Directors to become liable for GST debts

As part of the government’s ongoing fight against illegal phoenixing activity, on 5 February 2020 the Senate passed The Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019.

Hidden within this legislation was the provision that directors of companies which have a GST debt which is 3 months overdue will become personally liable for such unpaid GST. This is in addition to the personal liability which they already face for non-payment of PAYG Withholding and Superannuation.

This law will come into operation after it receives Royal Assent, and at this stage it is expected to come into force from 1st April 2020.

Directors of companies with outstanding GST obligations are advised to act fast to make the most of an available window of opportunity before the new law becomes operational. Where there is a problem GST debt, directors should consider either paying the debt, or entering into a payment arrangement with the ATO ahead of the commencement of the new law. Where this is not possible, they should obtain professional advice on other potential courses of action.

A new regime is almost upon us, where company directors’ assets will become fair game for the ATO in its bid to recover outstanding GST revenue. If this new law affects you, please contact our office.

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Portable Long Service Leave is here

From 1 July 2019, some Victorian workers in the community services, contract cleaning and securities industries, are able to accumulate long service leave benefits based on their service (with one or more employers) to the industry under the Portable Long Service Leave Benefits Act 2018 (Vic).

Key features of the arrangement are:

• Eligible employers are required to register eligible workers (potentially any employees and sole trading contractors) through an online portal.

• Quarterly, eligible employers pay a set levy (1.65%-1.8%) to the Portable Long Service Leave Authority (PLSLA), and report details of the hours worked, ordinary pay and any long service leave taken.

• Workers will be able to apply for a lump sum payment from the authority after 7 years of cumulative work.

• Only service after 1 July 2019 will be portable.

• There are mechanisms for employers who pay long service leave in accordance with the long service leave Act to be reimbursed from the Authority for any service after 1 July 2019, preventing double dipping.

To apply, the employer has to be engaging in the industry. For cleaning and security, this means that the employer is receiving revenue for cleaning or providing security services. For the community service sector, the employer simply has to employ a person to perform community service work.

For employees to be eligible, they must be predominantly employed to perform the eligible service (cleaning, security or community services). Therefore, security staff working for a security firm will be eligible. A sole-trading contractor cleaner working directly for a law firm will not, nor will the bookkeeper of a crisis centre. ‘Community services’ is a broad term covering support to people who have a disability, are vulnerable, disadvantaged or in crisis, and any services funded by NDIS. It also includes community education, advocacy, and development.

Registration is compulsory, so we recommend contacting the PLSLA if there is any possibility your organisation being eligible. During the application process, the PLSLA will call to discuss your situation to ensure that only eligible entities are registered, and provide help with any implementation.

Would you like to know more? Start with: https://www.vic.gov.au/portable-long-service

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Super Guarantee Amnesty – plan to get in quick!

The Federal Government has reintroduced legislation into Parliament to implement the one-off Superannuation Guarantee (SG) Amnesty. The Amnesty will allow eligible employers to own-up to past superannuation underpayments dating as far back as 1st July 1992, making good their indiscretions without much of the penalties that such disclosures normally bring. Underpayments of super that occurred after 31st March 2018 will not be covered.

To qualify, employers must voluntarily disclose a SG shortfall after 24th May 2018, and prior to the commencement of any ATO audit action. The Amnesty will expire 6 months after the Bill receives Royal Assent.

Some of the anticipated benefits to employers in coming clean are that the Administration fee ($20 per employee per quarter) will not apply, the Part 7 Penalty (200% of the underpaid super) will be waived, and the catch-up super payment will be tax-deductible (normally it would not be tax-deductible)

The government expects $160m of underpaid super to be recovered as a result the Amnesty. After the Amnesty period is over, employers who have underpaid super can expect significantly increased punitive measures to apply. If you think you will be affected by this Amnesty please contact our office. It will be best to get the timing right. The window to act will be limited.

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Main residence CGT bill is resurrected

Legislation to deny capital gains tax (CGT) exemption on the family home for non-residents has been reintroduced into parliament.

The original measure, which was announced in the 2017-18 budget and received considerable backlash from members of the tax and expat community, due to its retrospective nature, lapsed (no doubt with many sighs of relief) with the calling of the Federal Election. The new bill now essentially denies access to the CGT main residence exemption for non-residents who sell the family home after 30th June 2020.

Under the new bill, individuals who have been foreign residents for a period of six years or less may be able to access the CGT main residence exemption if, during the period of that foreign residency, certain life events occurred.

A life event includes a terminal medical condition to the foreign resident, their spouse or their child under 18 years of age; death; and divorce or separation. Aussies with a non-resident tax status will not doubt be concerned by this bit of news.

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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, https://rdlaccountants.com.au/blog/wp-content/uploads/2019/09/External-Conduct-Stds.pdf or take a look at the ACNC’s resources: https://www.acnc.gov.au/for-charities/manageyour-charity/charity-governance/acnc-external-conductstandards

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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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