Fuel tax credit rates increased on 3 February in line with fuel excise indexation.
If you claim less than $10,000 in fuel tax credits per year, next time you calculate your claim just use the rate that applies at the end of that BAS period.
Remember, from 1 November 2019 fuel tax credits for fuel used to power passenger air-conditioning units of heavy vehicles, like buses and coaches, must be claimed at the rate for ‘heavy vehicles for travelling on public roads’. For fuel acquired before 1 November 2019, you can use the ‘all other business uses’ rate.
Quarterly BAS lodgers may need to use different rates in their December BAS for fuel acquired before and after 1 November.
Should you have any queries, please do not hesitate to contact Torquing Numbers on 8538 7266 and we will be more than happy to assist you.
Devastating bushfires have been burning across large parts of Australia since 2019.
If you have been impacted by these bushfires, we don't want you to be concerned about your financial affairs. We can help you sort out your financial affairs when you are ready.
ATO support is available for you
The Australian Taxation Office (ATO) is offering relief for people affected by the fires. If you have been affected directly by the fires, the ATO is automatically granting deferrals for lodgments and payments. Further, the ATO is offering help by:
providing you extra time to pay your debt or lodge tax forms such as activity statements
helping you find your lost tax file number (TFN) by using methods to verify your identity such as your date of birth, address and bank account details
re-issue income tax returns, activity statements and notices of assessment
help you re-construct tax records that are lost or damaged
fast track any refunds owed
set up a payment plan tailored to your individual circumstances including interest-free period
remit penalties or interest charged during the time you have been affected
If you have been affected by this disaster, please give us a call on 8538 7266 if you need our help.
Will you be paying tax on land next to your home from 2020?
Land that a person owns and occupies as their home, or ‘principal place of residence’ (PPR), is generally exempt from land tax. In Victoria, the exemption has also historically extended to separately titled land that was ‘contiguous’ with the PPR land, did not contain another residence and was used for domestic purposes together with the home.
‘Contiguous land’ means adjoining land or land separated only by a road or other similar area across which movement is reasonably possible.
The most common examples of ‘contiguous land’ used by homeowners include a separately titled tennis court, swimming pool or extended garden beside the title on which their house is located.
From 1 January 2020, separately titled contiguous land in metropolitan Melbourne will no longer be included in the exemption that applies for a PPR. This change will not be ‘grandfathered’, so you will not continue to qualify for the exemption just because you were previously entitled to it. Only the title that has your residence located on it will remain exempt from land tax.
As a result, some taxpayers are facing the prospect of being charged thousands of dollars on separately titled contiguous land every year by the State Revenue Office. Exceptions apply for:
adjacent land on a single title together with your home (for example, if you consolidate your PPR title and the ‘contiguous land’ title by 31 December 2019, being the relevant date for the 2020 Land Tax year);
your PPR and the contiguous land are wholly in ‘regional Victoria’ (specified municipal districts and alpine resorts );
the contiguous land is a separately titled car park or storage cage connected to a unit or apartment in metropolitan Melbourne; or
the taxable land held by the taxpayer, including the contiguous land, is valued under the ‘tax-free threshold’ (currently $250,000).
The policy intent behind this change seems to be to prompt economic activity by making ‘vacant’ land more costly to hold.
If this change will impact you, please contact your property lawyer who will be able to discuss this with you in more detail.
Article (extract) supplied by Hall and Wilcox Lawyers.
Low and middle income earners
If you are an Australian resident for income tax purposes and you pay tax on your taxable income, you may be eligible for both the low income tax offset and the low and middle income tax offset.
You don't have to do anything to claim the offsets. We will work them out for you when we prepare your tax return.
The offset will reduce the amount of tax you pay on your taxable income. This is a non-refundable tax offset, so you can't receive a refund for any unused amount of the offset. If you have not received any income you can't claim this tax offset.
Low income tax offset
If your taxable income is less than $66,667, you will get the low income tax offset.
The maximum tax offset of $445 applies if your taxable income is $37,000 or less. This amount is reduced by 1.5 cents for each dollar over $37,000.
Low and middle income tax offset
If your taxable income is less than $126,000, you will get some of the low and middle income tax offset. The maximum offset is $1,080 per annum. The base amount is $255 per annum.
The new low and middle income tax offset is available for the 2018–19, 2019–20, 2020–21 and 2021–22 income years and is in addition to the low income tax offset.
If you have received income, the amount of the offset you are entitled to depends on your taxable income. We will work this out for you when we prepare your income tax return.
Should you have any questions please do not hesitate to contact our office on 03 8538 7266.
