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TAX TIME 2019

TAX PLANNING - HOW MUCH TAX WILL YOU PAY IN 2019?

Tax planning offers many opportunities for taxpayers:

- Legally arrange your affairs in a manner to minimise your taxation liabilities
- Control the amount of tax you pay
- Maximise your access to tax rebates
- Plan your cash flow by knowing your taxation liabilities in advance.

Book your tax planning appointment before 30 June 2019 to review your 2019 profit, to estimate your tax payable and to put in place tax minimisation strategies.

Single Touch Payroll requires employers to send tax and superannuation information to the ATO every time they pay their employees and will commence on 1 July 2019 for all employers.

Features of Single Touch Payroll:

- Employers will no longer need to provide their employees with payment summaries for the information they report through Single Touch Payroll.
- Employees will find the information they need to complete their income tax return in ATO online services, accessed through myGov. Employees who choose not to have a myGov account can contact the ATO to get a copy of their payment summary information.
- Employers will no longer need to provide the ATO with a payment summary annual report (PSAR).
- From January 2020, the ATO will pre-fill activity statement labels W1 and W2.
- Employers will be able to offer online commencement forms to new employees, including Tax file number declaration, Superannuation (super) standard choice, Withholding declaration and Medicare levy variation declaration forms that can be sent to the ATO from myGov.

How to report through Single Touch payroll:

  • Report through your existing Single Touch Payroll enabled software
  • Report through a new Single Touch Payroll enabled software.  If you are a micro employer with one to four employees, the ATO has compiled a list of 24 companies that have put forward product proposals to offer low cost (ie less than $10 per month) Single Touch Payroll solutions. The list can be found at www.ato.gov.au/business/single-touch-payroll/in-detail/low-cost-singletouch-payroll-solutions.
  • Ask a third party, such as a registered tax or BAS agent or payroll service provider, to report through Single Touch Payroll on your behalf. If you have four or less employees, Twomeys will be able to report your Single Touch Payroll information quarterly for the first two years, rather than each time you process a pay run.

NB: If you have closely held payees (i.e. the payee is directly related to the entity from which they receive payments, for example family members of a family-owned business), you are exempt from reporting closely held payees for the 201920 financial year.

The instant asset write-off threshold has increased to $30,000, and has been extended to 30 June 2020.

The instant asset write-off now also includes businesses with a turnover from $10 million to less than $50 million. These businesses can claim a deduction of up to $30,000 for the business portion of each asset (new or second hand), purchased and first used or installed ready for use from 7.30pm (AEDT) on 2 April 2019 until 30 June 2020.

Businesses with a turnover of up to $10 million can also claim a deduction for each asset purchased and first used or installed ready for use, up to the following thresholds:

- $30,000, from 7.30pm (AEDT) on 2 April 2019 until  30 June 2020
- $25,000, from 29 January 2019 until before 7.30pm (AEDT) on 2 April 2019
- $20,000, before 29 January 2019.

NB: The GST exclusive cost of the asset must be less than the above thresholds in order to claim an instant asset write-off.

Heavy vehicles can be used in different activities both on and off public roads. The amount of fuel tax credits you can claim depends on what fuel you use, when you acquired it and if you use it:

  • for travelling on public roads
  • in all other activities, including off public roads, on work sites and to power auxiliary equipment.

You need to do separate calculations for different fuel tax credit rates.

To work out how much fuel was used in the different activities, you can use any apportionment method considered fair and reasonable for your circumstances.
Common methods and measures include where you:

  • add up all the eligible quantities of each fuel type that attract the same fuel tax credit rate
  • subtract any ineligible fuel, such as fuel you used in light vehicles on a public road, from the total fuel acquired
  • determine a reliable percentage of eligible fuel usage for a sample period and apply this over a number of tax periods.

The ATO's simplified method for working out fuel used in vehicles with auxiliary equipment can be found at:
www.ato.gov.au/business/fuel-schemes/in-detail/heavy-vehicles/?page=5#Methodsofworkingoutfuelconsumption_auxil and includes the following:
 

 Vehicle Percentage  Auxiliary equipment
 Concrete truck  30%  Mixing barrel and mechanisms for loading/unloading concrete
 Commercial coach  5%  Air conditioning
 Refrigerated vehicle  10%  Refrigeration unit
 Waste collection  15%

 Bin lifting equipment

The current fuel tax credit rate for heavy vehicles travelling on a public road is 15.8c/litre and for all other uses – including power auxiliary equipment of a heavy vehicle is 41.6c/litre. With such a large difference in the rates, it is important that you identify any non on road use of heavy vehicles and claim it at the appropriate higher rate.


