Tax Bulletin – March 2019

GENERAL

Changes to the small business instant asset write-off

On 29 January 2019, the Prime Minister announced that legislation will be introduced to:

  • extend the small business instant asset write-off by 12 months to 30 June 2020; and
  • increase the write-off threshold from less than $20,000 to less than $25,000 (effective immediately).

The current threshold of $20,000 has applied since 7.30pm AEST on 12 May 2015 and was due to revert to $1,000 on 1 July 2019. Under the proposed changes, from 29 January 2019 until 30 June 2020, small businesses with an aggregated annual turnover of less than $10 million may claim an immediate deduction for the business-use portion of each depreciating asset costing less than $25,000.

Tax scammer alert

The ATO has again warned taxpayers to be alert for scammers impersonating the ATO, as it appears, they have changed tactics in 2019. Specifically, the ATO is seeing the emergence of a new tactic where: “scammers are using an ATO number to send fraudulent SMS messages to taxpayers asking them to click on a link and hand over their personal details in order to obtain a refund”.

The ATO has advised it will not:

  • send an email or SMS asking a taxpayer to click on a link to provide login, personal or financial information, or to download a file or open an attachment;
  • use aggressive or rude behaviour, or threaten taxpayers with arrest, jail or deportation;
  • request payment of a debt via iTunes or Google Play cards, pre-paid Visa cards, cryptocurrency or direct credit to a personal bank account; or
  • request a fee in order to release a refund owed to taxpayers

Non-compliant payments to workers

The rules for claiming deductions for payments to workers are changing. From 1 July 2019, businesses can only claim deductions for certain payments made to workers where they’ve met the Pay As You Go (‘PAYG’) withholding obligation for that payment.

Specifically, a business can only claim a deduction for the following payments if it complies with the relevant PAYG withholding rules:

  • Salary, wages, commissions, bonuses or allowances to an employee.
  • Directors’ fees.
  • Payments to a religious practitioner.
  • Payments made under a labour hire arrangement.
  • Payments made for a supply of services (except from supplies of goods and real property) where the contractor has not provided their ABN.

Where the PAYG withholding rules require an amount to be withheld, the business must:

  • withhold the amount from the payment before they pay their worker; and
  • report that amount to the ATO.

Importantly, a deduction will not be lost if an incorrect amount is withheld (or reported) by mistake.

CORPORATE AND INTERNATIONAL

ATO transfer pricing guidance for inbound distributors

The ATO has issued Practical Compliance Guideline PCG 2019/1, which sets out the ATO’s compliance approach to the transfer pricing risks associated with inbound distribution arrangements in all industries. An inbound distributor is an intermediary between the producer of goods and another entity in the distribution channel or supply chain. PCG 2019/1 applies to inbound distributors whose business predominantly involves distributing:

goods purchased from related foreign entities for resale; or

digital products or services where related foreign entities own the intellectual property.

NOT-FOR-PROFIT

Gifts and honorariums

Charities may want to provide gifts or honorariums to individuals – including current or outgoing Responsible Persons, members, staff or volunteers – as a gesture of gratitude and appreciation for their services. Charities that prepare financial statements may also need to disclose gifts or honorariums to certain individuals (such as Responsible Persons) in accordance with the Australian Accounting Standards Board Related Party Disclosures standard (AASB 124).

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