A trial was conducted by the ATO in 2013 & 2017 in using external collection agencies for lodgement obligations but the focus at that time was for self-preparers. Apparently, the pilot did not have adverse impact on the ATO’s reputation, no complaints received and had helped to increase in clients engaging the assistance of intermediaries with lodgement.

The pilot demonstrated that using external collection agencies is viable, efficient and an effective option to complement ATO strategies.

ATO is looking to expand to clients who use the services of registered agents in meeting their lodgement obligations such as BAS. ATO intend to encourage clients to visit and consult their agents to help them keep their lodgement obligations up to date. The target is for the late lodgers who have few outstanding lodgements with the aim to stop clients from being behind on the deadlines.

The project will leverage off an existing process wherein a debt has a place in relation to external collection agencies. Any feedback or irritants that are raised from existing process are taken into consideration by the ATO. The ATO considers members views and opinions to ensure that the ATO takes into account members recommendations. Also, a consultation with the Tax Practitioner Stewardship Group was held as they provide valuable feedback.

The ATO outlined to members a draft infographic detailing the process that they will follow should a client have an overdue lodgement. The ATO intends to get feedback from members on the content of how this process is presented. The ATO is working with ATO corporate communications team to have this infographic made available at the ATO website, ato.gov.au. This makes ATO’s lodgement action infographic available to tax practitioners that allows them to have a targeted conversation with their clients and so they can use it internally within their practice to help them understand the lodgement process.

Following are just some of the Members comments and suggestions:

The tax practitioners will be contacted by ATO through an email or letter to advise their client has outstanding lodgements. Their client will be referred to an external collection agency for further compliance action should they fail to lodge outstanding obligations. The ATO is expecting the client to contact their tax practitioner who will in turn work with the ATO and facilitate lodgements which will stop any further compliance action from being necessary.

An indicative timeline could be added to the infographic as a tool to use in discussions with their clients as suggested by the members. Tax practitioners could then advise their clients in 30 days or 60 days the next action that will be taken by the ATO in relation to outstanding lodgements.

If you are located on the Gold Coast or surrounding areas Contact Us at Solve Business Accountants if you need help with your business tax.

Source: Australian Taxation Office

ATO uses SMS and emails for important information and promotional purposes.  Recently, the ATO announced that from 5-23 November 2018, they will contact all clients who are entitled for refund but have incorrect bank details provided on the filed tax returns.  An email list of clients will be sent to tax agents the ATO has contacted and no further action is needed to take for the agents.

The SMS text message informs clients that due to incorrect bank details, their refund could not be processed and they are advised to contact the ATO to provide correct bank account details. This comes after a new tax scam was discovered by ATO where a fraudster impersonates a tax agent.

Clients who contact the ATO within seven days to provide their correct bank details will be refunded electronically while a refund check will be issued to those who will fail to reply. Clients can call 13 28 61 to correct their details.

The ATO has advised tax practitioners to contact their clients to inform them that the ATO would never threaten clients with arrests, jail nor demand immediate payments. ATO would never advise unusual payment methods such as iTunes vouchers, Bitcoin cryptocurrency, store gift cards or direct credit to a bank account with a BSB that isn’t either 092-009 or 093-003. Lastly, it will never send an SMS advising taxpayers to click a certain link and provide login, personal and financial information or to download a file or open an attachment.

Around 2.3 million scams as of August this year have been reported which makes it as the core issues among taxpayers and small business clients. While ATO contacts taxpayers by phone, email and SMS regularly, there might be a chance that it could be a scammer on the other end. Phone scams are the most common however, scammers constantly change their tactics. Thus, ATO reminds taxpayers and small businesses to stay alert and beware of unsolicited emails and SMS.

During the tax season this year, a high alert was issued following a scam on fake myGov email advising a tax payer a refund but instead, the intention is to steal financial and personal information.

The ATO reminds taxpayers to report the incident if they feel that it’s a scammer as this will help the ATO to get an accurate picture of what is happening with the current scams, which will ultimately help to protect the Australian Community.

Taxpayers may call 1800 008 540 to report a scam or to check if the call, email or SMS was legitimate.

