Summer 2021

Welcome to the end of the year & half way through the financial year. I hope you are on target to achieving your financial goals.

In January I will be in Queensland, in February in Victoria & country NSW visiting a range of clients. Please contact me if you would like to make a time to meet to review your business & financials. If you know a business owner or investor in these areas who needs an accountant please put me in contact with them, it would be great to assist them with their tax, accounting & financial needs.

As November drew to a close all eyes were on the new strain of the coronavirus, Omicron. Global shares fell sharply on fears that Omicron will spread more easily than other variants and existing vaccines may be less effective against it. Europe is already facing a spike in COVID cases and new lockdowns. Global oil prices fell 10% on Black Friday (November 26) on the threat of renewed border closures and reduced demand for air and road travel. Markets are likely to remain volatile until there is confirmation that a new vaccine can be created quickly, which experts believe is likely.

Elsewhere, the economic smoke signals were mixed. Australian company profits rose 4% in the September quarter, and 5.4% over the year, supported by government subsidies. Not surprisingly, the NAB business confidence index rose 11.2 points in October to 20.8, its second highest result on record. But wages growth is lagging, up 0.6% in the September quarter and 2.2% over the year. Unemployment increased from 4.6% to 5.2% in October while underemployment rose from 9.2% to 9.5%. While retail sales jumped 4.9% in October as lockdowns ended in some states, consumers remain jumpy. The ANZ-Roy Morgan consumer confidence rating fell over 2 points in October to 106.0. Adding to hip pocket nerves, the national average unleaded petrol price hit a record high of 170.4c a litre in November. The Aussie dollar fell 4c in November to US71.2c.

Whatever your plans for the festive season, we wish you and your family a very merry Christmas & an exciting new year!

Daniel

Tax Alert December 2021

As COVID-19 turbulence starts to settle, the ATO is moving away from its supportive position and returning to its more usual compliance focus.

That means taxpayers need to be aware their financial affairs will come under renewed attention in the year ahead.

Data gathering programs increase

In recent months the ATO has announced programs to gather data on various aspects of Australians’ financial lives to use in its ongoing data-matching projects.

Recent programs include gathering data on property management and rental bonds, cryptocurrency, online selling and novated leases for the upcoming financial year (2022-23). The ATO will also be collecting data on payments made by government agencies such as Comcare, the Department of Health, the NDIA, Department of Veterans’ Affairs and the clean energy regulator.

Taxpayers who buy and insure high-value lifestyle assets will also be under the microscope, with the ATO looking to collect details that will “assist with profiling [to obtain] a holistic view of a taxpayer’s wealth”. Under this program, the taxman will be obtaining information from insurance companies for the period 2020-21 to 2022-23 about assets exceeding certain nominated thresholds.

These high-value assets include boats valued over $100,000, motor vehicles (including caravans) and thoroughbred horses valued over $65,000, fine art worth over $100,000 per item and aircraft valued over $150,000. Data obtained from insurers will include individual client identification and policy details.

Overseas gifts or loans under scrutiny

The ATO has also announced it will be increasing scrutiny of undeclared foreign gifts or loans from related overseas entities, including family and friends.

The regulator says it has encountered many situations where Australian taxpayers are deriving assessable income or capital gains offshore but failing to declare these in their income tax returns. The ATO will be looking at arrangements where taxpayers are attempting to avoid tax on foreign assessable income by disguising amounts as gifts or loans.

Anyone receiving genuine monetary gifts or loans should keep supporting documentation. Inheritances count as gifts, so if you receive an inheritance from overseas, get a certified copy of the person’s will or estate distribution statement.

Focus on working from home deductions

On a positive note, if you are still working from home due to COVID-19, you can continue using the shortcut method for claiming deductions until 30 June 2022.

From 1 July 2022, you will need to use either the traditional fixed rate or actual cost methods and meet their eligibility and recordkeeping requirements.

The ATO says it’s currently reviewing the 52 cents per hour fixed rate method to make it easier and simpler to use, given more people will be working from home in the longer term.

Backpacker tax under fire

Employers paying working holidaymakers will need to keep a close eye on developments in this area following a decision by the High Court that tax rates applied to these employees is discriminatory as it is based on nationality.

The decision could affect the applicability of the backpacker tax for workers from countries with double tax agreements with Australia. According to the ATO, this means working holidaymakers from Chile, Finland, Germany, Japan, Norway, Turkey, UK, Germany or Israel.

The ATO is currently considering the implications of the High Court decision and will provide further guidance for employers. In the meantime, employers should continue using the tax rates in the ATO’s published withholding tables for backpackers.

Self-education expense threshold to go

The government has made good on its May 2021 Budget promise to remove the $250 non-deductible threshold for claiming work-related self-education expenses.

The Treasury Laws Amendment (2021 Measures No.7) Bill 2021 is currently before Parliament. If passed, it will remove the current threshold for taxpayers claiming self-education expenses. It’s also expected to simplify the claims process in your annual tax return.

