S Baker & Co Pty Ltd Chartered Accountants in Collingwood, Victoria, Australia | Local business

S Baker & Co Pty Ltd Chartered Accountants

Locality: Collingwood, Victoria, Australia

Phone: +61 3 9482 4244

Address: 29 Victoria Parade 3066 Collingwood, VIC, Australia

Website: http://www.sbakerandco.com.au

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21.01.2022 Unprecedented level of visibility: ATO announces first use of STP data The ATO has announced its first direct use of Single Touch Payroll information, vowing to act on its unprecedented level of visibility of superannuation information, as it sends a warning to errant employers. ATO deputy commissioner James OHalloran said the agency is now heavily focused on SG obligations, having recently completed an examination of SG contributions for 75 million payment transactions... for the first three quarters of 201819 for around 400,000 employers. From this data, we can already see that between 90 per cent and 92 per cent of contribution transactions by volume were paid on time and that between 85 per cent and 90 per cent of the transactions by dollar value were paid on time, Mr OHalloran said in a speech to the Australian Institute of Superannuation Trustees (AIST) 2019 Chairs Forum. Were now starting to actively use the data to warn employers who appear not to be paying the required SG on time, in full or at all, that they should change their behaviour. The ATO has attributed the increased in data visibility to the introduction of Single Touch Payroll (STP) reporting and improvements in super funds reporting through the Member Account Transaction Service (MATS). A new SG campaign is now underway, with Mr OHalloran noting that 2,500 employers who have been identified as having paid some or all of their SG contributions late during 201819 set to be contacted this week. A further 4,000 employers will begin receiving due-date reminders from the ATO. It should be noted this is the first direct use of the Single Touch Payroll reporting arrangements, based on what your funds report to us relating to SG payments, Mr OHalloran said. Its a tangible action which demonstrates our increasing ability to effectively follow up in relative real time apparent late or non-payment of SG. SG amnesty The ATOs actions come as the proposed SG amnesty and its associated legislation has been reintroduced into Parliament. The SG amnesty provides for a one-off amnesty to encourage employers to self-correct historical SG non-compliance dating from 1 July 1992 to the quarter starting on 1 January 2018. While the ATO will continue to apply the existing law until the bill passes, employers have been warned of the short six-month amnesty time frame to rectify any past underpayments. SG audit work Mr OHalloran was also keen to tout the ATOs ongoing SG audit work, with 27,000 SG cases completed over the last financial year. Of those, 22,000 employers were contacted and the ATO raised assessments for $805 million in outstanding SG. The ATO also issued 5,000 individual director penalty notices (DPNs) for 3,600 companies to a combined value of $283 million. As importantly, as a result of our compliance activities, we collected $532 million in outstanding SG and distributed it to 471,000 individuals during 201819, Mr OHalloran said.

20.01.2022 ATO black economy hotline rings hot with 15,000 tip-offs Black economy tip-off calls to the ATO have breached the 15,000 mark in the three months since it launched its new tax integrity centre, with cash payments and income declaration among the biggest gripes. On 1 July, the ATO launched its new tax integrity centre, aimed at providing a single point of contact for reporting suspected or known illegal phoenix, tax evasion and black economy activity....Continue reading

19.01.2022 Labor confirms 1 January start date for negative gearing and CGT proposal Labor has announced that it will implement its plan to restrict negative gearing to new investment properties and halve the capital gains tax discount from 1 January 2020. The date, announced by shadow treasurer Chris Bowen, will limit negative gearing to new housing, with all investments made prior to the date to be fully grandfathered.... Likewise, the CGT discount will be halved to 25 per cent for investments entered into after 1 January 2020. If you are intending to purchase a rental property, do this before the introduction of the new legislation and lock in the CGT discount at 50% before it is gone.

19.01.2022 Franking credit inquiry report labels proposal ' inequitable and deeply flawed' Based on the evidence received during the inquiry, MP Tim Wilson said that, based on the evidence received during the inquiry, the committee recommended against the removal of refundable franking credits. The committee stated in the report that any policy that could reduce Australian retirees’ income by up to a third should only be considered as part of an equitable package for wholesale tax refo...rm. In doing so, the ALP’s policy will force many people, who have saved throughout their lives to be independent in retirement, onto the age pension. This defeats the stated purpose of the policy, which is to raise revenue, the report stated. The policy may also reduce the value of some Australian shares and reduce investment in Australian companies, the report said. A range of submitters were concerned about the need to rearrange their investments, and to reduce spending, particularly on private health insurance and charitable donations as a consequence of the ALP’s policy.

