With the start of a new financial year, this blog highlights changes that may impact on your business and on you personally.  Please contact us to discuss any of the measures.

 

Expanding accelerated depreciation for small businesses

 

Legislation has passed that means that businesses with a turnover of under $10 million can claim an immediate deduction for the business portion of each depreciating asset:

•           purchased for less than $30,000 between 3 April 2019 and 30 June 2020;
•           purchased for less than $25,000 between 29 January 2019 and 2 April 2019; and
•           purchased for less than $20,000 before 29 January 2019.

 

The balance of the general small business pool is also immediately deductible if the balance is less than $30,000 at 30 June 2019.

 

Businesses with a turnover from $10 million to less than $50 million can now also claim a deduction for the business portion of each asset that cost less than $30,000 if it was purchased and first used or installed ready for use from 3 April 2019.

 

New test makes it easier to carry forward losses in companies

Legislation has passed, backdated to 1 July 2015, which has introduced an alternative similar business test to be satisfied when seeking to carry forward losses in a company.

It generally enables losses to be carried forward even if the company commences business activities or transactions which are new so long as they evolve from, and complement, the business carried on before the change in ownership or control. 

For example, if a company develops a new product or function from the business activities already carried on, and this development opens up a new business opportunity or allows it to fill an existing gap in the market, the business as a whole is likely to satisfy the similar business test.

The Australian Taxation Office (ATO) has issued a ruling, Law Companion Ruling 2019/1, which gives examples of when the similar business test will be passed.  One of these is where a clothing retailer moves from retail premises to an exclusively online platform.  

Private health insurance statements

 

From 1 July 2019, health insurers are no longer required to send private health insurance statements. Previously they were required to send statements by 15 July each year.  It is now optional for them to send this information.

 

Private health insurance information will be available in the pre-fill report, usually by mid-August.  It is possible to request a statement from your health insurer.

 

Income statements

 

Employers that report through Single Touch Payroll are not required to provide payment summaries to their employees.

 

Income statements replace payment summaries. Employees can access their income statements through ATO online services via myGov.

 

Employees will receive a notification from the ATO in their myGov inbox when their income statement is 'Tax ready', so they can complete their tax return. The income statement will show the employee's year-to-date salary and wages, the tax that has been withheld and the reported amounts of the employer super.

 

Employees will be able to contact the ATO for a copy of their income statement if they do not have access to myGov.

  

New ATO audit targets

 

Rental properties - the ATO has warned it is doubling the number of its audits scrutinising rental deductions this year. In particular the ATO is disallowing claims in relation to rental properties used for private purposes over seasonal holiday periods such as Christmas; and interest claims for the entire investment loan where it has been refinanced for private purposes.

 

Clothing and laundry expense claims – the ATO is targeting clothing and laundry work-related expense claims. While you don't need receipts for claims up to $150, the ATO can ask how you calculated your claim and may even ask employers if they have a required uniform.

 

Work-related car expenses – the ATO stated last year one in five car claims was exactly at the maximum limit that doesn't require receipts. Under the cents per kilometre method, taxpayers don't need to keep receipts, However the ATO says you do need to be able to demonstrate how you worked out the number of kilometres you travelled for work purposes (for example, by producing diary records of work-related trips).   

 

Superannuation guarantee on annual leave loading

 

The ATO has issued a statement saying superannuation guarantee must be paid on annual leave loading unless it is referable to a lost opportunity to work overtime.

The ATO says it will be satisfied that the entitlement is demonstrably referable to a lost opportunity to work overtime, if there is written evidence related to the entitlement.

ATO Fringe benefits tax (FBT) audit focus

The ATO has listed FBT issues that are on its radar this year:

• failing to report motor vehicle fringe benefits, and incorrectly applying exemptions for vehicles;
• mismatches between the amount reported as an employee contribution on an FBT return compared to the income amounts on an employer's tax return;
• claiming entertainment expenses as a deduction but not correctly reporting them as a fringe benefit,
• incorrectly classifying entertainment expenses as sponsorship or advertising;
• incorrectly calculating car parking fringe benefits;
• not reporting fringe benefits on business assets that are provided for the personal enjoyment of employees or associates.