News & Insights

This edition features pieces on:

• Upcoming federal budget: It’s now less than a fortnight until the Federal Budget which is to be handed down on 9 May. Some of the things to look out this year potentially include an announcement on the future of temporary full expensing and its possible replacement, the fate of the so-called stage three individual income tax cuts, and much more.

• New reporting requirements for SMSFs: From 1 July 2023, trustees and directors of SMSFs must report certain events that affect their members transfer balance account quarterly. These events must be reported by lodging a ‘transfer balance account report’ (TBAR).

• Financing motor vehicles: One of the most common decisions facing business is how to finance and account for the acquisition of a motor vehicle. There are numerous ways of doing so, including outright purchase, lease, chattel mortgage, and hire purchase…with each resulting in differing accounting, taxation and GST treatment. 

• Temporary full expensing…get in quick: On current legislative settings, the depreciation rules for business are set to change for the worse from 1 July. If you are considering investing in your business, it may be advantageous to get in before this date to take advantage of temporary full expensing. 

• Bringing forward super deductions: Businesses who pay superannuation guarantee contributions to their workers can optimize their 2022/23 tax position by bringing forward these contributions to before 1 July 2023. However, there are a number of important timing issues that must be adhered to.

• Upcoming, year-end trust distributions: In good news for taxpayers who operate their business via trusts, the ATO has softened its position in this area following a recent decision by the Full Federal Court. What does this mean for upcoming trust distributions for 2022/23?

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This edition features pieces on:

• Proposed 15% super tax: Individuals with large superannuation balances may soon be subject to an extra 15% tax on earnings if their balance exceeds $3 million at the end of a financial year. Those affected would continue to pay 15% tax on any earnings below the $3 million threshold but will also pay an extra 15% on earnings for balances over $3 million.

• Reducing the risk of crypto scams: ASIC has released fresh and timely information around cryptocurrency scams. Scammers use cryptocurrencies, like bitcoin or ether, because they are not easily recovered. Crypto can be sent overseas quickly with limited oversight. If you lose your money to a crypto scam, your money is likely gone. What are the red flags to be aware of?

• FBT exemption for electric vehicles: Fringe benefits provided on or after 1 July 2022 for cars that are eligible zero or low emissions vehicles that are first held and used on or after 1 July 2022, may be exempt from FBT. A new ATO factsheet provides more detail on this exemption. 

• Finding your lost super: There is more than $16 billion in lost and unclaimed superannuation across Australia. Does some of this belong to you? Make sure you search for any lost or unclaimed super you may have as bringing it all together may help you save on fees and will also make it easier to manage your retirement savings. The good news is that it is easy to conduct a search.

• Fending off GST audits: The government has welcomed the uncovering and prosecution of ‘the biggest GST fraud in Australia’s history’, stopping approximately $2.5 billion in fraudulent GST refunds from being paid to fraudsters. On a smaller scale, there are lessons to be learned about how you or your business can stave off a GST audit or review if you are subject to ATO scrutiny.

• Trust distribution landscape now more settled: If you carry on your business affairs through a trust structure, there is now slightly more clarity around the law on distributions following a decision of the full Federal Court. With 30 June rushing towards us, family trusts need to be considering their position in relation to upcoming trust resolutions.

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This edition features pieces on:

• Crystalising capital losses: It’s been a tough 12-months for investors. However, a loss on an investment is only realised if you dispose of the asset. If you retain the asset, you may be able to ride things out and hopefully the market bounces back. Even where you do sell and incur a capital loss, there can be a silver lining from a tax perspective.

• PAYG instalment variations: The ATO is encouraging accountants to educate clients around varying PAYG instalments – this can potentially assist cashflow. If you or your business’s financial situation has changed for the worse, varying your PAYG instalments downwards can help with cashflow which can be a significant problem for small business. There are however dangers in varying.

• Legislating the purpose of superannuation: Treasury released a consultation paper on legislating the purpose of superannuation. However, as noted in the paper, the purpose of legislating such an objective is to guide future policy makers rather than lay the groundwork for changes to existing superannuation settings.

• Changes to claiming work-from-home deductions: Are you one of the five million Australians who claim work from home deductions? If so, stricter record-keeping requirements may now apply from 1 March 2023. A new, increased cents per hour rate is also now available. 

