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

The end of the 2019 financial year is almost upon us! It has been another fascinating year with its share of ups & downs both economically and politically.

There are a number of options available to optimise your accounting and tax position at year end, with one of the most interesting being your year end stock valuation. Of course that all starts with a good stocktake. A well run stocktake will help ensure your stock is where expected and appropriate. Interestingly, for tax purposes, you can value stock either at cost (landed), market selling price or replacement value. The different valuation bases can be applied selectively to individual stock items and can be changed each year to reflect current circumstances. This means that while most of your stock is valued at cost, it may be more beneficial to value slow-moving, damaged or obsolete stock at market selling price or replacement value. A write-down in stock value gives rise to an immediate tax deduction, which of course is beneficial to your cashflow.

Beyond the immediate year end issues, the start of the new financial year is an opportunity to shift your focus forward. We note that many business owners are concerned about determining the value of their business and how they continue to build that value. For some, it is a matter of being "sale ready"; for others it is about succession and/or their estate planning.
Valuations may also be required for restructures, inter-generational succession, key employee incentives, accessing tax concessions, disputes or family breakdowns, bank funding, due diligence and planning for sale. Clarity around real value is important for such considerations and a valuation will help owners understand the key value drivers of their business. Spry Roughley is able to provide valuation services tailored to your requirements, from an indicative valuation for less formal needs; a calculation engagement that is compliant with valuation standards and ATO guidelines, or full substantiated valuation, as appropriate.

For those with outstanding tax debts under $100,000 (including interest charges and penalties) now is an opportune time to engage with the ATO and negotiate a payment plan on your terms. Be prepared to pay an upfront amount of 10% but the payment terms can be up to 24 months. Amounts over $100,000 require far more assessment by the ATO to be approved. Call us if you need assistance on such matters.

And finally, for businesses needing to be compliant with accounting standard AASB 16 dealing with leases, Spry Roughley can offer a complete solution. We have selected a software product, Nomos One, which can manage your leases and generate the appropriate accounting entries needed for what is now a very complex area. We can provide the system and/or support with training and processing, tailored to your requirements and this is especially appropriate for those requiring an audit.

For more details on any of the issues mentioned, please contact us.

Best wishes for a prosperous 2019/20 financial year. Please read on for more technical updates…

  • Requirement registered to lodge 2019 tax and other returns – The Notice of Requirement to Lodge a Return for Income Year Ended 30 June 2019 has been registered. This covers income tax returns and other lodgements.
  • Payment summaries and STP this tax time – taxpayers may need a myGov account – For the first time, as a result of the introduction of Single Touch Payroll (STP), taxpayers may need a myGov account in order to get the payment summary details they need to complete their 2019 tax returns.
  • STP exemptions and deferrals – ATO reminders – With reported unpreparedness for (STP), mainly among small businesses, the ATO has reminded businesses about the STP exemptions and deferrals that are available.
  • Ombudsman calls on ATO to cease small business recovery action where tax disputes are before AAT – The Ombudsman has called for the ATO to immediately cease debt recovery action where tax disputes were before the AAT. The ATO states that its long standing policy on debt recovery for cases in dispute at the AAT is to only pursue disputed debt in "exceptional circumstances" and that there are only ''very rare cases''.
  • Cryptocurrency: record keeping requirements and data matching program – The Commissioner has published a gazette notice setting out the record keeping requirements for cryptocurrency owners and traders. The data obtained from cryptocurrency designated service providers is being used to identify the buyers and sellers of crypto-assets and quantify the related transactions.
  • Super death benefit for de facto partner upheld – The Federal Court has dismissed an appeal against a decision to pay a superannuation death benefit pension to a deceased's de facto partner instead of a lump sum to his estate. It was not satisfied that the Tribunal had misunderstood its task or failed to take into account all the circumstances of the relationship.
  • Protecting Your Super - how new law may affect SMSFs – The Treasury Laws Amendment (Protecting Your Superannuation Package) Act 2019 introduces a number of reforms to protect individual's super savings from undue erosion by fees and unnecessary insurance.
  • ATO reminds SMEs about paying super for backpackers – The ATO has reminded businesses that employ backpackers that they may need to pay superannuation guarantee for them.

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,

Shaun

Shaun Madders, Director
Spry Roughley Services Pty Limited



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Requirement registered to lodge 2019 tax and other returns

The Notice of Requirement to Lodge a Return for Income Year Ended 30 June 2019 has been registered. This covers income tax returns and other lodgments for franking account returns, including special rules for late balancing corporate tax entities that elect to use 30 June as a basis for determining their franking deficit tax liability; venture capital deficit tax returns; ancillary fund returns; trustees of SMSFs; and member information statements by superannuation providers.

The Notice also covers use of approved forms for lodgment, lodgment deferrals, lodgment exemptions, and penalties for non-lodgment.

The Notice of Requirement for Parents with a Child Support Assessment to Lodge for the Income Year Ended 30 June 2019 has also been registered.

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Payment summaries and STP this tax time – taxpayers may need a myGov account 

While it is being reported that many businesses are not ready for Single Touch Payroll (STP), one report suggests that 70% of small and medium-sized entities (SMEs) are not ready, the employees of businesses that are operating STP face some changes.

As a result of the introduction of STP, taxpayers may need a myGov account in order to get the payment summary details they need to complete their 2019 tax returns. How taxpayers receive their payment summary or income statement from their employer depends on how their employer reports their income, tax and super information to the ATO.

