the Commissioner holds that the items come within the ordinary meaning of “plant” and are therefore deductible as such.

6 July

Queensland’s apprentice and trainee employers get extension to payroll tax rebate
The Queensland Government has announced, via a public ruling, that the 50% payroll tax rebate for wages paid to apprentices and trainees is to be extended for a further 12 months to include wages paid in the financial year ending 30 June 2022. The rebate is available in addition to certain exemptions from payroll tax for these wages, and applies to the balance of wages outside the exempted amounts.

Insurance in super: Claims handling guide released
In a joint release from the Association of Superannuation Funds of Australia (ASFA), the Australian Institute of Superannuation Trustees (AIST) and the Financial Services Council (FSC), guidance has been issued on insurance claims handling processes for superannuation funds. Emphasis has also been dedicated to developing a “vulnerable member” approach, which is viewed as being of critical importance, particularly in light of the challenges many members still face as the national economy recovers from the COVID-19 induced economic downturn.

Undisputed tax debts explode
The Inspector-General of Taxation (IGoT)report Investigation and Exploration of Undisputed Tax Debts in Australia looks at the trends over the 2016 to 2020 financial year period, where IGoT found undisputed debt leaped from $19 billion to $34 billion (an increase just shy of 78%), mainly due to the natural disasters and the economic fallout from the pandemic. The full report is downloadable here (PDF 3.9MB) but a shorter version with helpful diagrams is available here.

Exchange rates released
The ATO has released the average foreign exchange rates for June 2021 for converting foreign income into Australian dollars. Historical month and quarter rates, back to July 2020, are also listed.

Exemption to FBT when employers help soon-to-be ex-staff
In the October Federal Budget, the Federal Government announced that it would make an FBT exemption for employer provided retraining and reskilling benefits provided to redundant (or soon to be redundant) employees where the benefits may not be related to their current employment. This exemption is finally law, and can be applies from 2 October 2020. Employers that have already lodged their 2021 FBT return and paid any FBT owing can amend their return to reduce the FBT paid for retraining and reskilling that is exempt.

Lodgment programs published for 2021-22
The ATO has made available the practitioner lodgment and payment due dates, concessional dates, and what to do if lodgment cannot be made on time. The programs are for both tax agents and BAS agents.

Personal TBC information release date deferral
A previous announcement from the ATO  that pre-retirees’ personal transfer balance cap would be available from 5 July has of course now passed, but has been revised. Individual updated TBCs will now be available 15 July. The ATO says the delay is due to system issues limiting its ability to deploy indexation for all individuals who currently have a transfer balance account.

Does your client have a solid case to test tax law? Here’s one funding option
The test case litigation program was established to fund cases that have broader implications beyond individual disputes with the ATO, which says it can help fund your client’s reasonable litigation costs if the outcome of their case will affect a significant number of taxpayers.

5 July

Electric vehicle tax break for Tasmanians
Tasmania has announced a waiver of stamp duty for electric vehicles (EVs) meaning Tasmanians will pay no stamp duty when they purchase an EV from 1 July for the next two years. The estimated savings is an average of $2,000 on every purchase.

Guideline update for Div 7A UPEs under sub-trust arrangements
The ATO has updated its practical compliance guideline PCG 2017/13 to extend its application to investment Option 1 and investment Option 2 sub-trust arrangements maturing in the 2021 income year. The PCG outlines the Commissioner’s expectations regarding the repayment of the loan principal for sub-trust arrangements maturing in the income years from 2017 to 2021 inclusive.

Complaints centred on financial difficulty down 40% for 2020-21
The Australian Financial Complaints Authority (AFCA) says complaints involving financial difficulty were down nearly 40% from the numbers seen the previous year. The authority stresses however that it may be months before the full impact is felt from the end of government emergency support and assistance from financial firms such as deferred loan repayments. The most complained about product for 2020-21 was credit cards, accounting for 14% of all complaints, followed by home loans (9%) and personal transaction accounts (8%). With credit cards, the most common issues were default listings and unauthorised transactions, with the latter accounting for 11% of card complaints.  

Pre-filling data starts to flow in
The ATO says that pre-filling data will start to be available for tax returns from 1 July as the ATO receives it, and tax agents can access the data shortly after. Tax agents can access reports from 2009 to the current income year. These can be viewed online and printed by accessing the pre-filling report using the secure Online services for agents system under Reports and forms. Note that the ATO states that if information provided in the pre-filling report is missing or incorrect according to your client’s records, your client should resolve the discrepancy with the information provider.

New (or near-new) dwelling exemption certificate instructions issued
Non-resident buyers of Australian property generally need to seek out their own individual foreign investment approvals, but with a new (or near-new) dwelling exemption certificate, this become unnecessary. The ATO has issued guidance for property developers (and other vendors) on how to apply for a new (or near-new) dwelling exemption certificate. The exemption certificate provides approval for a foreign buyer to purchase up to $3 million in a single development, but after that individual approvals must be sought.

Fast key codes provided for tax professionals dealing with the ATO
When phoning the ATO, fast key codes allow practitioners to key ahead to the option of their choice without listening to the entire menu. The ATO has published lists of fast key codes for tax agents and BAS agents, which the ATO recommends bookmarking as they are regularly updated.

Super levy determination for 2021-22 for funds and RSAs
A determination has been issued by APRA that sets the level of superannuation supervisory levies. Note that retirement savings account providers are to not be levied directly for the 2021-22 income year.

Tax matters for indigenous corporations that may need attention this tax time
The ATO knows that as indigenous corporations deliver important services to their communities, managing finances well helps keep those services running. It highlights the benefits of being a non-profit organisation, reminds corporations to check about the tax on funding and grants, and the super paid to staff. It also provides information on tax concession essentials.

Deriving rent and the small business CGT concessions
To access the small business CGT concessions, certain conditions must first be satisfied, such as an asset satisfying the active asset test. Assets with a main use of deriving rent are specifically excluded from being an active asset, but there is a little wriggle room.

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