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Correcting GST Errors

         

 

If a taxpayer finds a mistake made on a previous activity statement, they can:-

  • Correct the error on a later activity statement if the mistake fits the definition of a “GST error” and certain conditions are met;
     
  • Lodge an amendment – the time limit for amending GST credits is four years, starting from the day after the taxpayer was required to lodge the activity statement for the relevant period; or
     
  • Contact the Australian Taxation Office (ATO) for advice

The benefit of correcting a GST error on a later activity statement (where the conditions are met) is that the taxpayer will not be liable for any penalties or general interest charge (GIC) for that error.  The ATO says it is generally easier to correct a GST error on a later activity statement than to revise an earlier activity statement.  Revising an earlier activity statement that contains an error can incur penalties or GIC.

Accountants often prefer to amend the activity statement, to match the returns better with the accounting records, particularly if that results in an extra refund.

 

 

AcctWeb

Jail time for GST fraud

Warning:  Very recent cases where GST fraud have landed business people in jail.

         

 

One example:  A luxury property developer who caused a loss of $3.4 million to the Commonwealth through GST fraud has been sentenced to six years’ jail after an ATO investigation.

Manly man Benjamin Ensor was sentenced in the NSW District Court to six years in jail and ordered to pay reparations of more than $1.8 million.  Ensor’s conviction came after an ATO investigation found he had structured his companies to fraudulently obtain GST credits and failed to report property sales to avoid paying GST, causing a loss to the Commonwealth of $3.4 million.

Between 2008 and 2011, Ensor lodged false BAS statements on behalf of nine companies of which he became the sole director, using the money he obtained to fund the purchase of luxury items including a marina at Lake Macquarie, a catamaran and a unit to live in.

The funds were also used to meet expenses incurred during the course of developing five beachfront luxury apartments in Manly.  He reported his companies’ expenditure was more than $24 million and claimed more than $2.2 million in GST refunds.  He also failed to report the sales of the Manly apartments on which he should have paid GST of more than $1.5 million.

In making GST refund claims, he created false invoices that showed related companies provided project management services, and produced fraudulent invoices for the purchase of high-value excavators, trailers, trucks and catamarans.

ATO assistant commissioner Aislinn Walwyn said the conviction represented the agency’s stance against illegal phoenix behaviour and tax crimes.  “This case exhibits classic illegal phoenix behaviour. Companies were deliberately liquidated to avoid paying creditors and taxes. New companies continued operating the same or a similar business with the same ownership,” Ms Walwyn said.

 

Another example:  The Maroochydore District Court sentenced David Latemore to two and a half years in jail for GST fraud and ordered him to repay more than $130,000 that he fraudulently obtained.

Between October 2008 and February 2013, Latemore lodged eight BAS and fraudulently obtained $138,723 in GST refunds and attempted to obtain a further $962,772.  Although Latemore stated that he was the director of a motor vehicle and yacht business, an ATO audit found the company had no business activity, did not make any business sales or purchases, had not paid any GST and had no entitlement to receive the GST refunds claimed.  He also supplied false documents to the ATO to support his claims.

 

Jotham Lian (composite of two articles)
29 January and 4th February 2019
accountantsdaily.com.au

 

Instant asset write-off threshold upped to $25k

The government has increased the threshold for the instant asset write-off to $25,000 as it looks to entice the small business sector ahead of a federal election.

           
 
Announced yesterday, Prime Minister Scott Morrison has pledged to increase the small business instant asset write-off to $25,000 from $20,000.
 
The write-off will be available for small business with an annual turnover of less than $10 million and will apply until 30 June 2020.
 
The government will be seeking to legislate the change when Parliament resumes on 12 February.
 
This measure is estimated to have a cost to revenue of $750 million over the forward estimates period, with an estimated 3 million small businesses eligible to access the write-off.
 
“The $25,000 instant asset write-off will improve cash flow by bringing forward tax deductions, providing a boost to small business activity and encouraging more small businesses to reinvest in their operations and replace or upgrade their assets,” Mr Morrison’s office told Accountants Daily.
 
The government’s decision to raise the threshold comes after Labor announced that it would introduce the Australian Investment Guarantee, a permanent feature which will allow businesses to immediately deduct 20 per cent of any new eligible asset worth more than $20,000.
 
Labor has also pledged to introduce a dedicated small business minister in cabinet if it forms government.
 
 
Jotham Lian 
30 January 2019 
accounantsdaily.com.au

Strategies to handle scam phone calls and problem e-mails.

         

 

Many people have received telephone calls, recorded messages and e-mails from scammers claiming to be from organisations such as the ATO, Australia Post and Telstra saying money is owed, asking for personal information or access to their computer. One recorded message supposedly from the ATO informs you ‘you have committed tax fraud and a warrant is out for your arrest’! Another very popular scam is to say that there is a problem with your internet or a security flaw in your computer’s firewall or similar.