18.01.2022 No Tax Deduction for Cash in Hand Payments The Tax Office has reminded the accounting community that cash-in-hand payments to employees and contractors will no longer be eligible for a tax deduction, as part of a crackdown on undeclared earnings. The new rule was unveiled as part of the 2018-19 federal budget. It will take effect for all payments made from 1 July this year, for income tax returns lodged for the 201920 financial year and beyond.... According to the ATO, the new rule aims to level the playing field where businesses pay workers in cash to avoid PAYG withholding obligations, and where contractors do not provide an ABN or withhold any tax and cash payments they receive. ATO assistant commissioner Peter Holt said in a statement that the removal of tax deductions for cash payments is just one way it is tackling the black economy. Its fairly straight-forward: do the right thing and you can claim a deduction. Deliberately do the wrong thing and youll miss out on a deduction and risk being penalised, he said. The Black Economy Taskforce estimates that the black economy is costing the community as much as $50 billion, which is approximately 3 per cent of gross domestic product (GDP). This is money that the community is missing out on for vital public services like schools and roads. Businesses that operate in the black economy are undercutting competitors and gaining a competitive advantage by not competing on an even footing. Mr Holt also warned that employers not complying with PAYG withholding requirements can be penalised. He noted that cash is a legitimate way of doing business, and we recognise that some industries do tend to take more cash than others, but that it is often being used to avoid paying tax and superannuation. When cash is used to deliberately hide income to avoid paying the correct amount of tax or superannuation, its not only unfair, its illegal, Mr Holt said. Honest mistakes wont be impacted The removal of the tax deduction will not apply to innocent errors, where an employer accidentally classifies an employee as a contractor if they are provided with an ABN. Our objective is to support small business to help them get it right, Mr Holt said. But anyone caught deliberately doing the wrong thing will lose their deduction. According to Mr Holt, employers that voluntarily disclose that they have not met withholding requirements before the ATO takes any form of compliance action will still be eligible for the deductions, and may also be entitled to penalty reductions.

18.01.2022 Franking credit inquiry report labels proposal inequitable and deeply flawed Based on the evidence received during the inquiry, MP Tim Wilson said that, based on the evidence received during the inquiry, the committee recommended against the removal of refundable franking credits. The committee stated in the report that any policy that could reduce Australian retirees income by up to a third should only be considered as part of an equitable package for wholesale tax refo...rm. In doing so, the ALPs policy will force many people, who have saved throughout their lives to be independent in retirement, onto the age pension. This defeats the stated purpose of the policy, which is to raise revenue, the report stated. The policy may also reduce the value of some Australian shares and reduce investment in Australian companies, the report said. A range of submitters were concerned about the need to rearrange their investments, and to reduce spending, particularly on private health insurance and charitable donations as a consequence of the ALPs policy.

18.01.2022 Tax Office focus on foreign income. The Tax Office has repeated its focus on foreign income this tax time, warning practitioners that they may be contacted if certain red flags crop up. The ATO will be paying close attention this tax time on taxpayers correctly reporting all sources of foreign income on their tax return.... Accordingly, tax practitioners may hear from the ATO if their practice reports a large amount of foreign losses. Practitioners and clients may also be contacted if the Tax Office receives information from a foreign revenue authority or other third parties indicating that a client may have received income from another country. The Common Reporting Standard (CRS) gives the ATO access to financial account data from over 65 foreign jurisdictions which have committed to exchanging information with each other. ATO Assistant Commissioner Karen Foat said that with financial account information of more than 1.6 million offshore accounts holding over $100 billion now available to the agency, hiding assets and income offshore was now pointless. If youre an Australian resident for tax purposes, you are taxed on your worldwide income, so you must declare all of your foreign income no matter how small the amount may be. This may include income from offshore investments, employment, pensions, business and consulting, or capital gains on overseas assets, said Ms Foat. Australians that deliberately move cash overseas in an attempt to hide it should be concerned. Hiding your assets and income offshore is pointless. Tax havens are becoming a less effective model as international agreements improve transparency. You can no longer hide money behind borders. Foreign income includes most pensions and annuities, interest, dividends, royalties, rent, capital gains, personal services income.

