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Welcome to the
 August 2019 edition of the Spry Roughley Report.

I am not sure of the import, nor the provenance, of that saying "May you live in interesting times", but we surely are! 10 year Government bonds priced under 1%. Who would have thought?

The significance of quantitative easing is evident in the prevailing low interest rate environment and that looks destined to continue for a number of years. This is dramatically revising valuations upward as the basis of such calculations are rooted in the risk-free rate of return – namely 10 year Government Bonds. Higher asset valuation will thus endure, although the resultant volatility in values is difficult to manage. At a recent financial investment webinar one of the investment managers had reset their long-term interest rate expectations at 2.5%, noting that "the days of 4%, 5% and even 6% are history as inflation will not re-emerge!". 

Some interesting cases have been decided that clarify the interpretation of personal leave and long service leave entitlements. For personal leave, the entitlement is 10 days per year and whilst payroll systems normally accrue for that based on a standard 7.6 hours per day, an entitlement of 76 hours per year, the Court held that for shift-workers working 12 hour shifts, their entitlement is actually 10 days at 12 hours per day – 120 hours. The employee is therefore entitled to be paid at the hours per day normally scheduled to be worked, which one would expect to be 12 hours per day! You may need to revisit your payroll accrual system if this applies to you. 

Long service leave entitlements, which arose from furlough in early Australian Government practice whereby civil servants were provided with paid leave to visit home after a period of employment in the colonies, has also become more complex as work patterns have evolved. The question arises as to entitlements to long service leave when a part-time or casual employee transitions to full-time work, and vice-versa. Long service leave now accrues at the rate of 8.67 weeks of leave for 10 years of service. The pay applicable for long service leave in most States for those with variable hours or casual employment is very complex and again, most payroll systems will not accrue entitlements reliably. Is it any wonder restaurants are in strife over their payroll practices? More "red tape" the Government may wish to take on board.

Some reminders to employers of recent legislative amendments: 

  • Cash-in-hand payments to workers are no longer tax deductible from 1 July 2019. This applies to payments to employees where tax is not withheld, and for contractor payments where they do not have an ABN;
  • The Director Penalty regime is being extended to superannuation guarantee payments, in addition to existing pay as you go withholding and GST breaches. There is only limited scope for Directors to escape exposure to personal liability once a direction to pay has been issued by the Commissioner. The liability must generally be settled within 21 days of any such direction. For superannuation guarantee payments, once they are overdue any Director Penalty Notice cannot be avoided, even if the company is subsequently liquidated. The 3 month correction period will no longer apply to such liabilities;
  • Employees salary sacrifice superannuation cannot be used to limit an employers obligation to make the full 9.5% superannuation contribution on the employees' pre-sacrifice pay.

For the more technically oriented, read on for specific insights, amongst which I noted that the Superannuation "downsizer" contributions for older Australians have exceeded $1 billion, accessed by 4,246 people since July 2018!

As usual, please do not hesitate to call us on (02) 9891 6100 should you wish to discuss how any of the points raised in the report specifically affect you, or click here to send us an email.

Warm regards,

Martin

Martin Roughley, Director
Spry Roughley Services Pty Limited



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ATO will inform certain tax agent clients their information is "Tax ready"

If tax agent clients' employers report through Single Touch Payroll (STP) and the clients are linked to ATO online services through myGov, the ATO will send them a myGov Inbox message to let them know that their end of year payment summary (income statement) has been marked by their employer as "Tax ready" and can be used in their tax return and they can access their income statement in ATO online services through myGov, or the tax agent can give them the information.

If tax agent clients do not already have myGov accounts, agents should let them know they do not need one for the agent to lodge their tax return. Tax agents can access their employment data and lodge for them once their information is "Tax ready".

Learn more about this...


Top mistakes to avoid this tax time: ATO 

The ATO has revealed some of the most common mistakes people make at tax time. Top mistakes include lodging before all prefill data is available or failing to report all income and claiming the wrong thing – work-related expenses is one area where people commonly make mistakes. To help taxpayers work out what they can claim, the ATO has developed 30 occupation guides for specific occupations; forgetting to keep receipts; and claiming for something never paid for.

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Pension deeming rates cut from 1 July 2019 

The Government has announced that it will lower the social security deeming rate from 1.75% to 1.0% for financial investments up to $51,800 for single pensioners and $86,200 for pensioner couples. The upper deeming rate of 3.25% will be cut to 3.0% for balances over these amounts.

