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Sky Update – November 2016

In this Sky Update, we bring you all the latest tax news along with some other items that may pique your interest.

Superannuation changes

In the last Sky Update we detailed a number of important changes to the superannuation system.

On 23 November a number of those superannuation reforms, passed the Parliament and are now awaiting Royal Assent.

These changes include:

  • Reducing the concessional contribution cap to $25,000;
  • Reducing the income threshhold at which additional contributions tax applies from $300,000 to $250,000;
  • Reducing the non-concessional (personal) contribution cap to $100,000;
  • Introducing a limitation on non-concessional (personal) contributions for people with over $1.6m in superannuation;
  • Removing the “10% rule” for self-employed persons wanting to make tax deductible superannuation contributions; and
  • Removing a tax concession for funds paying “transition to retirement income streams”.

If you would like more information on these changes, please do not hesitate to contact us.

Contrived trust arrangements in ATO sights

The ATO has cautioned taxpayers against arrangements that seek to minimise tax by creating artificial differences between the taxable net income and distributable income of closely held trusts.

Deputy Commissioner Michael Cranston said the ATO is investigating arrangements where trustees are engineering a reduction in trust income to allow taxpayers to improperly gain favourable tax breaks, or sometimes to pay no tax at all.

Although he noted that many people use trust structures appropriately and within the law, Mr Cranston said the ATO has seen some trustees exploit the differences between trust net income and distributable income to have the net income assessed to individuals and businesses that pay little or no tax, and allow others to enjoy the economic benefits of the net income tax-free.

ATO data-matching programs continue

The ATO has advised that it will continue with the following data-matching programs:

Share transactions

Data about share transactions will be acquired for the period 20 September 1985 to 30 June 2018 from various sources, including stock transfer companies. The ATO will collect full names and addresses, purchase and sale details, and other information.

The program aims to ensure that taxpayers are correctly meeting their tax obligations in relation to share transactions. It is estimated that records relating to 3.3 million individuals will be matched.

Credit and debit cards

Data about credit and debit card transactions will be acquired for the 2015–2016 and 2016–2017 financial years from various financial institutions. The ATO will collect details (such as name, address and contact information) of merchants with a credit and debit card merchant facility and the amount and quantity of the transactions processed.

The program seeks to identify businesses that may not be meeting their tax obligations. It is estimated that around 950,000 records will be obtained, including 90,000 matched to individuals.

Online selling

Data will be acquired relating to registrants who sold goods and services to an annual value of $12,000 or more during the 2015–2016, 2016–2017 and 2017–2018 financial years. The ATO said data will be sought from eBay Australia and New Zealand Pty Ltd.

The data will be used to identify those apparently operating a business but failing to meet their registration and/or lodgment obligations. It is estimated that between 20,000 and 30,000 records will be obtained.

Christmas is coming

With the Christmas holidays in sight, the Fair Work Ombudsman has reminded employers to be mindful of their rights and obligations surrounding public holidays.

For more information, refer to the Public Holidays and Public Holidays FAQs pages on the Fair Work Ombudsman’s website.

Issues Guidance released to help R&D applicants

The Department of Industry, Innovation and Science has developed new guidance to help companies to correctly identify and register activities for the R&D Tax Incentive. The new guidance has been prepared to assist companies undertaking R&D activities in the industries of software development, agriculture, building and construction and mining to avoid common errors in their self-assessment.

To access the guidance, please follow the link to the Business.gov.au website. And as always, feel free to contact our office if you have questions on the R&D Tax Incentive.

Hospitality operators put on notice on employee entitlements

Fair Work inspectors recently conducted surprise audits of restaurants, bars and cafes in Sydney’s Glebe Point Road to check businesses are complying with workplace laws.

More than 50 businesses were audited, following the Fair Work Ombudsman receiving intelligence and allegations about non-compliance by employers in the popular “cheap eats” precinct.

The audits involved Fair Work Ombudsman inspectors assessing time-and-wage records to check businesses are paying employees their full lawful entitlements and complying with pay slip and record-keeping laws.

This serves as a blunt reminder to hospitality operators to ensure that their employment practices are in order.

Any operators who need assistance with payroll or selecting appropriate HR systems are encourage to contact our office.

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