If you are located on the Gold Coast or surrounding areas Contact Us at Solve Business Accountants if you need help with your business tax.

The Australian Taxation Office (ATO) is turning their attention to the significant number of errors and false claims being made by rental property owners who use their property for personal holidays or where the property is otherwise not genuinely available for rent for the full year.

The ATO has also announced that it will focus on disproportionate interest expense claims and incorrect apportionment of rental income and expenses between rental property owners. It will also look at holiday homes that are not genuinely available for rent and incorrect claims for newly purchased rental properties.

The ATO wants to remind taxpayers that when claiming deductions for their rental property to include all the rental income and make sure that their property was genuinely available for rent when the expense was incurred. Taxpayers must also make sure to apportion any deductions to take into account for any private usage and must have records for the claims they make.

What to consider

Assistant Commissioner Kath Anderson has reminded taxpayers that deductions can only be claimed against the rental property to the degree that the property is genuinely being rented out or is available for rent. While private use by family and friends of a holiday home is entirely legitimate, it does reduce the ability to earn income from the property and this in turn impacts the deductions you can claim for the rental property. You can only claim deductions for your rental property if your property is genuinely available for rent. You cannot claim for times when you were using it for your own personal holidays or letting friends and family stay rent-free. Also, if the property is rented to friends and family at “mate’s rates”, you can only claim deductions for expenses up to the amount of the income received.

The ATO is also focusing on other times when a property is not rented or genuinely available for rent. The ATO has had numerous cases where a taxpayer claims that their property is available for rent, but when the ATO investigates, it is clear they have little or no intention of renting it out. Some of these case have included situations where unreasonable conditions have been placed on prospective renters, rental rates have been set well above market rates, or failing to advertise a holiday home in a way that targets people who would genuinely be interested in it.

New technology, data matching and other systems allow the ATO to identify unusual claims and property owners whose claims are disproportionate to the income received can expect additional scrutiny from the ATO. The ATO has emphasised the importance of keeping accurate records of income and expenses, evidence of the property being rented or genuinely available for rent at market rates, and who stayed at the rental property and when, including the time when the property is used for personal purposes.

Below are some guidelines from the ATO for you to determine if your property is genuinely available for rent:

1) Advertise your property: Advertise your property to a large audience. Advertising through only a real-estate agent or an online site is not always enough evidence to show that a property is genuinely available for rent, and neither is only advertising locally or by word of mouth.

2) Ensure your property is in good condition: The property must be located and in a condition that will mean tenants want to rent it. If your property in a remote location or is run-down, it may not be realistic to expect that your property will appeal to anyone.

3) Charge market rates: Charging rent that is above-market rates to deter tenants from applying may mean your property is considered to not be genuinely available for rent. Likewise, if you, your friends or your family stay for free, the property will not meet the criteria during that time period. If your property is being tenanted at a discounted rate then the allowable deductions are limited to the amount of rent charged, not the market rates.

4) Accept tenants: If you refuse to rent out the property to interested potential tenants without good reason, this indicates that you may not have a genuine intent to make income from this property and could be reserving the property for private use. In this case, the property would not meet the criteria for being genuinely available for rent.

Source: Australian Taxation Office

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The Australian Taxation Office (ATO) is making a broader push to quash the “standard deduction” claims on work-related clothing and laundry claims.  Over the last five years a 20% increase in work-related clothing claims has been recorded. Last year there was nearly $1.8 billion claimed in clothing and laundry expenses by over 6 million taxpayers.

Assistant Commissioner Kath Anderson expressed their concern that while many of these claims are legitimate, they do not believe that half of all taxpayers were required to wear uniforms, protective clothing or occupation-specific clothing.  Also, they noticed that around a quarter of clothing & laundry claims were exactly $150, which is precisely the threshold where tax payers are not required to keep detailed records. The ATO is concerned that some tax payers may think that they are entitled to claim $150 as a “standard deduction”, even though they do not meet the clothing and laundry requirements.

The ATO reiterated that the $150 limit for laundry expenses is granted to reduce the record-keeping burden but it’s not an automatic entitlement for everyone. While the ATO does not require written evidence for claims under $150, the claim must relate to the laundering of uniform, protective or occupation-specific clothing that the taxpayer is required to wear in earning their income and taxpayer must be able to show how the calculation was done.

