Business debt on ATO’s watchlist

Posted on 18 September 2023 | by Allan Hall

The five types of business debt at the top of the tax office’s watchlist

The Australian Taxation Office (ATO) has unveiled the top five categories of business debt that have captured its attention, signalling the end of the unprecedented leniency extended to late payers during the COVID-19 lockdowns.

Speaking at the Tax Institute Tax Summit in Melbourne, Vivek Chaudhary, the ATO’s deputy commissioner of lodge and pay, emphasised the necessity of offering substantial support to taxpayers, including small businesses, amidst lockdowns and stringent public health measures.

The ATO’s arsenal during the pandemic included payment plans, deferred deadlines, waived penalties and interest, and the option to file without immediate payment, all aimed at aiding businesses during challenging times. Chaudhary acknowledged the positive outcomes of these measures but also pointed out their impact on payment behaviour, with an increasing number of businesses failing to meet tax deadlines compared to the pre-pandemic period.

Chaudhary identified five priority payment categories where the ATO’s renewed focus will be most evident:

Topping the list is the unpaid Superannuation Guarantee Charge (SGC), a penalty imposed on businesses that fail to fulfil their Superannuation Guarantee obligations. Notably, small businesses owe the majority of this debt, totalling $1.8 billion. To ensure compliance, the ATO has equipped itself with tools such as garnishee notices, payment directives, Director Penalty Notices, and potential legal actions to secure SGC payments.
Chaudhary expressed concerns about new self-assessed debts raised by employers, suggesting that taxpayers might be waiting for the ATO to prompt payment before taking action.
Refund fraud remains a significant worry, with fraudsters siphoning billions of dollars from the tax system through counterfeit GST refunds.
The ATO is also monitoring substantial aged debts exceeding $100,000, and
Debts arising from audit actions initiated by the ATO. Chaudhary emphasised that while some audit adjustments stem from genuine errors, others result from negligence, recklessness, or deliberate attempts to evade tax payments, and such cases will receive no leniency, with heightened expectations for debt settlement.

Consequently, the ATO is reverting to its pre-pandemic compliance strategies to transition from the COVID-induced payment culture to a more standard payment approach. ATO commissioner Chris Jordan revealed that the ATO is pursuing approximately $50.2 billion in collectable debt, with small businesses accountable for over $33 billion of this total.

Read the full speech Addressing collectable tax debt – Tax Institute’s Tax Summit 2023 here »

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Federal Budget weight behind tax audits

Posted on 7 August 2023 | by Allan Hall

The 2023 Federal Budget included $1 billion for audits of taxpayers over the next 4 years.

Therefore all taxpayers have an increased chance of a tax office review of their returns in the near future.

Did you know that our costs for assisting you with the management and supply of information to the ATO for their reviews can be insured?

We’ve partnered with AuditCover to share their offer with our clients. AuditCover covers the professional fees you may incur when responding to a tax audit, review, investigation or enquiry from the ATO or state-based authorities and agencies.

If you haven’t already done so, please consider getting an online quote below.

If you’d like assistance with generating a quote, please let us know and we will be happy to help.

GET A QUOTE FOR AUDIT INSURANCE

If you have any questions, you can call AuditCover on 1300 895 797 or email them at [email protected]. Need more info? Read more here »

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Superannuation health check

Posted on 29 May 2023 | by Allan Hall

Use this checklist to review the health of your super in 5 easy steps

Getting started

The best way to perform these checks is either on ATO online services through myGov or by contacting your super advisor directly
You need a myGov account linked to the ATO
Once you link your myGov account, you can also use the ATO app.

Check 1: Check your contact details

Check your contact details, tax file number (TFN) and bank account are up to date with the ATO and your super fund. This helps prevent lost super and assists us in matching any unclaimed super to you.

Log on to ATO online services through myGov. In the top menu, select My profile. From the drop-down options, select either:

Personal details to update your name, contact number, email and home address
Financial institution details to update your bank account and
- under the Account heading, you will see Income Tax and Superannuation
- select either Add or Update.

To update your contact details, bank account and TFN with your super fund, see their website or contact them directly.

Check 2: Check your super balance and employer contributions

It’s important to check your super balance each year to see how much you have and keep track of your employer contributions. You can do this anytime on ATO online services or through your super fund.

