The ATO is remitting failure to lodge penalties for eligible small businesses.  Businesses which have not yet taken advantage of the ATO’s lodgement penalty amnesty only have until 31 December 2023 to do so.

Businesses must meet the following criteria in order to be eligible for the amnesty:

• had an annual turnover under $10 million when the original lodgement was due;
• have overdue income tax returns, business activity statements or FBT returns that were due between 1 December 2019 and 28 February 2022; and
• lodge between 1 June and 31 December 2023.

Importantly, when taxpayers lodge their eligible income tax returns, business activity statements and FBT returns, failure to lodge penalties will be remitted without the need to apply.

The amnesty does not apply to privately owned groups or individuals controlling over $5 million of net wealth.

Directors who bring their company lodgements up to date can also have penalties remitted and, if they are reliant on company lodgements to finalise their own tax affairs, any failure to lodge penalties will be remitted.  This also applies to eligible lodgements made between 1 June and 31 December 2023.

Employers should ensure they declare and estimate their annual remuneration as requested on the WorkCover annual Rateable Remuneration Submission.

Each financial year, employers receive both a Workcover Insurance Premium and a Rateable Remuneration Submission. In paying the premium, employers can often overlook the requirement to complete the annual Rateable Remuneration Submission.

The annual Rateable Remuneration Submission requires the employer to certify the actual rateable remuneration and estimate the following year’s remuneration.  A failure to do so, can result in interest and penalties being applied.   To assist clients with this process, we will include the relevant dates in our lodgement obligations section of the relevant newsletter.

In addition, employers are reminded of the need to revise the estimate of rateable remuneration if it exceeds or is likely to exceed the most recent estimate of remuneration by 20%.  WorkSafe should also be notified of any changes to your workplace or business activity, a change in your legal business, a change of address or the contact person for your insurance changes.

If you require any further assistance or clarification regarding your WorkCover obligations please contact our office.

Employers are reminded that, in relation to their SG obligations for the quarter ending 31 December 2023, the due date is 28 January 2024.

If the correct amount of SG is not paid by an employer on time, they will be liable to pay the SG charge, which includes a penalty and interest component.

The SG rate is 11% for the 2024 income year.

Businesses that have employees, or hire eligible contractors, will need to ensure that their payroll and accounting systems are updated to reflect the new super guarantee rate of 11% for payments of salary and wages that are made from 1 July 2023.

Businesses need to calculate super contributions at 11% for their eligible workers for payments of salary and wages they make from this date.

Super contributions for the quarter ending 30 June (due by 28 July 2023) were calculated at the 10.5% rate for payments of salary and wages made prior to
1 July.

All clients should be aware of the increasing prevalence of invoice scams, with scammers targeting businesses by posing as suppliers or vendors.  These scams commonly involve the sending of invoices that appear to be from legitimate sources, but the bank details have been altered.

Businesses are encouraged to review their procedures for validating invoices and consider including written procedures for validating any changes to vendor/client/customer contact details and also bank account details.  Oral confirmation of the changes should also occur between the business representative and the vendor/client/customer.

Importantly, staff should treat any request to change payment details with extreme caution.  Checking that an invoice is genuine before action is taken, particularly in the instance when there is a request for payment is highly recommended.  By fostering awareness of invoice scams and adhering to written procedures as outlined above, businesses can improve their resilience against invoice scams and minimize the risk of financial loss.

Finalisation Declaration through Single Touch Payroll (STP)

A reminder to employers reporting through STP (which should be all employers unless an exemption or deferral applies), you need to finalise payroll information for the 2022/23 financial year by lodging a STP Finalisation Declaration with the ATO by 14 July 2023. The finalisation declaration can be completed once the STP information for all employees is confirmed as correct.

Employers that finalise through STP are not required to provide payment summaries to employees or lodge a payment summary annual report to the ATO.  Employees can access their payroll information for their 2023 tax return through a registered tax agent or their myGov account.

We will be in touch shortly with our payroll clients in relation to completing their finalisation declaration.  Should you require any further assistance please contact our office.

Single Touch Payroll (STP) Phase 2

Most digital service providers (DSPs) including QuickBooks and Xero have now transitioned to STP Phase 2 reporting. The expansion requires employers to report extra information to the ATO each time they file their payroll and includes changes to payroll categories, allowances, salary sacrifice reporting and income types.

Employers that have not already started Phase 2 reporting should ensure they are aware of the changes required and ask their DSP when their product will be ready if they don’t already know.

Closely Held Payees

The ATO is reminding employers that amounts paid to ‘closely held payees’ should now also be reported through STP. A ‘closely held payee’ is an individual directly related to the entity they receive payments from. For example, family members of a family business, directors or shareholders of a company and beneficiaries of a trust.

The due date of STP finalisation declarations for closely held payees is 30 September 2023.

There are concessional reporting options for closely held payees which include:

• Reporting actual payments on or before the date of payment (along with arm’s length employees)
• Reporting actual payments quarterly
• Reporting a reasonable estimate quarterly.

If you have any questions or require assistance with any of the topics raised in this update, please contact our office.

Reminder of Superannuation Guarantee (SG) Rate Increase

Employers are reminded that the SG obligation for the 1 April 2023 to 30 June 2023 quarter is due by 28 July 2023.

