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Taxpayers confused by Scott Morrison’s $1,080 tax refund

The excitement over the tax sweetener is quickly turning to confusion, as many Aussies wait for a handout that will never arrive.

       

 

The refund is actually a tax offset, which is calculated when you lodge your income tax return

The tax offset reduces your overall tax bill, so you might end up having to pay less if you receive a tax bill.

The low and middle income tax offset is a non-refundable offset, which means any unused offset amount itself cannot be refunded or reduce the Medicare Levy.

Taxpayers with a taxable income that does not exceed $37,000 will receive a low and middle income tax offset up to $255.  People with a taxable income that exceeds $37,000, but is not more than $48,000 will receive $255, plus an amount equal to 7.5% to the maximum offset of $1,080.

Quick Guide

                                       Taxable Income                          Rebate

                                              0 to $37,000                              255

                                       37,000 to 48,000                   255 + 7.5%

                                       48,000 to 90,000                             1,080

                                     90,000 to 126,000                   1,080 – 3%

                                              126,000 plus                                   0

 

 

AcctWeb

Common STP set-up mistakes – ATO

Authorisation failures and software set-up issues are among some of the top mistakes accountants and their business clients are making with the new Single Touch Payroll regime, with one in 10 failing their first submission.

         
 
 
With the Single Touch Payroll regime now over a month old for employers with 19 or fewer employees, ATO assistant commissioner Jason Lucchese has shed light on some of the common mistakes he continues to see with the initial set-up of STP.
 
The first involves authorisations to allow the registered tax or BAS agents to act on behalf of the client for STP lodgement.
 
“One of the most common mistakes we’re seeing is that some employers and tax professionals don’t have internal authorisations in place before they commence or commence reporting,” Mr Lucchese told Accountants Daily.
 
“That’s where the person who will be sending the STP report may not be the business owner or the public officer, and they need to make sure they’ve made appropriate delegations or they’ve put appropriate delegation.
 
“For example, the payroll manager, they may need to be added as an authorised contact if they’re interacting with the ATO about STP matters.
 
“Similarly, if you are a registered tax or BAS agent, to lodge STP reports on a client’s behalf, they obviously must authorise that agent and they’ll need to make sure that they are linked to their business in ATO systems as part of that initial set-up.”
 
The other most common mistake involves connecting to the ATO using a software service ID (SSID).
 
Mr Lucchese noted that STP reports will not be received unless the correct SSID is provided — usually done by calling the ATO or through a one-off notification through access manager.
 
“For tax agents, with single clients or themselves, they can phone us to provide that SSID or they can also complete a one-off notification through access manager as well,” he said.
 
“For agents that have multiple clients, they can also do that through a bulk request form through the tax or BAS agent portals through the ATO website.”
 
These mistakes are still leading to a 10 per cent failure rate on first submission, an early learning first raised in June when about 65,000 small business employers were reporting through STP.
 
That number has now jumped to over 300,000 out of the total 750,000 small business population, with just over a month out before the 30 September transition deadline.
 
 
 
Jotham Lian 
13 August 2019 
accountantsdaily.com.au
 

Proposal to hold directors liable for GST set to pierce corporate veil

The proposed extension of the director penalty regime to GST liabilities could spell the end of the corporate veil for small to medium enterprise directors, says an insolvency specialist.

         
 
 
With the reintroduction of Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019 last month, the commissioner could soon be allowed to collect estimates of anticipated GST liabilities and make company directors personally liable for their company’s GST liabilities.
 
This follows on from the current director penalty regime which makes directors personally liable for PAYG withholding amounts and SGC obligations.
 
Speaking with Accountants Daily, Worrells Solvency and Forensic Accountants partner Stephen Hundy said that with many SME directors providing personal guarantees for a company’s obligations, the latest proposal to extend director penalty notices to GST could potentially see the end of the corporate veil.
 
“With a large number of SME companies we deal with, the directors have exposed themselves personally for their company’s debts due to the large number of personal guarantees provided,” Mr Hundy said.
 
“Together with the ATO’s power to issue DPNs in respect of unpaid PAYG withholding tax and superannuation guarantee charge (SGC), this can mean in some cases that an SME director may be personally exposed for a large majority of the debts of their company. 
 
“In many cases, the directors have no choice but to provide personal guarantees in order to obtain credit from financiers and suppliers. In a lot of cases, however, we find that directors do not know what they have personally guaranteed and also they are unaware that they are personally liable for PAYG withholding tax and SGC,” he added.
 
“With tax debts, we see the majority of debt owed to the ATO comprising PAYG withholding tax and GST. At present, a DPN cannot be issued in respect of unpaid GST; however, if the director penalty regime is extended as proposed to include GST, this will increase the extent to which directors’ assets may be at risk in the event of an insolvency.”
 
While the bill has not yet passed, Mr Hundy believes accountants should remind their clients of their various obligations and the prospect of having GST added to that list of liabilities.
 