Why do scammers succeed?

Unfortunately, the main reason is the person receiving the call or e-mail.  Scammers are trained in looking for signs of hesitancy or weakness and when they sense this they are merciless.  The real problem is that the scammers know well the topics that will attract or scare people into action: monies owed, a big win, a technical issue, or to help someone. 

Scammers are paid based on their success and they are highly trained in keeping people engaged and on the line. 

Phone calls.

You need to be strong if you’re to avoid being caught out and the simplest way to do this is ask who they work for, what is their phone number, say you’re not interested and hang up. Or, call them out and say they are ‘a scam call’, then they often hang up on you.  Phone scammers are inventive and some are ‘Phone spoofing’, this is when someone disguises the number they are calling or texting from by changing their caller ID. They hijack or imitate phone numbers, either to imitate a person, business or department to get money or information. They often choose interstate numbers so you do not immediately know you are answering an overseas call centre or potential scam call.

The best strategy though, is not to let them talk for more than a few seconds, and hang up. Hang up too soon or and they will keep ringing you back!

Major organisations will never ring up and ask for access to your computer or threaten that a warrant is out for your arrest. If a demand is made that relates to the ATO then call your accountant to make sure if ATO debts are owed and when.

E-mail scams & viruses

Common scam emails currently doing the rounds are invoices from companies that either do not exist or scam emails from organisations like ‘Australia Post’ (you have a package being delivered) or ‘ASIC’ (you have a tax debt).  We may suspect they are fraudulent but too many of us still respond.

The compulsion to open that invoice or attachment is strong.  Remember, everyone's e-mail address may be on scammers' lists so you will be exposed. 

A second, and dangerous risk, from such e-mails is that they can have infected attachments and links that can do real damage to you, your computer, your business’s computer network and your files.  Ransom ware is still out there.

Three things that help with scam, spam and malicious e-mails.

  1. Simply delete them but some businesses and corporations use e-mail to save costs for statements and invoices and other information, so you have to be vigilant not to delete these by mistake. 
     
  2. This is your best defence and relates to the sender’s e-mail address.  It is NOT possible for a scammer to use the exact same domain name as, say, the ATO or AFP.  HOWEVER, they are getting very close.  When you receive an e-mail, ALWAYS check the URL address it came from before reading or clicking – specifically the part after the @ sign. You will notice that many after the @ sign are simply ridiculous, but you will also receive some that have the supposed sender in the address, for example @ato.zzz.net.au.  Always remember that the ATO bit is part of the zzz.net.au domain (the spammer) and NOT the ATO's domain.  If in doubt contact the business or organisation by phone or a known email address to confirm email content.
     
  3. The Subject line.  There is a field of marketing that focuses on how to get people to react to a Subject line.  So, reacting quickly to a subject line about a fine from the ATO is exactly what the scammer is hoping for.  A subject line like this can make you click on part of the content or attachment before you think of reading or checking the sender’s address.

 

Peter Graham
AcctWeb, an ISP and domain hosting company for over 20 years.

Australian Taxation Office (ATO) Scam Alert: Fake Demands for Tax Payments

         

 

The ATO has noticed an increasing trend of scammers demanding tax payments through Bitcoin and ATMs.

The ATO’s advice is simple; it will never ask a person to make a payment into an ATM or via gift or pre-paid cards such as iTunes and Visa cards or ask for direct credit to be paid to a personal bank account.

Taxpayers who lodge through a registered tax agent generally have longer to pay their bill and will be advised by their tax agent if and when any tax payment is due.  However, the ATO warned that scammers have been known to attempt to impersonate tax agents too.

The golden rule – hang up if you don’t already know the person and ring us.

If you want to report the call, the ATO toll free scan line is 1800 888 540.

 

 

AcctWeb

Expiry of 900,000 interest-only loans set for January

If you feel a bit aggrieved by having to move away from a workable interest only loan then you won't be alone.  Apparently there are 900,000 loans in the same boat!

         

 

New market research indicates about 900,000 interest-only loans will revert to principal and interest payments this month, following a tougher year on the mortgage market for property investor clients.

Comparison site finder.com.au drew this estimate from an analysis of housing finance data from the Australian Bureau of Statistics (ABS).

The expirations follow restrictions from the banking regulator, APRA, on interest-only lending. APRA’s cap saw interest-only loan approvals fall by about 55 per cent in the 12 months to June 2018.

APRA’s restrictions and the revelations of the royal commission also formed part of the reason individuals and businesses alike struggled to secure or extend financing arrangements in 2018.

While IO approvals are dropping, the demand remains strong, according to finder.com.au’s data, which shows that despite house values continuing on its downward slide and the RBA trying to discourage Australians from taking on riskier debt, nearly a quarter of investors and one in five owner-occupiers are seeking IO loans.

