ATO Embarks on Substantial Real Property Transactions Data Matching

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The ATO has announced that they will be embarking on a data matching exercise for real property transactions that have occurred during the period 20 September 1985 to 30 June 2017.

Real property transactions can give rise to significant capital gains tax and GST consequences. The ATO will be focused on whether these consequences have been appropriately reported by taxpayers.

This data will be obtained from various sources such as revenue offices, rental bond authorities and land title offices.

The Commissioner has stated that the purpose of this data matching program is to confirm that taxpayers have been correctly meeting their tax obligations.

The ATO expects to match data for approximately 11.3 million individuals. If the data matching triggers a discrepancy, the taxpayer will be notified via a letter and will have the opportunity to respond. Prosecution may eventuate, but it is unlikely, as most action would involve an amendment to the years assessment with possible penalties and general interest charges.

ATO Help for Bushfire Victims

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For those who have recently been affected by Victorian and Western Australia bushfires, the ATO will fast-track any refunds as well as allowing for additional time to lodge income tax returns and activity statements.

Is this you?

No action is required. As stated by the Tax Commissioner “If your business or residential address is in one of the identified affected postcodes it will happen automatically. You can visit our website to see the new lodgment dates and check if your region is included.  Further postcodes may be added as needed, so check our website for more information,”

ATO Focus on Cafes & Restaurants – Box Hill

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The ATO will be making visits over the next few months to cafés and restaurants in Box Hill, Melbourne. The aim is to meet with owners and ensure they understand their tax obligations. It has been noted by the ATO, ““Where taxpayers are unwilling to work with us or continue to cause us concern, we will undertake further investigation.”

Capital Start-Up Costs Immediate Deduction

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From July 1st 2015, small businesses and entities that intend to carry on business may immediately claim certain start up costs.

These costs include:

  • advice from a professional in regards to structure and operation of the proposed business
  • fees relating to the set up of the business and operating structure (for example, ASIC fee for registering a company)

These expenses can now be fully deducted in the year in which the expenditure was incurred. Before July 1st, these expenses had to be deducted over a five year period.

Payment of Death Benefits from Superannuation Funds

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The Superannuation Complaint’s Tribunal has recently released some guidance in relation to the payment of death benefits from superannuation funds due to an increased number of confusion and complaints.

“There are some common misconceptions about superannuation death benefits that can result in unexpected outcomes for the beneficiaries of a death benefit, and may result in a complaint being made to the Tribunal.

The most common misconception, arguably, relates to the purpose of superannuation.

Broadly speaking, the purpose of superannuation is to provide income in retirement to members and their dependants; it does not form part of a person’s estate.

Accordingly, a superannuation death benefit should be paid to dependants and those who had a legal or moral right to look to the deceased member for financial support had they not died.

The ability of a superannuation fund to pay a death benefit directly to a dependant rather than to the estate has a number of advantages.

Firstly, it ensures that the benefit is paid directly for the benefit of the dependants and is not available to creditors who would be paid first from the assets of the estate.

Secondly, it can usually reach the beneficiaries quicker than if a grant of probate or letters of administration has to be obtained and the estate called in and distributed.

Thirdly, as a general rule, superannuation death benefits are protected from bankruptcy.

Therefore, even if the deceased member was bankrupt, or if the estate is insolvent, funds can be paid direct to the dependants to replace the income stream that may be lost as a consequence of the death.

However, if you would like to ensure that your superannuation is distributed a certain way then it is important to find out if your superannuation fund has the option for a binding nomination and if so, ensure you meet the requirements, including renewing your binding nomination every three years.”

 

Small Business Tax Cuts

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From the 1st July 2015, the ATO implemented a new two-tier tax system for companies. The tax rates are as follows:

  • 28.5% if the company’s aggregated turnover is less than $2 million
  • 30% if the company’s aggregated turnover is more than $2 million

As a small company, no action is required at this point. The new rate will automatically be applied to PAYG instalments.

Report GST Annually and Pay Quarterly Instalments

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The option to report GST annually, and pay instalments quarterly is now available to all businesses that have a turnover that is less than $2 million.

The GST instalment is worked out by the ATO (which can be varied by the taxpayer) and then the entity reports its actual GST information annually on an Annual GST return.

If you would like to discuss this option, please call our office.