Tax Time 2016: take care with work and rental property claims
In a recent media release the ATO has encouraged people to check which work related expenses they are entitled to claim this tax time, and to understand what records they need to keep.
The ATO will pay extra attention to people whose deduction claims are higher than expected, in particular those claiming car expenses, travel, internet, mobile phones and self-education. Assistant Commissioner Graham Whyte also noted that “the ATO will take a closer look at any unusual deductions and contact employers to validate these claims”.
In a separate media release, the ATO also encouraged rental property owners to better understand their obligations and get their claims right. Mr Whyte said the ATO would pay close attention to excessive interest expense claims and incorrect apportionment of rental income and expenses between owners. “We are also looking at holiday homes that are not genuinely available for rent and incorrect claims for newly purchased rental properties”, Mr Whyte said.
SMSF borrowing arm’s-length terms deadline extended
The ATO has extended the deadline to 31 January 2017 for trustees of self managed super funds (SMSFs) to ensure that any related-party limited recourse borrowing arrangements (LRBAs) are on terms consistent with an arm’s-length dealing.
The ATO had previously announced a grace period whereby it would not select an SMSF for review for the 2014–2015 year or earlier years, provided that arm’s-length terms for LRBAs were implemented by 30 June 2016 (or non-compliant LRBAs were brought to an end before that date).
The deadline extension to 31 January 2017 follows the ATO’s release of Practical Compliance Guideline PCG 2016/5, which sets out “safe harbour” terms for LRBAs.
If an LRBA is structured in accordance with PCG 2016/5, the ATO will accept that the LRBA is consistent with an arm’s-length dealing and the non-arm’s length income (NALI) rules (47% tax) will not apply.
Lifetime $500,000 non-concessional superannuation cap
As announced in the 2016–2017 Federal Budget, the Government has proposed a lifetime non-concessional superannuation contributions cap of $500,000 to apply from Budget night (3 May 2016).
This means that people who are planning to make non-concessional contributions now need to check their historical non-concessional contributions data back to 1 July 2007 (which will be counted against the $500,000 lifetime limit).
To this end, the ATO can calculate non-concessional contribution amounts for the period 1 July 2007 to 30 June 2015, provided that the individuals and funds have met their lodgment obligations.
Note - recent media reports are suggesting that the newly elected Turnbull government may rethink this budget announcement.
ATO clearance certificates for property disposals
A new foreign resident capital gains withholding tax regime has been introduced that applies to contracts that are entered into from 1 July 2016, with a market value of $2 million or more.
Where the new rules apply, the transaction will incur a 10% non-final withholding amount at settlement.
Withholding does not apply to sales by Australian resident sellers, but these sellers will need to obtain a clearance certificate from the ATO and provide it to the purchaser to avoid the 10% withholding.
Taxable Payments Annual Report (TPAR)
Businesses operating in the building & construction industry must lodge a TPAR by 28 August to report payments made to contractors during the year.
If you need assistance lodging a TPAR for your business, please get in touch.
ATO Small Business Benchmarks & Business Performance Check Tool
The ATO has released the latest small business benchmarks which are based on the data from 2014 income tax returns and business activity statements.
Assistant Commissioner Matthew Bambrick said one of the great things about the benchmarks is that they give small businesses peace of mind. "If a small business is inside the benchmark range for their industry and the ATO hasn't received any extra information that may cause concern, they can be confident that they probably won't hear from us," Mr Bambrick said.
The business performance check tool on the ATO App also makes it quick and easy for small businesses to compare their own operations with industry benchmarks.
Mr Bambrick said the benchmarks were also a helpful guide for small businesses to see how they stack up against others in their industry. "We know a lot of small businesses, advisors and industry associations use the benchmarks to gauge competitiveness, whether or not costs might be too high or profit margins too low."
"Sometimes when a small business finds themselves outside the benchmarks for their industry it may be because they have more waste than their competitors or they're spending more on materials in comparison. Using the benchmarks as a guide, not only can they identify where they are slipping behind but also how they can improve and build their business."
The World's 50 Best Restaurants
It was recently announced that Melbourne will host the 2017 The World's 50 Best Restaurants Award.
The event, described by Tourism Australia's managing director John Sullivan as "like the Olympic Games of food", will bring the worlds most influential chefs, restaurateurs and media to Melbourne.
Tourism Australia anticipate that there will be 190 media outlets from 40 different countries in attendance. This gives Melbourne and Australia a chance to showcase what we have to offer to the world and promises to be a boon for domestic and international tourism.
32 Main Road, BALLARAT VIC 3350
1300 328 855
Suite 13, 33-35 Macedon Street, SUNBURY VIC 3429
03 9744 4522