Tax Bulletin - January 2019
ATO to send text messages if bank account details incorrect
The ATO has advised that it will send SMS text messages directly to taxpayers where incorrect bank account details were included in their tax returns and they were entitled to a refund.
The SMS will advise impacted taxpayers that:
their refund cannot be processed due to incorrect bank account details; and
they should phone the ATO on 13 28 61 to correct their details.
If impacted taxpayers contact the ATO with their correct details within seven days, any refund due will be issued electronically. In the wake of an increase in recent tax fraud attempts, it is clear that taxpayers need to exercise additional caution when dealing with electronic messaging from (or purportedly from) the ATO. The authenticity of ATO correspondence can be verified by calling the ATO on 1800 008 540; however, if you are ever unsure about any correspondence received, please contact our office.
ATO contact regarding business cars and Fringe Benefits Tax ('FBT')
The ATO has recently advised that it will be contacting taxpayers (and tax agents on behalf of their clients) that have been identified as having cars registered in their business name who have not lodged an FBT return.
The ATO has reminded businesses that:
a car fringe benefit will occur when a business owns or leases a car and makes it available for an employee's private travel or use (including garaging the car at or near an employee's home and making it available for private use); and that
business directors are also 'employees' for FBT purposes.
External collection agencies to enforce ATO lodgement obligations
The ATO has finalised a trial relating to sending overdue taxpayer lodgement obligations to external collection agencies. As a result, it may now refer taxpayers to an external collection agency to secure tax return lodgement. The ATO has stated that it will only refer a taxpayer to an external collection agency where the taxpayer takes no action in response to its initial correspondence letters.
ATO data matching and share transactions
The ATO has extended its data matching program, this time focusing on share data.
The ATO will continue to receive share data from ASIC, including details of the price, quantity and time of individual trades dating back to 2014, with more than 500 million records obtained.
The ATO will use the information to identify taxpayers who have not properly reported the sale or transfer of shares as income or capital gains in their income tax returns.
It seems share transactions are high on the ATO's priority list, given more than 5 million Australian adults (almost one-third) now own shares.
CORPORATE AND INTERNATIONAL
Company loans to shareholders under review
The Government has released a consultation paper outlining proposed reforms to ‘simplify’ the loan agreements that are generally required when a shareholder (or their associate) borrows funds (or receives a payment) from a related company.
Broadly, where a private company makes a payment or loans funds to a shareholder and/or their associate, the amount will be treated as a taxable unfranked dividend paid to the recipient.
To avoid this, many shareholders enter into complying 'Division 7A loan agreements' (basically agreeing to repay the relevant amount within 7 years, or 25 years if the loan is secured).
With this in mind, Treasury is currently looking at (amongst other things):
simplifying the Division 7A loan rules by converting to a new 10-year model; and
clarifying that distributions from a trust to a ‘bucket’ company that remain 'unpaid present entitlements' come within the scope of Division 7A.
The proposed amendments are intended to apply from 1 July 2019 and will arguably be the most significant tax reforms impacting business and investment clients over the next two years.
Improvement to employee share schemes announced
The Government has announced it intends to introduce legislation to improve the ability of small businesses to offer employee share schemes by simplifying the current regulatory framework, and reducing the time and cost burden for businesses by (amongst other things):
increasing the value limit of eligible financial products that can be offered in a 12-month period from $5,000 per employee to $10,000 per employee;
creating an exemption for disclosure, licensing, advertising and on-sale obligations in the Corporations Act; and
allowing small businesses to offer (in most instances) employee share schemes without publicly disclosing commercially sensitive financial information.
2018 Annual Information Statement due date extended
The due date for many charities to complete their reporting has been extended. Charities with reporting due dates between 31 December 2018 and 28 February 2019 now have until 31 March 2019 to submit their 2018 Annual Information Statement.
Important: This is not advice. Clients should not act solely on the basis of the material contained in this Bulletin. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. The Bulletin is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval.
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