By Juliet Helmke July 29, 2021 Australians in lockdown may have used the extra time on their hands to get their tax returns lodged early. Over 2.1 million refunds have arrived in bank accounts, according to the Australian Taxation Office (ATO), for a total of over $5.3 billion refunded so far this tax time. The average compensation across the refunds processed was $2,490. Many of the refunds will include the government’s low- and middle-income tax offset, which was first introduced in 2019. The program was extended in the most recent federal budget, covering people earning up to $126,000, at a cost of $7.8 billion. This year, under the offset, approximately 10 million Australians will receive a benefit back on their taxes ranging from $255 to $1,080. Assistant Treasurer Michael Sukkar noted the extra cash in Australians’ pockets came at a critical time for the Australian economy. “The injection of over $5.3 billion into the economy is welcome news during the current COVID-19 pandemic,” Mr Sukkar said. For those that hadn’t yet lodged their returns, Mr Sukkar encouraged people to take advantage of ATO’s Tax Help program, a free service open to anyone with simple tax affairs who earns around $60,000 or less in salary or wages each year. The program assists around 30,000 Australians annually in lodging their returns. Others who do not meet the requirements for the Tax Help program might be eligible for the National Tax Clinic program, a government-funded initiative independent of the ATO, which helps people who may not be able to afford professional advice and representation with their tax affairs.
Reminder of superannuation caps indexation for 2022 From 1 July 2021, the superannuation contributions caps have been indexed for the 2022 income year. The new concessional contributions cap for the 2022 financial year is now $27,500 (increased from $25,000). The new non-concessional (i.e., non-deductible) contributions cap for the 2022 financial year is now $110,000 or (where the ‘bring forward’ rules are applicable) $330,000 over three years (increased from $100,000 or $300,000 respectively). The CGT cap amount for the 2022 financial year is now $1,615,000 (increased from $1,565,000). Editor: The increase in the concessional contributions cap in particular will require those salary sacrificing additional superannuation to consider if they wish to increase their packaging arrangements so as to maximise the $2,500 increase in the cap. Ref: ATO website, Key superannuation rates and thresholds: contributions caps, updated 6 July 2021
Division 7A benchmark interest rate for 2022 remains unchanged The Division 7A benchmark interest rate for the 2022 income year remains unchanged from the 2021 rate of 4.52%. Ref: ATO website, Division 7A benchmark interest rate, 6 July 2021
Changes to STP reporting from 1 July 2021 Employers should have already been reporting through Single Touch Payroll (‘STP’) unless they only have closely held payees, or they are covered by a deferral or exemption. From 1 July 2021, there have been changes to STP reporting for small employers with closely held payees and quarterly reporting for micro employers. More specifically, for employers with closely held payees, employers must now report amounts paid to their closely held payees through STP. They can choose to report such payments via one of three methods, being: q actual payments each pay day; q actual payments quarterly; or q a reasonable estimate quarterly. For micro employers reporting quarterly, the STP quarterly reporting concession is only available to micro employers who meet certain eligibility requirements (which now include the need for exceptional circumstances to exist). Ref: ATO website, Changes to STP reporting from 1 July, 16 July 2021
Maximum contributions base for super guarantee The maximum super contributions base is used to determine the limit on any individual employee's earnings base for superannuation guarantee purposes on a quarterly basis. Employers do not have to provide the minimum quarterly support for earnings above this limit. For the 2022 financial year, the maximum contributions base has increased to $58,920 (up from $57,090). Editor: This means once an employee earns over $235,680 during the 2022 income year, no additional superannuation guarantee will generally be required to be paid by an employer. Practically, this means that the maximum superannuation guarantee contribution that an employer must pay for the 2022 income year is 10% of $235,680 (or $23,568). Ref: ATO website, Key superannuation rates and thresholds, Maximum super contribution base, updated 6 July 2021.
The ‘gigs up’ with a new sharing economy reporting regime Treasury has released draft legislation introducing the long-awaited third party reporting regime (proposed to apply from 1 July 2022). The new regime will initially require ride-sharing and short term accommodation online platform operators to report transactions they facilitate directly to the ATO. This measure was first announced in the 2020 MYEFO (following a recommendation from the Black Economy Taskforce established in 2016). It is intended to extend to all other types of sharing (‘gig’) economy online platforms such as food delivery and task services from 1 July 2023. Under this new proposed regime, the identity of participants and payments they receive will be reported to the ATO (twice a year) to identify entities who may not be meeting their tax obligations. Ref: Treasury website, Implementing a reporting regime for sharing economy platform providers, 6 July 2021
Taxable Payments Annual Reports (‘TPARs’) due 28 August 2021 TPARs are due to be lodged for businesses who have paid contractors to provide the following services: q building and construction; q cleaning; q courier, delivery or road freight; q information technology (‘IT’); or q security, surveillance or investigation. With specific reference to the TPAR due on 28 August 2021, the ATO has reminded taxpayers they may need to report payments made to contractors during the 2021 income year for the first time. This will particularly be the case where such payments were made for delivery services done on behalf of their business (i.e., perhaps as a result of a COVID-19 business ‘pivot’ during lock down periods). Importantly, the ATO has reminded taxpayers that they already have the records needed to lodge a TPAR from preparing their relevant activity statements including the: q contractor’s name, address and ABN (if known); and q total amounts for the income year of payments to each contractor (including GST) and tax withheld where the contractor did not quote their ABN. Ref: ATO website, TPAR – check if you need to lodge, 12 July 2021
New FBT retraining and reskilling exemption available Recent legislative amendments mean that employers who provide training or education to redundant (or soon to be redundant employees) may now be exempt from fringe benefits tax (‘FBT’). The ATO has reminded eligible employers that they can apply the exemption to retraining and reskilling benefits provided on or after 2 October 2020. There are no limits on the cost or number of training or education courses that employees may undertake. Furthermore, retraining and reskilling benefits that are exempt from FBT don’t need to be included in the FBT return, or in an employee’s reportable fringe benefits amount. The ATO has also advised that if an employer has already lodged and paid for their 2021 FBT return, they will need to amend to reduce the FBT paid for any exempt retraining and reskilling benefits. Ref: ATO website, FBT retraining and reskilling exemption now law, 19 July 2021.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
Super guarantee contribution due date for June 2021 quarter The due date for employers to make super guarantee contributions for their employees for the June 2021 quarter is 28 July 2021. Note that the super guarantee rate in relation to salary and wages paid on or before 30 June 2021 is 9.5%, but the super guarantee rate is 10% in relation to salary and wages paid from 1 July 2021 (even if they are paid in relation to work performed before that date). Also, contributions made (and received by the fund) after 30 June 2021 will not be deductible in the 2021 income year, even if they are made in relation to work performed during the 2021 income year.
