Robert Goodman Accountants Blog

The ATO warns taxpayers to be aware of a phone scam intimidating people into paying fake tax debts. It is a new approach where the scammers impersonate registered tax agents.

Recent reports to the ATO have identified that scammers coerce the victim into revealing their agent's name or initiate a three-way conversation between the scammer, the victim and another scammer impersonating the victim's registered agent. 

In a recent case, a victim withdrew thousands of dollars in cash and deposited it into a Bitcoin ATM, fearing police had a warrant out for his arrest.

The ATO has asked tax agents to inform their clients that the ATO will never demand immediate payments, threaten them with arrest or request payment by unusual means such as iTunes vouchers, store gift cards or Bitcoin cryptocurrency. The ATO says taxpayers can verify suspicious phone calls by calling 1800 008 540.

Want to know more? Call us at Robert Goodman Accountants on 07 3289 1700 or email us at reception@rgoodman.com.au.  Source: Australian Taxation Office Last modified: 24 Sep 2018   QC 56827. Brought to you by Robert Goodman Accountants. 

Do your homework when working from home

 

Technology-driven changes to the employment market are seeing record numbers of Australians claiming deductions for expenses incurred while working from home. But a high level of mistakes, errors and questionable claims has prompted the Australian Taxation Office (ATO) to increase attention, scrutiny and education for home office expenses this tax time.

Assistant Commissioner Kath Anderson said that last year, 6.7 million taxpayers claimed a record $7.9 billion in deductions for 'other work-related expenses' which includes expenses related to working from home.

"There is a rising trend of employees working from home, and while extra costs related to working from home are usually deductible, we are seeing some taxpayers either over-claiming or claiming private costs," she said.

"There is mounting evidence that many taxpayers don't know what they can and cannot claim. In particular, we are seeing some taxpayers claiming expenses they never paid for, expenses their employer reimbursed, private expenses and expenses with no supporting records," Ms Anderson said.

Taxpayers can legitimately claim additional costs incurred as a direct result of working from home, but need to be careful not to claim private expenses as well.

"Claims for the work-related portion of expenses like phone, internet, depreciation of your computer, printing and stationary are all allowed," she said.

"But one of the biggest issues we are seeing is people claiming the entire amount of expenses like their internet or mobile phone, not just the extra bit related to work. In reality, the rest of us are subsidising their private phone calls and internet usage, which is not okay," she said.

According to Ms Anderson, the additional costs of running expenses like electricity for heating, cooling and lighting are deductible, but you need to be able to demonstrate that there were additional costs.

"If working from home means sitting in front of the TV or at the kitchen bench doing some emails, it's unlikely that you are incurring any additional expenses. However, if you have a separate work area, then you can claim the work-related portion of running expenses for that space," she said.

While employees can claim additional running costs associated with working from home, occupancy costs are limited.

"Employees cannot generally claim occupancy-related expenses like rent, mortgage repayments, property insurance, land taxes and rates," Ms Anderson said.

Ms Anderson warned that employers are sometimes contacted to verify expenses.

"Taxpayers claiming working from home expenses should remember that we might contact their employer to confirm their claim. Sometimes we discover that the employer paid the costs, either upfront or through reimbursement, while other times we discover there was no need for the employee to work from home at all."

According to Ms Anderson, record-keeping is a key focus area for the ATO this year.

"This tax time we expect to disallow a lot of claims where the taxpayer hasn't kept records to prove that they legitimately incurred the expense and that the expense was related to their work," she said.

"To claim working from home expenses, taxpayers must keep supporting records such as receipts, diary entries and itemised phone bills or other records. Even though detailed receipts are not required for phone and internet claims up to $50 per year, it's not an automatic entitlement – you still need to be able to show how you calculated your claim," she said.

"The ATO has a handy Home Office expenses calculator on our website to help taxpayers calculate their claim, and a very good guide to working from home," Ms Anderson said.

While technology is allowing more and more employees to work from home, it is also allowing the ATO to deploy sophisticated systems and analytics to spot claims that don't add up and claims that are out of the ordinary compared to others in similar occupations earning similar income.

Ms Anderson said there are three golden rules for taxpayers to follow to get working from home claims right. "One – you must have spent the money yourself and not been reimbursed, two – the claim must be directly related to earning your income, and three – you need a record to prove it."