Contrary to Commissioner Chris Jordan’s assertions that incorrect claims were more rampant in agent-prepared returns than the self-prepared returns, Mark Chapman, the H&R Block director of tax communications believes that the majority of incorrect claims come from self-prepared returns. In response to the ATO commissioner’s claims, Mr Chapman stated that “as tax agents, it is our job to make sure that clients claim everything they’re entitled to but equally that they don’t claim what they are not entitled to”.

To avoid confusion as to what are acceptable claims for uniforms, protective clothing, occupation-specific clothing & laundry, the following are some guidelines that have been gathered from the ATO website:

A taxpayer can claim the cost of a distinctive work uniform

(such as one with your employer’s logo attached permanently to it) and it must be either:

Additional claims include the cost of the following:

In addition, taxpayer can also claim the cost of cleaning, repairing, and renting any of the above mentioned work-related clothing.

Washing, drying or ironing yourself is also claimable by using a reasonable basis to calculate the amount, such as $1 per load for work-related clothing, or 50 cents per load if other laundry items were included.

Costs of purchasing or cleaning plain uniforms or clothes, such as black trousers, white shirts, suits or stockings are not claimable, even if your employer requires you to wear them.

Real Example

The ATO has confirmed that expenditure incurred by a swimming instructor in purchasing swimwear was not an allowable deduction.

The taxpayer worked as a swimming instructor and purchased swimsuits every six to eight weeks as a result of the damaging effect of the chlorine.  The ATO advised that although the clothing was specialised, it was still conventional clothing, indistinguishable from any swimsuit used for private purposes.

Many taxpayers fall foul of these rules and try to claim deductions for expenditure for ordinary clothing. Unless the clothing is protective, such as safety boots, etc., or certain uniforms, the expenditure is generally not deductible.

Source: Australian Taxation Office

If you are located on the Gold Coast or surrounding areas Contact Us at Solve Business Accountants if you need help with your business tax.

A fact sheet has been released by the ATO (Australian Taxation Office) in relation to employer superannuation guarantee obligations explaining its compliance and penalty approach, which was set out in the Superannuation Guarantee (Administration) Act 1992 (SGA Act).

The ATO explained that this approach will apply to employers who are unwilling or unable to meet their superannuation guarantee obligations, including late payment, under-payment or non-payment of SG contributions to eligible employees.

Employers are required to pay super to any eligible employee who earns $450 or more (before tax) in a calendar month. The super guarantee contribution, which must be paid to a complying super fund or retirement savings account, is currently 9.5% of an employee’s ordinary time earnings and is the minimum amount of super that must be paid.

ATO stated that irrespective of the following, SG must still be paid:

In addition, the ATO added that contractors that are paid mainly for their labour are employees for SG purposes, even if the contractor quotes an Australian Business Number (ABN). Super contributions for these contractors must be made by employers if they are paid:

If employers do not pay the minimum amount of SG by the due date for an employee, they would be liable for the super guarantee charge (SGC), which comprises of:

SGC is not a deductible expense.

Additional penalties and charges may include the following:

Moreover, a company director who fails to meet SGC liability in full by the due date becomes personally liable for the penalty which is equivalent to the unpaid amount. The fact sheet provides compliance examples and the type of behaviour that will attract closer scrutiny from the ATO and mitigating factors that may be taken into consideration in determining the level and type of penalties that will be imposed.

Solve Accountants are Business Accountants on the Gold Coast and here to help you achieve your goals. If you have any questions or need help please contact us now.

During the conference held last February, Deputy Commissioner of Superannuation James O’Halloran discussed the changes and other plans that the ATO has set out for Self-Managed Superfunds (SMSFs).

The commissioner opened his statement by assuring that the ATO will continue to support SMSFs, not only by providing ongoing certainty and practical support but also by progressively and sensibly seeking to ensure that SMSFs comply with the law.  He reminded SMSF holders that they can now view details of all their super accounts reported through the ATO via the online MyGov site. Included in the information that can be viewed are account balances and insurance indicators, total super balance and the status of bring-forward arrangements relating to non-concessional contributions.