• Super teething issues: Last year 9,700 individuals applied for compassionate release of super for dental treatment expenses, and 82% were approved. Out of those approved, 9% were for a dependent child’s dental treatment, which could include braces. What are the rules around making a claim?

• FBT and car logbooks: The majority of employers calculate any car fringe benefits under the logbook method. As we approach the end of the FBT year, logbooks need to be in order, including adequate descriptions of trips, odometer records and more.

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This edition features pieces on:

• Missing the director ID deadline: For those who have missed the deadline to obtain a director ID, you can still apply!  However, an extension of time application form will need to be completed first. Although the deadline may have been missed, the ATO says it will take a reasonable approach with directors who are trying to do the right thing.

• ATO’s new year resolutions: Whether your side-hustle has crossed the line into a business, keeping good business records, and determining whether the personal services income rules apply to you…are just some of the issues that the ATO says will be on its radar as we head into 2023.

• Using your SMSF property upon retirement: Many SMSF trustees wonder if they can live in their SMSF property once they retire. This is a common question particularly as property is such a popular SMSF investment. The answer is that the rules in this area are quite restrictive.

• The importance of cashflow forecasts: Cashflow is one of the leading causes of small business failure. To this end, a Cash Flow Forecast is a crucial cash management tool for operating your business effectively – tracking the sources and amounts of cash coming into and out of your business.

• ATO finalises section 100A guidance for family trusts: For those who operate their affairs through a family trust, the ATO has released its final guidance on how section 100A applies to distributions. In light of this guidance, there are various risk-management options on the table for distributions moving forward. 

·         Reduction in downsizer eligibility age: The eligibility age for downsizer contributions reduced from 1 January 2023. This means if you are age 55 or older, you could invest the proceeds of the sale of your family home to your superannuation outside of your standard contribution caps.

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We are pleased to provide you with your December 2022 Newsletter.

Christmas is traditionally a time of giving, including employers showing gratitude to their workers for a job well done throughout the year, also to customers, contractors, and suppliers. However, depending on the nature and value of the gift, and also who the gift recipient is, such magnanimity can attract unwanted income tax, fringe benefits tax and also GST consequences. So how as an employer do you gift most tax-effectively this festive season? Aside from gifts, cash bonuses and leave bonuses are quite common at this time of year. These too have flow-on impacts for employers and employees alike.

Electric vehicles are set to become more affordable after the government sealed a deal with crossbench Senators. The new law introduces an electric car discount in the form of an FBT exemption. This allows for car fringe benefits comprising the use or availability for use of an eligible car that is a zero or low emissions vehicle to be exempt from FBT where certain conditions are met. Employers are the other big winner from the changes, which will remove the FBT liability on company-owned electric vehicles provided as part of a salary package for personal use by employees.

Meanwhile, in a recent speech, the ATO’s assistant Commissioner outlined the ATO's latest compliance issues it is focusing on for those who operate an SMSF. Identity fraud and investment scams, illegal early release of benefits, non-lodgment of SMSF annual returns, the adequacy and independence of audits, as well as the obtaining of director identification numbers for directors of corporate trustees are just some of the issues on the ATO’s radar.

Contents

This edition features pieces on:

• On-boarding employees for the holiday rush: Hiring additional employees to help with surging end-of-year demand? The New employment form, accessed through ATO online services, will help reduce compliance time for employers.
  

• Single member SMSFs: it is permissible to have single member funds. The main advantage of doing so is that you have total control over your retirement savings, and the investment decisions in respect of those savings. However, there are some issues to be mindful of.
  

• Xmas gifts from employers: Gifts provided by employers to employees, contractors, suppliers and key customers can have very different income tax, GST, and FBT treatment. However, keeping some basic rules in mind can assist employers in gifting tax-effectively.
  

• New work from home deduction rules: New rules have taken effect for calculating an individual’s work from home deductions. In summary, the new method for working out your claim may leave you worse off than the methods it replaced, and also impose a greater compliance burden.
  

• FBT exemption for electric vehicles: Electric vehicles are set to become more affordable for both households and businesses after the government sealed a deal with crossbench Senators on legislation to exempt low and zero emission cars from fringe benefits tax (FBT).
  

• SMSF compliance – what’s on the ATO’s radar?: identification fraud and investment scams, illegal early access to retirement savings, non-lodgment of annual returns, regulatory contraventions, the adequacy and independence of audits are just some of the issues on the ATO’s radar in respect of SMSF compliance.

