Taxwise Business News • FBT changes: salary packaged meal and other entertainment benefits • Other FBT updates • Car expense substantiation methods simplified • Superannuation rates and thresholds for 2016-17 • Work-related car expenses, third party reporting and other measures – amendments now law • Reviewing taxable payments annual reports • “Certainty” letters being issued by the ATO • National Innovation and Science Agenda - tax changes announced • Going overseas to work? • Data matching programs In this Issue...
Dependingonthesortofentertainmentthatyouremployerprovidedtoyouasanemployee,theremay be different FBT implications which mayneed tobe included in your2015-16PaymentSummary.
2) FBT exemptions for work-related
electronic devices
From 1 April 2016, small business employers(withturnoveroflessthan$2million)willbeableto provide employees with multiple electronicdevicestouseforworkwithoutincurringafringebenefitstax(FBT)liability.
Employerscanprovidetoemployees:
• mobilephones
• tablets
• laptops
• calculators
FBTchanges:salarypackagedmealandotherentertainmentbenefitsAsthecurrentFBTyearendson31March2016and a new one begins on 1 April 2016, thereare a number of upcoming changes to salarypackagedmealandotherentertainmentbenefitsthatemployeesneedtobeawareof,including:
i) Changes for employees
From1April2016,therearechangestotheFBTtreatmentofsalarypackagedmealentertainmentand entertainment facility leasing expensebenefits(mealandotherentertainmentbenefits).Someof the changeswill affect all employees,while others will affect employees of not-for-profitorganisations.
Thefollowingappliestoallemployees:
•all salary packaged meal and otherentertainmentbenefitsarereportableandwillbe includedon thepayment summarywherethereportingexclusionthreshold isexceeded;and
•the50-50 splitmethodand12-week registermethod cannot be used by the employerfor valuing salary packaged meal and otherentertainmentbenefitswhichmayaffecthowmuchanemployeecansalarypackage.
OtherFBTupdates1) FBT implications over the festive season
The ATO reminded employers over the festiveseasonthatemployerswhoprovideentertainmenttotheiremployeesduringthefestiveseason(oratanyothertimeoftheyear)shouldremember
Note that providing these devices may be abenefit in addition to or part of your salary orwagespackage.
Car expense substantiationmethodssimplifiedTosimplifythecarexpensedeductionrules,from1July2015,thegovernmenthasabolishedtheone-thirdofactualexpensesmethodand12%oforiginalvaluemethod.Thecentsperkilometremethod(withtheexisting5,000kmcap)andthelogbookmethod(withunlimitedkms)remain.
The cents per kilometre method has beensimplifiedtouseastandardrateof66centsperkilometre for the 2015-16 income year, ratherthanaratebasedontheenginesizeofthecar.The Commissioner will set the rate for futureincomeyears.
TheATOhasadvisedemployerstobeawarethattheATOsettheapprovedPAYGwithholdingrateforcentsperkilometrecarallowancesat66centsperkilometrefrom1July2015.Employersshouldwithholdfromanyamountabove66centsforallfuture payments of a car allowance. Failure todosomayresult in theemployeehavinga taxliabilitywhenheorshelodgesataxreturn.
Employeeswhofrom1July2015havebeenpaida car allowance at a rate higher than the newapprovedamountshouldconsiderwhethertheyneedtoincreasetheirwithholdingtoavoidanytaxliabilityattheendoftheyear.
See your tax professional if you require moreinformationaboutthischange.
Superannuationratesandthresholdsfor2016-17
The ATO has released the key superannuationrates and thresholds for 2016-17. The ratesapplytocontributionsandbenefits,employmentterminationpayments,superguaranteeandco-contributionsandincludethefollowing:
i) Concessionalcontributionscap
Thegeneralconcessionalcontributionscapis $30,000 for those agedunder 49 yearsold. A higher cap of $35,000 applies tothose aged 49 years or over on 30 June2015.
ii) Non-concessionalcontributionscap
The non-concessional contributions cap is$180,000.
People aged under 65 yearsmay be ableto make non-concessional contributionsof up to 3 times their non-concessionalcontributionscapfortheyear,overathree-year period. This is known as the “bring-forward”option.
Ifyouareaneligiblelowormiddleincomeearner and make personal (after-tax)contributions to your super during afinancial year, the government will matchyour contribution with a co-contributionup to a certain amount. The maximumsuperannuationco-contributionentitlementfor the 2016-17 year remains at $500.However, the lower income thresholdincreasesto$36,021andthehigherincomethresholdincreasesto$51,021.
A summary of the past 5 years’relevant income thresholds is below:
Work-related car expenses,thirdpartyreportingandothermeasures–amendmentsnowlawIn previous editions of TaxWise, we notedchangesthatweregoingtooccurinthefollowingareas:
•work-relatedcarexpenses;
• ZoneTaxOffset;
• FBT concessions on salary packagedentertainmentbenefits;and
• thirdpartyreporting.