 ATO’s position on SMSF event- based reporting

Mr. O’Halloran confirmed that from 01 July 2018, SMSF event based-reporting (EBR) will be limited to SMSFs that have members with total superannuation account balances with a minimum of $1 million. This means that SMSF members whose total superannuation balance are under $1 million can choose to report events which impact their members transfer balances at the same time that the SMSF lodges its annual return.

On 22 August 2017, Mr O’Halloran said they issued a public position about SMSF event-based reporting.  The feedback highlights concerns about the cost and effort that may be associated with the proposed approach. He stated that the ATO has listened to all the feedback and have decided to provide annual reporting for SMSFs with members that have lower superannuation balances and to permit a quarterly reporting timeframe for other SMSFs. The ATO will continue to evaluate the risks and benefits arising from this change to SMSF event-based reporting.

ATO to monitor persistent non-lodgers

Mr O’Halloran reiterated the importance of SMSF lodgement and said it’s a cornerstone obligation for any trustee in a properly operating SMSF. Even if a SMSF trustee uses a tax agent, trustees themselves are responsible for their SMSF and there is still the requirement to lodge even if the SMSF is in pension phase.

One of the projects for this financial year is to target those SMSFs who have not lodged for some time. The ATO is seeking to reduce the level of long term outstanding lodgements. As identified, some 12,000 SMSFs (linked to 5,000 agents) have never lodged an SMSF annual return or had more than two years of overdue lodgements. Nearly 3,000 agents relating to over 8,600 funds have been contacted to gather reasons and information for the non- lodgement of returns, with a view to secure lodgements or to wind up the fund. The ATO will continue to work on this into the 2018-2019 financial year.

In relation to the 2016/17 lodgement of the SMSF annual return, the ATO has granted a deferral of all SMSF lodgements until 30 June 2018.  This applies to the due date for payment of any relevant 2017 financial year income tax liability. As 30 June 2018 is a Saturday, trustees have until the next business day to lodge a return with an election for transitional GST relief as part of the super changes that came into effect 01 July 2017, or amend a lodged 2016/2017 return in order to include an election if one wasn’t made.

Sources: Australian Taxation Office

Solve Accountants are Business Accountants on the Gold Coast and here to help you achieve your goals. If you have any questions on self managed super funds or need help please contact us now.

According to Australian Taxation Office (ATO), the top 100 population consists of entities that have substantial economic activity related to Australia and form the largest contributors to corporate income tax, excise, GST, and other tax revenue sources. Consisting predominantly of public and multinational businesses and superfunds, they have a significant impact on the health of the Australian Taxation system and the ATO engages with them on a one-to one basis to help manage their compliance and assure their tax performance.

The ATO’s purpose and vision for this risk management model is for Australians to value their tax and superannuation systems as community assets, where willing participation is recognised as good citizenship.  The ATO is excepting the outcome to build confidence in the aspects of Australia’s tax system through helping people understand their rights and obligations, managing non-compliance and improving ease of compliance and access to benefits.

How the ATO identify and categorise the Top 100

The ATO risk assesses each large public and multinational business at an economic group level. It includes all Australian based entities under direct or indirect Australian or foreign majority controlling interest and the businesses are initially identified based on the size of their Australian operations. Additional factors the ATO consider in identifying the top 100 is the amount of GST, income tax, or excise paid and also the influence the business may have on the market segment.

The top 100 clients are then provided a risk categorisation on income, goods and services, excise and petroleum resource rent taxes. They will receive an annual letter from the Commissioner to advise them of their risk categorisation. The letter clearly outlines the basis and categorisation for each applicable tax and how the ATO intends to engage with them over the next year and what this will mean for them.

 What are the risk categories?

The ATO use three risk categories as follows:

This taxpayer is rated at a lower risk level compared to other clients in the top 100 population, with this taxpayer having no significant history of adjustments from the ATO. However, this does not mean that they have no risks and that the ATO would not have any disputes or differences of opinion on the tax outcomes intended by law.

