The ATO wants to better understand the difficulties small business owners face so they can address these issues to make it easier for small business owners to run their business. One way they are doing this is through running ‘Small business fix-it squads’.
‘Small business fix-it squads’ are rapid-design projects where small business owners, tax professionals, government agency representatives and intermediaries work together to examine a problem from the small business perspective. The squad then develops recommendations to fix the problem.
Membership for a particular squad depends on the problem that needs solving. Suitable members are chosen to assist with finding solutions.
If you have a tax-related problem affecting your business, you can email the ATO and they may set up a squad to come up with a solution.
Chat to your tax adviser if you have tax-related problems firstly as they too may be able to come up with an appropriate solution.
If you are interested in helping the ATO improve its interaction with small businesses, you may be able to join the ATO’s small business consultation panel. To find out more, you can visit the ATO website.
In previous editions of TaxWise, we noted changes that were going to occur in the following areas:
The changes have now become law. See earlier editions of TaxWise for details of the changes.
The ATO reminded employers over the festive season that employers who provide entertainment to their employees during the festive season (or at any other time of the year) should remember to think about the following:
Depending on the sort of entertainment you provide to your employees, there may be different FBT implications.
Talk to your tax adviser about the entertainment you provided to your employees over the festive season (did you have a Christmas party? Did you give your employees any gifts?)
From 1 April 2016, small business employers (with turnover of less than $2 million) will be able to provide your employees with multiple electronic devices to use for work without incurring a fringe benefits tax (FBT) liability.
You can provide:
If you are looking to provide multiple devices to your employees, you are able to purchase these at any time, but you can’t give them to your employees until 1 April 2016 or they will be subject to FBT.
Note that providing these devices may be a benefit in addition to or part of your employee’s salary or wages package.
If you are planning on providing multiple devices to your employees, talk to your tax adviser first to ensure you properly comply with the FBT rules.
The ATO is consulting with small business owners and tax professionals on how to reduce the costs of GST reporting for small business with a turnover of less than $2 million.
This includes simplifying account set up, record keeping and business activity statement (BAS) preparation by removing unnecessary GST labels on BAS.
They have begun to test out proposed solutions with a number of stakeholders including agents, small business industry associations and software developers.
We will keep you updated through future editions of TaxWise as this review progresses.
If you are a small food retailer, you most probably buy and sell products that are subject to GST as well as products that are GST-free. Others buy products that are subject to GST and are GST-free and sell only products that are subject to GST. As such, it can become quite complicated to accurately record your sales that are subject to GST and others that are not, making accounting for GST complicated.
The ATO introduced the simplified accounting method for GST purposes (SAM) to make it easier for business owners to account for GST. These methods help business owners to work out the amount of GST they are liable for in each tax period.
There are five methods to choose from, so you need to decide which one is best for your business. Though prices must be set according to the Australian Competition and Consumer Commission’s (ACCC’s) guidelines.
The ATO has developed a guide to assist business owners with accounting for GST which can be accessed on the ATO website. However, to ensure you get it right, it would be best to speak to your tax adviser to ensure you have the right systems in place for tracking, and meeting, your business’ GST obligations.
On 12 November 2015, the ATO issued a Taxpayer Alert about arrangements where a purported partnership with a private company partner is used to enable individuals to access business profits without paying top-up income tax at their marginal rates of tax: TA 2015/4 (12 November 2015).
The ATO is currently reviewing arrangements where profits are claimed to be directed through a purported partnership that has a private company as a partner. Most of the profits are taxed to the private company at the corporate tax rate, but are accessed by one or more individuals without paying additional tax reflecting their higher marginal tax rate.
The ATO is currently undertaking a pilot compliance program reviewing a number of cases involving arrangements of this type and will be engaging with additional taxpayers over the coming months.
Should you be involved in arrangements of this kind, talk to your tax adviser to see if your arrangement could come under review by the ATO.
SuperStream is continuing to be rolled out for small businesses. As such, the ATO has been looking for ways to assist small businesses which may need support or assistance to implement SuperStream.
