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July 2018

‘Wipe the slate clean’: Clients, accountants urged to use new amnesty period

Businesses look set to be granted a 12-month window to address historic under-payment of superannuation, against a backdrop of ongoing warning shots being fired by the government and regulators.

         

 

The federal government’s proposed one‑off, 12-month amnesty for historical underpayment of superannuation guarantee (SG) obligations is currently before the Senate, after passing through the lower house.

Institute of Public Accountants (IPA) chief executive, Andrew Conway, sees this as an opportunity for businesses and clients alike to “wipe the slate clean.” 

“Any non-payment of this worker entitlement represents wage theft; a practice never to be condoned,” Mr Conway said in a statement earlier this week. 

“However, we acknowledge that small businesses can sometimes experience cash flow issues, making them vulnerable when it comes to meeting their SG obligations by the required due date,” he said. 

“The IPA supports this amnesty period as it incentivises employers to come forward and do the right thing by their employees by paying any unpaid superannuation in full,” he said.

Non-payment of SG obligations has been a highly-publicised focus of the federal government’s broader package of integrity measures aimed at ensuring on-time payment and regular reporting by super funds.

As part of the measures, the ATO will also have the power to apply for court-ordered penalties which include up to 12 months’ imprisonment.

Single Touch Payroll (STP) will be central to ATO surveillance, and this plus other incoming reporting laws give the ATO access to current information about the amounts of superannuation that employers owe their employees.

This follows warning shots fired in 2017, when the ATO said it was looking to up its SG casework by one-third.

 

By: Katarina Taurian
​26 JUNE 2018
www.accountantsdaily.com.au

 

Super savings gap for women stuck at 30%

While the gender gap in superannuation is improving, an economic index indicates women are still retiring with superannuation balances 30 per cent lower than men.

         

 

While the gender gap in superannuation is improving, an economic index indicates women are still retiring with superannuation balances 30 per cent lower than men.

The Financy Women’s Index for the June quarter indicates that women are still facing a gender pay gap of 15.3 per cent and a superannuation savings gap of 30 per cent at retirement age.

Financy Women’s Index is based on data from over 700 annual company reports (as well as monthly, quarterly, biannually, and biennially) and methodology from the Australian Bureau of Statistics, the Australian Securities Exchange, the ATO and the Australian Government Department of Education and Training.

Australian Super group executive Rose Kerlin said further work is still needed in the areas of equal pay, equality of opportunity and more equal sharing of family responsibilities to close the gap which results in too many women having insufficient savings to fund a comfortable retirement.

Dianne Charman, chair of AFA Inspire, said that the fact that many women work part-time is having a long term impact on their superannuation.

“The Financy Women’s Index importantly reminds us to work with women to raise awareness about how even a small contribution to superannuation will, over the long term, put women in a better position.”

Association of Financial Advisers chief executive Phillip Kewin said the latest Financy Women’s Index results indicate that progress towards creating positive and meaningful cultural change in the financial wellbeing of women in Australia is happening slowly.

“It is disappointing to see that, at 26.1 per cent, the financial and insurance services industry has the highest pay disparity of all industries,” said Mr Kewin.

 

www.smsfadviser.com
Miranda Brownlee
27 June 2018

Watch out for charges with incoming GST laws.

Accountants and their clients have been advised to pay close attention to the commencement of GST on low value imported goods that could see Australian retailers incorrectly charged by overseas suppliers.

       

 

From 1 July 2018, GST will apply to sales of low value imported goods, valued at $1,000 or less, to consumers in Australia, in a bid to ensure that such imported goods receive the same treatment as goods purchased domestically.

Speaking to Accountants Daily, Crowe Horwath partner, Mark Reynolds, said the implications for Australian businesses would be mainly two-fold, namely for retailers who use drop shipping, and registered retailers who may be incorrectly charged GST by their overseas suppliers. 

As the changes are meant to target consumers, Australian retailers registered for GST should not be charged GST on low value goods imported for use in their business, and will need to provide their ABN and state they are registered for GST to their supplier.

“As an Australian business, one of the issues will be making sure you don't get charged GST incorrectly and the reason for that is the overseas suppliers, if they have to register for GST, can get what is called a simplified GST registration and that means they don't have to get an ABN and they can't claim input tax credits but they don't have to issue a tax invoice,” said Mr Reynolds.