The start date for the change is likely to be 1 April or 1 July 2022.

Reminder on super stapling

If you are an employer, don’t forget to request super fund details from new employees, now the government’s super stapling rules are in place.

If a new employee doesn’t choose a super fund, you must request their stapled super fund from the ATO if they have one. This fund is linked to them and must be used for your Superannuation Guarantee (SG) contributions unless the employee requests otherwise.

If you would like help getting your tax affairs in order for the new year, contact our office today.

Single Touch Payroll (STP) changes ahead

Just when you thought you had all your systems bedded down for Single Touch Payroll (STP), from the start of next year the government is expanding the information on employee payments you need to provide.

So, what will the changes mean for your small business?

STP reporting to expand

Under the current STP rules, employers are required to report payroll information to the ATO each time they pay an employee salary or wages, pay-as-you-go (PAYG) withholding or superannuation.

In the 2019-20 Federal Budget, the government announced an expansion of the data it collected through the STP system starting from 1 January 2022.

The change is called STP Phase 2 and under the new rules, employers will be required to report additional information on or before each pay day.

According to the government, the aim of STP Phase 2 is to “reduce the reporting burden for employers who need to report information about their employees to multiple government agencies”.

The additional data collected from 1 January 2022 will also be used in the administration of the social security system.

New STP Phase 2 requirements

The key changes in your reporting include providing extra information on the employment basis for each of your employees (full-time, part-time or casual).

You will also need to provide information on the tax treatment of their salary. This is to help the ATO identify the factors influencing how you calculated your employee’s PAYG withholding. For instance, where your employee has notified you that they have a Study Training Support Loan.

When an employee ceases employment, you will now need to provide information on the reason, for example, voluntary separation, redundancy or due to illness. This will remove the need for you to provide former employees with separation certificates.

Phase 2 also gives you the option to include child support garnishees and child support deductions in your STP report, reducing the requirement to provide a separate remittance advice report to the Child Support Registrar.

More detailed information

Reporting of income types and country codes is also being introduced with STP Phase 2 to help the ATO identify employee payments with specific tax consequences. The government believes this will allow your employees to complete their personal tax returns more easily.

A significant change with Phase 2 will be the new requirement to separately itemise the components of any gross payment amounts such as bonuses and commissions, directors’ fees, paid leave, salary sacrifice, overtime and allowances.

Allowances will need to be reported separately, not just expense allowances that may be deductible for your employees. Any lump sum payments you make to employees need to be reported under new labels.

Although you need to provide additional information in your STP reports, the way you submit the report, due dates and types of payments covered in your reports will stay the same. Your tax and super obligations and the requirements for end of year finalisation will also stay the same.

Benefits from the STP expansion

The government claims employers will receive a number of benefits from the introduction of STP Phase 2.

A key one is a reduction in the duplicate information you are required to provide to different government agencies, reducing unnecessary interactions with these departments.

You will also no longer be required to send tax file number (TFN) and withholding declaration information to the ATO, as this will be captured in the employment conditions section of your STP report.

By more clearly defining the components making up an employee’s gross income, the government says it will be easier for employers to understand their various obligations.

Assistance with new reporting requirements

The government is working closely with digital service providers to ensure they update their software, so it is ready to commence collecting the additional information from 1 January 2022.

The specific information your business needs to provide for STP Phase 2 depends on the particular software product you use, and how you manage your payroll.

Contact us if you would like more information or help transitioning your business to the new STP requirements.

Australia is ripe for a road trip

With much of the country opening up after a long period of travel disruptions due to COVID-19, Australian’s now, more than ever, are taking the opportunity to get on the road and discover our own backyard. And, if you’re able to work flexibly, you may be able to extend that holiday a little longer or work each day whilst you’re on the road.

You may think caravanning was just for the ‘grey nomad community’ or ‘we’re too young to be travelling in a caravan’ but times have certainly changed. Due to our international borders being closed for so long, road trips are becoming increasingly more popular and so is the mode of transport we use to get around.

Thor Industries, owners of Jayco and Airstream, began seeing a marked increase in sales back in May and June 2020, and sales are continuing to grow. So much so, they now have a backlog on orders well into 2022.ⁱ

If you are thinking of taking a road trip, there are a number of considerations when choosing the type of caravan or RV for you and your family. You may want a caravan or trailer that is smaller and easier to tow on the back of your car or 4WD, or a large and luxurious RV may be more your style, where you are able to tow a small SUV at the back for off-roading.

Why choose a road trip?

When it comes to road trip destinations in Australia, we are totally spoilt for choice and Mother Nature offers some spectacular scenery along the way. Whether you prefer hugging the magnificent coastline, exploring the lush tropical north, or heading inland and going bush, there is something special for everyone.

While a road trip provides the opportunity to experience some of Australia’s beautiful landscapes, studies have found that being amongst nature also helps alleviate stress and anxiety, improves our physical health and can also boost our mood.ⁱⁱ

There are many other benefits to leaving the big smoke behind and travelling to regional areas to see and experience new and exciting things. You’ll no doubt spend money in most of the towns that you stop in on your journey, boosting the local economy when buying locally made arts and crafts, local produce, or perhaps you’ll book a tour if they are available.