For more information: the ATO home office expenses poster (PDF 251KB)This link will download a file, or visit ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Home-office-expenses/

To find the ATO home office calculator, visit ato.gov.au/calculators-and-tools/home-office-expenses-calculator/

Case studies

Over-claiming mobile phone and internet expenses

An architect claimed 80% of the cost of his private mobile phone and home internet as a work-related expense.

When asked, the taxpayer provided his non-itemised phone and internet bills for the year as evidence for his claim. However, he had not maintained a diary or other record demonstrating how he calculated that 80% of his costs related to his work. His employer was also unable to verify the extent to which he was required to use his private mobile and internet connection for work.

Although the taxpayer had not maintained or provided appropriate records, the ATO did accept that he was required to incur these expenses and allowed a claim of $50 – the maximum phone/internet claim that can be allowed without supporting evidence.

Incorrectly apportioning expenses

A teacher who was promoted to school principal in the income year claimed home office expenses for electricity and phone of $2,400.

When the ATO contacted the tax agent, the agent provided a letter from the employer to confirm that the taxpayer was required to work from home out of school hours. However, neither the taxpayer nor their agent could demonstrate how they calculated the claim.

The taxpayer submitted a voluntary disclosure, explaining that they had made an incorrect claim and lacked records to substantiate it, and should have instead used the fixed rate of 45 cents per hour. Based on the hours the taxpayer had worked at home over the school year, the claim was reduced by 70%.

A penalty was applied for not taking reasonable care when preparing the return. However, the penalty was reduced because the taxpayer provided the voluntary disclosure before an audit commenced.

Incorrectly claiming occupancy expenses

An advertising manager claimed a deduction for her rent and electricity costs. When asked why she made these claims, the taxpayer explained that she was required to work at home outside regular hours because a lot of business was generated from overseas clients, and provided the calculations for her claims.

However, the area used by the taxpayer did not have the character of a 'place of business,' (eg a hairdresser's home salon, caterer's home kitchen or a photographer's home studio). This meant that while her claim for electricity costs (running expenses) was allowed, her claim for rent (occupancy expense) was disallowed. A penalty was also applied for failing to take reasonable care.

Want to know more? Call us at Robert Goodman Accountants on 07 3289 1700 or email us at reception@rgoodman.com.au.  Source: Australian Taxation Office Last modified: 11 Sep 2018  QC 56777. Brought to you by Robert Goodman Accountants. 

As part of an assistance program to help drought-stricken farmers, the Government has announced that it will allow primary producers to immediately deduct (rather than depreciate over 3 years) the cost of fodder storage assets, such as silos and tanks used to store grain and other animal feed storage.

This measure, yet to be legislated, will be available for fodder storage assets first used or installed ready for use from Sunday 19.8.2018, and complements the $20,000 instant asset write-off already available for small businesses, the Government said.

Call us at Robert Goodman Accountants on 07 3289 1700 or email us at reception@rgoodman.com.au.  © Copyright 2018. All rights reserved. Source: Thomson Reuters. Brought to you by Robert Goodman Accountants. 

Paying company debts by instalments

Does your business have a debt with the ATO? Depending on your circumstances, you may be able to apply for a payment deferral, or work out a tailored payment plan with the ATO. It can be easy if you're an individual or sole trader with a debt of $100,000 or less and can be done quickly online. For businesses with debts of more than $100,000 it may be more complex but if you act early there is still time to get the best outcome.

If your business has gotten into a bit of trouble lately and you suddenly find yourself faced with a tax debt. Don't panic. Despite what has been reported in the media recently, the ATO won't bankrupt your business if you make early contact and make a genuine attempt to either pay or work out a payment plan.

Depending on your circumstances, you may be able to apply for a payment deferral, or work out a tailored payment plan with the ATO. Applying for a payment plan with the ATO can be easy if you're an individual or sole trader with an income tax or activity statement debt of $100,000 or less, it can be done online through your myGov account.

If you have debts of more than $100,000, that's when you and your business may need to jump through a few more loops. Usually, you would need to show the ATO that your business is viable, in that it has the ability to pay its debts and meet ongoing commitments. The assessment considers factors such as gross margin, cash flow, asset/liability position including working capital, liquidity, debtor/creditor position, and the availability of funding.