For those already in interest-only contracts, the switch to principal and interest could add an additional $400 a month to borrowers’ repayments – or about $5,000 per year – based on current interest rates.

APRA announced plans to ditch its cap on interest-only lending in December last year, taking effect this month.

 

Business Reporter
04 January 2019
accountantsdaily.com.au

Cap lifted on popular financing option for clients

APRA will remove its cap on interest-only loans from next year, a move which is set to open more financing options for clients in 2019.

       

 

From 1 January 2019, APRA will remove its 30 per cent limit on interest-only residential mortgage lending for banks and other lenders.

This cap was originally put in place in March 2017 in a bid to reinforce sound lending practices, and has resulted in a cooling down of the interest-only lending market.

According to APRA, the introduction of the benchmark has led to a marked reduction in the proportion of new interest-only lending, which is now significantly below the 30 per cent threshold.

What does this mean for property investors?

In short, this move opens up opportunity and competition in the lending market for investors in 2019.

“This enables us to have more conversations with clients about the choices that they’ve got, and the options for them with their properties,” mortgage broker and owner of Pink Finance Nicole Cannon told sister publication Smart Property Investment.

“The cap restricted how many lenders we could use, and some priced investment lending so that it’s not competitive. In some cases it’s almost just as cheap to do principal and interest as it is to do interest only, she added.

Ms Cannon believes the caps have “done their job” of educating investors about the pros and cons of interest-only loans.

“I don’t think lifting the cap will mean investors flock back to interest-only arrangements, but it does open up the conversation and options. I think the awareness is now out there to be mindful of product and structure, and ensure it meets your long term goals,” Ms Cannon said.

Approach with caution

APRA warned lenders that lifting the caps will not mean its supervision of interest-only lending practices is relaxed.

“In APRA’s view, interest-only mortgages, and in particular owner-occupied interest-only lending, remain a higher risk form of lending,” APRA said in a letter to authorised deposit taking institutions (ADIs).

“As a result, APRA expects that ADIs will maintain prudent internal risk limits on interest-only lending,” APRA said.

“These internal limits should cover both the level of new interest-only lending and the type, including lending on an interest-only basis to owner-occupiers and lending on an interest-only basis at high LVRs.”

Access to finance has proven difficult for accountants and clients alike in recent months, in the wake of the royal commission and tougher regulatory conditions from APRA.

In September, interest-only loans represented 16.2 per cent, or $61.2 billion, of new home loan approvals, according to the latest data from APRA. This represents a 54.9 per cent pe in the last quarter

 

Katarina Taurian
19 December 2018
accountantsdaily.com.au

 

Tax, SMEs set to be ‘political football’ in 2019 as election nears

Small and medium businesses are set for a busy year of tax promises as political parties look to sway voters ahead of a Federal Election, says one mid-tier.

       

 

With the Federal Budget due to be delivered a month early on 2 April 2019, Australians will likely be headed to the polls in May.

Speaking to Accountants Daily, RSM principal, Jarrad Turnbull believes SMEs will be thrust into the spotlight as political parties look to claim last minute votes

“The SME space will be a political football in the lead up to the election, predicted to be in May 2019, as all sides of politics attempt to gain voter support,” said Mr Turnbull.

“After the election, the challenge will be the make-up of the Senate cross bench and their views on business taxation as compared to the government.

“This will result in some uncertainty for SME’s as the government may need to negotiate with the crossbench to allow its legislative reforms to proceed.”

Over the last 12 months, SMEs saw an acceleration of already legislated tax cuts for business under $50 million, as well as changes to the definition of a base rate entity.

The accelerated tax cut plan will see those companies facing a tax rate of 26 per cent by 2020–21 before finally dropping down to 25 per cent in 2021–22.

From the 2017-18 income year, a 'bright line' test will determine eligibility for the lower company tax rate. Under the bright line test, companies that receive more than 80 per cent of their income in passive forms will not be eligible for the lower company tax rate of 27.5 per cent.

“Overall 2018 was a quiet year for tax in the SME space. There was a lot of talk about the small business space, but little in the way of change,” said Mr Turnbull.

“Many businesses are enjoying the increase in the threshold for small business concessions to $10 million, up from the previous $2 million. As well as companies with a turnover of up to $25 million appreciating the lower 27.5 per cent tax rate, which will increase to $50 million in the 2019 year.”

 

By Jotham Lian
28 December 2018
accountantsdaily.com.au

Golden Rules for Deductions

         

 

The Australian Taxation Office now uses sophisticated data analytics to assess a range of deductions and claims. 

Taxpayers must follow three golden rules when making a deduction:

  • the taxpayer must have spent the money (and not been reimbursed);
  • the claim must be directly related to earning the taxpayer’s income;
  • they must keep records to prove it; and
  • taxpayers may receive a “please explain” or have a claim disallowed.

 

AcctWeb

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