The ATO has announced it will continue its data matching program of share transactions acquired between 20 September 1985 to 30 June 2018.

The objective of the program is to ensure that taxpayers are correctly meeting taxation obligations in relation to share transactions, including registration, lodgement, reporting and payment responsibilities.

In particular, the ATO will continue to acquire details of share transactions from sources such as Computershare, Link Market Services, Australian Securities Exchange, Boardroom and ASIC.

The ATO has enacted legislation to extend the industries required to report payments to contractors under the Taxable Payments Reporting System (TPRS) regime.

Road freight, IT and security investigation or surveillance industries will need to report payments from 1 July 2019.   This is in addition to the cleaning and courier industries which came under the TPRS from 1 July 2018, and the Building and Construction industry which has been required to report payments to contractors since 2012.

ATO DEBT – EVEN UNDER PLAN – IS A DEAL BREAKER!

Over recent years, bank scrutiny of the ATO position of clients has gradually increased.

This is was originally on the back of the substantial increase in ATO debts during the GFC in 2008. The ATO was very supportive of business through this period and significant debt accumulated as a result. From circa 2010, this position changed and the ATO became much firmer and has since been the cause of many businesses been wound up.

The banks have gradually increased their scrutiny of the ATO debt position of clients. Until recently, a debt under an arranged payment plan (with an explanation as to why this occurred) or a recently repaid debt, were things that would generally be accepted by the banks. However, we are now in an environment (again with a large reason being the Royal Commission) where any ATO debt, even under a payment plan, is an automatic 'no' to any finance request. Furthermore, even if there is a debt that has recently been repaid, this can similarly stop a transaction from proceeding with many banks now wanting a 6 – 12 months clean history with the ATO.

So, what is the reason behind this? From the bank's perspective, ATO debts are due to GST and PAYG Withholding payments plus PAYG Tax Instalments for the clients themselves. Particularly the first two of these relates to money which the business is effectively holding on behalf of the ATO – it is technically cash that is never owned by the business and is just been administered by the business on behalf of the ATO. If the client is unable to make these payments, then it means one of two things. Either the client has a cash flow issue or has poor management ability. Both of these items are major red flags for the banks. It is not unusual for a business to have periods of tight cash flow, but the banks do not see delaying BAS and Tax payments as a solution to this. The clients need to work through this and, if required, look to their main bank for additional assistance.

There is no doubt obtaining a payment plan from the ATO is quick and easy and they generally refund any interest and thus it is also economical. If cash flow is, or maybe a little tight, an ATO payment plan looks like a quick,  simple and cost-effective option. We are now in an environment where this needs to be seriously weighed against any intended finance requirements, or annual reviews on existing finance, with a bank over the next 12 months (and not many businesses go 12 months without dealing with the bank).

PAYROLL TAX THRESHOLD CHANGES

Payroll tax is applied to a business's New South Wales wages that exceed the threshold. The current payroll tax rate is 5.45% on wages in excess of the threshold of $850,000. Businesses in NSW will benefit from a progressive increase in the payroll tax threshold over the next four years as follows:

 YEAR THRESHOLD 
2018-19  $850,000
 2019-20  $900,000
 2020-21  $950,000
 2021-22  $1,000,000

 

AUDIT SHIELD

The recent Federal budget allocated an additional $130.8 million in funding for ATO to increase compliance activities targeting individual taxpayers and their tax agents.

Twomeys is pleased to be able to offer our clients Audit Shield insurance which covers professional fees (up to prescribed limits) in the event that you receive one of the following audits: income tax, record keeping, capital gains, fringe benefits, workers compensation, payroll tax, GST/BAS, SMSF and employer obligations.

If you would like to participate in the Audit Shield service, please contact your local Twomeys office.

The Australian Business Register (ABR) is phasing out Trading Names and from November 2018, the ABR will only list Business Names that are registered with ASIC.

If you conduct business under a name other than your own, you need to register a Business Name. You don't need to register a business name if you trade under your own name (eg John Smith), but you'll need to have a business name if it's anything else (eg John Smith Plumbing).

You cannot apply for a business name that is identical to one already on the register. Before you apply, you can check the Business Name availability on the ASIC website. The fees for registering a business name are $35 for one year and $82 for three years.

Further information is available at https://asic.gov.au/forbusiness/registering-a-business-name/