The Minister for Families and Social Services, Senator Anne Ruston, said the changes would benefit about 630,000 age pensioners and almost 350,000 people receiving other payments. Under the new rates, age pensioners whose income is assessed using deeming will receive up to $40.50 a fortnight for couples, $1053 extra a year, and $31 a fortnight for singles, $804 a year.

The reduced deeming rates have been backdated to 1 July 2019. Any additional pension payment will flow through into pensioners' bank accounts from the end of September 2019 in line with the regular indexation of the pension.

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Personal tax cuts Bill passed without amendment, now law 

The Treasury Laws Amendment (Tax Relief So Working Australians Keep More Of Their Money) Bill 2019 fully implements the personal tax cuts measures announced in this year's 2019-20 Federal Budget. Starting immediately, low and middle income earners with an income up to $126,000 will receive up to $1,080 in low and middle income tax offset (LMITO), or $2,160 for dual income couples, with the increased tax relief to apply from the 2018-19 income year.

As a result of the amendments, the Treasurer said around 94% of Australian taxpayers are projected to face a marginal tax rate of 30% or less in 2024-25.

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ATO statement on administration of the low and middle income tax offset (LMITO) 

The ATO announced on 5 July 2019 that it is implementing the necessary system changes so taxpayers that have already lodged their 2018-19 tax returns will receive any increase to the low and middle income tax offset (LMITO) they are entitled to. Any tax refund will be deposited in the taxpayers nominated bank account.

The amount of the offset taxpayers may be entitled to, and the amount of any refund, will differ for everyone depending on individual circumstances such as income level and how much tax was paid throughout the year.

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STP reporting irregularities: ATO contacting businesses 

The ATO has advised tax agents that it is currently emailing Single Touch Payroll (STP) enabled employers who have either ceased reporting for over 45 days; or have submitted employees under multiple payroll or BMS IDs. Some of these businesses may be tax agent clients. These reporting irregularities may cause their employees to see incorrect, incomplete or multiple entries in their income statements.

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Employees guide for work expenses: ATO 

The ATO has released an employees guide for work expenses to help employees decide whether their expenses are deductible, and what records they need to keep to substantiate them. The Guide says that not all expenses associated with employment are deductible and also debunks some myths about work expense deductions.

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FBT, taxi travel and ride sourcing – ATO clarifies 

For businesses, taxi travel by an employee is an exempt benefit if the travel is a single trip beginning or ending at the employee's place of work. The ATO says taxi travel can also be an exempt benefit if it is a result of sickness or injury. 

For Not-For-Profits, depending on the type of NFP organisation, certain benefits they provide to employees may receive concessional treatment from FBT. However, some benefits may be exempt from FBT altogether.

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New ATO data-matching program – overseas movement data and HELP debt 

The ATO said it will acquire overseas movement data from the Department of Home Affairs (DHA) for individuals with an existing HELP, VSL or TSL debt. The data matching program will be conducted for the 2019-20, 2020-21 and 2021-22 financial years.

Those living and working overseas with a Higher Education Loan Program (HELP), Vocational Education and Training Student Loan (VSL) and/or Trade Support Loans (TSL) are required to update their contact details and submit an overseas travel notification if they have an intention to, or already reside overseas, for 183 days or more in any 12 months; and lodge their worldwide income or a non-lodgment advice.

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GST on low value goods – "very successful initiative", says ATO 

The ATO says it has now collected over $250 million in additional GST since the GST on low value goods measure began on 1 July 2018, outstripping forecasts by $180 million.
As businesses do not need to register unless they meet the A$75,000 GST turnover requirements, most small independent operators do not need to register and have not been affected by this measure.

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Super downsizer contributions reach $1 billion: Minister 

The Assistant Treasurer, Michael Sukkar, has announced that older Australians downsizing from their family homes have contributed $1 billion to their superannuation funds. The downsizer measure, which commenced on 1 July 2018, allows older Australians choosing to sell their home and downsize or move from homes that no longer meet their needs, to contribute the proceeds from the sale of their home into superannuation up to $300,000.

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Reasonable travel and overtime meal allowance amounts for 2019-20 

Taxation Determination TD 2019/11, issued on 3 July 2019, sets out the amounts the Commissioner treats as reasonable for the 2019-20 income year in relation to employee claims for overtime meal expenses; domestic travel expenses; and overseas travel expenses.
For employee truck drivers who receive a travel allowance and are required to sleep (take their major rest break) away from home, TD 2019/11 provides separate meal expense amounts for breakfast, lunch and dinner.

Learn more about this...

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