Tax help for people affected by bushfires
The ATO has advised that refunds will be fast-tracked for people directly affected by bushfires, and they will have additional time to lodge income tax returns and activity statements due between October and December 2013 (the new lodgment date is 28 January 2014).
“You do not need to apply for a deferral or a faster refund if your business or residential address is in one of the identified affected postcodes. It will happen automatically. You can visit our website to see the new lodgment dates and check if your region is included,” Tax Commissioner Chris Jordan said.
People outside of the identified postcodes that have been impacted by the disaster are still able to contact the ATO for assistance on 1800 806 218.
If taxpayers are experiencing any difficulties meeting their tax obligations, the ATO will make arrangements on a case-by-case basis.
“We understand that for many people their tax affairs are the last thing on their minds right now.”
“When people are ready, we will make sure they are supported in dealing with their tax obligations.”
The ATO can also provide more time for people to pay tax debts and can help reconstruct tax records where documents have been destroyed.
In addition, people donating up to $10 to ‘bucket appeals’ and other disaster relief funds this financial year will be able to claim a tax deduction without a receipt. For donations greater than $10, people should keep a receipt to substantiate their claim.
Tax changes under the new government
The new government has identified 92 announced but still unlegislated and unresolved tax and superannuation changes.
Of these, the government stated it will proceed with 18 initiatives, a further three initiatives will be significantly amended, and it will not proceed with seven initiatives. The remaining announced changes will be considered and, if required, the government intends that the bulk of any legislation that is to be progressed should be passed by Parliament by 1 July 2014.
Specifically, the government will not proceed with the following three measures which directly affect individual and business taxpayers:
The un-enacted measures the government will proceed with include:
Update on issues affecting SMSFs
At a compliance level, the ATO says that it is focusing on:
Related party transactions
The breaches most commonly reported to the ATO by SMSF auditors are trustees investing in, or transacting with, related parties in breach of the rules. This can include providing a loan or other financial assistance to a member or relative, which is prohibited.
Further, it is also common when there is a ‘loan’ to a member that it doesn’t meet the characteristics of a genuine loan anyway, and the member is simply accessing their super before they are entitled to.
ASIC warning to real estate industry
ASIC has warned the real estate industry that agents recommending investors use a SMSF to invest in property must ensure they are appropriately licensed to provide such advice.
Real estate agents may not realise they are providing ‘financial product advice’ and need an Australian financial services (AFS) licence when making recommendations or statements of opinion to a person to use an SMSF to invest in property.
Editor: Although this affects the real estate agents personally, it’s obviously important for SMSF trustees in this situation to ensure they are receiving appropriate advice from a person qualified to do so.
ATO to target work-related expense claims
This year the ATO is paying particular attention to a range of industries and occupations including:
The ATO says that it is also looking closely at:
ATO Data Matching Program
The ATO has advised that it will request and collect records relating to approximately 600,000 individuals receiving ‘Carer Allowance’ or ‘Carer Allowance Healthcare Card Only’ from the ‘Department of Human Services – Centrelink program’, to ensure that claims for the Dependent (invalid and carer) tax offset are being made correctly.
Spike in email scams
The ATO is warning taxpayers to protect their personal and financial details following a sharp spike in reports of tax-related email scams.
Since June, reports from the public of ‘phishing’ scams have quadrupled from 3,586 to 15,441 compared with the same period last year.
“While the public is reporting scam emails to the ATO in increasing numbers, scammers are also becoming more sophisticated in the way they trick taxpayers into handing over their personal details,” Tax Commissioner Chris Jordan said.
“We advise people to be vigilant of emails that mimic the ATO’s online publications. Think very carefully before clicking on links and attachments in emails or on social networking sites.
“The ATO will never send taxpayers an email asking them to confirm, update or disclose confidential information including your name, date of birth, home address, passwords or credit card details.”
Be careful about property arrangements with family!
The Administrative Appeals Tribunal (AAT) has held that a taxpayer who jointly owned a townhouse with his son (who lived there) was liable for CGT on his share of the property when it was sold.
In April 2002, the taxpayer purchased a townhouse for his adult son to reside in, but he had both of them registered on the title of the property, to “guard against his son acting unwisely”.
His son lived in the townhouse until 2007, when he moved into another house, and in September 2007 the townhouse was sold and the proceeds from the sale were used to reduce the son’s debt to the bank for the second house.
The taxpayer was assessed for the 2008 income year for CGT on 50% of the net capital gain arising from the sale of the townhouse.
Reasons for Decision
The taxpayer claimed that:
However, the AAT stated that these matters did not alter his liability, as:
Taxpayer slammed on (lack of) record keeping
The AAT has upheld the application of a 50% penalty to a taxpayer for ‘recklessness’ in claiming deductions that couldn’t be substantiated.
In the 2011/12 tax year, the taxpayer made the following claims for tax deductions in relation to his work as a car salesman:
Following an audit, these were reduced to nil, $150 and nil, respectively, and the ATO also imposed a penalty of $6,092, being 50% of the tax shortfall of $12,184 (on the basis the taxpayer was ‘reckless’).
Reasons for Decision
The taxpayer claimed that his conduct was unintentional and that the penalty was unfairly imposed on him, being “more severe than would be imposed in a court if he had been convicted of criminal conduct”.
However, it was established during the trial that:
Therefore, the AAT was satisfied that the taxpayer was grossly negligent in claiming the deductions included in his tax return, and that his conduct was more serious than mere failure to take reasonable care, so the 50% penalty was appropriate.
Are you sure your ‘independent contractors’ are not ‘employees’?
Two recent cases have highlighted how important the distinction between ‘independent contractors’ and ’employees’ is:
As a general proposition, an independent contractor provides personal services whilst working in and for his or her own business, whereas an employee provides personal services whilst working in the employer’s business.
Taxi cents per kilometre rates
The current taxi cents per kilometre earnings rate (for the 2012 income year) is $1.27/km (up from $1.24/km for the 2011 income year).
This rate is the average amount of gross income earned by a taxi for the total kilometres travelled by the taxi in a year, including GST.
Taxi operators and drivers can use the rate to:
The ATO also uses the cents per km rate where taxi operators or drivers do not have proper records.
2013/14 CGT improvement threshold
For the 2013/14 income year, the improvement threshold is $136,884 (up from $134,200 for the 2012/13 income year).
This threshold is used for working out when a capital improvement to a pre-CGT asset is a separate asset and for capital improvements to CGT assets where a rollover may be available.