A key taxpayer would be proactive in advising the ATO about their issues, looking to work on possible resolutions compare to higher-risk clients. They would provide true and full disclosure of potential and significant controversial tax positions and would not seek to conceal issues. The ATO is expecting this taxpayer to engage cooperatively to seek a resolution and keep them informed with their decisions and actions.  The ATO would work with them to resolve any issues and evaluate their compliance with tax law should a potential contestable mater arise.

This taxpayer may have multiple identified risks and/or have economic outcomes that may not be reflected in their tax outcomes. They will have more complex risks, with larger amounts of tax at risk compare to clients with the key taxpayer category. The ATO will work closely with these clients to improve their risk categorisation and would meet to discuss a treatment plan to lower their risk rating. The ATO would expect the relationship with this taxpayer to be positive.

This taxpayer may have structural and multiple complex risks over different parts of the tax law. They would exhibit behaviours that include poor and inconsistent engagement with the ATO, failure to meet deadlines on information requests and are occasionally late with meeting their tax obligations.

This higher risk taxpayer would not tend to seek the ATO’s advice on major transactions with significant tax obligations. More often their governance of tax risk is poor and would use tax outcomes as a dominant factor in making business decisions.

The ATO would conduct comprehensive audits and other intensive risk assessment approaches and would continuously review this type of higher risk taxpayer. Also, the ATO would communicate their concerns as early as possible in an aim to identify and understand the risk. This approach allows the clients to make informed choices about their compliance approach. Should they fail to be opened and transparent, the ATO would use their formal powers in gathering information.

Source: Australia Taxation Office

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The Australian Taxation Office (ATO) has issued a warning that it will be paying extra attention to people claiming higher than expected deductions during tax time this year. It will focus on taxpayers claiming work-related deductions that are higher than usual compared to other taxpayers in similar industries, particularly deductions for travel, car expense claims for transporting bulky tools, internet, mobile phone and self-education expenses.

With over eight million Australians claiming work-related deductions each year, the Australian Taxation Office (ATO) Assistant Commissioner Graham Whyte is prompting people to make sure they are claiming the correct deductions this tax time.

From 2016 the ATO has been able to check taxpayers deductions in real-time as they complete their online return. It also takes a closer look at any unusual deductions and contacts employers to validate these claims. From 2016 there have been changes in the rules for calculating car expenses and taxpayers need to use a logbook or the cents per kilometre method to support their claims.

“Australians claim over $21 billion in work-related expenses each year, and we want to support taxpayers to claim what they are entitled to – no more, no less,” Mr Whyte said. The ATO acknowledges that most taxpayers want to do the right thing, but mistakes are constantly being discovered and while the amounts at an individual level are relatively small, collectively the overall impact is significant.

Mr Whyte said in 2014-15, the ATO conducted around 450,000 reviews and audits of individual taxpayers, leading to revenue adjustments of over $1.1 billion in income tax.

He went on to state “Deliberately making incorrect claims is an easy way to get into some serious trouble. It’s just not worth it.”

The ATO has the capability to scrutinise each tax return lodged using increasingly sophisticated tools and data matching analytics. This means the ATO can identify and review income tax returns that may omit information or contain unreasonable deductions. When a red flag is raised, the ATO will investigate further and if your claims seem unusual they will either check them with your employer or ask you to substantiate your claims.

To assist taxpayers making claims for work-related expenses, the ATO has a series of occupation guides and other general advice available on its website to help people in specific industries understand and correctly claim the expenses they may be entitled to.

The ATO has stated that there are three golden rules you must consider before making a work-related expense claim:

1) must have spent the money yourself, not been reimbursed

2) it must be related directly to earning income

3) must keep a record to prove it.

If taxpayers are using myTax to lodge their tax returns, they will receive a real-time warning if their claims for work-related deductions are unusually high compared to other taxpayers in similar occupations.

The ATO has highlighted the following real-life case studies and lessons to be learnt from taxpayers making incorrect work-related expense claims:

1) make sure your claims are justified

A dairy farm employee claimed deductions totalling almost $19,000. When the ATO spoke to his employer, they said that the employee was provided with all the tools and work gear he needed to undertake his duties. The employee’s deductions were disallowed in full.