ATO letter to SMSF trustees
The Australian Taxation Office has recently sent letters to 17,700 SMSF trustees.
The letter made reference to an “administrative penalty of A$4200 if your investment strategy fails to meet these [diversification] requirements”.
The letter went to trustees whose SMSFs, the ATO believes, hold 90 per cent or more of their funds in a single asset class.
Such a letter has not been sent before by the ATO. If you receive one of these letters, don’t panic It is merely designed to ensure you consider the benefits of having a diversified portfolio.
More importantly, we strongly suggest you regularly review your investment strategy and have this strategy documented. If you need assistance with this, please let us know as we can help.
New industries entering the taxable payments reporting system
Does your business:
provide road freight services, information technology services, security, investigation, or surveillance services, and
pay contractors (including subcontractors, consultants and independent contractors) to provide those services on your behalf?
If you do, you will need to complete a Taxable payments annual report (TPAR) to report the total payments (including cash payments) you make to each contractor for providing those services on your behalf.
Your first report is due 28 August 2020 for the 2019–20 financial year.
So if you haven’t already, you need to start keeping records of the contractor payments you made from 1 July 2019.
The details you need to report about your contractors are generally contained in the invoices you receive from them and is what you would use for your deduction claims.
If you are not sure you can contact our office at 03 8538 7266 and we will be more than happy to assist you.
$30,000 instant asset write-off
Thinking of purchasing assets for your business?
The instant asset write-off threshold has been increased to $30,000 and extended to 30 June 2020.
If you purchase an asset (new or second hand) costing less than $30,000 and it is used or installed ready for use from 7:30pm AEDT on 2 April 2019, you can claim a deduction for the business portion.
Different thresholds apply for assets purchased before that date:
from 29 January 2019 until before 7:30pm AEDT on 2 April 2019, the threshold is $25,000
before 29 January 2019, the threshold is $20,000.
You may purchase and claim a deduction for multiple assets provided each asset is under the relevant threshold.
Assets that cost $30,000 each or more can't be immediately deducted. You can continue to deduct them over time using the small business pool.
From 2 April 2019, the instant asset write-off has also been expanded to include businesses with a turnover from $10 million to less than $50 million.
If you are not sure you can contact our office at 03 8538 7266 and we will be more than happy to assist you.
Protecting your super reforms
The 'PROTECTING YOUR SUPER' reforms were passed by parliament and will apply from 1st July 2019.
The aim of these changes is to ensure you are not paying for insurance that you do not know about or want via superannuation - however one of the consequences is that it could result in insurance you DO want being cancelled.
Insurance attached to superannuation will be automatically cancelled (unless you nominate otherwise) where the superannuation account has not received a contribution or a rollover for 16 months or more.
You are able to stop this cancellation from happening by notifying the superannuation fund that you wish to maintain the cover.
The superannuation providers are required to provide notifications to those clients that are affected and if this is you, you may have already received notice.
Remembering that sometimes it is difficult for people to obtain new cover and well worth holding onto insurance already in place; if you think these reforms might apply to you or to a superannuation account you hold, you should take action immediately as the first round of cancellation dates under the new legislation will be 1st July 2019.
Single Touch Payroll
Single Touch Payroll (STP) changes the way employers report their staff's wages to the tax office by requiring businesses to report tax and superannuation payments to the ATO at the same time that they run their payrolls, rather than after the fact.
The Australian Government has announced STP will apply to all employers from 1 July 2019.
Each time you pay your employees you will also be sending your employee salary and wage information, pay as you go (PAYG) withholding and super information to the ATO. These will be year-to-date amounts.
You will need to make sure your current payroll software is updated by your digital service provider (DSP) to offer STP reporting, or choose payroll software that is STP-enabled.
What the changes mean for employers
Each time you run your payroll and pay your employees, you will also send the ATO your STP data from your payroll software.
If you need to, you will be able to make corrections to your employees' year-to-date (YTD) amounts in your next pay.
You will not be required to provide payment summaries (including part-year payment summaries) to your employees for the payments you report and finalise through STP. Once you make a finalisation declaration, the ATO will notify your employees that their employment income statement is 'tax ready' in myGov and they can use it to complete their tax returns.
Reporting superannuation information
You will continue to report and pay your employees' superannuation entitlements through your existing SuperStream solution. This does not change as a result of STP.
What will change is the requirement to report your employees' super liability or ordinary time earnings (OTE) each pay day. This is based on the amounts you currently provide on an employees' payslip.
Super funds will report to the ATO when you make the payment to your employees' super fund.