Typically, if your business has debts of more than $100,000 and you're applying for a tailored payment plan, you will need to provide the following information to the ATO:

  • proposal to pay all amounts owed in the shortest possible timeframe, while allowing all future tax obligations to be met by the due date;
  • details of how the debt arose;
  • steps taken to mitigate the debt (eg loans from either banks or other sources);
  • most recent bank statement for each bank or financial institution account held;
  • detailed profit and loss (statement of financial performance) and balance sheet (statement of financial position) for the year to date and last two financial years;
  • details of overdraft or loan facilities including term loans, hire purchase and leasing facilities (needs to include details such as balances owing, monthly repayment amount for each debt and limit for overdrafts);
  • aged creditors and debtors listing; and
  • any other relevant information.

Once your business has been assessed as viable and you enter into a payment plan with the ATO, you need to be aware that interest will continue to accrue on the unpaid debt until it is completely paid off. Small businesses with a good payment and lodgement compliance history may be eligible for interest-free payment plans for activity statement debts if they meet certain conditions.

If you default on a payment plan, the ATO may impose stricter requirements before agreeing to a new plan. Requirements may include a higher upfront payment, or for payments going forward to be made by direct debit, or both. In cases where you and the ATO cannot reach an agreement on a payment plan, all is not lost. If you're willing to provide security such as a registered mortgage over a freehold property or an unconditional bank guarantee from an Australian Bank, the ATO may consider requests to defer the time of payment of a debt or payment by instalments.

Help! I have an ATO debt.

If you have a debt, the most important thing is to make early contact with the ATO to ensure that they are aware of your situation. Contact us today and we can help your business prepare any proposed payment plans and liaise with the ATO to get the best outcome.

Call us at Robert Goodman Accountants on 07 3289 1700 or email us at reception@rgoodman.com.au.  © Copyright 2018. All rights reserved. Source: Thomson Reuters. Brought to you by Robert Goodman Accountants. 

Alternative dispute resolution process

Alternative dispute resolution (ADR) is not only used to resolve substantive disputes, and can be used to clarify or limit issues, and remove barriers created by relationship issues between you and the ATO. Usually, if your dispute is not very complex, in-house facilitation may be used. More complex issues will usually be outsourced to an external practitioner. Working out if the ADR process is right for you can save you time, money and heartache in any dispute or potential dispute.

If you're involved in a dispute with the ATO, going straight to the Court or Tribunals may not be the most time or cost-effective way to proceed. As a taxpayer, you can access the alternative dispute resolution (ADR) process in any dispute with the ATO, which used appropriately may be the most cost-effective and efficient way to resolve disputes. Basically, it involves using an impartial person to help resolve the dispute or at least narrow the issues between the parties.

Broadly, the ADR processes encompass 4 branches, facilitative, advisory, determinative, and blended dispute resolution.

Facilitative

In this branch, independent ADR practitioners assists the parties to identify the issues, formulate solutions, and consider any alternatives with the goal of reaching an agreement either about the entire dispute or some issues within the dispute. Examples of the facilitative processes include:

  • Mediation – an external practitioner is engaged to facilitate the process. The parties usually split the costs involved where mediation is voluntarily entered into. Note that mediators do not normally give advice, unless the parties have requested an advisory/evaluative mediation or conciliation.
  • In-house facilitation – a trained independent ATO officer facilitates the process. There are no costs involved in the process. However, the facilitator will not establish facts, give advice, decide on who is "right or wrong". The facilitator's function is to guide the parties through the process and assist them to ensure where are open lines of communication and that messages are correctly received.

Advisory

This process may also be referred to a neutral evaluation (or early neutral evaluation) and involves the parties presenting their arguments to an independent practitioner who provides advice on some or all of the facts of the dispute, the law, and possible or beneficial outcomes.

In tax and superannuation disputes, the practitioner will usually have substantial experience in tax law so they can give an insight into a decision a Court or Tribunal may make if the dispute proceeds to litigation. Once the practitioner gives the advice, it is up to each party whether they accept the advice and how they will use that information. For example, if both parties hear from the independent practitioner that they will not be completely successful in their case before the Tribunal or Court, they may decide to enter into a negotiated agreement to resolve the dispute rather than going through the costly legal proceedings.