2) make sure you weren’t reimbursed already

A business analyst who travelled between Shanghai and Australia for work, claimed over $46,000 in travel expenses. When the ATO contacted the employer, they were advised that this employee was reimbursed for the cost of all his meals, accommodation and travel within Australia and internationally. Consequently, the claims were disallowed.

3) make sure you are getting good advice

A tiler lodged his tax return using a registered tax agent and claimed over $4,000 in deductions that related to his car, based on transportation of bulky equipment to/from work. The ATO contacted his employer who confirmed he was not required to transport any such bulky equipment to work and also advised that secure lockers were provided at work to store tools. His claim was disallowed and tax agent was reminded to undertake proper enquiries to determine his clients’ eligibility to deductions.

4) make sure you have evidence to support your claims

A sales consultant claimed over $38,000 for car and other work-related expenses. When asked to provide evidence to support her deductions it became apparent that she had overstated her expenses as she could not provide receipts to substantiate her claims. After discussions with the ATO, she agreed to substantially reduce her expense claims and she was asked to pay a tax shortfall of over $8,000 plus penalties.

5) make sure your claims are related to your work

A computer network engineer claimed over $4,000 in deductions relating to car, travel, clothing and other work-related expenses, as well as the cost of managing his tax affairs. When queried, the engineer told the ATO he travelled interstate for both work and private purposes, his clothing expenses were for the purchase of general business attire and his claims for managing tax affairs related to managing the family trust. The engineer’s claims were disallowed by the ATO because they appeared to be of a personal nature and he was unable to substantiate his claims with written evidence.

6) make sure you know what is and isn’t deductible

A factory meat processing worker claimed $12,800 for various deductions. When the ATO requested evidence of his claims, the taxpayer was unable to produce receipts with the exception of the donations which were automatically deducted from his pay. Also, when ATO contacted his employer, they were advised that the worker was not required to travel for work purposes and that all protective gear and tools required to perform his duties were supplied by the company. The worker’s deduction claims were disallowed except for the gifts and donations which he was able to verify.

7) make sure you back up your data

A soldier from Canberra claimed $1,500 for self-education expenses and $5,000 for gifts and donations. When the ATO requested evidence to substantiate these claims, the soldier said all his receipts were stored as images on his tablet, which had fallen into his child’s bathtub and no longer worked. The claims were disallowed.

8) make sure you were at the conference/course

A medical professional made a claim for attending a conference in America and provided an invoice for the expense. When the ATO checked, they found that the taxpayer was still in Australia at the time of the conference. The claims were disallowed and the taxpayer received a substantial penalty.

9) incorrect log book

A taxpayer claimed deductions for car expenses using the logbook method. The ATO found they had recorded kilometres in their logbook on days where there was no record of the car travelling on the toll roads, and further enquiries identified that the taxpayer was out of the country. Their claims were disallowed.

Source: Australian Taxation Office

Contact Solve Business Accountants located on the Gold Coast, Qld Australia if you need help with your business tax.

The Australian Taxation Office (ATO) has outlined the behaviours of privately-owned groups that attract its attention in relation to a wide range of tax issues, including Capital Gains Tax (CGT), private company profit extraction (including Division 7A), consolidation, and Fringe Benefits Tax (FBT). The ATO will focus on a number of tax aspects of entities within this sector such as exaggerated capital losses, incorrect use of carried forward tax losses and a failure to have complying Div 7A loans in place.

The ATO has broadly stated that the following characteristics and behaviours may attract their attention:

– economic or tax performance that is not comparable to businesses that are similar

– low transparency relating to your tax affairs

– unusual, one-off or large transactions, including shifting or transfer of wealth

– historical aggressive tax planning

– tax outcomes that are inconsistent with the tax law intent

– taking controversial interpretations or choosing non-complicance of tax law

– if your after-tax income does not support your personal lifestyle

– treatment of private assets as business assets

– accessing business assets for private tax-free use

– poor risk-management and governance systems

In addition to the above, the ATO has stated that there are specific characteristics and behaviours in relation to the following tax issues that can attract their attention:

Capital Gains Tax

The ATO will focus on capital losses, particularly where those losses appear to be exaggerated, fabricated or misclassified to ultimately reduce taxable income. In particular, large capital losses attract the attention of the ATO, so it is important to be able to substantiate the capital loss reported. The ATO will also focus on CGT reporting and payment obligations resulting from a disposal of a capital asset. They are particularly concerned where the amount of net capital gain reported is less than what it should be based on their estimates using external data matching sources.