Extension of time to make repayments on Division 7A loans Editor: Under a complying Division 7A loan from a private company, the borrower must make minimum yearly repayments ('MYR') before the end of the lender’s income year to avoid the loan being treated as an assessable dividend. To offer more support due to the ongoing effects of COVID-19, an extension of the repayment period is now available for those who were unable to make their MYRs by the end of the lender’s 2020/21 income year (generally 30 June). The borrower can apply for this administrative relief using the ATO's streamlined online application. Note that they must still make up the shortfall of their 2020/21 MYR by 30 June 2022. Editor: A similar extension was also available for the MYR for the 2019/20 year, and borrowers who obtained this extension needed to have made up that shortfall by 30 June 2021. If they didn't meet this deadline, they will need to either obtain a further extension of time for the 2019/20 MYR outside the streamlined process, or amend their 2019/20 tax return to include a dividend.
Rent or lease payment changes due to COVID-19 The ATO has provided updates regarding the tax implications when a landlord gives, or a tenant receives, rent concessions (such as waivers or deferrals of rent) as a result of COVID-19. For example, the ATO provides the following advice for tenants that have received a rent waiver. If the waived rent is related to a past period of occupancy that the tenant has already incurred and claimed a deduction for, they are still entitled to that deduction.
However: * if they have already paid the incurred rent and it has been waived and refunded to the tenant, they will need to include this amount in their assessable income when they receive it; or * if they have not already paid the incurred rent and it has been waived, the rent waiver will be a debt forgiveness. When such a debt is forgiven, the tenant will make a gain. The amount isn't usually included in the business's assessable income — it is instead offset against amounts that could otherwise reduce the business's taxable income. If the waived rent is related to a future period of occupancy, they will not be entitled to a deduction for that amount. Editor: These types of rent concessions can give rise to various tax implications for both tenants and landlords (including GST implications), so please contact our office if you would like assistance in this regard.
Lost, damaged or destroyed tax records The ATO knows that many taxpayers are facing lasting impacts left in the wake of natural disasters, so if they find their records have been lost or destroyed, whether in cyclones, floods or bushfires, the ATO can help. According to ATO Assistant Commissioner Tim Loh: “If you have a myGov account linked to the ATO, you’ll be able to view some of your records, including income tax returns, income statements and previous notices of assessments. If you lodge through a registered tax agent, they can also access these documents on your behalf.” Government agencies, private health funds, financial institutions and businesses provide information to the ATO which is available to tax agents and automatically included in returns by the end of July. If taxpayers have lost receipts due to a natural disaster, the ATO can accept reasonable claims without evidence, so long as it’s not reasonably possible to access the original documents (although the taxpayer may be required to tell the ATO how they calculated the claim).
Introducing SMSF rollover alerts Since February 2020, the ATO has been issuing alerts via email and SMS when certain changes are made to a self-managed super fund ('SMSF'). With the inclusion of SMSF rollovers in SuperStream, the ATO will send the fund an email and/or text message alert when the fund uses the SMSF verification service ('SVS') to verify the SMSF's details before making a rollover. Note that funds may use this service multiple times when actioning a single rollover request, which may result in receiving multiple alerts. These alerts are being sent to help safeguard retirement savings and reduce the risk of fraud or misconduct. If a fund receives an alert and is already aware of the rollover request, there is nothing more that needs to be done. However, if a member didn't request a rollover to be made to an SMSF, or they want more information, they will need to contact their existing super fund(s) as a matter of priority, as rollovers through SuperStream may be processed in as little as 3 business days.
SMSF limited recourse borrowing arrangements interest rates The ATO has confirmed that the following interest rates charged under a limited recourse borrowing arrangement ('LRBA') to an SMSF would be consistent with the safe harbour terms the ATO will accept for the 2021/22 financial year. Real property: 5.10% Listed shares or units: 7.10% Note that these rates are unchanged from those the ATO accepted for the 2020/21 year.
New ATO data-matching programs The ATO has advised that it will engage in two new data matching programs, as outlined below: q the ATO will acquire novated lease data from McMillan Shakespeare Group, Smartgroup Corporation, SG Fleet Group, Eclipx Group, LeasePlan, Toyota Fleet Management, LeasePLUS and Orix Australia for the 2018/19 through to 2022/23 financial years (relating to approximately 260,000 individuals each financial year); and q the ATO will acquire account identification and transaction data from cryptocurrency designated service providers for the 2021 financial year through to the 2023 financial year inclusively (relating to approximately 400,000 to 600,000 individuals each financial year).