Your employer should pay your super at least every 3 months. They may choose to do it more frequently, such as your regular pay cycle. From 1 July 2022 to 30 June 2023, your employer should pay at least 10.5% of your salary into your super. From 1 July 2023 to 30 June 2024, the rate increases to 11%. If you’re under 18, you need to work more than 30 hours a week to be eligible for super.

Funds report account balances to us at certain times of the year. Balances shown in ATO online services may be different to your actual current balances.

Log on to ATO online services through myGov. From the top menu, select Super and then either:

Fund Details to see all your super accounts and balances (including those held in funds or with us) and the most recent date reported by your fund
Information then Employer contributions to see the total year-to-date employer contributions in a selected year – select Transactions to see each contribution separately.

For help calculating the amount of super your employer should be paying, use the ATO’s Estimate my super tool. If you do not receive super contributions or the amounts are incorrect:

contact your employer and request an update
report it.

Check 3: Check for lost and unclaimed super

You may have lost track of some of your super when you changed your name, address or job, for example. This is why it’s important to ensure your fund has your current details.

Lost super is when your fund has lost touch with you, or your account is inactive. This money is held by your fund. Unclaimed super is when your fund transfers lost super to the ATO.

All your super accounts including lost and ATO-held super are displayed on ATO online services.

Log on to ATO online services through myGov. From the top menu, select Super. Then select either:

Fund details to check for lost super – if you want to keep your super with the same fund, contact them directly to update your details
Manage and then Transfer super to transfer this lost super to an eligible super account – or ask your fund to complete the transfer for you
Manage and then Transfer super to transfer ATO-held super to an eligible super account
Manage then Withdraw ATO-held super to have your super paid directly to you if the amount is less than $200 or you are over 65.

Check 4: Check if you have multiple super accounts and consider consolidating

If you’ve had more than one job, you may have more than one super account. It’s important to know how many super accounts you have. Combing your super may reduce fees and make it easier to manage.

If you decide to consolidate your super, it’s important to choose the fund that’s right for you. You should check that it provides better value, and the insurance cover suits your needs, which may change throughout your life. To see which fund is the best option for you, visit MoneySmart. If you are unsure of what to do, contact your super fund or seek independent financial advice.

Log on to ATO online services through myGov. From the top menu, select Super then either:

Fund details to see all your super accounts and balances
Manage and then Transfer super to consolidate your accounts, then
- select the fund you want to close (transfer)
- select the fund you want your money transferred to from the accounts listed
- confirm your selection and submit request.

Check 5: Check your nominated beneficiary

Take time to ensure you have a valid death beneficiary nomination in place in your super fund as this isn’t covered by your will. This means your loved ones will not be put through unnecessary difficulties to finalise your estate.

Most binding nominations expire every three years. Some super funds have an option where nominations do not expire and remain in place until they are revoked.

If you don’t nominate a beneficiary, your fund may not know who your benefit should be paid to. In these cases, they will follow the law. This usually means they pay it to one or more of your dependents or your legal personal representative.

To check or nominate your death beneficiary:

Refer to your super fund’s website or contact them to check if you already have a valid nomination in place
To update it, complete the form from your super fund, sign and date in the presence of two witnesses
If you are unsure, contact your super fund or seek independent financial or legal advice from a qualified advisor

Why you should review your super

Your super is one of the biggest assets you’ll accumulate in your lifetime.

However, many Australians think they don’t need to worry about their super until retirement. Some don’t think about it at all.

It’s never too early to think about your super and the earlier you get on top of it, the better. It’s a good idea to regularly review and manage your super. At the very least, make sure you:

are getting the super you are entitled to from your employer
know where it is.

Small decisions you make today can have big impacts on your final super outcomes. For instance, missing out on some employer contributions today, could have a huge impact on your super balance in retirement due to the compounding effect of earnings. The same can happen if you have lost or unclaimed super.

Benefits of a super health check

A super health check consists of 5 simple and important things you can do to get on top of your super. It will help you:

manage your super
understand your entitlements
make better choices for when you retire.

You can check on your super at any time. However, we suggest you get into the habit of doing a health check each year when you prepare your tax return.

