TAX COMPLIANCE AND DEVELOPMENTS

Keep relevant documents and make timely elections

Taxpayers must keep all relevant documents, usually for five years, to show that they have incurred the expense for which they are claiming a tax deduction. If a taxpayer needs to make an election to have a specific concession apply (eg for the small business CGT concessions, or family trust and FBT elections), they should ensure such an election is made by the relevant deadline.

Tip: Generally, only a taxpayer who directly incurs an expense (and derives the related income) may claim the tax deduction.

Single touch payroll and group certificates

From 1 July 2018, employers with more than 20 employees are required to provide real time reports to the ATO of salary and wage payments, SGC contributions, ordinary time earnings of employees and PAYG withholding amounts.

From 1 July 2019, this system will extend to all employers.

Reports will be provided to the ATO using an approved format. Most popular software packages are being upgraded to accommodate the new ATO requirements. There will be no change to the due dates for payments of SGC contributions and PAYG withholding remittances, although employers may elect to pay (early) using the new software when they report to the ATO.

STP reporting will also mean changes for employees. When an employer reports through STP their employees will see their year-to-date tax and super information in myGov. This information will be called an income statement, and will be updated each time the employer runs their payroll.

Employers are no longer required to give their employees payment summaries for the information they report through STP. Payment summary information will be available in myGov at the end of the financial year on the employee’s employment income statement (some people may still refer to it as a group certificate).

Third-party reporting

The government has introduced a system of reporting for third parties in addition to the existing income tax, BAS and PAYG withholding reporting systems and annual investment income reports by investment bodies.

The system requires reports be provided to the ATO for the following:

•       state and territory revenue and land titles offices must report all land or leasehold transfers (from 1 July 2016);

•       ASIC, market participants and trustees of trusts with an absolutely entitled beneficiary must report on transactions relating to shares and units of unit trusts (from 1 July 2016);

•       government grant payments (from 1 July 2017); and

•       administrators of payment systems must report on electronic business transactions (from 1 July 2017).

Automatic exchange of information

Since 1 July 2014, Australian financial institutions have had to report to the ATO details of the accounts and other investments held by US Citizens. The ATO then reports that information to the U.S. Internal Revenue under the Foreign Account Tax Compliance Act (FATCA).

From 1 July 2017, this has been extended to all non-resident account holders and investors in Australian financial institutions under the Common Reporting Standard developed by the OECD. Therefore, from 1 July 2017, financial institutions must report these details to the ATO, which will on-report to the relevant foreign country. The ATO will also receive such reports of Australian citizens with accounts and investments with foreign financial institutions.

The definition of financial institutions for this purpose is very wide and, in addition to banks, it can include: managed funds, private equity groups, investment advisers, brokers, spread-betters, custodians, certain insurance entities, personal investment companies and certain trusts.

If you would like to know more please contact one of our accountants on 07 4639 1099 or come in and see us at 14 Russell Street Toowoomba.