Thechangeshavenowbecomelaw.Seeearliereditions of TaxWise (and above in relationto the FBT concessions on salary packagedentertainment benefits and work-related carexpenses)fordetailsofthechanges.
Reviewing taxable paymentsannualreportsAre you a contractor in the building andconstruction industry? If so, you should beaware that theATO iscontactingbusinesses inthe building and construction industry aboutinformation that businesses have provided ontheirTaxablePaymentsAnnualReport.TheATOwillbecontactingbusinesseswhohave:
• providedareportwithmissingorinvalidABNs;
• included amounts paid for GST when thecontractorisn’tregisteredforGST;
• advised the ATO they are not required toreport, but the ATO’s records indicate thebusinessshouldhavereported.
TheATOwilladvisebusinessesthatarereviewedwhatthereviewhasfoundandwillsuggestwaystomake it easier for the business to completetheirreportsmoreaccuratelyinthefuture,suchas using the ABN Lookup tool or ATO app tocheckacontractor’sABNoriftheyareregisteredforGST.
This may impact the kind of informationbusinessesaskcontractorstoprovide.ItmaybebesttoreviewyourABNregistrationtoensureallthe details recorded on theAustralian BusinessRegister about your registration are accurate(www.abr.gov.au).
‘Certainty’lettersbeingissuedbytheATOTheATOwillbecontactingmorethan500,000taxpayers throughapilotprogram it is runningto let themknow that their recently submitted2014-15taxreturnsarefinalisedandwillnotbesubjecttoanyfurtherreview.
The ATO says that individuals who receive a‘certainty’lettercanbeassuredthattheATOishappywiththeirtaxreturn,andhasclosedthebookspermanentlyonthereturn,providedthereisnoevidenceoffraudordeliberateavoidanceoftax.
Theletterisintendedtoacknowledgeandprovidecertaintytotaxpayerswhomeettheirobligationswith their tax. Receiving this letter means theATO has completed its routine informationchecksonarecipient’staxreturnandissatisfiedwiththeinformationprovided.Therewillbenofurtherrevieworauditofthatreturn.
• a range of other factors, including goodlodgement,complianceanddebthistory;
• the taxpayer had straight-forward tax affairs(suchasnolinkstootherentities).
Noteveryonewhomeetsthecriteriawillreceivea letter during the pilot. Depending on thesuccessofthepilot,theATOaimstoexpandthisprogramtomoretaxpayersfortaxtime2016.
Formoreinformation,gototheATOwebsite.
National Innovation andScienceAgenda-taxchangesannouncedOn7December 2015, a suite of new tax andbusiness incentive measures was announcedunder the Commonwealth government’sNationalInnovationandScienceAgenda(NISA):Prime Minister’s media release (7 December2015); Treasurer’s media release (7 December2015).
The intention is that thegovernment’s taxandbusinessincentivesundertheNISAwillencouragesmartideastoencourageinnovation,risktakingandbuildanentrepreneurialcultureinAustralia.
gains tax exemption. This scheme is basedon the successful SeedEnterprise InvestmentScheme in the United Kingdom, which hasresulted in over $500 million in funding toalmost2,900companiesinitsfirsttwoyears.The new arrangements will apply from thedate of Royal Assent and are expected tocommencefrom1July2016
• build on the recent momentum in venturecapital investment in Australia including byintroducinga10%non-refundabletaxoffsetforcapitalinvestedinnewEarlyStageVentureCapital Limited Partnerships (ESVCLPs), andincreasingthecaponcommittedcapitalfrom$100millionto$200millionfornewESVCLPs.The new arrangements will apply from thedate of Royal Assent and are expected tocommencefrom1July2016
• relax the “same business test” that deniestax losses if a company changes its businessactivities, and introduce a more flexible“predominantlysimilarbusinesstest”.Thiswillallowastart-uptobringinanequitypartnerandsecurenewbusinessopportunitieswithoutworrying about tax penalties. Legislation isexpected tobe introduced in thefirsthalfof2016. The “predominantly similar businesstest”willapplyto lossesmade inthecurrentandfutureincomeyears
• removerulesthatlimitdepreciationdeductionsfor some intangible assets (like patents) to astatutory life and instead allow them to bedepreciatedovertheireconomiclifeasoccursfor other assets. The new arrangements willapplytoassetsacquiredfrom1July2016.
Smallbusinessesandstart-upsThegovernmentwill:
• supportincubatorswhichplayacrucialroleinthe innovationecosystemtoensurestart-upshaveaccesstotheresources,knowledgeandnetworks necessary to transform their ideasintogloballyscalablenewbusinesses;and
•make existing employee share scheme(ESS) rules more user friendly. The newruleswill allow companies to offer shares totheir employees without having to revealcommercially sensitive information to theircompetitors.Thesechangesbuildontherecentreforms toESS,which includeddeferring thetaxing point for employees and introducinganadditionalconcessionforthoseworkinginstart-upcompanies.Legislationisexpectedtobeintroducedinthefirsthalfof2016.
