New Rules For Charities Operating Overseas

On July 23rd, conduct standards applying to all charities operating overseas became law. The definition of “operating overseas” is broad, and captures many more charities than the overseas aid organisations that might come immediately to mind. Activities like buying goods or services from overseas, sending volunteers internationally, giving money to someone to take overseas, and partnering (formally or giving a once-off donation) with international organisations may trigger their application.

The standards require charities operating overseas to keep additional records and monitor activities to ensure that funds are used appropriately, activities are legal and vulnerable people are protected.

Want to know more? Here is our fact sheet, or take a look at the ACNC’s resources:

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New helpful resources for Charities

The ACNC has issued a range of factsheets, guides and templates in its ‘Small Charities Library’ for the use of small charities in meeting their compliance obligations.

These documents provide guidance on a range of issues applicable for small charities, including complying with governance requirements, access to tax concessions and keeping appropriate records to comply with reporting obligations.
You can access the Library here

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Taxable Payments Annual Reports due soon

Businesses providing cleaning and courier services are reminded that they now fall within the scope of the Taxable Payments Annual Reports (TPAR). Information disclosed in these reports is used by the ATO to identify contractors who may not be doing the right thing, including not reporting income, failing to lodge tax returns or activity statements, not registering for GST or using false ABNs.
This system of reporting has applied since 2012 to businesses providing building and construction services. The due date for these reports is 28th August 2019, so time is running out.
This reporting regime will apply to businesses in the road freight, security, investigation, surveillance, and information technology industries for the 2019/20 year.
If you need help with your report please contact our office.

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Tax treatment of compensation from financial institutions

By 30 June 2019, five major financial institutions paid $119.7 million in compensation for poor financial advice to 6,318 customers. The question is, how are these payments treated for tax purposes?

The tax treatment varies according to why the compensation was paid and who the payment was made to. Compensation payments are made for a number of reasons including fee for no service, deficient advice, or overcharging for insurance premiums for death or disability insurance cover. Each one has different tax consequences.

In some cases, the compensation will be assessable income and in others will impact the cost base of any underlying investment. If an investment has already been sold, the compensation may trigger a capital gains tax liability and in some cases it will be necessary to amend prior year tax returns.

There may also be GST consequences. In general, the GST treatment will mirror the GST consequences for the financial institution that made the payment. If you or your superannuation fund claimed GST credits, these may need to be repaid where a compensation amount includes a GST component.

Managing the tax treatment of compensation payments can be tricky. If you or your superannuation fund has received a compensation payment, please let us know as soon as possible so we can assist you get the tax treatment right.

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Employers hit with FBT on Uber services

A recent ATO guidance statement has clarified that employers providing travel benefits to employees could be subject to FBT if such services are provided via a ride-sourcing organisation such as Uber, instead of a registered taxi service.
Section 58Z of the FBT Assessment Act 1986 (FBTAA) provides employers with an exemption for taxi travel between home and work and in the case of illness, where certain conditions are met. Unfortunately under the FBT law, this concession applies only to a taxi service as defined in the FBT Act, which defines a “taxi” as a vehicle that is licensed to operate as a taxi. While some employers will be able to rely on the exemption available for minor and infrequent benefits for private home/work travel, regular providers of such benefits may struggle to fall within the ambit of the exemption. Having identified that a ride-sourcing service is likely to carry an FBT burden, many employers will opt for the traditional taxi service to avoid the FBT sting. Travel to business meetings, the airport, etc. for business-related purposes will continue to be FBT free regardless of the carriage service used. Give us a call if you wish to discuss this.

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ATO ruling on FBT for religious practitioners now finalised

Organisations operating as religious institutions will be interested to note that the ATO ruling on FBT for religious practitioners has now been finalised. It was released on 19th June 2019 as TR 2019/3.
The final ruling appears to be largely unchanged from the draft. The ruling clarifies that those who relied on the previous ruling (TR 92/17) will have the protection of that ruling.

We will analyse the ruling further, but in the meantime, it is available here.

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Single Touch Payroll – Will you be ready?

For employers with less than 20 staff, Single Touch Payroll (STP) is just around the corner. While initially intended to begin on 1st July 2019, the ATO has allowed such employers to begin any time before 30th September 2019. A further extension period of up to 12 months is available, but employers need to apply.

Single Touch Payroll is a new way of reporting tax and super information to the ATO. Using payroll software, or another solution that is STP ready, employers send their employees’ salary and wage information, pay as you go (PAYG) withholding, details of Reportable Fringe Benefits and Reportable Employer Superannuation Contributions, and super information, to the ATO each pay period.

What will it mean for employers?
For employers, the STP system will mean that:
• Pay cycles do not need to change (you can continue to pay your employees weekly, fortnightly or monthly);
• Super information will be reported to the ATO (in addition to the current Clearing House reporting)’
• You will you no longer need to give employees a payment summary for the information reported and finalised via STP – this will be available to your employees on myGov.

Talk to us about how we can help you be ready for this significant change.

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Sweeping Changes to Insurance through Superannuation

A recent important legislative change that received Royal Assent and takes effect from 1 July 2019. This change relates to insurance held through superannuation (other than an SMSF or small APRA fund), where the member is deemed to be “inactive”. Whilst the changes don’t take effect until 1 July 2019, it is possible you may have received letters from your superannuation funds notifying you (by 1 May 2019) of the impending changes.
Under the changes, superfunds are not able to offer insurance coverage (on an opt-out basis) to many members if the member has an inactive account, irrespective of the size of the account balance.
An inactive account is defined as one that has not received a contribution or rollover in respect of that member for a continuous period of 16 months. If you have insurance that was put in place many years ago and has continued to be held, but where you are no longer making contributions to that account, it is likely you will be impacted by this change.
It is important to consider your situation and consult your financial adviser to discuss the appropriate action to take, to ensure that your insurance policies remain in force.

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Curtain soon to fall on Medical Expenses claims

The Federal government has been phasing out the Medical Expenses tax offset, which entitles individuals to a tax reduction of either 10% or 20% (depending on the individual’s income level) of the amount paid for medical expenses above a certain threshold. Since 1st July 2015 the offset has only been available to individuals in respect of costs of disability aids, attendant care or aged care, but 30th June 2019 will see this concession come to an end.
It is a timely reminder to ensure that, where applicable, eligible costs are paid prior to 30th June 2019 to bring them within the scope of the offset.

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Rental property deductions in the ATO sights

Recent audit activity by the ATO has led the regulator to conclude that there are significant errors in claims being made by taxpayers against rental income. The ATO’s audit work on over 300 taxpayers found that there were errors in 9 out of 10 cases, with incorrect interest claims for refinanced loans, incorrect classification of capital works as repairs and maintenance, and taxpayers not apportioning deductions for holiday homes when they are not genuinely available for rent, being the main areas where taxpayers have transgressed.
The ATO’s previous blitz on work related expenses dropped the average claim by just $130, resulting in an extra $600 million in government revenue. With this in mind, the focus on rental property claims is set to continue, in the hope that it too will result in a windfall to government coffers. Taxpayers have been put on notice.

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