“Advisers and accountants should ensure that their director clients are aware of what they are guaranteeing and also that they are liable for PAYG withholding tax and SGC. In respect of taxation lodgements, it is advisable to lodge these with the ATO even if the associated debt cannot be paid, as this may offer some protection in the future if things go awry,” Mr Hundy said.
 
“New company directors should always conduct some due diligence in respect of a company’s unpaid statutory obligations before consenting to be appointed; otherwise, they may find themselves personally liable for past company debts. Conversely, exiting directors should ensure that they are released from any personal guarantees which they may have provided for a company’s obligations.
 
“As always, seeking advice early is the key when things get tough. This not only applies to directors but to advisers and accountants, who should seek out specialist advice at the earliest opportunity to enhance the prospects of their client avoiding insolvency.”
 
 
 
Jotham Lian 
14 August 2019 
accountantsdaily.com.au
 

September 2019 – vital statistics for Australia

       
 
One great source of data about Australia. Become better acquainted with the country we love.

An up-to-date snapshot of Australia's vital statistics.  

Please click on the following link to see all this interesting information. The areas covered are:

  • Overview
  • Markets
  • GDP
  • Labour
  • Prices
  • Money
  • Trade
  • Government
  • Business
  • Consumer
  • Housing
  • Taxes
  • Climate

 

Access all this data here.

 

 

tradingeconomics.com/australia

 

Tax Commissioner wants to turn black economy to ‘lighter shade of grey’

ATO Commissioner Chris Jordan believes the agency’s local business visits are helping to change community behaviour, while reassuring small businesses that their tax performance fares well on an international scale.

         
 
Seeking to provide some context over the ATO’s recently released tax gap findings, Commissioner Chris Jordan said that despite small business taxes paid coming in 12.5 per cent below what was owed — a higher percentage than either large corporations or individual taxpayers — the sector is doing well in terms of tax compliance.
 
“Internationally, we are performing really well in terms of our small business tax performance,” he said while speaking at the National Small Business Summit in Melbourne.
 
According to Mr Jordan, “the small business economy is paying about 95 per cent of the tax that it should” when you take out the black economy. That figure drops just below 90 per cent when black economy activity is included.
 
In other countries, that figure is “substantially less”, he said.
 
“I think that is a solid achievement… the vast majority of the small businesses there are doing their best to comply.”
 
However, Mr Jordan noted that with the tax gap research showing an $11.1 billion shortfall in taxes actually paid versus what was owed, “there is still work to be done”.
 
“We will hold to account those who do try to cheat the system so that we can continue to protect the people who are doing the right thing,” he said.
 
“Our role as regulators of small business is really about fairness, about protecting against inequity… and making it as easy as possible for people to comply with the regulations.”
 
This, he suggested, is why the government and the ATO are so aggressively targeting the black economy.
 
“We’re hoping to see the black economy change from black to at least a lighter shade of grey over time.”
 

ATO visits ‘have an impact’

 
Mr Jordan also spoke about the ATO’s plans to visit up to 10,000 SMEs across the country each year.
 
The commissioner said that media coverage of where ATO inspectors will visit next attracts considerable attention.
 
“People do sort of pay attention to it, it does have an impact,” he said.
 
“I was only talking to someone last night who was saying that the local baker that they go to has gone from a cash-only sign to EFTPOS now.”
 
 
 
Adam Zuchetti 
02 September 2019
accountantsdaily.com.au
 

Changes to the Private Health Insurance Statement

Most taxpayers know that if they do not have adequate private health insurance, that there can be a charge or a surcharge on the tax assessment.

         

 

The taxable income also impacts the government rebate received by the health insurer, which effects the net premium. 

The law has recently changed in regards to the way health insurers give you information about your private health insurance premiums.  Previously, your health insurer was required to send a private insurance statement to each adult covered by the policy by 15 July each year.  It is now optional for them to send you this information.  The health insurer may send the statement by email, email, or a link to an online version.

If you do not receive a statement and your tax agent does not, you will need to contact your health insurer.  We have observed that most insurers have provided a statement this tax year, but no one can predict what will happen next tax year.

The Australian Taxation Office will income test your share of the policy, regardless of who paid the premiums and how many other people are covered on the policy.

A few taxpayers may be interested in the reason for two lines on the statement.  Premium and rebate calculations are based on a year ending 31st March and one line is a code for premiums, before that date and the other code is after that date.

The most significant item is that your policy confirms an adequate level of private health hospital cover throughout the year.  If not, you may be liable for Medicare Levy.

 

 

AcctWeb

Up to 9 in 10 ‘other’ expenses adjusted as ATO reveals dodgy claims

Close to 90 per cent of claims in ‘other’ deductions were adjusted last year as the ATO reveals a number of unusual claims it disallowed, including a $58,000 wedding.