This will provide the ATO with visibility of an employer's super obligations and payments.
Implementing STP in your business
Upon completing your March 2019 Business Activity Statement, we shall contact you to discuss STP and how you can implement it in your business.
Otherwise, feel free to contact us.
Scammers fake ATO phone numbers
Scammers are using pre-recorded robocalls impersonating the ATO and threatening immediate arrest for an unpaid tax debt. The scammers use a technology known as 'spoofing' to show a genuine ATO number on the caller ID. The technology also allows them to replicate websites and email addresses.
If you receive such a call or voicemail, hang up or delete it. If you have shared personal information, or made a payment to a scammer, call on 1800 008 540.
The best way to protect yourself is to -
Not share personal details, unless you know you can trust the person you are dealing with, such as
your tax file number
date of birth
turn on multifactor authentication, like SMS security codes, when available
ensure you are aware of the status of your tax and super affairs. Check your account using the secure channel you use such as Business Portal or ATO Online.
If you are not sure you can contact our office at 03 8538 7266 and we will be more than happy to check it for you.
Federal budget 2019
A stronger economy and a secure future were the promise of Federal Treasurer Josh Frydenberg in announcing a A$7.1 billion surplus, tax cuts and extra funding for infrastructure and services to regional Australia in the 2019/20 budget.
The budget assumes real growth in gross domestic product (GDP) of 2.75 per cent in the 2019/20 and 2020/21, unemployment at 5 per cent over the same period and the consumer price index (inflation) at 2.25 per cent in 2019/20.
Wage and salary earners
The Treasurer announced A$158 billion in personal income tax cuts through more than doubling the low and middle-income tax offset from 2018/19. This will benefit more than 10 million people earning up to A$126,000 a year.
From July 2024, the government will cut the 32.5 per cent marginal tax rate to 30 per cent, applying to all taxpayers earning between A$45,000 and A$200,000. The top 5 per cent of taxpayers will pay one third of all income tax collected
The instant asset write-off will be extended to June 2020 and increased from A$25,000 to A$30,000. The write-off allows small business with a turnover of less than A$10 million to claim an immediate deduction for a purchase below that amount but will be expanded to businesses with turnover of up to A$50 million, or another 22,000 businesses.
Building and transport industries
The budget includes increasing the Urban Congestion Fund to A$4 billion from A $1 billion, to cut travel times in Australia’s rapidly-growing cities.
A A$500 million Commuter Car Park Fund would improve access to public transport hubs, A$2.2 billion for roads, A$1 billion to improve freight routes and access to ports and A$100 million for regional airports.
A A$525 million skills package would create 80,000 new apprenticeships in industries with skills shortages and double to A$8,000 the incentive payments to employers per apprenticeship placement.
There were also announcements to create new training hubs, give new apprentices a A$2000 incentive payment, and invest in science, technology and research
The budget papers commit to major spending in regional and rural areas to expand water infrastructure, provide drought relief and upgrade regional airports
There will be a one off Energy Assistance Payment of $ 75 for single pensioners and $ 125 for couple pensioners. The ALP is expected to support the measure
Frydenberg announced A$725 million for aged care, with 10,000 new home care packages and capital works focused on regional Australia.
Australians suffering from cancer, heart disease, epilepsy and who live in rural areas are likely to benefit from several major investments in assistance programs and medication. The budget also contains A$461 million for youth mental health and suicide prevention
Members of regulated superannuation funds will not have to meet the work test after 1 July 2020 if they are 65 or 66 years of age.
The restrictions on claiming the spouse contribution tax offset will be eased from 1 July 2020, giving 70 to 74-year-old spouses eligibility.
The calculation of exempt current pension income will be simplified for superannuation funds from 1 July 2020, allowing a preferred method of calculation and removal of some actuarial certificates.
Transitional tax relief for merging superannuation funds will become permanent from 1 July 2020.
Super Stream will be expanded from 31 March 2021 to include electronic ATO requests for release of superannuation funds and SMSF rollovers.
An expression of interest process will be undertaken to identify options to support establishment of a Superannuation Consumer Advocate.
Car Fringe Benefit
If you make a car you own or lease available for the private use of your employee, you may provide a car fringe benefit.
For fringe benefits tax (FBT) purposes, a car is any of the following:
a sedan or station wagon
any other goods-carrying vehicle with a carrying capacity of less than one tonne, for example a panel van or utility (including four-wheel drive vehicles)
any other passenger-carrying vehicle designed to carry fewer than nine passengers.
