|IN THIS ISSUE|
More small business tax measures are now law
On 26 August 2015 the Tax Laws Amendment (Small Business Measures No 3) Act 2015 received Royal Assent. The Act makes amendments in the following areas:
- tax discount for unincorporated small businesses;
- immediate deductibility for small business start-up expenses;
- fringe benefits tax exemption for portable electronic devices for small businesses.
A previous edition of TaxWise Business detailed these measures. In summary:
- Tax rate cut for unincorporated business entities – this involves a 5% tax discount for individual taxpayers capped at $1,000 with business income from an unincorporated business with an aggregated annual turnover of less than $2 million will be introduced from the 2015-16 income year.
- Professional expenses – new businesses will be able to claim an immediate deduction for professional expenses (eg for the cost of advice from lawyers, accountants and other professionals) associated with starting a business from the 2015-16 income year.
- Electronic devices and FBT – this involves a fringe benefits tax exemption for portable electronic devices used primarily for work purposes will be expanded from 1 April 2016.
On 15 October 2015 the Assistant Treasurer introduced into the House of Representatives the Tax and Superannuation Laws Amendment (2015 Measures No 5) Bill2015. The Bill will make amendments in the following areas:
work-related car expenses;
Detailed below is the new measure in this Bill that might be relevant to your business.
a) Work-related car expenses
The Bill will change the methods for calculating work-related car expense deductions. Currently, there are four methods taxpayers can use to calculate work-related car expenses (12% of original value method, one-third of actual expenses method, cents per kilometre and logbook method).
The ‘12% of original value’ method and the ‘one-third of actual expenses’ method will be removed from the law leaving the ‘cents per kilometre’ and ‘logbook’ methods as the only two methods available.
The Bill will also provide a streamlined process for calculating the cents per kilometre method by providing a single rate of deduction which more accurately reflects the actual running expenses of a vehicle. In the 2015-16 income year, the cents per kilometre rate will be set at 66 cents per kilometre. The Bill gives the Commissioner the power to set the cents per kilometre rate for later years via legislative instrument.
Changes to the income tax law for this measure will generally apply in relation to the 2015-16 income year and later income years. Changes to the FBT law for this measure will operate from 1 April 2016 and later fringe benefits tax years.
There is draft legislation out that will amend the superannuation guarantee charge laws to simplify the laws and reduce the associated harshness of penalties under these laws.
Under the current law, employers must make quarterly superannuation guarantee (SG) contributions for their eligible employees to avoid having to pay the SG charge to the ATO. The SG charge regime imposes punitive costs to deter employers from paying their SG contributions late or in part. This can have a significant impact on small businesses.
As a part of the announced changes, the SG charge will be simplified by aligning the earnings base for calculating the SG charge (currently total salary and wages) with the earnings base for calculating SG contributions (ordinary time earnings).
The changes will also reduce the harshness of the SG charge by aligning the interest component on any SG shortfall with the period contributions that are outstanding. These changes will also remove the additional penalties under the current superannuation guarantee administration laws and align them with the administrative penalties under the Taxation Administration Act 1953.
These changes complement two other measures to reduce small business superannuation compliance costs; expansion of the small business superannuation clearing house and simplifying when a standard choice form must be provided by an employer. Both of these changes have applied since 1 July 2015.
The ATO has issued a reminder that large and medium employers must be SuperStream compliant by no later than 31 October.
The ATO previously announced it would allow these employers (those with 20 or more employees) an additional four months to adopt SuperStream, following the 30 June deadline. At the time of issuing this reminder, the ATO said from 1 November 2015, it would turn its attention to identifying those employers not compliant with SuperStream.
The ATO will continue to help employers adopt SuperStream, but there could be penalties for those who deliberately choose not to adopt it.
The ATO has published a checklist for employers to assist them to prepare to make super contributions for their employees using SuperStream. Employers should note that:
- Employers with 20 or more employees need to be using SuperStream no later than 31 October 2015.
- Employers with 19 or fewer employees need to be using SuperStream no later than 30 June 2016.
During the next few months, the ATO will be contacting small business employers that may not yet be using SuperStream to make super contributions. The ATO plans to contact employers in 22 industry groups.
Employers will receive a SMS message advising SuperStream has started and an email inviting them to register to attend an industry specific SuperStream webinar. The relevant industry groups are:
- Pharmacy and cosmetics
- General Practitioners, Dentists and Specialists
- Cafes and Restaurants, Catering & Take-away
- Fruit, Veg & Floristry
- Farming (livestock and crops)
- Hairdressing and Beauty Services
- Automotive & Repair
- Engineering & Technical Services
- Bus & Taxi
- Road Freight
- Consulting (Management & IT)
- Banking & Finance / Insurance & Super
- Accommodation, Pubs & Clubs
- Food & Grocery
- Manufacturing – general
- Building & Employment Services
- Metals & Engineering
- Other specialist & boutique
- Accounting & Legal
- Hospitals, Clinics, Aged Care, Accommodation & Allied
- Education & Training
The ATO has issued a reminder that once the audit of a self-managed superannuation fund (SMSF) has been finalised, an annual return should be lodged. The SMSF annual return is used to report income tax, regulatory information and member contributions, and to pay the supervisory levy.
If a fund was registered on or after 1 January 2015, it must lodge an SMSF annual return for the year it was registered,regardless of the amount of assets it holds, and even if a nil tax assessment is expected.
If a fund was registered before 1 January 2015 and does not have assets, it may not need to lodge a return.
The ATO has issued a reminder that every self-managed super fund (SMSF) registered on or after 1 January 2015 must now lodge an annual return for its first year, regardless of the assets it holds or if a nil tax assessment is expected.
If the SMSF was registered before 1 January 2015 and does not have assets, the ATO can be requested to either:
- cancel the registration, or
- flag the record as “return not necessary” (RNN).
A RNN is generally only available for a SMSF’s first year of registration.
All self-managed superannuation funds now need to be able to receive SuperStream-compliant contributions.
To do this, an SMSF needs a bank account to receive the contributions, an active electronic service address to receive data associated with contributions, and an ABN.
An SMSF trustee can get an active electronic service address from an SMSF messaging provider, or through the SMSF’s administrator, tax agent, accountant or bank.
Data matching program – Online selling
The ATO is undertaking a data matching program through which information about registrants who sold goods and services to a value of $10,000 or more during the period 1 July 2014 to 30 June 2015 online will be obtained.
Data will be sought from eBay Australia and New Zealand Pty Ltd, a subsidiary of eBay International AG which owns and operates www.ebay.com.au.
The data requested will include information that enables the ATO match online selling accounts to a taxpayer, including name, address and contact information as well as information on the number and value of transactions processed for each online selling account. This information will be matched electronically with certain sections of ATO data holdings to identify possible non-compliance with taxation law.
It is estimated that records relating to between 15,000 and 25,000 individuals will be matched.
The ATO has advised that advisors and their clients who are having difficulty accessing the small business superannuation clearing house (SBSCH) should ensure they are using the correct link to access SBSCH by visiting Superannuation Clearing House – Logon.
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