The first quarter of the 2020 financial year has come and gone. While many things remain the same, we have highlighted changes that may impact on your business and on you personally.  Please contact us to discuss any of the measures.  

 

Directors to be liable for their company's unpaid GST

Legislation is passing through Parliament that gives the Commissioner of Taxation the power to make company directors personally liable for their company's outstanding GST liabilities.

 

This will be in addition to directors being liable for the unpaid PAYG withholding and superannuation guarantee liabilities of their companies. 

 

Once the legislation is law, directors that cease to be directors after the end of the relevant GST instalment quarter will be subject to the penalty regime, even if they cease to be directors before the payment due date.

 

Superannuation Guarantee amnesty reintroduced

The Government has re-introduced legislation to provide a one-off amnesty to enable employers to self-correct historical underpayments of Super Guarantee (SG). The amnesty was originally announced by the Government on 24 May 2018 but legislation to enact it lapsed when the Federal election was announced.

The new amnesty period will apply to SG shortfalls as far back as 1 July 1992, and up until the quarter starting on 1 January 2018 (inclusive). It will not apply to shortfalls for quarters starting from 1 April 2018.

Employers that qualify for the amnesty in relation to their SG shortfall for a quarter:

• will not have to pay the administrative component ($20 per employee per period);
• will not be liable for the additional penalty (up to 200%) for failing to provide an SG statement by the time they were required to do so; and
• will be able to deduct payments made in relation to the SG charge imposed on the SG shortfall, or contributions that are offset against the SG charge, that are made during the amnesty period (apart from the amnesty, the SG charge is non-deductible).

Employers must still pay all SG shortfall amounts owing to their employees, including the nominal interest and GIC.

To qualify for the amnesty (once it is law), a disclosure must be made to the ATO in the approved form (and must not have been previously disclosed).  

Special superannuation concession for "downsizer" contributions

A fairly recent superannuation concession enables people who are 65 years old or older and who meet certain eligibility requirements, to make contributions into their superannuation (called downsizer contributions) of up to $300,000 from the proceeds of selling their home without being subject to the current restrictive work test or the contributions caps.

The home sold needs to be in Australia and been owned by the individual or his/her spouse for 10 years or more prior to the sale.  There is no requirement to purchase another home.

The proceeds from the sale of the home need to be either exempt or partially exempt from CGT under the main residence exemption.

A person can only make downsizing contributions for the sale of one home.

The contributions are not tax deductible and will be taken into account when determining eligibility for the Age Pension. 

Fringe benefits tax (FBT) and exempt taxi travel

Taxi travel provided by an employer to an employee is exempt from FBT if the travel is a single trip beginning or ending at the employee's place of work. Taxi travel can also be an exempt benefit if it is a result of sickness or injury and the whole or part of the journey is directly between:

• the employee's place of work;
• the employee's place of residence;
• any other place that it is necessary, or appropriate, for the employee to go as a result of the sickness or injury.

The ATO has pointed out however that these exemptions do not apply to ride-sourcing services provided in a vehicle not licenced to operate as a taxi (eg Uber).

Treasury has released draft legislation designed to rectify this anomaly.  However the proposed amendments would only apply in relation to fringe benefits provided on or after the legislation becomes law.  Employers must therefore be aware of this issue in the meantime. 

The taxable payments reporting system has expanded 

With effect 1 July 2019, the taxable payments reporting system has been expanded to entities providing the following services:

• road freight services;
• security, investigation or surveillance services; and
• information technology services.

ABN holders who supply these services are required to advise the ATO of any payments (or other consideration) they make to contractors on or after 1 July 2019, where such consideration is wholly or partly for providing a service on their behalf.

The ATO expects that businesses reporting under the following industry codes are likely to have reporting obligations if they use contractors to provide their services:

• 46100 Road Freight Transport;
• 70000 Computer System Design and Related Services; and
• 77120 Investigation and Security Services.

The first annual report (the Taxable payments annual report) is due by August 2020. 

 

ATO's appeal to the High Court rejected in major case on residency

The High Court has refused the Commissioner's application for special leave to appeal from the decision of the Full Federal Court in Harding v FCT [2019] FCAFC 29.

In that case, the Full Federal Court held that if a person has a permanent place of abode in a foreign country, they can be regarded as a non-resident even if that person lives in temporary accommodation in that country.