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· If you have any questions or feedback regarding our Monthly Client Newsletter or if you'd like clarification or further advice on any of the content in this month's edition - don't hesitate to reach to us at admin@shepdud.com.au

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Introduction to this Month’s Edition

Are you across the 25 October federal Budget and how it may impact you, your business and your superannuation affairs? In this special edition, we canvass the important measures contained in the first federal Labor budget in almost a decade. On the taxation front, the adoption of the Stage 3 tax cuts, the scrapping of a tax offset for low and middle-income earners were the big-ticket items. On superannuation, maintaining the current contribution rules, and the ruling out of a three-year audit cycle for SMSFs were both welcome announcements.

With the housing crises in full swing, quite a number of people have welcomed relatives and friends into their homes (and rental properties) until they can find permanent accommodation of their own. A recent Administrative Appeals Tribunal (AAT) case has confirmed that where rent paid in this circumstance is not at commercial levels, this may limit the deductions that the homeowner/landlord can claim. It will though depend on the circumstances at hand.

Meanwhile, choosing the right business structure and knowing what your obligations are can be complex. This is particularly the case around superannuation and whether you are obligated to pay it to yourself as a business owner. This will principally depend on the vehicle through which you operate your business.

Contents
This edition features pieces on:

• Federal budget – business and individual taxation: It was a somewhat quiet budget on the business front, with it being notable for the burning issues that it did not address such as Division 7A reform, the taxation of trusts, the future of the loss carry back rules and current depreciation rules for business (both expiring in 2023). On the individual level though, lucrative future year tax cuts were confirmed.
  

• Federal budget - superannuation: The retention of the existing contribution caps, leaving indexation undisturbed, reducing the downsizer contribution age to 55 (down from 60), and the delay in the SMSF residency rule changes were just some of the announcements on the super front.
  

• Rental deductions curbed: Where you let out your home to family or friends or otherwise on a non-commercial basis, a recent AAT decision reminds us that, in doing so, this may limit your deduction claim to the amount of rent charged.
  

• Director ID’s – new campaign launched: The federal government has launched a last-ditch awareness campaign reminding those who are directors to obtain their ID by the 30 November deadline. How? Who? Why? We answer these questions.
  

• Do I have to pay myself super as a business owner?: The answer depends on a range of factors, principally your trading structure. Different rules apply for sole traders, companies, partnerships and businesses operated through a trust structure.

• Business versus hobby: When do otherwise private activities cross over from a hobby to a business? This matters from a tax perspective particularly around the declaring of payments received, claiming deductions, record-keeping…and more!

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If you would like clarification or further advice on any of the content in this month’s edition, please reach out on admin@shepdud.com.au

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Introduction to this Month’s Edition

Have you applied for your director identification number? Time is running out to meet the 30 November 2022 deadline which applies to most directors. All existing directors of a company, registered Australian body, registered foreign company, or a director of corporate trustees of an SMSF are required to apply for a director ID. A director ID is a unique 15-digit identifier that all directors or people intending to become directors must apply for. It’s free to apply and you only need to apply once. A director must apply for their own director ID personally.

With the economy emerging from its COVID-related downturn, individuals may have made business losses that may be able to be offset against other income such as salary and wages. There are however a number of hurdles to clear. These include the non-commercial loss rules which determine whether the loss, or your share of the loss, is deductible in the current year.

Meanwhile, the latest ATO super statistics confirm that there is a significant superannuation gender gap – with women generally having far less super savings than men. There are a number of strategies that can be employed to close this gap including catch-up contributions, superannuation splitting, and spouse contributions.

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Please contact us for clarification, or further advice, regarding any of the topics covered in this newsletter

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Introduction to this Month’s Edition

With interest rates rapidly increasing, homeowners are being encouraged to look around for a better deal on their home loan. ASIC has recently released some tips if you are doing so. These include asking your existing lender for a better deal, negotiating the length of your new loan, factoring in the cost of possible lender mortgage insurance, comparing a range of accompanying fees and charges, and more.

Rental property claims are being heavily scrutinised by the ATO this Tax Time. The ATO is urging rental property owners to ensure they carefully review their records before declaring income or claiming deductions.

