ATO Changes That Will Affect Your Business

By Heaney Business Group
Creative People Busy Working in Meeting

Payment Summaries are No Longer Required

20 Employees or More

If you are a business with 20 employees or more, you will no longer need to issue Payment Summaries and you have until 14th July to have your declarations finalised.

Less Than 20 Employees

If you are a smaller business of less than 20 employees, you are required to start using STP as of the 1st of July 2019; you will also no longer need to provide Payment Summaries if you have started using STP already and have until 31st July 2019 to have your declarations finalised. Micro businesses have extra time concessions so speak to your accountant in regards to your circumstances.

Employees whose employer has already started using STP will be able to access their Income Statement from myGov; which will also show their superannuation information and tax that has been paid on their behalf.

Small Businesses Owe the ATO $15 billion

In Australia there are 3.8 million small businesses which includes 1.6million sole traders many of who are employers and collectively they owe the ATO $15 billion, so this tax season the ATO is looking at trying to recover some of its debt. Areas the ATO are targeting include:

  • setting up or changing to a company structure
  • claiming motor vehicle expenses
  • business expenses that may not be correctly apportioning between personal and business use

The ATO are using data matching software and benchmarking to analysis the data and are clamping down on business owners trying to make unwarranted claims.

To Receive a Tax Deduction, You Must Meet Your Tax Obligations

From 1 July 2019, if you have not met your PAYG withholding payments and reporting obligations then you will not be able to claim a tax deduction for payments of the following things:

  • salary, wages, commissions, bonuses or allowances to an employee;
  • directors’ fees;
  • to a religious practitioner;
  • under a labour hire arrangement; or
  • made for services where the supplier does not provide their ABN.

There are exceptions in some instances so speak to us if you are unsure.

From 1st July 2021 the Government has proposed that ABNs of taxpayers who are required to lodge a tax return but haven’t done so will be cancelled. Also from 1 July 2022, ABN holders will be asked to confirm that their Australian Business Register details are correct each year.

Increased Reporting of Payments to Contractors for Some Industries.

From 1 July 2019, increased reporting of payments made to contractors who work within certain business sectors that have the potential to be active in the black economy will be required. This ATO requirement is said to collect approximately $2.7bn per year in lost in income and GST liabilities.

Businesses that will be affected are:

  • security providers and investigation services
  • road freight transport
  • computer system design and related services businesses

Businesses in the building and construction industry, cleaning, and courier services already had to report payments to contractors and will need to do so by 28 August 2019 for the 2018 -2019 Tax Period.

Trust Distributions Must be Completed on Time

Distribution decisions for your trust must be made in writing by 30th June 2019 or you may risk the trusts income going to the default beneficiary or the trustee which could result in tax implications. If you have not completed and signed your trust minute for 2019 we will be reminding you soon.

Have You Paid Your Superannuation?

The ATO now allows for people who have been out of the work force this year, like new Mums or Students to top up their superannuation contributions. Small Business Owners often forget to pay super for themselves as well.

You can top up your super if you have a total superannuation balance below $500,000 as at 30 June 2019; and have not utilised your entire concessional contributions cap ($25,000) for the year. You can ‘carry forward’ the unused amount  of the yearly contributions on a rolling 5 year basis.

“For example, if your total concessional contributions in the 2018-19 financial year were $10,000 and you meet the eligibility criteria, then you can carry forward the unused $15,000 over the next 5 years. You may then be able to make a higher deductible personal contribution in a later financial year. If you are selling an asset and likely to make a taxable capital gain, a higher deductible personal contribution may assist in reducing your tax liability in the year of sale.”

Some conditions apply so please check with us.

If you have any questions or are unsure how any of these changes may affect your business please ring HBG Tax and Accounting on 08 9594 1963.

This article was written based on information supplied from Knowledge Shop Newsletter June 2019.

The material and contents provided in this article is of informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.

  Category: Tax
  Comments: None

Are You in The ATO’s Spotlight this Tax Season?

By Heaney Business Group
Man writing

ATO Is Shining the Spotlight on Work Related Deductions

ATO Taxation Statistics show that in 2016-17 there were more than 8.84 million people claiming $21.98 billion in work-related expense deductions.” ABC News reported.

To claim an expense for your business you need to have incurred that expense in your business and have records of it; the expense needs to relate DIRECTLY to how your business earns its revenue. Expenses that have a partial business and personal use will need to be split in the percentages associated with the use and only the business expense can be claimed. Common work-related expenses that also have personal components are cars, mobiles and internet service for home businesses.

Record Keeping – When You Don’t Have to Keep Records

When claiming work deductions below $300 you are not required to keep records unless it is clothing that is over $150; however beware the ATO can ask you to prove that you DID purchase the items related to the claim. If you haven’t kept records of your purchase and you can’t prove that you purchased it, your claim may be denied.

Do You Have a Home Office?

Did you know that there are different rules that apply when you are working from home?

When your home is the principal location for your business and you have a dedicated office area, you may be able to claim a variety of expenses associated with the amount of area (square meterage) in your home that is used to conduct your business.  For your dedicated work area, you may be able to claim expenses that are incurred in the running costs for that portion of your home like a percentage of your electricity bill plus depreciation on your office equipment.

If you don’t have a dedicated work area and use the dining table or the couch to work from, the work-related expense claim you can make are likely to be more limited.

Cryptocurrency is Considered as an Asset for Tax Purposes

The ATO considers cryptocurrency an asset for tax purposes and not a form of currency. Being an asset means that cryptocurrency is therefore subject to capital gains tax. You need to keep records of all of cryptocurrency your trades so that you can determine whether you have made a loss, or a gain relating to each trade and therefore are required to pay tax on any gains.

Capital gains tax can be a complicated area and the ATO will be scrutinising taxpayers that are claiming large cryptocurrency losses.

Do You Earn Income Via the Shared Economy?

If you are earning an income from the shared economy, for example AirBnB or Uber you must declare this income like any other on your tax return. You can also claim business expensed related to the service that you provide.

Are You in The ATO’s Spotlight this Tax Season?

If you are unsure if any of these apply to you or any have other questions related to your tax please contact HBG Tax and Accounting on 08 9594 1963 this week so any arrangements that are needed can be made before the end of the tax year.

This article was written based on information supplied from Knowledge Shop Newsletter June 2019.

The material and contents provided in this article is of informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.

  Category: Tax
  Comments: None