Determinative

In this process, an independent practitioner evaluates the dispute and makes a determination, an example of this includes arbitration. However, the ATO notes that determinative processes are not generally appropriate for ATO disputes as it can incur similar costs and delays as litigation, but lack the openness and transparency of Court of Tribunal decisions.

Blended dispute resolution

This is where an independent practitioner plays multiple roles such as conciliation and conferencing, and may also facilitate discussions and provide advice on the merits of the dispute. The facilitator will usually have qualifications in the area of the dispute. This process is usually used by the Administrative Appeals Tribunal in tax and superannuation disputes in the early stages of the proceedings.

I have a dispute, what should I do?

Certainly, in any dispute or potential dispute emotions will be running high, and rash decisions may be made; but keep a cool head to work out which option best suits your circumstances will save you lots of time, money, and heartache. If you're not sure if the ADR process is right for you, we can help you work out your options.

Call us at Robert Goodman Accountants on 07 3289 1700 or email us at reception@rgoodman.com.au.  © Copyright 2018. All rights reserved. Source: Thomson Reuters. Brought to you by Robert Goodman Accountants. 

How illegal phoenixing affects you

Every year, illegal phoenix activity costs the Australian economy billions of dollars not to mention the direct costs to businesses, employees, and the government. Just how much has been quantified by a recent report commissioned by three government agencies. Overall, the direct cost to businesses, employees, and the government has been calculated to around $2.85bn to $5.13bn, while the total impact to the Australia economy is around $1.8bn to $3.5bn in lost gross domestic product.

According to the Australian Bureau of Statistics, at the end of 2016-17 the number of businesses that ceased operating in Australia amounted to 261,450, an increase of 0.5% from the previous year. While most of these are likely to be honest commercial failures, after all, there are statistics that indicate that around 60% of Australian small businesses fail within the first 3 years, a percentage of these yearly failures may be attributable to illegal phoenixing.

Illegal phoenixing is the deliberate liquidation of a company to avoid liabilities while simultaneously commencing similar operations in another company or trading entity. This type of illegal activity leaves behind not only outstanding payment to tax authorities, but also unpaid creditors, unfulfilled customer orders and unpaid employee entitlements.

"[Illegal phoenixing] can occur in any industry or location. However illegal phoenix activity is particularly prevalent in major centres in building and construction, labour hire, payroll services, security services, cleaning, computer consulting, cafés and restaurants, and childcare services. [it is also seen] in regional Australia in mining, agriculture, horticulture and transport. There is an emerging trend in intermediaries who promote or facilitate illegal phoenix behaviour."

To tackle this issue on a national level, the Inter-Agency Phoenix Taskforce has been established to identify, manage and monitor suspect illegal phoenix activity. This task has been made significantly easier with the development of the ATO Phoenix Risk Model (PRM) which allows for the identification of potential illegal phoenix population which can be more closely monitored by the taskforce. As at June 2018, the taskforce comprises of 29 government agencies including all State and Territory Revenue Offices.

A recent report commissioned by three Phoenix Taskforce member agencies (ATO, ASIC and the Fair Work Ombudsman) into the economic impacts of illegal phoenixing activity shows a sobering picture of how this illegal activity affects all of us, either directly, or through broader economic impacts:

  • direct cost to businesses in the form of unpaid trade creditors is $1,162-$3,171m;
  • direct cost to employees in the form of unpaid entitlements is $31-$298m;
  • direct cost to the government in the form of unpaid taxes and compliance cost is $1,660m; and
  • the net effect to the Australian economy is $1.8bn-$3.5bn lost gross domestic product

As the figures show, illegal phoenix activity has deep financial impact on the Australian economy. Not to mention the costs unable to be captured by the report such as employee stress related to losing their jobs, discouragement effect on labour supply due to people not getting their full entitlements, increased social welfare burden through increased government support, and distortionary competition effects on lawful businesses. 

How to protect yourself

As an employee, you should ensure that you receive a payslip and regularly review your entitlements and superannuation. As a business owner, look out for warning signs such as a company offering lower than market value quotes, or changes to a company name with the same management or staff. If you think you may be dealing with a company the is involved in illegal phoenixing, we can help with the due diligence before you enter into any business arrangements.