17.01.2022 Errors in 9 out of 10 rental claims prompt new compliance blitz ATO Commissioner Chris Jordan said the Tax Offices audits of over 300 rental property claims found errors in almost nine out of 10 returns reviewed. According to Mr Jordan, 85 per cent of taxpayers with rental properties are represented by a tax agent. Were seeing incorrect interest claims for the entire investment loan where it has been refinanced for private purposes, incorrect classification of capital wor...ks as repairs and maintenance, and taxpayers not apportioning deductions for holiday homes when they are not genuinely available for rent, said Mr Jordan.And when you consider that rentals include over 2.1 million taxpayers claiming $47.4 billion in deductions, against $44.1 billion in reported income, you can get a sense of the potential revenue at risk. In line with its property focus, the ATO also issued a reminder late last year that clients are no longer able to claim any deductions for the cost of travel they incur relating to inspecting, maintaining, or collecting rent for a residential rental property unless they are carrying on a business of property investing or are an excluded entity. See more

16.01.2022 ATO announce increased audit activity for small businesses. Earlier this year, the government announced a fresh $1 billion funding boost to the ATO to extend the operation of the Tax Avoidance Taskforce and to expand the Taskforces programs and market coverage. Last week, ATO deputy commissioner Deborah Jenkins announced that the Tax Office will launch a new black economy hotline on 1 July 2019, giving the public an opportunity to dob in businesses offer[ing] discounts for ...cash. ATO commissioner Chris Jordan has also hinted towards a $10 billion tax gap in the small business sector, significantly larger than the corporate tax gap at $1.8 billion, and the individuals not in business tax gap at $8.7 billion. On the individuals front, the Tax Office also recently applied to the Office of the Australian Information Commissioner (OAIC) to hold on to lifestyle assets data from insurers for a further two years. There has been a marked increase in job advertisements for various positions within the ATO, particularly within the black economy and Tax Avoidance Taskforce areas, Ms Dunn said. The government committed over $1 billion of funding in the federal budget for ATO audit activity, and I fully expect we will start to see a marked increase in please explain letters and audit activity over the coming months. With Single Touch Payroll data starting to flow through, Ms Dunn believes small businesses and individual taxpayers can start expecting reviews if their data falls outside benchmarks. With this in mind, Ms Dunn believes tax practitioners should start proactively engaging with high-risk clients to manage their firms own risks. Tax agents have the opportunity to assist clients with relevant tax advice or with setting up processes to help them comply with tax obligations, Ms Dunn said. Tax agents also have the opportunity to review their own risk, by ensuring adequate processes are in place to assist in identifying things such as unusual deductions, clients who disclose low taxable income but have a lavish lifestyle, client non-compliance with compulsory superannuation and withholding obligations, Division 7A and trust issues. If the tax agent is aware of, or identifies, areas of client non-compliance, I would strongly recommend they discuss with their clients the benefits of early engagement and voluntary disclosure with the ATO.

16.01.2022 YEAR END TAX PLANNING STRATEGIES FOR SMALL BUSINESSES Tax planning strategies differ if your business is considered a small business under the Tax Act. From 1 July 2018, in order to be a small business, the turnover of the business, including connected entities and affiliates, has to be less than $10 million GST exclusive per annum. The turnover for either the current financial year or the previous financial year can be used. ...Continue reading