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Disclaimer: This article contains general advice only and has been prepared without taking into account particular objectives, financial circumstances and needs. The information provided is not a substitute for legal, tax and financial product advice. Before making any decision based on this information, you should assess its relevance to your individual circumstances. The information provided in this newsletter is objectively ascertainable and therefore does not constitute financial product advice. If you require personal advice, please contact us to arrange an appointment with one of our licensed SMSF advisors. Source: ATO

ATO, contributions, employees, employer, insurance, self-managed superannuation SMSF, superannuation, tax return

Federal Budget ATO compliance crackdown

Posted on 26 May 2023 | by Allan Hall

Increased number of reviews

The importance of audit insurance in the wake of the Federal Budget – did you know that you can get insurance that covers the costs of professional fees incurred to respond to an ATO audit?

The recently announced Federal Budget 2023 has unveiled significant funding increases ($588M) in the government’s stance towards tax compliance, particularly through the Australian Taxation Office (ATO). GST compliance,and Personal income tax deductions have been specifically named by the government as areas of risk.

If you are in business, audit insurance is an often-overlooked component of business insurance, however in an environment where compliance scrutiny is intensifying, having audit insurance serves as a proactive measure to safeguard one’s financial interests.

Extended audit scope

Even if you are not in business, you may be a high-income earner, or have investment properties, the scope for an ATO review is much greater than in the past. You should be aware of safeguarding your financial well-being and know that you are not immune to tax compliance scrutiny (and review).

As complexities within our tax system increase, the time and expertise required to respond effectively to ATO reviews also escalate, resulting in more costs to simply respond to the review, not including ongoing management of the ‘case’ to completion. The potential cost of such services is increasing, with accountants needing to spend many hours (at hourly rates) to address detailed audit correspondence and liaise with clients.

Audit insurance offers coverage for professional fees incurred in responding to ATO and other government department reviews.

Investing in audit insurance ensures that individuals are also financially prepared to handle these reviews without incurring a significant cost burden.

With a substantial allocation of government funding towards tax compliance, the ATO aims to enhance its ability to address emerging risks and generate additional revenue. In light of these developments, it becomes increasingly crucial for businesses and many other taxpayers to consider the importance of audit insurance as a protective measure.

Payday super proposed

Posted on 8 May 2023 | by Allan Hall

Superannuation system update in consultation

Following a media release last week, the Government announced that from 1 July 2026, employers will be required to pay super for their employees at the same time as their salary and wages.

The start date will provide employers, super funds, payroll providers and other parts of the superannuation system with sufficient time to prepare for the change.

This is not yet law.

Treasury and the ATO will consult closely with industry and stakeholders on these changes in the second half of 2023. This measure is aimed at closing the gap on billions of dollars in unpaid super.

The upside for small business is the bank account better reflecting actual cash flow position. With most accounting software packages heavy lifting the additional administration required, employers who outsource their payroll will face additional compliance costs.

For more information, see the Hon Stephen Jones MP joint media release here or contact the team at Allan Hall.

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WFH changes and what the ATO is looking for

Posted on 13 March 2023 | by Allan Hall

Calculation and record-keeping requirements of your working from home (WFH) deductions may have changed for the 2022-23 income year.

The 80c per hour temporary shortcut method ended on 30 June 2022.

For the 2022-23 income year you may be able to use either the revised fixed rate method or the actual cost method to determine your working from home deductions.

Whilst the actual cost method remains unchanged, the fixed rate method has increased from 52c per hour to 67c per hour. The revised fixed rate method incorporates the following usage expenses:

electricity
gas
stationery
computer consumables, such as printer ink
internet
phone.

It is not possible to claim an additional deduction for expenses that are already covered by the revised fixed rate method. However, you may be eligible to claim a separate deduction for the depreciation of assets, including items like laptops, mobile phones, and office furniture.

To claim your working from home deductions using the revised fixed rate method, you must be able to provide both:

A representative record of the total number of hours worked from home during the period from 1 July 2022 to 28 February 2023.
A record of the total number of actual hours worked from home for the period 1 March 2023 to 30 June 2023.

If you choose not to use the fixed rate method, you may be able to use the actual cost method. Please contact your Allan Hall Accountant to assist you in getting the best tax deduction for your personal circumstances.

