2017 Tax Updates for Businesses
It's important to keep up to date with changes from the ATO to find out what updates could be affecting your business. Here is a summary of some recent tax updates.
Credit and debit card, online selling, and ride sourcing data matching
The ATO is collecting data from financial institutions and online selling sites as part of their data matching programs for credit and debit cards, online selling and ride sourcing.
The data will include:
- the total amount of credit and debit card payments businesses received
- online sellers who have sold at least $12,000 worth of goods or services
- payments made to ride sourcing drivers from accounts held by the ride sourcing facilitator
The ATO matches this data with information they have from income tax returns, activity statements and other ATO records to identify any discrepancies.
Tip! If you need to correct a mistake you have made in your income tax return, you should talk to your tax agent.
Ride sourcing data matching
The ATO’s ride sourcing data matching program has been developed to address the compliance risk of the registration, lodgment and reporting of businesses offering ride sourcing services as a driver. It is estimated up to 74,000 individuals (ride sourcing drivers) offer, or have offered, this service.
The ATO will request details of all payments made to ride sourcing providers from accounts held by a ride sourcing facilitator's financial institution for the 2016-17 and 2017-18 financial years.
They will match the data provided by the facilitator's financial institution against our records. This will identify ride sourcing drivers that may not be meeting their registration, reporting, lodgment and/or payment obligations.
Where the ATO is unable to match a driver's details against ATO records, they will obtain further information from the financial institution where the driver's account is held.
The protocol has been prepared to meet the requirements of the Office of the Australian Information Commissioner's Guidelines on Data Matching in Australian Government Administration (2014) (the Guidelines).
This will impact you if you offer ride sourcing as part of your business.
Simpler reporting with Single Touch Payroll
Single Touch Payroll is a government initiative to simplify business reporting obligations. In the previous issue of TaxWise Business, we noted that the Budget Savings (Omnibus) Bill 2016 which contains the Single Touch Payroll rules, had been introduced into Parliament. This has now become law.
The Single Touch payroll regime will enable employers to report salary or wages, pay as you go (PAYG) withholding and superannuation information to the ATO from their payroll solution, at the same time they pay their employees. This will mean simpler reporting obligations and more options for completing tax and super forms electronically.
Single Touch Payroll reporting will be available to all employers from 1 July 2017.
However, only employers with 20 or more employees will have to report this way under the law. They must start reporting through Single Touch Payroll from 1 July 2018.
Further information is available on the ATO website: Simpler-reporting-with-Single-Touch-Payroll.
To do! If you are an employer with 20 or more employees, you will need to look into your reporting to the ATO to ensure it complies with the requirements of the Single Touch Payroll regime.
‘Black Economy’ Taskforce
On 14 December 2016, Minister for Revenue and Financial Services, the Hon Kelly O'Dwyer MP, announced that the government had established a taskforce to crack down on the ‘Black Economy'. Ms O'Dwyer said, “While there is no single, internationally-agreed definition, typically, the ‘black economy’ refers to people who operate entirely outside the tax system or who are known to tax authorities but deliberately misreport their tax (and superannuation) obligations. The ‘black economy’ can also include those engaged in organised crime, including those who engage in the production and sale of prohibited goods."
The ‘Black Economy’ Taskforce, to be chaired by former chair of the B20 anti-corruption taskforce, Mr Michael Andrew AO, will provide an interim report to government in March 2017. Tackling the ‘black economy’ requires a whole of government approach and participants will include the Reserve Bank of Australia, the Australian Federal Police, ASIC, APRA, AUSTRAC, and the Departments of Human Services and Immigration.
The Taskforce will provide a final report in October 2017 which will include an overarching whole of government policy framework and detailed proposals for action to counter the ‘black economy’.
Targeted amendments to Division 7A
The amendments will apply from 1 July 2018 and will introduce:
- a self-correction mechanism to assist taxpayers to rectify inadvertent breaches of Division 7A promptly;
- appropriate safe harbour rules to provide certainty and simplify compliance for taxpayers;
- simplified rules regarding complying Division 7A loans, including in relation to loan duration and the minimum interest rate; and
- a number of technical amendments to improve the integrity and operation of Division 7A and provide increased certainty for taxpayers.
The proposed changes draw on a number of recommendations from the Board of Taxation's post-implementation review into Division 7A.
To do! This change may impact you if you have private loans from your business. In that case, you should seek advice from your tax professional.
ATO issues warning on contrived trust arrangements
The ATO recently released Taxpayer Alert TA 2016/12 cautioning against arrangements that minimise tax by creating artificial differences between the taxable net income and distributable income of closely held trusts.
Deputy Commissioner Michael Cranston said the ATO is investigating arrangements where trustees are engineering a reduction in trust income to improperly gain favourable tax breaks, or sometimes pay no tax at all.
The ATO identified these arrangements through ongoing monitoring and reviews by the Trusts Taskforce, and continues to look for these arrangements using sophisticated analytics.
The Trusts Taskforce was established in 2013 to undertake targeted compliance action against people involved in tax avoidance or evasion using trusts. Since this time, the ATO has raised $772 million in liabilities and collected $164.5 million. In addition to cash collected, assets of $55 million have been restrained under proceeds of crime legislation.
Goods taken from stock for private use
If you take items from your business’ trading stock for your own use, make sure you include the value of these items as part of your business’ assessable income.
To do this, you should record the actual value of the goods (excluding GST) or use estimates provided by the ATO if you are a sole trader or in a partnership. The ATO estimates are updated yearly and are available for the following industries:
- takeaway food shop
- mixed business (including milk bar, general store and convenience store).
For more information on amounts the ATO accepts as estimates and small business benchmarks, visit the ATO’s website.
Note! Seek advice from your tax agent or adviser if you are unsure how to treat stock used for private purposes in your accounts for tax purposes.
This article is distributed by HTG Partners to provide information of general interest to their clients. The content of this newsletter does not constitute specific advice. Readers are encouraged to consult their tax adviser for advice on specific matters.
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