11.01.2022 Unprecedented level of visibility’: ATO announces first use of STP data The ATO has announced its first direct use of Single Touch Payroll information, vowing to act on its unprecedented level of visibility of superannuation information, as it sends a warning to errant employers. ATO deputy commissioner James O’Halloran said the agency is now heavily focused on SG obligations, having recently completed an examination of SG contributions for 75 million payment transactions... for the first three quarters of 201819 for around 400,000 employers. From this data, we can already see that between 90 per cent and 92 per cent of contribution transactions by volume were paid on time and that between 85 per cent and 90 per cent of the transactions by dollar value were paid on time, Mr O’Halloran said in a speech to the Australian Institute of Superannuation Trustees (AIST) 2019 Chairs Forum. We’re now starting to actively use the data to warn employers who appear not to be paying the required SG on time, in full or at all, that they should change their behaviour. The ATO has attributed the increased in data visibility to the introduction of Single Touch Payroll (STP) reporting and improvements in super funds’ reporting through the Member Account Transaction Service (MATS). A new SG campaign is now underway, with Mr O’Halloran noting that 2,500 employers who have been identified as having paid some or all of their SG contributions late during 201819 set to be contacted this week. A further 4,000 employers will begin receiving due-date reminders from the ATO. It should be noted this is the first direct use of the Single Touch Payroll reporting arrangements, based on what your funds report to us relating to SG payments, Mr O’Halloran said. It’s a tangible action which demonstrates our increasing ability to effectively follow up in relative real time apparent late or non-payment of SG. SG amnesty The ATO’s actions come as the proposed SG amnesty and its associated legislation has been reintroduced into Parliament. The SG amnesty provides for a one-off amnesty to encourage employers to self-correct historical SG non-compliance dating from 1 July 1992 to the quarter starting on 1 January 2018. While the ATO will continue to apply the existing law until the bill passes, employers have been warned of the short six-month amnesty time frame to rectify any past underpayments. SG audit work Mr O’Halloran was also keen to tout the ATO’s ongoing SG audit work, with 27,000 SG cases completed over the last financial year. Of those, 22,000 employers were contacted and the ATO raised assessments for $805 million in outstanding SG. The ATO also issued 5,000 individual director penalty notices (DPNs) for 3,600 companies to a combined value of $283 million. As importantly, as a result of our compliance activities, we collected $532 million in outstanding SG and distributed it to 471,000 individuals during 201819, Mr O’Halloran said.

11.01.2022 ATO Focus on motor vehicle deductions. Over $7.2 billion in work-related car expenses claimed last year have placed the popular deduction firmly in the headlights of the ATO this tax time. According to ATO assistant commissioner Karen Foat, over 3.6 million people made a work-related car expense claim in 201718, totalling more than $7.2 billion.... The deduction will be a key focus area for the Tax Office this year, with one in five claims exactly at the maximum 5,000km limit for the cent per kilometre method. While some claims of exactly 5,000km are legitimate, weve found many people are unable to show how theyve arrived at this amount, and as a result, theyve had their claim reduced or disallowed in full, Ms Foat said. We are still concerned that some taxpayers arent getting the message that overclaiming will be detected, and if it is deliberate, penalties will apply. While some people do make legitimate mistakes, we are concerned that many people are deliberately making dodgy claims in order to get a bigger refund. We see taxpayers claiming for things like private trips, trips they didnt make and car expenses their employer paid for or reimbursed them for. Ms Foat said the ATOs sophisticated analytics will compare taxpayer claims with others earning similar amounts in similar jobs. In one unsupported claim last year, a taxpayer claiming $4,800 using the logbook method had triggered an ATO red flag, with a request for the logbook resulting in the taxpayer presenting a car service logbook instead of a logbook kept for calculating their work-use car percentage. The taxpayer was found to have not undertaken any work-related car travel during the year. Another claim was flagged after the ATO identified an office worker claiming $3,300 for 5,000 kilometres of work-related travel using the cents per kilometre method. The taxpayer advised that his employer did not require him to use his car for work and that his claim was based on trips he made from home to work. According to Ms Foat, where the Tax Office identifies questionable claims, they will contact taxpayers and ask them to show how they have calculated their claim. In some cases, where further scrutiny is warranted, the ATO may even contact employers to confirm whether a taxpayer was required to use their own car for work-related travel. Simply driving between work and home is not enough to warrant a deduction. You must have a work-related need to travel while performing your job, like traveling from site to site or be required to transport bulky tools, Ms Foat said. Apart from work-related deductions, the ATO has also indicated its focus on the overclaiming of rental deductions and the non-declaration of rental income, after commissioner Chris Jordan said that a random audit sample of returns with rental deductions found that nine out of 10 contained an error