The full text of the National Innovation andScienceAgendaisavailableontheNISAwebsite.
Should you have any plans to invest in start-up, or to start your own, it would be worthseekingadvicefromyourtaxadviserabouttheseproposedchanges,
Goingoverseastowork?If you are planning on living and workingoverseas, there are some things you shouldfixupwiththeATObeforeyougo.Yourtaxadviser
willbeabletotellyouaboutwhatyouwillneedto do before leaving Australia. For example,where you have aHELP debt,make sure youupdateyourcontactdetailswiththeATO.
Youshouldalsonotethatonceyouearnacertainamount of income overseas, you will need tomakepaymentstowardsyourHELPdebt.
DatamatchingprogramsThe ATO is undertaking a number of datamatchingprogramsthatmayimpactyouasanindividual taxpayerdependingonwhat sortofactivitiesyouhavebeenengagedin.Shouldyouhave any concerns about thesedatamatchingprogramsorhavereceivedcorrespondencefromtheATOaboutanyofthem,youshouldspeakwithyourtaxadviser.
1) Real property transactions - Data matching program
TheATOhasannouncedthatitwillacquiredetailsof real property transactions for theperiod20September1985to30June2017fromStateandTerritoryrevenueandlandtitlesdepartmentsandofficesandrentalbondauthoritiesineveryStateandTerritoryinAustralia:AustralianGovernmentGazetteNoC2015G02019(8December2015).
The objectives of this data matching programareto:
• obtain intelligence about the acquisition anddisposalofrealpropertyandidentifyrisksandtrendsof non-compliance across thebroadercomplianceprogram;
• identify a range of compliance activitiesappropriatetoaddressriskswithrealpropertytransactionsbytaxpayers;
•work with real property intermediaries toobtainanunderstandingoftherisksandissues,aswellastrendsofnon-compliance;
• gain support and input into compliancestrategiestominimisefuturerisktorevenue;
• promotevoluntarycomplianceandstrengthencommunityconfidence in the integrityof thetaxsystembypublicisingtheoutcomesofthedatamatchingprogram;and
The ATO is currently working with insuranceproviders to identify policy owners on awiderrangeofassetclasses.Theseassetclassesinclude:
• Marine;
• Aviation;
• enthusiastmotorvehicles;
• fineart;and
• thoroughbredhorses.
The purpose of the ATO obtaining thisinformationistogainabetterunderstandingofcertaintaxpayers’wealthandtohelptheATOtoprovide tailoredservices to taxpayers toensure
theymeettheirtaxobligations.
DuringJanuaryandFebruary,theATOwillissueformal notices to insurers to provide the ATOwiththesepolicydetails.TheATOanticipatesitwillreceive100,000recordswherethedifferentassetclassesmeetcertainthresholdamounts.
3) Ride sourcing – data matching program
TheATOhasgivennoticeof adatamatchingprogrampursuant towhich itwillacquiredatato identify individuals that may be engagedin providing ride sourcing services during the2013-14,2014-15and2015-16financialyears:Commonwealth Gazette C2015G01623 (7October2015).
Detailsofallpaymentstoridesourcingprovidersfrom identified accounts held by ride sourcingfacilitators with various financial institutionswill be requested for those financial years.Ride sourcing facilitators provide an electronicplatform enabling members of the public toengagetheservicesofaridesourcingprovider(eg,adriver).
Thedataacquiredwillbeelectronicallymatchedwith certain sections of ATO data holdings toidentify taxpayers that can be provided withtailored information to help them meet theirtax obligations, or to ensure compliance withtaxationlaw.
The ATOwill obtain the following data itemsfromthesourceentities:
• payeeaccountname;
• payeeBSB;
• payeeaccountnumber;
• dateofpaymenttothepayee;and
• amountofpaymenttothepayee.
4) Online selling - data matching program
TheATO has given notice of a datamatchingprogram under which it will acquire onlineselling data relating to registrants who soldgoods and services to a value of $10,000 ormoreduringtheperiod1July2014to30June2015: Commonwealth Gazette C2015G01628(8October2015).
ThedatarequestedwillincludeinformationthatenablestheATOmatchonlinesellingaccountstoataxpayer,includingname,addressandcontactinformationaswellasinformationonthenumberand value of transactions processed for each
online selling account. This acquired data willbe electronicallymatchedwith certain sectionsofATOdataholdingsto identifypossiblenon-compliancewithtaxationlaw.
It isestimatedthatrecordsrelatingtobetween15,000and25,000individualswillbematched.
5) Visa holders, sponsors and migration agents - data matching program
TheATOhasgivennoticeof adatamatchingprogram under which the Department ofImmigrationandBorderProtectionwillprovidetheATOwithnames,addressesandotherdetailsof visa holders, their sponsors and migrationagents for the 2013-14, 2014-15, 2015-16and 2016-17 financial years: CommonwealthGazette C2015G01712(21October2015).