Where to go – that is the big question…

Australia is made for a road trip and there are plenty of Instagram worthy photo opportunities to take advantage of too, so whether it be long or short, here are some of the most scenic drives in our country:

Cairns to Cape York (QLD): Cape York Peninsula (northernmost point in Australia), Mossman Gorge

Great Ocean Road (VIC: The Grotto, Loch Ard Gorge, 12 Apostles

NT – Nature’s Way (NT): Kakadu National Park, Katherine Gorge, Litchfield National Park

Perth to Albany and return (WA): Silo trail, Stirling Range National Park

Waterfall way (NSW): Bellingen, Dorigo National Park, Ebor Falls,

West Coast Wilderness (TAS): Cradle Mountain, Lake St Clair, Pencil Pine Falls

The Epicurean Way (SA): Fleurieu Peninsula, McLaren Vale, Adelaide Hills and Barossa wine regions

Plan ahead

You may be a seasoned caravanner or a first timer, but here are some travel tips to help you and your family on your next adventure:

Ensure everything is mechanically sound before you head off. Check if are there any weight limits along the way, what are the roads like – are all the roads sealed or will there be dirt tracks or rivers you may need to cross? Check the weather forecast. Pack essential items like medical kits, physical road maps as there may not be phone reception in some areas and if necessary, pre-book accommodation sites.

If you’re travelling with children, you may need to stop more frequently, so you must factor in the additional time it will take to reach your destination – timing is everything.

All in all, remember to appreciate what we have in this big, beautiful country, it truly is one of a kind. As the saying goes – ‘take only photos and leave only footprints’ and prepare yourself for what could be the holiday of a lifetime.

i https://www.businessinsider.com.au/rv-thor-industries-has-14-billion-order-backlog-inventory-2021-6

ii https://www.stress.org/how-being-outdoors-and-getting-active-impacts-stress-management

What super stapling means for employers

If there’s one certainty in business these days, it’s constant change. Now there’s an extra step you need to take with new employees to comply with the superannuation choice of fund rules.

From 1 November 2021, whenever a new employee starts with your business and they don’t select a super fund for their Super Guarantee (SG) contributions, you will need to ask the ATO for their stapled super fund details.

New fund choice rules

Under the new rules covering choice of super fund, every employee is now stapled (or linked) to an existing super account that follows them for life as they change jobs unless they choose otherwise.

This reform to the super rules was introduced by the Federal Government to reduce duplicate account fees and insurance premiums paid by employees on their super. Up until now, many employees ended up with a new super account each time they started a new job, often losing track of multiple accounts and unnecessary fees along the way.

A stapled fund can be any type of eligible super fund, including SMSFs and defined benefit super funds.

The new stapling rules do not affect your existing employees, so in most situations you will only need stapled fund details if a new employee fails to give you a choice of fund form.

You must, however, request the stapled super fund details for any new employee who is a temporary resident or who is covered by an enterprise bargaining agreement or workplace determination made before 1 January 2021.

If the employee doesn’t have a stapled fund, you can make your SG contributions into your employer default MySuper product (unless they are subject to an enterprise bargaining agreement or modern award stipulating a prescribed super fund).

What to do from 1 November 2021

To ensure you’re ready to request stapled fund details, check you have enabled online services with the ATO and your authorised representative has all the necessary permissions in place.

When you onboard a new employee on or after 1 November 2021, the first step of offering your employee an ATO Superannuation Standard Choice Form within 28 days remains the same. If they fail to choose a super fund, you will then need to check with the ATO whether or not your employee has a stapled super fund.

Before you can make a stapling request, however, you need to have lodged either a Single Touch Payroll (STP) event or a tax file number (TFN) declaration for your new employee with the ATO.

If your new employee has a stapled fund, you simply pay your SG contributions into that fund. Employees always retain the right to change super funds if they wish and their new super fund then becomes their stapled fund.

More than one super fund

If your employee has more than one super fund, they are automatically stapled to the fund that most recently received a super contribution on their behalf. Where there is more than one active super fund, the most appropriate fund (such as the one with the largest balance), will be selected by the ATO.

The new stapled fund rules don’t mean your business can avoid nominating a default super fund to receive your SG contributions.

If your new employee doesn’t have a stapled fund, you will need to make your contributions into this fund.

The reforms mean it’s also a good idea to check whether the superannuation clauses in your employment contracts for new employees cover the possibility of super contributions being made into an employee’s stapled fund.

As an employer, if you fail to meet your obligations under the choice of fund rules – such as checking for a stapled fund – additional penalties may apply on top of the normal SG Charge (SGC) penalties.

If you would like more information on stapling, or the rules about making contributions for your employees’ super in general, please contact our office today.

Important Dates December 2021

Business

Company Tax

1 December: Payment due date for companies that were required to lodge by 31 October