Meanwhile, recent data from the government’s MoneySmart website and the Association of Superannuation Funds of Australia helps individuals answer the perennial questions: how much superannuation will you need to retire? And how much are you likely to spend in retirement?

Contents
This jam-packed edition features items on:

• ATO rental property focus – this Tax Time, the ATO is homing in on rental property claims. Declaring all related income, correctly claiming any expenses over the correct period, and retaining appropriate records are all in focus.
  

• COVID-19 relief for SMSF trustees now at an end – the ATO has reminded SMSF trustees that the COVID-19 relief and support offered to SMSFs is now over. This support related to residency, rent relief, loan repayment relief, and in-house assets.
  

• Wash sale arrangements under scrutiny – where you sell and then quickly reacquire shares or cryptocurrency in order to derive a tax benefit, the advantage of doing so may be disallowed by the Taxman. Each arrangement will be judged on its circumstances, however.
  

• GST health check – now that the financial year has come to a close, it’s a good time to check all things GST. Reporting periods, accounting methods, unclaimed GST credits, should all be covered off on.
  

• YourSuper comparison tool – if you have a MySuper fund, the ATO’s YourSuper comparison tool can help you compare different MySuper products and choose a superannuation fund that meets your needs.
  

Switching home loans – with interest rates increasing quite rapidly, homeowners are being encouraged to look around for a better deal on their home loan. ASIC has recently released some tips in this space

We're always here to help

Please contact us for clarification, or further advice, regarding any of the topics covered in this newsletter

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Introduction to this Month’s Edition

During COVID-19, the ATO took a softly-softly approach to debt collection, acknowledging the financial impacts of the pandemic. However, with the economy now opening back up, firmer debt collection practices are resuming, including garnishees, recovery of director penalties, disclosure of business tax debts, and legal actions including summons, creditors petition, wind-up and insolvency action. Do you or your business have a tax debt? If so, it’s important to engage with the ATO with our assistance. Their payment plans can be quite flexible.

Employers need to make Single Touch Payroll (STP) finalisation declarations by 14 July each year. As your registered agent, we can assist you in this important, upcoming process. Your employees depend on this process being completed in order to lodge their tax returns.

Meanwhile, the new financial year heralds an increase to the superannuation guarantee (SG) rate for your employees and certain contractors. Low paid workers are now also entitled to SG. This additional employer cost comes with some complexity. We guide you through it.

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Critical information

Ø Year end tax planning – both from a tax and superannuation perspective.

Ø An ATO warning on the latest tax scam doing the rounds. The ATO has recently reported an increase in fake websites offering to provide Tax File Numbers and Australian Business Numbers.

Ø What the new government has foreshadowed on the tax and super front. This includes support for significant income tax cuts for individuals, a crackdown on multinational tax avoidance, lowering the age eligibility for the super downsizer scheme and a home buyer subsidy – making it easier to buy your first home.

Ø The four items under the ATO’s microscope as we head into Tax Time 2022.

Ø How downsizer super contributions can help older individuals for their retirement.

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Critical information

Ø With the ATO having announced a more hardline approach to discretionary trusts, we detail some good news around the possible retrospectivity of their new approach.

Ø Are you aware of the personal property security register? In your May newsletter, we outline its importance and how it can reduce your risk of property you are thinking of purchasing being repossessed

Ø It’s recommended that employers have in place a human resources (HR) manual. HR manuals document the workplace policies and procedures that will be applied to all employees inside and to a lesser extent outside the workplace.

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Critical information

Ø With the FBT year now at an end, we provide a non-exhaustive checklist of some of the main potential fringe benefits employers may have provided their workers throughout the year.

Ø With the ATO flagging a new crackdown on discretionary trust distributions, find out the potential target areas in your April Newsletter.

If you are a ride-sharing driver (such as with Uber) or if you are a rider, there is a raft of tax issues to be aware of from both standpoints. From GST, income tax, deductions, and PAYG withholding…we’ve got it all covered.

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Critical information

The 2022 Federal Budget was handed down last night. In this special edition of our Client Newsletter, we have summarised some of the main measures that may impact both your business and individual clients, including:

• 20% additional deduction for skills training and digital adoption
• The extension of various apprentice wages subsidies
• An increased income tax offset of up to $1500 for low and middle income earners
• $250 cost of living payment for various welfare recipients
• Further relief for first home buyers
• 50% reduction in fuel excise.
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