Private company profit extraction (including Division 7A)

The ATO will focus on arrangements designed to extract profits from private companies while avoiding tax on the amounts being distributed. This may include the application of Division 7A deemed dividend rules or the potential application of anti-avoidance rules. In particular, the following behaviours and characteristics may attract the ATO’s attention:

– amounts are not repaid after being taken from a company

– no complying loan agreement has been put in place

– yearly minimum repayments not made on a loan

– the company income tax return does not declare interest income

– a company asset for private use

– attempts to avoid application of Division 7A to transactions between a private company and a shareholder or their associate


Consolidation allows wholly-owned corporate groups to operate as a single entity for income tax purposes.

The ATO will focus on the correct implementation of the following consolidation tax rules:

– available fraction rules

– cost-setting rules

– consolidation exits

– consolidation membership rules

Fringe Benefits Tax

The ATO has stated that it will focus on the correct application of the following FBT rules:

– FBT motor vehicle rules, particularly where an employer-provided motor vehicle is used or available for use for the private travel of employees

– FBT employee contribution rules, particularly where employee contributions that have been paid by an employee to an employer are declared in both the FBT return and the employer’s income tax return.

– FBT employer rebate rules, particularly focusing on the eligibility of the employer to claim a FBT rebate

– FBT living-away-from-home allowance rules, particularly focusing on employers applying the new tax laws correctly.

Source: Australian Taxation Office

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2016 – eBay sellers, ride-sourcing, card payments

The Australian Taxation Office (ATO) has advised that it will be collecting seller data from eBay Australia and eBay New Zealand Pty Ltd to ensure that taxpayers are correctly meeting their tax obligations. The data matching will include information relating to registrants that sold goods and services of $10,000 and over during the 2014-15 financial year, including the name, contact information, address, and the value and number of transactions that were processed for each online selling account. The data-matching program will enable the ATO to address the compliance behaviour of businesses and individuals that sell goods and services using the online-selling website who may not be correctly meeting their taxation obligations, particularly those businesses and individuals with undeclared income and incorrect lodgement and GST reporting.

The ATO advised that it will collect data to identify individuals that are engaged in providing ride-sourcing services between the 2013-14 to 2015-16 financial years. Details of payments made to ride-sourcing providers from the identified accounts held by the ride-sourcing facilitators with various financial institutions will be requested for the years relevant.

Furthermore, the ATO has stated that it will be collecting data relating to credit and debit card payments to merchants for the periods from 1 July 2014 to 30 June 2015. The data requested will include information that enables the ATO to match merchant accounts to a taxpayer, including name, address and contact information as well as information on the number and value of transactions processed for each merchant account. This acquired data will be electronically matched with certain sections of ATO data holdings to identify possible non-compliance with taxation law. Records relating to approximately 900,000 merchant accounts are expected to be received. The number of affected individuals linked to those accounts is expected to be approximately 90,000.

2016 – Shares and Securities

The ATO has issued a notice advising that it will obtain details for the period 20 September 1985 to 30 June 2016 from various share registry services. The type of data the ATO will collect will comprise of contact details, purchase and sale details, and quantities of shares bought and disposed of.

It is projected that more than 95 million records will be obtained, including the records for approximately 1.2 million taxpayers. The records will be electronically matched against ATO records to identify non-compliance with registration, lodgment, reporting and payment obligations under taxation laws.

The ATO says the program aims to identify income tax returns that may not include accurate information relating to the disposal of shares and securities, especially in relation to CGT. Also, it has been announced that the Department of Human Services will be undertaking a new data-matching program in which data from all current recipients of the Commonwealth Seniors Health Card will be matched with data from the income tax returns lodged with the ATO in the last three financial years.