If the vehicle provided doesn't meet the definition of a car, and your employee has private use of the vehicle, the right to use the vehicle may be a residual fringe benefit.
A car is taken to be available for the private use of an employee on any day that they or their associates:
use it for private purposes
are allowed to use it for private purposes.
If a car is garaged at or near your employee's home, even if only for security reasons, it is taken to be available for their private use regardless of whether or not they have permission to use the car privately. Similarly, where the place of employment and residence are the same, the car is taken to be available for the private use of the employee.
Generally, travel to and from work is private use of a vehicle.
Exempt car benefits
There are some circumstances where use of the car is exempt from FBT. For example, an employee’s private use of a taxi, panel van or utility designed to carry less than one tonne, is exempt from FBT if its private use is limited to:
travel between home and work
incidental travel in the course of performing employment-related travel
non-work-related use that is minor, infrequent and irregular (for example, occasional use of the vehicle to remove domestic rubbish).
Other benefits relating to the use of a car
Other benefits you provide relating to the use of a car, whilst not constituting a car fringe benefit, may instead constitute an expense payment or residual fringe benefit. For example:
if you pay for, or reimburse, an employee’s expenditure on road tolls, you may be providing an expense payment fringe benefit
if you allow an employee to use your electronic toll tag, you may be providing a residual fringe benefit
if you allow private use of a motor vehicle that is not a car, you may be providing a residual fringe benefit.
Scams targeting ASIC customers
Scammers pretending to be from ASIC have been contacting people asking them to pay fees and give personal information to renew their business or company name.
These emails often have a link that provides an invoice with fake payment details or infects your computer with malware if you click the link.
Warning signs the email is not from ASIC
An email is probably a scam and is not from ASIC if it asks you:
to make a payment over the phone
to make a payment to receive a refund
for your credit card or bank details directly by email or phone
How do you protect yourselves from email scams?
Keep your anti-virus software up to date.
Be wary of emails that don't address you by name or misspell your details and have unknown attachments
Don't click any links on a suspicious email
ASIC will only issue a renewal notice 30 days before your renewal date.If you are not sure you can contact our office at 03 8538 7266 and we will be more than happy to check your registration renewal date.
On the 7th of February 2018, a Bill was introduced into Federal Parliament requiring purchasers of new residential premises and new subdivisions of potential residential land to remit the GST on the purchase price directly to the ATO as part of the settlement process. Under the current law, the supplier of the property (eg the developer) is responsible for remitting the GST to the ATO upon lodging a business activity statement (BAS) up to three months after settlement.
When the Bill is passed, GST withholding by purchasers will commence on 1 July 2018. There is a two-year transition window for contracts that were executed before that date and will settle before 1 July 2020. After that date, GST withholding will apply to all residential sales.
The withholding amount is 1/11th of the contract price for fully taxable sales (reduced to 7% for margin scheme sales). Settlement adjustments are ignored and the withholding is based on the stated contract price only.
Purchasers will have two options in relation to the withheld GST:
remit it to the ATO on or before settlement; or
give the vendor a bank cheque on settlement (made out to the ATO).
All vendors of residential premises/residential land (including developers, investors and private home owners) will need to provide a notice to the purchaser before settlement advising whether GST withholding applies. Failure to do so will be a strict liability offence, attracting a fine of $21,000 for individuals and $105,000 for companies.
At the time of writing, the Treasury Laws Amendment (2018 Measures No. 1) Bill 2018 is before the House of Representatives.
Residential rental properties – depreciation
Changes announced as part of the 9th May 2017 federal budget have now been legislated after being passed by the Senate on the 15th of November 2017.
From 1 July 2017, unless you are carrying on a business of property investing or are an excluded entity, you cannot claim for depreciation of second-hand plant and equipment in rental premises used for residential accommodation.
These changes apply to second-hand plant and equipment you acquired at or after 7.30 pm (AEST) on 9 May 2017 unless you acquired them under a contract entered into before this time. Additionally, you cannot claim for plant and equipment installed on or after 1 July 2017 if you have ever used it for a private purpose.
ATO Clearance Certificate Required for Property Sales
New rules apply to Australian resident vendors disposing of certain taxable property under contracts entered into from 1 July 2017.
The changes apply to real property disposals where the market value is $750,000 and above.
The entity that has legal title to the asset, is the entity required to obtain an ATO clearance certificate. Each vendor must lodge their own application. Vendors who are parties to the same property transaction are not able to lodge joint applications.