“So if I’m dealing with an overseas supplier who is charging GST but they don't have an ABN and they don't give you a tax invoice, I can't claim any input tax credits. As an Australian business, I need to be advising the offshore supplier that I'm registered and have an ABN — don't charge me GST because there is a risk there if I don't get a tax invoice, I can't claim a credit.

“If they charge GST by mistake, our clients in Australia can't get it back and they can't claim a refund in their BAS, they have to go to the guys overseas and say, ‘you made a mistake, can you please adjust the price’, and if you are not dealing with them on a regular basis, it is going to be very difficult.”

According to the ATO, drop shipping refers to goods sold to Australian consumers by Australian retailers who house these goods overseas at the time of sale, and these transactions are currently not subject to GST.

“It's not uncommon to warehouse stock in China, Singapore, or somewhere in Asia, and then sell it to a client but because it is mailed to a client through the post, it was not subject to GST but now of course that will be so you've got an issue with Australia suppliers who might be delivering goods from overseas into Australia and they will have a GST implication,” said Mr Reynolds.

“From an Australian advisers perspective we have to make sure our clients here know what the law is and making sure they are not registering when they don't have to, and registering when you need to and obviously making sure they are not getting charged GST when they shouldn't be.”

 

By: Jotham Lian
​18 JUNE 2018
www.accountantsdaily.com.au

ATO reveals top tax time mistakes, set to contact 1 million taxpayers

The ATO will be contacting over one million taxpayers either directly or through their tax agent in the coming months as part of its compliance activity, and have revealed the most common trouble spots for taxpayers at tax time. 

         

 

With tax time 2018 beginning this weekend, the ATO has continued its ongoing education campaign by publishing the five most common mistakes seen from its audits and reviews from previous years.

According to the tax office, the top five mistakes include taxpayers who are leaving out some of their income, those who claim deductions for personal expenses, those who fail to keep receipts or records, those who claim for something they never paid for, and those who claimed personal expenses for rental properties.

ATO assistant commissioner Kath Anderson said the tax office would be taking a more proactive approach this year in a bid to clamp down on agents and taxpayers who “push the boundaries”.

“We are increasing our investment in education and assistance, as well as reviews and audits. This year we are expecting to make contact with more than 1 million taxpayers either directly or through their agents,” Ms Anderson said.

“This tax time we will be paying close attention to claims for private expenses like home to work travel, plain clothes, and private phone calls. We will also be paying attention to people who are claiming standard deductions for expenses they never paid for.

“Around half of the adjustments we make are because the taxpayer had no records, or they were poor quality. Yet it’s so easy to keep your records, using the myDeductions tool in the ATO app. Just take a photo, record a few details and then at the end of the year upload the information to your agent or to myTax.”

Further, Ms Anderson said the ATO would be taking a close look at income, including capital gains on cryptocurrency.

“A temp job, cash jobs, capital gains on cryptocurrency, or money earned from the sharing economy is all income that must be declared. We are constantly improving our data matching tools and even a one-off payment may be enough to raise a red flag,” she said.

The ATO’s latest warning comes off the back of several public notices, including a case study of incorrect claims in relation to work-related clothing and laundry claims.

Work-related car expenses have also been put on notice, with the ATO’s focus coming as part of a large-scale education campaign in the build up to tax time 2018.

 

By: Jotham Lian
​28 JUNE 2018
www.accountantsdaily.com.au

Tax Office reveals adventurous, dubious claims ahead of tax time

The ATO has released several case studies of adventurous and misguided expenses claims from taxpayers, but some fear they’re being made an example of because the Tax Office cannot “audit their way out” of a large-scale expenses crackdown.

         

 

The Tax Office has embarked on a large-scale education campaign in the build up to tax time 2018, and has specifically placed work-related clothing and laundry claims on notice after a 20 per cent rise in claims over the last five years, with 6 million people claiming nearly $1.8 billion in laundry expenses last year.

In a bid to showcase examples of incorrect claims, the ATO has released several case studies, including one advertising manager who claimed $1,854 for clothing purchased at popular fashion retail stores to wear at company work functions and awards nights. Her claim was disallowed in full and a penalty issued for failing to take reasonable care.