The data-matching will commence in July 2014. The program will assist the Department to assess a recipient’s ongoing eligibility for the Commonwealth Seniors Health Card. It is intended that this data-matching activity will continue on an annual basis. In addition to this, the ATO has announced that it will request and collect data relating to electronic payments made to businesses through specialised payment systems for the period from 1 July 2013 to 30 June 2014 from various entities including banks (BPAY data), PayPal, and other online payment facilities.

The ATO says the data will be matched with certain sections of ATO data holdings, including other third-party data holdings. It is expected that records relating to over 25,000 individuals will be matched. Among other things, the program aims to “provide a more level playing field for businesses that do the right thing by identifying, for corrective actions, those that may not be meeting their obligations”. The program also aims to assist the ATO in identifying liquidated or de-registered businesses that are continuing to trade.

2014 – Local Government Councils and Shire authorities

The Commissioner has announced that the ATO will obtain details of entities receiving taxable payments from various local government Councils and Shire authorities throughout New South Wales, Victoria, Queensland, Western Australia, South Australia, Tasmania, and the Northern Territory.

The data-matching program covers the 2011 to 2014 financial years. The data will be matched electronically with ATO data holdings to identify non-compliance with payment and lodgement obligations under Australian taxation law. Records relating to 20,000 to 40,000 individuals are expected to be matched. In addition to this, the ATO will request and collect data relating to credit and debit card sales of entities for the periods from 1 July 2012 to 30 June 2014 from various financial institutions.

The acquired data will be electronically matched with ATO data holdings to identify non-compliance with registration, reporting, lodgement and payment obligations under taxation law. It is expected that records relating to approximately 900,000 merchants will be matched.

2013 – eBay

The Department of Human Services has advised that it has requested and collected from eBay Inc the name, address, and date of birth of sellers with significant sales. The details collected will be electronically matched with specific Department data holdings to identify social welfare recipients who may not have disclosed income and assets to the Department.

Records of more than 5,000 individuals will be matched. The Department also advised that details from the Australian Business Register will be matched to identify non-compliance with income or other reporting obligations.

This appears to be an extension of the ATO’s already extensive data-matching programs aimed at those who are not reporting all their income.

2013 – Credit and Debit card sales

Data matching is an expanding program used by the ATO to identify those who are not reporting all their income. The ATO has advised that for the 2011-12 financial year it has obtained data that identifies credit and debit card sales that were made by Australian businesses from the following banks: Australia and New Zealand Banking Group Limited; National Australia Bank Limited; Westpac Banking Corporation; St George Bank; Commonwealth Bank of Australia; Bendigo and Adelaide Bank Limited; American Express Australia Limited;  and Diners Club Australia.

The ATO said the data will be matched against taxpayer records to identify those taxpayers who deliberately under-report or omit income. The ATO’s goal is to make it harder for people in business who deliberately try to hide income and evade tax obligations.

2012-13 – Payments to Contractors and Coffee Suppliers and Hardware Stores

The ATO is making it harder for business people who deliberately use cash to hide their income and evade their tax obligations. Data matching is an expanding program used by the ATO to identify those who are not reporting all their income.

The latest target includes;

The ATO also revealed that this program will continue into the 2012-13 year. Records relating to approximately 75,000 individuals and entities who have received contract payments from the employers or businesses will be matched against the income reported on income tax returns.

The ATO will monitor information received regarding coffee shops that purchase 15 kilograms or more of coffee per week from their suppliers, as well as individuals and businesses holding a hardware store trade account with annual purchases of $10,000 or more. Data on purchases and reported income will be cross-checked by ATO to make sure that all business income is being reported.

2010 – Motor Vehicles

From 1 July 2009 to 30 June 2010 the ATO will obtain data from state and territory motor vehicle registering bodies which will then be matched against taxpayer records.

This is to identify those participating in the cash economy by not declaring income to deliberately avoid their tax obligations.

Data will be obtained for all motor vehicles where the transfer and/or market value is $10,000 or greater. The ATO will use this information to help in addressing potential non-compliance in the following areas – income tax – GST – FBT & superannuation.

Contact Solve Business Accountants located on the Gold Coast, Qld Australia if you need help with your business tax.

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