Call us at Robert Goodman Accountants on 07 3289 1700 or email us at reception@rgoodman.com.au.  © Copyright 2018. All rights reserved. Source: Thomson Reuters. Brought to you by Robert Goodman Accountants. 

 

R&D tax incentive overhaul

In simple terms, the Research and Development (R&D) tax incentive provides a tax offset to eligible companies that conduct certain R&D activities that are likely to benefit Australia's wider economy. As a response to various reviews which indicated that the incentive was not meeting its policy objective, the government has introduced draft legislation to overhaul the incentive to better target the program and ensure its integrity.

The Research and Development (R&D) tax incentive is an offset designed to encourage eligible companies to undertake R&D activities that are likely to benefit Australia's wider economy. It provides a tax offset to eligible companies that conduct eligible R&D activities which are classified as experimental activities that are conducted in a scientific way for the purpose of generating new knowledge of information.

Since its implementation, successive governments have undertaken reviews into the effectiveness of the incentive. The 2016 Review of the R&D Tax Incentive and 2018 Innovation and Science Australia 2030 Strategic plan found the R&D tax incentive did not fully meet its policy objectives of inducing business research and development expenditure beyond "business as usual" activities".

As a response to the reports, the government announced in the 2018 Budget that it will be overhauling the R&D tax incentive to better target the program and ensure its integrity. In short, in draft legislation released, the government has proposed an introduction of an "R&D premium", which is the rate of the non-refundable offset plus the applicable company tax rate. The premium will depend on the aggregated annual turnover of the company as well as the R&D "intensity" in some cases.

For companies with an aggregated annual turnover of $20m or more, the R&D premium will be based on R&D intensity, calculated as a proportion of eligible R&D expenditure (up to $150m) and total expenditure (which will be based on the tax returns of the company applying for the incentive). The company will be entitled to differing percentage points of the non-refundable offset based on the intensity of the R&D activity varying from 4 percentage points for 0% to 2% intensity, to 12.5 percentage points for intensity above 10%.

For companies with aggregated annual turnover below $20m, the refundable R&D offset will be a premium of 13.5 percentage points above the applicable company tax rate. However, cash refunds from the refundable R&D tax offset will be capped at $4m per year and those amounts that cannot be refunded can be carried forward as a non-refundable tax offset to use in future income years. It has also been proposed that clinical trials will be exempted from the $4m refund cap, provided it satisfies the Therapeutic Goods Administration definition of a clinical trial.

The government said it was "committed to backing R&D investment and the economic opportunities and jobs it generates. At the same time, we need to make sure that the investment of taxpayers' money is well targeted by encouraging companies to do more, and not just be rewarded for R&D they would have conducted without an incentive…by better targeting R&D investment, these changes will lead to new ideas, products, services and jobs."

The proposed overhaul has been met with a subdued response from various industry groups, particularly in the technology and digital space which see the proposed changes as potentially being limiting. There is concern that start-ups that incur high R&D costs prior to earning significant income may worse off as the refund cap could reduce their cash flow at a time when they need it the most.

Does your company claim R&D?

If your company claims the R&D tax offset currently and you would like to know how the changes may affect you, we can help. Or maybe you are in the middle of setting up your own digital start-up would like some help in understanding the R&D tax incentive offset, we are here for you.

Call us at Robert Goodman Accountants on 07 3289 1700 or email us at reception@rgoodman.com.au.  © Copyright 2018. All rights reserved. Source: Thomson Reuters. Brought to you by Robert Goodman Accountants.

It follows: Higher education debts

Horror movie monsters have nothing on the higher education debts which will follow you to the ends of the earth. If you go overseas and you have a higher education debt under the Higher Education Loan program (HELP), Trade Support Loan (TSL) or the Higher Education Contribution Scheme (HECS), you are liable to repay those debts if you earn worldwide income over a certain threshold. This applies to all higher education debts regardless of when they were incurred.

It might seem like a horror movie cliché, a monster that follows you wherever you go, but did you know that your higher education debts under the Higher Education Loan program (HELP), Trade Support Loan (TSL) or the Higher Education Contribution Scheme (HECS) debts follow you wherever you go in the world?