The ATO recently launched an intensive communication program, delivering practical help and information via email and SMS to registered businesses across 22 industries. They have also contacted the relevant industry associations, publishing editorial and social media and hosting dedicated SuperStream online information sessions (webinars).
Specific Industry segment information can be found here. Some of the segments for which there is specific information are:
The ATO has also developed a checklist for employers which can be accessed on the ATO website.
The ATO is contacting businesses in the building and construction industry about information that businesses have provided on their Taxable Payments Annual Report. The ATO will be contacting businesses who have:
The ATO will advise businesses that are reviewed what the review has found and will suggest ways to make it easier for the business to complete their reports more accurately in the future, such as using the ABN Lookup tool or ATO app to check a contractor’s ABN or if they are registered for GST.
If you incur expenses creating or maintaining your business’ website, you may be able to claim some of these costs as a deduction in your tax return.
You might be able to claim costs incurred before you start up your business over a 5 year period after your business starts up (ie claim 20% of the cost per year).
If you have started your small business already and have chosen to use the simplified depreciation rules, you might be able to deduct the expense immediately.
Different rules apply if you have elected to allocate expenditure on in-house software to a software development pool. From 1 July 2015, in-house software expenditure incurred and allocated to a software development pool is deductible over five years.
You may also be able to claim a deduction for the ongoing expenses of running and maintaining your website, such as domain name registration and server-hosting in the income year that you incur this cost.
Seek professional advice from your tax agent or adviser about how to claim website development costs.
National Innovation and Science Agenda – tax changes announced
On 7 December 2015, a suite of new tax and business incentive measures was announced under the Commonwealth government’s National Innovation and Science Agenda (NISA): Prime Minister’s media release (7 December 2015); Treasurer’s media release (7 December 2015).
The intention is that the government’s tax and business incentives under the NISA will encourage smart ideas to encourage innovation, risk taking and build an entrepreneurial culture in Australia.
The following tax and business incentive measures have been announced as part of the agenda. The government will:
The government will:
The full text of the National Innovation and Science Agenda is available on the NISA website.
In the 2015-16 MYEFO statement, released on 15 December 2015 by the Treasurer, the Hon Scott Morrison MP, and the Minister for Finance, Senator the Hon Mathias Cormann, the government announced that it will simplify the reporting by employers of their PAYG withholding obligations and superannuation contributions by progressively implementing Single Touch Payroll (STP).
Under STP, employers will automatically report individual employee payroll information to the ATO using their business management software. STP will also introduce reporting of superannuation contributions information to the ATO when payments are made to super funds. Employers will have the option to pay their PAYG withholding at the same time they pay their staff.
The government will introduce streamlined processes for individuals commencing employment. Individuals will have the option of completing their Tax File Number declaration and Superannuation Standard Choice forms using myGov or through their employer’s business management software.
This measure will be phased in as follows:
To assist small business that wish to take advantage of the benefits of STP, the government will provide businesses with a turnover of less than $2 million with a $100 non-refundable tax offset for expenditure on Standard Business Reporting enabled software.
This offset will apply from 1 July 2017, and will be available for software purchases or subscriptions made in the 2017-18 financial year only.
Data matching programs
The ATO has announced that it will acquire details of real property transactions for the period 20 September 1985 to 30 June 2017 from State and Territory revenue and land titles departments and offices and rental bond authorities in every State and Territory in Australia: Australian Government Gazette No C2015G02019 (8 December 2015).
The objectives of this data matching program are to:
The ATO is currently working with insurance providers to identify policy owners on a wider range of asset classes. These asset classes include:
The purpose of the ATO obtaining this information is to gain a better understanding of certain taxpayers’ wealth and to help the ATO to provide tailored services to taxpayers to ensure they meet their tax obligations.
During January and February, the ATO will issue formal notices to insurers to provide the ATO with these policy details. The ATO anticipates it will receive 100,000 records where the different asset classes meet certain threshold amounts.
TaxWise® News is distributed by professional tax practitioners to provide information of general interest to their clients. The content of this newsletter does not constitute specific advice. Readers are encouraged to consult their tax adviser for advice on specific matters.