If the correct amount of SG is not paid by an employer on time, they will be liable to pay the SG charge, which includes a penalty and interest component.

As a reminder, from 1 July 2022, the compulsory SG rate increased to 10.5% (previously 10%).  The compulsory SG rate will increase again to 11% for the period 1 July 2023 to 30 June 2024.  Please ensure your payroll systems are updated by the start of the next income year for the increased SG rate.

Individual clients should also be aware of the changes to the work from home deduction for the 2022/23 financial year.  During the COVID pandemic, the ATO introduced a temporary shortcut method of claiming home office expenses.  This shortcut method allowed individuals to claim 80 cents for each hour worked from home.  This method ceased on the 30 June 2022, and a revised fixed rate method introduced.

To be eligible to claim a deduction for working from home expenses, clients must:

• Incur additional running expenses due to working from home
• Be fulfilling employment duties while working from home
• Keep records to prove the cost incurred

For the 2022/23 financial year, office workers who work from home can claim 67 cents an hour under the revised rate method, or alternatively use the actual cost method.  Under the revised fixed rate method, there are two important time periods requiring different documentation to record the hours worked from home:

• Prior to March 1, clients must have diary entries or some proof covering a four-week period between 1 July 2022 to 28 February 2023
• From March 1, 2023, clients must keep a complete record of all the hours they work from home for the period to June 30, 2023. This can be in the form of timesheets, rosters or a diary.

In addition to the record of hours worked, evidence of payment of home office expenses is required.  A copy of at least one bill for each type of working-from-home-expense, such as electricity, phone, computer consumables, stationery should also be provided.

Under this approach a separate deduction can be claimed for the decline in the value of assets used while working from home, for such items as computers and office furniture.  The repairs and maintenance of these items can also be claimed, along with the cleaning expense of a dedicated home office.   To make a claim for the decline in the value of assets you will need to have records to support the purchase of the item, when it was used, percentage of work-related use and the effective life of the asset.

Should you require any further information regarding the working from home deduction please refer to the following link: Working from Home Deductions

Please note these changes necessitate more detailed record keeping by individual clients in order to substantiate the working from home claim.

Our individual tax data organiser will assist in identifying the required information to make a working from home claim for this financial year.  The organiser includes an electronic ‘Work from Home Diary’ which, if applicable to you, will be a time saving tool!

If you require any further information please contact our office.

Retirees with an account-based pension or annuity are required to take a minimum amount of income each year from their account.  This is referred to as the minimum pension payment and is calculated as a percentage of the account balance.

The Government reduced the minimum drawdown requirement in March 2020 in response to the COVID 19 pandemic.  This was a temporary reduction that applied over the last few years and finishes on June 30, 2023.

From 1 July 2023 the minimum annual drawdown requirement reverts to the normal rates.  Accordingly, retirees who withdraw the minimum amount each year will need to double their payments for the 2023/24 financial year.  For those retirees who may be moving into a different age bracket, for example from the 80-84 age bracket to 85-89, then the minimum drawdown will increase even more.

Since 1 July 2015, the Victorian State Revenue Office has charged additional stamp duty for foreign purchasers, known as ‘Foreign Purchaser Additional Duty’ (FPAD).  A trust may be subject to FPAD where the trust is involved either in the purchase of residential property or land that is later intended for residential use.  The FPAD must be paid in addition to the usual stamp duty and is currently calculated at 8% of the purchase price.

The State Revenue Office recently changed its approach to FPAD, and now views discretionary trusts as a ‘foreign’ trust unless the trust deed specifically excludes foreign beneficiaries.

With this change in approach, regardless of whether any beneficiaries are in fact foreign or not, most discretionary trusts will now be treated as being foreign trusts and liable to pay FPAD when acquiring residential property.

In addition, if a trust is held to be a foreign trust, an additional annual land tax surcharge will apply.  This is called the absentee owner surcharge. This surcharge is currently 2% and is in addition to the general and trust surcharge rates.

We are currently working through our list of clients who may be affected by this change of approach and will be in contact shortly to advise an appropriate course of action.

If you have a study and training loan balance (e.g., a HELP debt), it may be worthwhile to consider methods of reducing the balance to ensure you are not left with a large tax bill when your 2023 income tax return is lodged.

While there is no interest charged on study and training loans, indexation is added to these debts on 1 June each year, based upon the consumer price index (‘CPI’).  Given the current rate of inflation, individuals with study and training loan balances should expect a larger than normal adjustment this year.

If you have a study and training loan balance, it is worth checking your loan balance and considering the following tips:

• Let your employer know if you have started studying or have a study loan.
• Check the amount your employer is withholding. If there has not been enough withheld to cover your compulsory repayment, you can ask your employer to increase the withholding amount.
• Make a voluntary repayment to reduce your total loan amount. Indexation on the loan is applied on 1 June, so a voluntary repayment prior to this date will reduce the balance that indexation is applied to.  Note that it may take a few business days for the ATO to receive and process the payment.

Indexation will not apply to a study and training loan on 1 June if the balance is nil.  Any loan debt over 11 months old will be subject to indexation.