       

 

ATO assistant commissioner Karen Foat has revealed that nearly 700,000 taxpayers claimed almost $2 billion of ‘other’ expenses last year.

Accountants Daily understands that a random sample of 400 of those ‘other’ expenses claims saw adjustments made to 88 per cent of them.

Last year, the ATO revealed an $8.7 billion inpiduals tax gap, with adjustments required for 72 per cent of its random sample of 868 returns.

With ‘other’ expenses, the ATO said it saw a mix of incorrect claims from self-preparers and returns lodged by a tax agent by refrained from giving a breakdown in figures.

“For self-preparers, the errors range from honest mistakes to deliberate over-claiming. In some instances, we have seen cases where a taxpayer has been dishonest with their tax practitioner about the legitimacy of expenses incurred,” an ATO spokesperson told Accountants Daily.

$1,700 in Lego and $24,000 for the cost of raising twins

The top five most outrageous claims seen by the ATO in tax time 2018 included a taxpayer attempting to claim $1,700 for the cost of Lego kits purchased for their children throughout the year.

Another saw a taxpayer trying to claim wedding expenses of approximately $58,000, claiming this was in relation to a work related overseas conference.

“He fraudulently claimed $33,087 in his return and $25,259 in his wife’s. This taxpayer was prosecuted,” said the ATO.

One taxpayer made a claim for “the cost of raising twins” totalling $24,000, while another claimed for the “cost of raising three children”, with one taxpayer stating “new born baby expensive” when making their claim.

Many taxpayers tried to claim the purchase of a new car, in the excess of $20,000, with one taxpayer attempting to claim $3,659 for a car purchased as a gift for their mother.

“A couple of taxpayers claimed dental expenses, believing a nice smile was essential to finding a job – and was therefore deductible. It isn’t and their claims were disallowed,” said Ms Foat.

“Where people make genuine mistakes, we simply disallow the claim. But when people are deliberately making dishonest claims, particularly for large sums, we will disallow the claim and may impose a penalty.

“We want people to understand what expenses they can claim and receive every dollar they are entitled to. But making incorrect claims that are personal or private take funding away from providing essential community services, and that’s not ok.”

 

 

Jotham Lian
31 July 2019
accountantsdaily.com.au

 

 

Downsizer Super Contribution

Australians who are 65 years old or older may make a downsizer contribution into their superannuation of up to $300,000 from the proceeds of seeling their home.

       

 

The downsizer contribution can still be made even if the contributor has a total superannuation balance (TSB) greater than $1.6 million.

A few points are:-

  • will not affect the TSB until 30 June at the end of the financial year
  • can only be made for the sale of one home
  • not tax deductible and will be taken into account in determining eligibility of the Age Pension
  • there is no requirement to purchase another home
  • must have held an ownership interest in the home for 10 years
  • limited to the lesser of $300,000, or the total capital proceeds received from the sale of the interest in the home
  • can be both owners (i.e. $300,000 each)
  • within 90 days of the change of ownership.

Early planning will ensure you don’t miss the boat.

 

 

AcctWeb

Tax payers to receive beefed up tax returns.

Great news!! The Tax Office will now start processing beefed-up tax refunds after the government’s $158 billion tax cut plan was passed in full.

       

 

Read more on the Budget website.

The Treasury Laws Amendment (Tax Relief So Working Australians Keep More of Their Money) Bill secured passage in the Senate on Thursday, with stage one delivering a doubled end-of-year rebate for low and middle-income earners to $1,080, up from $530.

Stage two, for the 2022–23 and the 2023–24 income years, will see the first personal rate of income tax of 19 per cent raised to the $45,000 threshold, up from $41,000. The top threshold for the 32.5 per cent tax bracket will also be raised from $90,000 to $120,000.

The third stage, set for 2024–25 and later income years, will see flatter tax brackets, namely 19 per cent for those earning between $18,201 and $45,000, 30 per cent for incomes between $45,000 and $200,000 and 45 per cent as the highest rate for incomes above $200,000.

With the ATO set to start fully processing 2018–19 tax returns from today, clients eligible for the offset can expect to see the additional credits from 16 July, the official date that the Tax Office expects to start paying refunds.

“The key tip is that to get the tax offset, you have to lodge a tax return, and the earlier you lodge, the earlier you’ll get the tax offset,” said H&R Block director of tax communications Mark Chapman.

“The ATO won’t officially begin to issue refunds until the middle of the month… that will give the ATO plenty of time to add the offset into returns that have already been lodged.

“So, lodging your tax return today should ensure that you get the full offset that you’re entitled to be added to your refund payment.”

 

 

Jotham Lian
05 July 2019
accountantsdaily.com.au

 

 

10 top global corporations since 1998

A very interesting, graphical, summary of the monsters of our global economy.  Fascinating stuff!!

The following video is a really great representation of how the top 10 global corporations have changed since 1998.

 

         

 

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