Further, a car detailer claimed over $20,000 of work related laundry expenses over two years on the basis of calculating the expenses at the rate of $226 per hour, as he “valued his personal time”.

He then made a voluntary disclosure that saw his deductions disallowed, with no penalties applied because of the disclosure before the ATO’s audits progressed.

Conversely, a lab technician claimed $2,500 for the cost of purchasing protective boots and laundering his work uniform but failed to keep any receipts to verify his claim, resulting in a reduction to $144, using the ATO’s reasonable basis.

Speaking to Accountants Daily, the Institute of Public Accountants general manager of technical policy, Tony Greco, said the examples given show that the ATO is trying to influence taxpayers’ behaviour ahead of tax time.

“The dilemma that the Tax Office has is that they can't audit their way out of this problem, all they can do is look at the outliers and hope that by reporting that, that they change community behaviours,” said Mr Greco.

“They are well and truly above what most people would consider reasonable.

“We don't know if these are agent prepared returns or whether they are self-preparers and the question that needs to be asked is do these types of claims go through agents? If the answer is yes then I would find that unusual that an agent would find this acceptable.”

ATO commissioner Chris Jordan had earlier claimed that incorrect claims were more rampant in agent-prepared returns compared with self-prepared returns.

However, H&R Block director of tax communications Mark Chapman believes tax agents would not possibly allow such bold claims to pass.

“As tax agents, it’s our job to make sure that clients claim everything they’re entitled to but equally that they don’t claim what they’re not entitled to,” said Mr Chapman.

“As such, the claims we see are all legitimate and I’d expect that any reputable tax agent would report the same. The bigger risk is probably through self-lodged returns where there is a bigger danger in taxpayers misinterpreting the law and making an inaccurate claim.”

 

By: Jotham Lian
​18 JUNE 2018
www.accountantsdaily.com.au

SMSFs – Our ‘hardest’ jobs

What are the hardest aspects of running your self-managed super fund (SMSF)?

           

 

Do they include keeping track of the seemingly-constant regulatory changes, handling the impact of those changes, choosing investments or handling your fund's paperwork and administration?

If you name dealing with the changing regulations and choosing investments as your two hardest jobs, you are among hundreds of thousands of other SMSF trustees.

Alternatively, you may find yourself in the fortunate position of considering there are no hard aspects of running your SMSF.

The 2018 Vanguard/Investment Trends SMSF Report survey, released during the past week, asked SMSF trustees to list the hardest aspects of running an SMSF. (Multiple responses were permitted.) Their responses included:

  • Keeping track of changes in rules and regulations (27 per cent).
  • Choosing investments (26 per cent).
  • Dealing with the impact of regulatory changes (21 per cent). (A number of survey responses overlap, particularly concerning regulatory change and investment selection.)
  • Handling paperwork and administration (18 per cent).
  • Understanding regulatory changes (17 per cent).
  • Paying for accounting fees and charges (16 per cent).
  • Finding time to research investments (13 per cent).
  • Having concerns that other fund members cannot manage my SMSF if I'm unable to do so (10 per cent).
  • Completing / submitting my EOFY regulatory/tax returns (10 per cent)
  • Finding time to plan and review for my SMSF (9 per cent).

Interestingly, more than quarter of SMSF trustees do not find any aspect of running their fund hard.

The findings that many SMSF trustees have difficulty choosing investments and in dealing with regulatory change partly explain another finding from the survey that a large proportion of SMSFs recognise that they have unmet needs for professional advice.

Investment Trends estimates that 276,000 SMSFs – out of 593,000 funds in existence at the time of the survey – have unmet needs for advice.

By placing responses into clusters of similar types of advice, the researchers estimate that 136,000 SMSFs have broad unmet needs for advice on tax and super,128,000 for advice on investment selection and 110,000 for advice on post-retirement planning.

An estimated 77,000 funds have an unmet need for advice specifically on inheritance and estate planning, which falls under the broader category of post-retirement planning.

The survey responses may prompt SMSF trustees to think more about what aspects of running their funds are the toughest, given their circumstances. And then to logically plan what they are going to do about it.

Next week: Why SMSF trustees want estate-planning advice.

 

Written by Robin Bowerman, Head of Corporate Affairs at Vanguard.
18 June 2018
www.vanguardinvestments.com.au