Tax Bulletin - April 2019
Continued focus on the cash economy
ATO Assistant Commissioner Peter Holt has announced that, in the 2019/20 financial year, the ATO will be visiting a further 10,000 small businesses across the country, including up to 500 small businesses in Tasmania. He further said that businesses that advertise as 'cash only' and businesses that are operating outside of the ATO's performance benchmarks for their industry will be especially targeted for a visit from the ATO.
Businesses in the following industries are most likely to get a visit from the ATO:
Restaurants and cafes;
Personal care businesses including hairdressers and nail salons;
Grocery stores / small supermarkets; and
Common errors with new GST withholding rules
The ATO has noticed some common errors made in activity statements since the introduction of "GST at settlement" on 1 July 2018. In particular, the new "GST at settlement" law does not affect a supplier’s obligation to lodge their activity statement and report their GST liabilities on taxable supplies in the activity statement period in which settlement occurred.
In addition, suppliers are advised not to report GST that has been withheld at settlement and paid to the ATO by the purchaser. Instead, a credit for the amount the purchaser withheld and paid will appear on the supplier's activity statement account once the activity statement is processed.
Latest ATO benchmarks released
The ATO has released updated benchmark data drawn from over 1.5 million small businesses around the country. Updated benchmarks for more than 100 industries are now available. The benchmarks are one of the tools the ATO uses to crack down on the black economy, along with data matching and referrals from the community.
“Businesses operating outside the benchmarks may trigger a red flag for businesses we suspect could be engaging in the black economy,” Mr Holt said.
“A frequent red flag is a business reporting minimal profit while the business owner seems to be maintaining a lifestyle far exceeding their personal income."
“If you use a registered tax professional, it’s also a good idea to have a chat with them about where your business sits in comparison with our benchmarks. They might have some advice about steps you can take to improve your performance.”
ATO warning regarding annual leave loading and OTE
The ATO has recently warned employers that it considers that annual leave loading should normally be part of ordinary time earnings ('OTE') for superannuation guarantee ('SG') purposes, unless it is referrable to a "lost opportunity to work overtime”.
Mostly vacant property still an 'active' asset
The AAT has held that a block of land next door to a taxpayer's main residence, which they used to store materials, tools and other equipment for their business, was still an 'active asset' for the purpose of the small business CGT concessions.
CORPORATE AND INTERNATIONAL
Taxpayer living in serviced apartments overseas not a resident
The Full Federal Court has found that a taxpayer had a "permanent place of abode" in Bahrain, even though he lived in temporary accommodation, and therefore allowed his appeal against a decision that he was a resident of Australia.
This decision confirms that the correct focus of the "permanent place of abode" residency test is whether there has been an abandonment of Australian residence (i.e., to live permanently outside of Australia), rather than whether a person actually lives in permanent accommodation overseas. In particular, the Full Court considered that the phrase "place of abode" is not a reference to a person's house or flat or other dwelling but rather the town or country in which a person is physically residing permanently.
Concerns about Charities
The number of concerns raised about Australian charities has risen again, according to a new report released today by the national charity regulator, the Australian Charities and Not-for-profits Commission (ACNC).
The 2018 edition of the ACNC’s annual Charity Compliance Report found that more than 1,800 concerns were raised about charities, up 6% compared to 2017.