Prior to 2017, individuals could incur these higher education debts and move overseas with no repayment obligations. However, these debts are now required to be repaid regardless of where you are in the world, as long as your worldwide income is over a certain threshold. This applies regardless of whether your debt was incurred before or after 2017. As long as you have a higher education debt to the Commonwealth of Australia, you are required to repay the debt regardless of where you reside.

If you have a higher education debt and plan on going overseas, you will need to update your contact details and submit an "overseas travel notification" if you intend to go overseas for 183 days or more in any 12 months.

This includes for any reason such as holiday, study or work. The 183 days is counted cumulatively and does not have to be taken all at the same time. For example, you could go on a holiday for a few months in one country, come back to Australia for a few months and then travel to another country. As long as it exceeds 183 days in total in any 12 months period you will have to submit an "overseas travel notification".

Once you've submitted the notification and have moved overseas, or if you're already living overseas and have a HELP, HECS or TSL debt, the next step is to report your worldwide income to ATO every year through an Australian tax return. Lodgements are usually due by 31 October each year, but it may be extended if you use a tax agent. For the 2018-19 year, your worldwide income will need to exceed $51,957 before the ATO will raise a compulsory repayment (overseas levy) in relation to your higher education debt. The repayment rate depends on how much worldwide income you earn and range from 4% to 8%.

For the 2018-19 year, if your worldwide income is at or below $12,989 you do not have to report your worldwide income but you will need to lodge a "non-lodgement advice form" to notify the ATO of your situation. If you find yourself in financial hardship while overseas and cannot afford the compulsory repayment even though you earn above the minimum repayment threshold, you can apply to the ATO to defer the payment.

Remember, you have options when you report your worldwide income to the ATO, you can choose between one of three assessment methods that work the best with your situation, the self-assessment method, the overseas assessment method, or the comprehensive tax-based assessment method. If it all seems too complicated you can always reduce your debt before you head overseas by making voluntary repayments.

Need guidance?

If you're going overseas and you have a higher education debt, we can help you get your house in order and lodge your returns with the ATO while you're away. We can also help you work out which assessment method is the best for your situation if you're already overseas and you're not sure what the best method is.

Call us at Robert Goodman Accountants on 07 3289 1700 or email us at reception@rgoodman.com.au.  © Copyright 2018. All rights reserved. Source: Thomson Reuters. Brought to you by Robert Goodman Accountants.

Cash payments limit coming soon

The Government is planning to introduce an economy-wide cash payment limit of $10,000 as a part of its crackdown on the black economy. Any transaction that exceeds $10,000 will need to be made using an electronic system or by cheque. The cash transaction limit will only be imposed for payments (for goods and services) to entities holding an Australia Business Number (ABN). It will not apply to consumer to non-business transactions, such as those in second-hand markets such as Gumtree, or where the selling party does not have an ABN.

As a part of the crackdown on black economy, the Government is planning to introduce an economy-wide cash payment limit of $10,000. Any payments made to businesses for goods and services from 1 July 2019 would be captured, and if the transaction exceeds $10,000, payment will need to be made using an electronic system or by cheque.

This proposed measure has been introduced in response to the findings of the Black Economy Taskforce Final Report. The report noted there were significant risks to legitimate commercial behaviour resulting from using large undocumented cash payments to purchase cars, yachts, other luxury goods, agricultural crops, houses, building renovations, and commodities. According to Minister for Revenue and Financial Services:

"We…know that businesses that insist on cash payment may be doing so to avoid their tax, retain welfare payments, or avoid child support and other obligations, and may therefore receive an unfair competitive advantage over those businesses that do the right thing."

However, consumers should note that the cash transaction limit will only be imposed for payments (for goods and services) to entities holding an Australia Business Number (ABN). The proposal will not apply to consumer to non-business transactions, such as those in second-hand markets such as Gumtree, or where the selling party does not have an ABN.

Further, the proposal will also not apply to financial institutions, so there will be no impediment on the abilities of individuals, businesses, or other entities to deposit large amounts of cash with their bank or to deposit cash in paying off loans with a financial institution. Although, any such deposits would be caught under the existing Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) reporting requirements to AUSTRAC.