Australian resident vendors will need to obtain a clearance certificate from the ATO, prior to settlement, to avoid an amount (12.5%) being withheld by the purchaser. The vendor will have to provide the purchaser with an ATO issued clearance certificate on or before the day of settlement to ensure no withholding occurs.
Cars and tax
From 1 July 2017 the following car threshold amounts apply.
There's an upper limit on the cost you use to work out the depreciation for the business use of your car or station wagon (including four-wheel drives). You use the car limit that applies to the year you first use or lease the car.
The car limit for 2017–18 is $57,581.
Goods and services tax (GST)
Generally, if you purchase a car and the price is more than the car limit, the maximum amount of GST credit you can claim is one-eleventh of the car limit amount.
You can't claim a GST credit for any luxury car tax you pay when you purchase a luxury car, regardless of how much you use the car in carrying on your business.
Luxury car tax
From 1 July 2017 the luxury car tax threshold for luxury cars increased to $65,094.
The threshold for fuel efficient luxury cars for the 2017–18 financial year remains at $75,526.
In general, the value of a car includes the value of any parts, accessories or attachments supplied or imported at the same time as the car.
Superannuation changes from 1st July 2017
ARE YOU MAKING CONTRIBUTIONS
The concessional contributions cap is $25,000 for everyone. Previously, it was $35,000 for people 49 years and older at the end of the previous financial year and $30,000 for everyone else.
The annual non-concessional contribution cap will be reduced from $180,000 to $100,000 per year. This will remain available to individuals aged between 65 and 74 years old if they meet the work test.
Your non-concessional cap will be nil for a financial year if you have a total superannuation balance greater than or equal to the general transfer balance cap ($1.6 million in 2017–18) at the end of 30 June of the previous financial year. In this case, if you make non-concessional contributions in that year, they will be excess non-concessional contributions.
If you are under 65 years, you may make non-concessional contributions of up to three times the annual non-concessional contributions cap in a single year by bringing forward your non-concessional contributions cap for a two- or three-year period.
In 2016–17, an individual (mainly those who are self-employed) can claim a deduction for personal super contributions where they meet certain conditions. One of these conditions is that less than 10% of their income is from salary and wages. This is known as the 10% maximum earnings condition.
From 1 July 2017, the 10% maximum earnings condition will be removed. This means most people under 75 years old will be able to claim a tax deduction for personal super contributions (including those aged 65 to 74 who meet the work test).
ARE YOU APPROACHING RETIREMENT
The government will remove the tax-exempt status of earnings from assets that support a transition to retirement income stream (TRIS). Earnings from assets supporting a TRIS will be taxed at 15% regardless of the date the TRIS commenced.
ARE YOU RETIRED
There is a limit on how much of your super you can transfer from your accumulation super account(s) to tax-free ‘retirement phase’ account(s) to receive your pension income.
This limit is known as the ‘transfer balance cap’. The cap relates to the amount you transfer and hold in retirement phase accounts. There is no limit on the amount of money you can have in your accumulation super account(s).
The transfer balance cap will start at $1.6 million, and will be indexed in line with the consumer price index (CPI), rounded down to the nearest $100,000.
DO YOU EARN MORE THAN $250,000
Currently, individuals with income and concessional super contributions greater than $300,000 will trigger a Division 293 assessment.
From 1 July 2017, the government will lower the Division 293 income threshold to $250,000. An individual with income, and concessional super contributions, exceeding the $250,000 threshold will have an additional 15% tax imposed on the lesser of:
• the excess, or
• the concessional contributions (except excess contributions).
ATO Data matching real property transactions
The ATO has gazetted a notice specifying that it will acquire details of real property transactions for the period 20 September 1985 to 30 June 2017 from various State Revenue offices and tenancies boards. Information to be obtained will include: rental bond number of identifier for rental bond; unique identifier for the landlord; full name of the landlord; full address of the landlord; period of lease; date of property transfer; property sale contract date; settlement date; and valuation details.
The ATO expects that around 31 million records for each year will be obtained. Based on current data holdings, the ATO estimates that records relating to 11.3 million individuals will be matched. The purpose of this data matching program is to ensure that taxpayers are correctly meeting taxation and other obligations administered by the ATO in relation to their dealings with real property. These obligations include registration, lodgement, reporting and payment responsibilities.
Note that the ATO intends to continue this data matching program from 2017. In the 2013–2014 Federal Budget, the Government announced that it would legislate to make the reporting of real property transfers to the ATO mandatory in the future. The current Government confirmed that it would proceed with this proposal. Amending legislation to implement the proposal is contained within the Tax and Superannuation Laws Amendment (2015 Measures No 5) Act 2015.