Regardless of the method you choose, it is important to maintain accurate and complete records for at least 5 years to support your claims for home-based business expenses.

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Increase in fuel tax credit rates

Posted on 6 February 2023 | by Allan Hall

Fuel tax credit rates increased on 1 February

This increase is in line with fuel excise indexation.

Here’s what you need to know

The easiest way to apply the correct rate is to use the ATO’s fuel tax credit calculator when making a claim on BAS
The ATO’s simplified method can be used to claim less than $10,000 a year in fuel tax credits.

If you claim less than $10,000 in fuel tax credits per year, the easiest and safest way to get your claims right is to use these simplified methods. These include:

the basic method for heavy vehicles which works out your off-public road use for you, so you don’t miss out on any credits
using the rate that applies at the end of your BAS period.

When working out your fuel tax credits, remember to use these tips to help get your fuel tax credits right:

Check how your fuel is used
Check you’re using the right rate — you may need to use different rates for fuel that was acquired before and after 1 February
Use the ATO fuel tax credit calculator to help you calculate your claim.

Registered tax agents and BAS agents can always help you with your tax, including making a correct claim.

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Illegal early access to super warning

Posted on 31 January 2023 | by Allan Hall

Accessing your super early may be illegal

Despite what you may have heard or read elsewhere, you cannot access your super before you retire unless you meet one of the very few exceptions to this fundamental rule of superannuation law.

Some may say they can help you set up an SMSF so you can access your super for reasons such as paying off your credit card, buying a house or going on holiday. This is not true — it is illegal.

For most people, you can only access your superannuation when:

turn 60 years of age and then cease employment or retire from the workforce
you turn 65 years of age (regardless of whether you’re still working or not).

Otherwise, it is illegal. There are only a few reasons that you might be allowed to access your super early. These include temporary or permanent incapacity, severe financial hardship, some compassionate grounds or you have a terminal medical condition. Strict criteria apply to each of these and your superannuation fund administrator will need to assist you in any application for these early release super benefits.

If you illegally access your super early, you risk:

losing your retirement savings
incurring extra tax, penalties and interest
disqualification as a self-managed super fund (SMSF) trustee if relevant, and have your name publicised for doing so.

Be extremely careful if someone offers to help you access your super early.

These ‘promoters’ will often:

charge a lot of money
ask you to transfer some or all your super from your existing super fund to the SMSF
tell you that you can use as much as you need for personal expenses.

Identity theft warning

These promoters may also ask for your personal information. If you provide any personal details, they can steal your identity. With your personal information, they can steal your super for themselves.

Preventative action

If a promoter contacts you, call the ATO on 13 10 20 straight away to get advice.

Do not agree to anything and do not sign any documents or give them your personal details.

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ATO, saving, super release, superannuation

Further eligibility age change for downsizer contributions

Posted on 16 December 2022 | by Allan Hall

The reduced eligibility age to make a downsizer contribution from age 55 is now law

This further reduces the downsizer eligibility age, which changed from 65 to 60 from 1 July 2022.

What does this mean?

From 1 January 2023, eligible individuals aged 55 years or older can choose to make a downsizer contribution into their super fund of up to $300,000 per person ($600,000 per couple) from the proceeds of selling their home. There are no changes to the remaining eligibility criteria.

Key dates for downsizer contributions

Eligible individuals aged 55 years or older can make a downsizer contribution from 1 January 2023
For any downsizer contributions made between 1 July 2022 and 31 December 2022, eligible individuals must be aged 60 years or older at the time of making their contribution
Prior to 1 July 2022, the eligibility age was 65 years and over.

Other important information to consider for 55-59 year olds

Individuals have 90 days from receiving the sale proceeds of their home to make a downsizer contribution. This means if an individual receives the proceeds of sale prior to 1 January 2023, they can make their contribution from 1 January 2023, as long as they are still making it within 90 days of receiving the proceeds
If 1 January 2023 falls outside of their 90-day window to make a downsizer contribution, they will not be eligible. It is unlikely the ATO would grant an extension of time in these circumstances.

To find out more about downsizer contributions, including details of full eligibility criteria, the Allan Hall Superannuation team can help.

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