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ATO Changes That Will Affect Your Business

By Heaney Business Group

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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.