Spry Roughley Articles

Bank lending practices for small and medium enterprises (SMEs) were in the spotlight when the Financial Services Royal Commission (FSRC) held round three of its public hearings from 21 May to 1 June 2018. This round of hearings focused on the conduct of financial services entities when providing credit to SMEs. The hearings will also explore the legal and regulatory regimes, as well as self-regulation under the Code of Banking Practice.  Read more…

The Government's seven-year personal income tax reform plan passed Parliament on 21 June 2018 intact after the Senate did not insist on earlier amendments that would have removed the third step from the plan. The Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018 then received Royal Assent on 21 June 2018 as Act No 47 of 2018.  Read more…

Amendments contained in the Treasury Laws Amendment (2018 Measures No 1) Act 2018 require purchasers of newly constructed residential properties or new subdivisions to remit GST directly to the ATO as part of settlement. This will apply from 1 July 2018.  Read more…

This tax time, the ATO will be closely examining claims for work-related clothing and laundry expenses. Assistant Commissioner Kath Anderson said, "last year around six million people claimed work-related clothing and laundry expenses, with total claims adding up to nearly $1.8 billion. While many of these claims will be legitimate, we don't think that half of all taxpayers would have been required to wear uniforms, protective clothing, or occupation-specific clothing." Clothing claims are up nearly 20% over the last five years and the ATO believes many taxpayers are making mistakes or deliberately over-claiming.  Read more…

The term "black economy" refers to people and businesses who operate outside the tax and regulatory systems, or who are known to the authorities but do not correctly report their tax obligations.

The Government is establishing a new Advisory Board to support its reform agenda to disrupt the black economy. The Minister for Revenue announced on 22 June 2018 that Mr Michael Andrew AO, who provided strong leadership to the Black Economy Taskforce last year, will chair the Black Economy Advisory Board.  Read more…

On 29 May 2018, the Productivity Commission released a draft report recommending changes to improve the superannuation system by addressing unintended multiple accounts and default funds that underperform.  Read more…

With the self managed superannuation fund (SMSF) annual return lodgment deadline upon us, minds should have already turned to meeting compliance requirements. The 2016–2017 financial year includes a few twists and turns which trustees should factor in to avoid late lodgment.  Read more…

With the end of the 2018 income tax year rapidly approaching, this issue of Client Alert draws attention to year-end tax planning strategies and compliance issues that taxpayers need to consider to ensure they are in good tax health. It focuses on the most important issues for small to medium businesses and individuals to consider so as to increase their tax refund or minimise their tax liability in respect of the 2018 income tax year. Read more…

Lower company tax rates and imputation

As illustrated in the following table, company tax rates are falling in Australia.

Income tax year	Turnover less than	Company tax rate
2016	$2 million	28.5%
2017	$10 million	27.5%
2018	$25 million	27.5%
2019-2025	$50 million	27.5%
2026	$50 million	26%
2027	$50 million	25%

Read more…

No more Budget repair levy

The Budget repair levy of 2% on the part of an individual's taxable income that exceeds $180,000 no longer applies in 2018. Therefore, the top marginal rate for 2018 (including the 2% Medicare levy) will be 47%, as opposed to 49% in the 2017 income tax year. The FBT rate is also 47% for the 2018 FBT year. Read more…

There have been recent changes to:

• the tax treatment associated with residential rental properties (eg travel deduction and depreciation changes);
• withholding tax obligations for purchasers of property:
  • 12.5% CGT withholding applies on the sale of any property for $750,000 or more, unless the vendor has a tax clearance certificate evidencing the vendor's Australian tax residency;
  • 10% GST withholding applies on the sale of new residential premises (from 1 July 2018);
• superannuation measures impacting home ownership (eg the first home super saver scheme and the superannuation downsizer incentive); and
• stamp duty and land tax issues – note that these are different in each state. Read more…

Keep relevant documents and make timely elections

Taxpayers must keep all relevant documents, usually for five years, to show that they have incurred the expense for which they are claiming a tax deduction. If a taxpayer needs to make an election to have a specific concession apply (eg for the small business CGT concessions, or family trust and FBT elections), they should ensure such an election is made by the relevant deadline.  Read more…

The ATO has recently published information about the "e-Audit" technology it utilises as part of its ongoing tax compliance activities. It says that if a taxpayer maintains electronic financial records, the ATO may use computer-assisted verification techniques to audit and analyse the records.  Read more…

The Federal Court has ruled that pay-as-you-go (PAYG) amounts were "withheld" from a taxpayer's salary so that she was entitled to a tax credit, despite the amounts never being remitted or notified to the ATO by her employers: Cassaniti v FCT [2018] FCA 92. The case illustrates the importance of records and documentation in establishing whether an employer has "withheld" PAYG in circumstances where that employer has not complied with their obligation to remit those amounts to the ATO.  Read more…

The government has released exposure draft legislation to ensure that a superannuation reversionary transition to retirement income stream (TRIS) will always be allowed to automatically transfer to eligible dependants on the death of the primary recipient. The amendments are designed to remove a trap in the current legislation that has created administrative difficulties for some funds.  Read more…

The ATO has released its latest small business benchmarks, providing over 100 different industries with average cost of sales and average total expenses. Businesses can see clearly what the relevant benchmarks are for their industry and use these to assess their own business.  Read more…

The foreign resident capital gains tax (CGT) withholding regime requires a purchaser of certain Australian property to withhold an amount from the purchase price (for remission to the ATO) if the vendor is a foreign resident. This regime is designed to assist the ATO in collecting CGT payable by foreign residents.  Read more…

The ATO has issued Law Companion Ruling LCR 2018/1, which covers the recently enacted measure to impose goods and services tax (GST) on supplies of imported low-value goods (ie goods valued at A$1,000 or less) from 1 July 2018. This measure was introduced to create a more "level playing field" for local retailers. The existing rules about GST on imports valued above $1,000 are unchanged.  Read more…

Contributions caps

The concessional contributions cap for 2018–2019 is $25,000 for members of all ages (unchanged from 2017–2018). As the concessional cap is now only indexed in $2,500 increments in line with average weekly ordinary time earnings, it is not expected to increase to $27,500 until 2023 based on the current rate of wages growth.  Read more…

The ATO has issued a fact sheet explaining its compliance approach to employers who fail to meet their superannuation guarantee (SG) obligations. This may include non-payment, under payment or late payment of SG contributions.  Read more…