In this Sky Update, we bring you all the latest tax news along with some other items that may pique your interest.
Register your R & D now
The R & D Tax Incentive provides a tax benefit to companies to offset the cost of carrying out eligible R & D activities. The objective of the program being to encourage innovation in Australia’s private sector.
Companies wishing to claim the R & D Tax Incentive for the financial year ended 30 June 2018 are required to register their eligible activities by 30 April 2019.
Late registrations will not be accepted and will preclude a claim being made. As such, companies wishing to claim are urged to prioritise completing the registration process.
If you need advice on your company’s eligibility, or assistance to register, please contact our office.
Federal Budget 2019/2020
The 2019-2020 Federal Budget will be handed down on Tuesday the 2nd of April 2019. With a Federal election looming, this may well prove to be an interesting one.
We will provide an update on the key announcements shortly after budget night to keep you in the know.
Commissioner of Taxation appeals the Sharpcan Gaming Machine Entitlements (GME) case
The Sharpcan case dealt with the question of whether a hotel operator was entitled to claim a tax deduction for the payments to acquire Victorian Gaming Machine Entitlements (GME).
The Full Federal Court decision handed down in September 2018 found in favour of Sharpcan and confirmed that the payments were tax deductible. This decision brought clarity to an issue that had been troubling clubs and pubs ever since the GME system was overhauled in August 2012.
This clarity may be short lived with the Commissioner of Taxation’s application for special leave to appeal the case having been granted by the High Court of Australia on the 20th of March.
Clubs and pubs will now have to wait for the High Court to hear the case and hand down a decision before they know where they stand.
Given that clubs and pubs will be paying significant sums of money to acquire new GME in August 2022, this case will be of significant importance to the industry. We will keep you posted. In the meantime, contact us if you have questions.
ATO clarifies position on whether superannuation is payable on leave loading
The question of whether annual leave loading constitutes ordinary time earnings (OTE) upon which superannuation contributions must be paid, has been troubling employers for a long time.
The ATO has recently published guidance on when annual leave loading will be considered to be OTE. The position is that annual leave loading will not be considered to be OTE where under the award/industrial agreement, the loading is “demonstrably referable to a notional loss of opportunity to work overtime”.
Most awards and agreements do not specifically state the reason for the application of annual leave loading. As such, the ATO position is that in those circumstances employers will not be able to satisfy the evidentiary requirements and the leave loading will be OTE upon which superannuation contributions must be paid.
The ATO has stated that they will not devote compliance resources to reviewing this issue in previous quarters. However, they expect employers to pay superannuation contributions on the loading moving forward unless they are able to clearly meet the evidentiary requirements to show that the loading is not OTE.
If you need assistance with your payroll requirements, please contact our office.
ATO to focus on rental property claims
In an address to the Tax Institute’s National Convention, the Commissioner of Taxation, Chris Jordan has announced that the ATO will be increasing their focus on rental income and deductions.
The Commissioner commented that over 300 audits on rental property claims had been recently undertaken with errors found in almost 9 out of 10 tax returns.
With over 2.1 million taxpayers claiming $47.4 billion in deductions against $44.1 billion of rental income, the ATO considers this to be a significant risk area.
We encourage taxpayers with rental properties to take extra care with their tax returns and to seek professional assistance to ensure that they are getting it right. Please contact our office for more information.