OCTOBER 2018 RECAP: Do you have a trading name that isn't registered as a business name?
Changes to the Small Business Capital Gains Tax Concessions
- From 1 November 2018, trading names have been removed from the ABR as it will no longer qualify as a registered business name. If you wish to use a trading name for business purposes, it is important that you register your trading name as a business name with ASIC immediately. Please contact our office is you are not sure about your registrations
Upcoming Lodgements & Obligations:
- Legislative amendments to the small business CGT concessions passed Senate late September
- the amendment that has been accepted by the Senate changes the start date of the measures to 8 February 2018 from what was originally intended to be 1 July 2017.
WHAT HAPPENED OVER THE LAST MONTH IN TAX? Draft Legislation which proposes to deny deductions for vacant land from 01 July 2019
- 07 November 2018 – Monthly Payroll Tax Returns due for lodgement and payment for entities reporting monthly
- 21 November 2018 – Lodge and pay October 2018 monthly business activity / installment activity statements
- 25 November 2018 – Lodge and pay Quarter 1 (July 2018 – Sept 2018) activity statements if you lodge electronically via Wheelhouse Tax Agent Portal
- 01 December 2018 – Payment for income tax due for large/medium taxpayers, companies and superfunds – Lodgement of return is due 15 January 2019
- 07 December 2018 – Monthly Payroll Tax Returns due for lodgement and payment for entities reporting monthly
- 21 December 2018 – Lodge and pay November 2018 monthly business activity / installment activity statements
Another release of draft legislation on the 2018–19 Budget measure which proposes to deny deductions for vacant land from 1 July 2019.
Under the new measure:
- vacant land = no building/structure on land that is substantial and permanent, and is in use/ready for use;
- losses and outgoings associated with holding vacant land that are incurred from 1 July 2019 are denied, irrespective of when the land was acquired (i.e. there is no grandfathering for existing properties);
- new residential premises are treated as 'vacant' until the premises are fit for occupancy and are rented/available for rent;
- denied deductions may qualify for inclusion in CGT cost base if criteria met;
Exclusions will apply:
10,000 small businesses in 30 locations across the country will be visited by the ATO
- to the extent that land is not vacant or is not being used to carry on a business;
- for companies, superannuation funds (non-SMSFs), MITs and public unit trusts (same exclusions apply as for the rules which limit travel expenses and depreciation on residential rental properties);
- where the taxpayer holds the land in carrying on a business (e.g. property development or primary production), or affiliate/spouse/child or connected entity carries on a business on the land;
- where losses/outgoings are incurred after land ceases to be vacant.
Following an article published Accountants Daily, as part of the $318.5 million federal budget funding boost
to the ATO to implement new strategies to combat the black economy, the Tax Office will be authorising mobile strike visits to 10,000 businesses in 30 locations across the country.
The locations will include 10 metro, 10 regional, and 10 remote areas.
For more information, visit https://www.accountantsdaily.com.au/business/12308-ato-mobile-strike-force-to-visit-10-000-small-businesses Deductions for travel denied for taxpayers who own residential rental property
Reminder to our clients that in November 2017, the government introduced new rules around tax deductions for travel expenses relating to residential property and restrictions for depreciation of items in residential rental properties, with a retrospective application from 01 July 2017.
For more information, please see https://www.ato.gov.au/general/new-legislation/in-detail/direct-taxes/income-tax-for-individuals/disallow-the-deduction-of-travel-expenses-for-residential-property/ Lower taxes for small and medium businesses
On 16 October 2018, the Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Bill 2018
received royal assent. This Bill implements the proposal to accelerate the reduction of the corporate tax rate for base rate entities.
A base rate entity is a corporate tax entity with an aggregated turnover of less than $50 million and no more than 80% of its income derived is of a passive nature.
Under this Bill, the corporate tax rate for base rate entities will reduce from 27.5% to 26% in the 2020-21 year before being cut to 25% for the 2021-22 income year and subsequent income years (rather than the current 2026-27 year as currently legislated). Work related claims and substantiating them
The ATO has increased its audit activities in the last 6-8 months and we are expecting this to increase further with a focus on employee's work-related claims.
The latest tax gap research indicates that a significant portion of work-related expense adjustments are the result of incorrect or insufficient record keeping. In particular, according to the research:
- there seems to be a high error rate in relation to apportionment;
- claims for 'standard' deductions where exceptions to substantiation provisions exist is surprisingly common; and
- some taxpayers insist on a deduction without holding any records at all and have nothing to indicate that they actually spent the money.
Ensure that all work-related claims can be substantiated as there is no such thing as "standard minimum deductions". Proposal to 'name and shame' phoenix operators
Illegal phoenix activity occurs when a company is deliberately liquidated to avoid paying creditors, taxes and employee entitlements.
The company then transfers the assets to a new entity and continues to operate the same or a similar business under the same ownership. This allows for an unfair competitive advantage over other businesses, as illegal phoenix operators never meet their financial obligations.
In a bid to "secure the tax base" by attacking phoenix activity, shadow Assistant Treasurer Andrew Leigh proposed allowing the commissioner of tax to publicly name individuals and companies that are found to have left creditors high and dry.
For more information visit https://www.mybusiness.com.au/management/5155-proposal-to-name-and-shame-phoenix-operators Changes to long service leave legislation in Victoria
The Victorian Government has made significant changes to long service leave and these are now in effect from 01 November 2018.
All employers with employees in Victoria need to be aware of the significant changes to long service leave entitlements.
Employers should review their leave policies and contracts of employment.
Wheelhouse work with some outstanding lawyers who can assist our clients in this area. As always, feel free to contact one of our friendly team members should you have any questions. Wheelhouse team