Employers need to let employees know if they won't be giving them a payment summary this year.

Employees with more than one employer may receive both a payment summary and an income statement. In that situation, employees will need to check that income from their payment summaries is included in their tax return.

This major change for 2019 will see many taxpayers needing to set up a myGov account and link it to the ATO. This is not necessarily a straightforward process. If taxpayers have a myGov account already linked to other services such as Centrelink or Medicare, adding the ATO can be problematic. For example, the name on each account must match exactly – the ATO is likely to have a taxpayer's full name whereas a Centrelink account may only have first and last name. This may prevent the ATO from being added to a taxpayer's myGov account. The situation can be rectified but may require a trip to a Centrelink office.

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STP exemptions and deferrals – ATO reminders 

With reported unpreparedness for Single Touch Payroll (STP), mainly among small businesses, and with employers having less than 19 employees needing to report their employees' tax and super information through STP from 1 July 2019, the ATO has reminded businesses about the STP exemptions and deferrals that are available.

There are exemptions for reporting through STP for a particular financial year, for certain payments, or for certain employees.

Where there are extenuating circumstances that impact an employer's ability to regularly report on or before pay day (eg regular intermittent internet connectivity issues that result in the ATO receiving its report a couple of days after pay day), they can apply for a recurring deferral.

Learn more about this...


Ombudsman calls on ATO to cease small business recovery action where tax disputes are before AAT 

The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) has issued a report into the ATO's enforcement of debt recovery. In a press release, the ASBFEO called for the ATO to immediately cease debt recovery action where tax disputes were before the Administrative Appeals Tribunal (AAT).

The report contains three key conclusions and seven recommendations. The ASBFEO also reminds small business taxpayers in dispute with the ATO of its Small Business Concierge Service, which started on 1 March 2019. This service provides legal assistance for AAT appeals for a limited cost.

The ATO issued a press release outlining its response to the report stating its long standing policy on debt recovery for cases in dispute at the AAT is to only pursue disputed debt in "exceptional circumstances" and that there are only ''very rare cases'' (eg in 2017-18, it took garnishee action against small business in just four cases).

The ATO further stated that it will give consideration to the report's recommendations while it awaits the Australian National Audit Office's review of how the ATO manages tax debts for small business.

Learn more about this...


Cryptocurrency: record keeping requirements and data matching program 

The Commissioner has published a gazette notice setting out the record keeping requirements for cryptocurrency owners and traders. The ATO advises that it is undertaking a data matching program for 2014-15 to 2019-20 for such entities. 

The data obtained from cryptocurrency designated service providers (DSPs) is being (and will continue to be) used to identify the buyers and sellers of crypto-assets and quantify the related transactions. Data will be matched against ATO records to identify individuals who may not be meeting their registration, reporting, lodgment and/or payment obligations.

The ATO will be working with other regulators, in particular, the Australian Transaction Reports and Analysis Centre (AUSTRAC) and the Australian Securities and Investments Commission (ASIC) to ensure that tax law requirements align with a whole of system approach.

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Super death benefit for de facto partner upheld 

The Federal Court has dismissed an appeal against a decision to pay a superannuation death benefit pension to a fire fighter's de facto partner instead of a lump sum to his estate in Howard v Batistich [2019] FCA 525. 

The trustee of the Crown Employees Superannuation Fund determined that the respondent, Ms Batistich, was a "de facto partner" of the deceased at the date of his death under the Superannuation Act 1916 (NSW) and the Interpretation Act 1987 (NSW). Accordingly, the trustee determined that Ms Batistich was entitled to a fortnightly pension. If there was no spouse (including a de facto), a lump sum death benefit of $350,000 would have been payable to the deceased estate.

The deceased's parents, as the administrators of his estate, complained to the Superannuation Complaints Tribunal that Ms Batistich did not meet the definition of de facto partner.

In dismissing the appeal, the Court said it was not satisfied that the SCT had misunderstood its task or failed to take into account all the circumstances of the relationship.

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Protecting Your Super – how new law may affect SMSFs 

The Treasury Laws Amendment (Protecting Your Superannuation Package) Act 2019 introduces a number of reforms to protect individual's super savings from undue erosion by fees and unnecessary insurance. The ATO says it will now be able to proactively consolidate eligible unclaimed super money into eligible active super accounts, including SMSFs and small APRA funds, if an individual hasn't requested a direct payment of this money or for it to be rolled over to a fund of their choice. Under the Protecting Your Super package, the ATO says SMSFs may receive a rollover of consolidated unclaimed super money for members.

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ATO reminds SMEs about paying super for backpackers 

The ATO has reminded businesses that employ backpackers that they may need to pay superannuation guarantee (SG) for them.

Backpackers on working holidays are considered temporary residents, and are entitled to superannuation guarantee if they are paid $450 or more before tax in a calendar month. Once they leave Australia, they can claim the super paid to them as a Departing Australia superannuation payment (DASP) providing all requirements are met.

Determine if backpackers on working holidays are eligible for super by using the ATO's Super guarantee eligibility decision tool.

Learn more about this...

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  • Our firm is built on being attentive to and extensively knowledgeable about our clients so we can work with them to help them to both achieve their goals and protect them from risk. We are forward looking in our advice and always aim to be practical and right.
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  • In business, there is so much going on and you don’t always have all the answers. That’s when you need to know who to call. Our clients call us.
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