Currently, the Government is planning to leverage the AML/CTF obligations to assist in the administration and enforcement of the cash limit. A combination of threshold transaction reporting and reporting of suspicious matters will be deployed, with the Black Economy Hotline facilitating community referrals on suspicious behaviour. Penalties will apply to both parties to the transaction should the $10,000 limit be breached, that is, the payer and the receiving business. According to the Government this will ensure that both business requesting cash payments and consumers pressuring businesses to take cash in exchange for a discount are captured.

If Australia implements this proposal, it will be in good company and join many other European countries that have introduced cash payments limit. The UK is currently consulting on the issue in a bid to crack down on those who use cash to evade tax and launder money. It seems the inevitable crackdown on cash and its links to illegal activities and avoidance of tax has begun.

Are you ready for the ban on cash?

If you would like to find out more about the proposed cash payments limit and how it will affect the way you do business, contact us today. Or if you would just like to start using electronic payments for your business, we can help.

Call us at Robert Goodman Accountants on 07 3289 1700 or email us at reception@rgoodman.com.au.  © Copyright 2018. All rights reserved. Source: Thomson Reuters. Brought to you by Robert Goodman Accountants.

Are you an employer that's fallen a little behind on super guarantee (SG) payments for your employees? Don't despair, the Government has announced a one-off amnesty to run until 24 May 2019, to allow employers to self-correct historical underpayments of SG amounts without incurring the penalties that would normally apply. This is subject to the SG shortfall occurring between 1 July 1992 and 30 March 2018 that have not previously been disclosed to the ATO.

Do you run a business that's maybe fallen a little behind on super guarantee (SG) payments for your employees? Perhaps you've had some cash flow issues in the past or forgot to make the payments one quarter. Well don't despair, the Government has announced a one-off amnesty to run until 24 May 2019, which will allow employers to self-correct historical underpayments of SG amounts without incurring the penalties that would normally apply.

 "The ATO estimates that in 2014-15, around $2.85bn in SG payments went unpaid…while this represents a 95% compliance rate, any level of non-compliance is unacceptable".

The amnesty applies to SG shortfalls as far back as 1 July 1992 but will not apply to shortfalls for quarters starting from 1 April 2018. Therefore, if your business inadvertently forgot to make SG payments for an employee during this period, you may be able to take advantage of the amnesty. To qualify for the amnesty, a disclosure must be made to the ATO in the approved form and must not have been previously disclosed.

Employers who take advantage of this amnesty will still need to pay all SG shortfall amounts owing to their employees, including the nominal interest and GIC (but not the administrative component). However, any SG charge payments and offsetting contributions made during the amnesty will be tax deductible for the employer.

According to the Government, those employers that do not take advantage of this amnesty will face higher penalties when they are subsequently caught. In general, a minimum 50% penalty on top of the SG charge that is already owed will be imposed. Additionally, a penalty of 200% of the SG shortfall amount may also apply for failing to lodge a SG statement on time. This is all on top of the SG charge payments and offsetting contributions not being deductible outside the amnesty period.

As a part of the carrot and stick approach the Government is taking, during the amnesty, the ATO will continue its usual enforcement activity against employers with historical SG obligations that don't own up voluntarily. In addition, it is also seeking to give ATO more tools to enforce compliance going forward including:

  • giving the ATO the ability to seek court-ordered penalties in cases where employers defy directions to pay their superannuation guarantee liabilities, including up to 12 months jail in the most egregious cases of non-payment;
  • requiring super funds to report contributions received at least monthly to the ATO which will enable the ATO to identify non-compliance and take prompt action;
  • rollout of Single Touch Payroll (STP) to all employers by 1 July 2019 which will aligning payroll functions with regular reporting of taxation and superannuation obligations; and
  • improving the effectiveness of the ATO's recovery powers, including strengthening director penalty notices and use of security bonds for high-risk employers, to ensure that unpaid superannuation is better collected by the ATO and paid to employees' super accounts.

Want to take advantage of the amnesty?

The amnesty provides a good, if not limited opportunity for employers to get their superannuation obligations in order before the ATO ramps up its compliance action and enforcement actions. If you're unsure about your SG compliance status, we can help you find out and apply for the amnesty if needed.

Call us at Robert Goodman Accountants on 07 3289 1700 or email us at reception@rgoodman.com.au.  © Copyright 2018. All rights reserved. Source: Thomson Reuters. Brought to you by Robert Goodman Accountants.