09.01.2022 Director penalty change strengthens SG rules - directors now personally liable for unpaid super for employees Company directors need to keep in mind that the Corporations Act holds directors personally liable for many of the legal and financial obligations expected from a company. Since 2015, company directors have been expected to personally shoulder pay-as-you-go withholding requirements should these not be met, and superannuation guarantee payments that are not paid on tim...e (within 28 days of the end of each quarter). The latter generally also includes a superannuation guarantee charge (SGC, which is the amount not paid plus interest plus an administrative penalty). As well as directors possibly facing personal liability, the options available to the ATO under its director penalty regime includes garnishee proceedings to recover amounts owed, offsetting amounts owed against any other tax credits, and initiating legal recovery proceedings. Before any of such actions are taken however, the ATO is obliged to issue a director penalty notice outlining the unpaid amounts and remission options open to the concerned directors. Until recently (more below) it was generally the case that the ATO would issue a director penalty notice three months after the due date of the relevant overdue obligation should the owed amounts either not be paid or not reported to the ATO. Directors would have 21 days from the date of the notice to act, or be held personally liable. Should the shortfall amounts be reported to the ATO within that three months, the director penalty is deemed non-locked-down that is, there are still certain options available to avoid personal liability: pay the amounts owed; appoint an administrator; or begin winding up the company. The latest change means that there is now to be no three month period allowed after the due date (28 days after each quarter) for superannuation guarantee (SG) and SGC payments. After the due date, the amounts owed by the company are locked-down. In other words, directors become automatically personally liable. Previously, placing a company into voluntary administration or insolvency within the 21 days from receiving a director penalty notice would avoid the penalty. This option, which the ATO seemed to be taking aim at, is now closed. For a recent financial year, the ATO estimated that more than $100 million of SGC debt was irrecoverable due to insolvent businesses, so the change to this part of the rules should help improve this outcome.

03.01.2022 Tax deductibility of ‘non-compliant’ payments about to get the chop From 1 July 2019, businesses will only be able to claim deductions for payments that are made to workers (employees or contractors) when the employer has complied with the pay-as-you-go (PAYG) withholding and other tax reporting obligations for that payment. If the PAYG withholding rules require a business to withhold an amount from a payment that the business makes to a worker, the business must:... withhold the amount from the payment before it is paid, and report the amount to the ATO. Any payments that are made where the business hasn’t withheld or reported the PAYG tax are dubbed by the ATO to be non-compliant payments, and for these an employer will not be able to claim a deduction. Note however that if the employer makes a mistake and withholds or reports an incorrect amount, they will generally not lose their deduction as long as the ATO is notified and a correction is made. Payments that must comply An employer can only claim a deduction for the following payments if they comply with the PAYG withholding rules. This includes payments: of salary, wages, commissions, bonuses or allowances to an employee of directors’ fees under a labour hire arrangement, and for a supply of services (except from supplies of goods and real property) where the contractor has not provided their ABN.

03.01.2022 ATO eyes undisclosed foreign income as fresh offshore data rolls in Financial account information of more than 1.6 million offshore accounts holding over $100 billion has now been made available to the ATO, with clients urged to come clean this tax time. With the Common Reporting Standard (CRS) now in full swing, the Tax Office now has access to financial account data from over 65 foreign jurisdictions which have committed to exchanging information with each other....Continue reading

03.01.2022 Tax deductibility of non-compliant payments about to get the chop From 1 July 2019, businesses will only be able to claim deductions for payments that are made to workers (employees or contractors) when the employer has complied with the pay-as-you-go (PAYG) withholding and other tax reporting obligations for that payment. If the PAYG withholding rules require a business to withhold an amount from a payment that the business makes to a worker, the business must:... withhold the amount from the payment before it is paid, and report the amount to the ATO. Any payments that are made where the business hasnt withheld or reported the PAYG tax are dubbed by the ATO to be non-compliant payments, and for these an employer will not be able to claim a deduction. Note however that if the employer makes a mistake and withholds or reports an incorrect amount, they will generally not lose their deduction as long as the ATO is notified and a correction is made. Payments that must comply An employer can only claim a deduction for the following payments if they comply with the PAYG withholding rules. This includes payments: of salary, wages, commissions, bonuses or allowances to an employee of directors fees under a labour hire arrangement, and for a supply of services (except from supplies of goods and real property) where the contractor has not provided their ABN.

01.01.2022 S Baker & Co Pty Ltd Chartered Accountants